Health insurance and healthcare is one of the most challenging issues in America. Figuring out how to pay for our ever increasing amount of medical care is one of the most challenging issues in America. Every political season has a fight about it. Everyone has an opinion on why it is broken. There is no consensus on where there are problems with payment vs delivery of healthcare. Free market oriented reforms focus on price transparency and consumer driven spending, like HSA Accounts, while government oriented reforms focus on single buyer price controls. Generally the plans involve tinkering with the existing employer driven health insurance markets or attempting massive reforms around government programs. Every election reforms are always proposed, and they are occasionally implemented, and rarely successful at their desired goals.
The HSA Account was created in 2003 as an example of consumer driven healthcare spending. Instead of government price controls and variations on medicare reimbursements, HSA Accounts were a perk of carrying a “high deductible” plan, with the concept that a high deductible would encourage people to be more price conscious regarding medical expenses than people with traditional health insurance would be. Originally you had a cap that was the smaller of the deductible or the annual limit, but in term that rule was relaxed to make it have an annual limit. HSAs have shown some degree of effectiveness, reducing spending on healthcare by 5%-7%, but have not shown the massive “bending of the curve” that was proposed. Healthy high income individuals looking for a tax advantaged retirement account have gravitated towards HSA Accounts, while lower income individuals have often gotten high deductible health insurance plans without the corresponding HSA money.
The Affordable Care Act (ACA, or PPACA), often referred to in the press as Obamacare, was the latest of government driven medical reforms. Efforts were made to increase enrollment in medicaid, while providing subsidies to lower middle class families to have the option of receiving health insurance via state based exchanges. ACA attempted to shift the financial incentives around the existing health insurance system, presuming that larger and more powerful systems would create financial pressures to bend the healthcare cost curve downward. ACA had limited success in reducing the number of uninsured, primarily increasing the insured population of adults under 26 by permitting them to stay on their parents insurance and other adults qualifying for medicaid expansion. ACA has a mixture components all designed to increase coverage and lower costs, but very few components have had substantial impacts except for the aforementioned provisions.