Health Care's New Lottery

Health Care's New Lottery
If you slip from the winners' circle of the insured, you'll discover a world of patchy, minimal health care that feels almost Third World.

By Jane Bryant Quinn
© 2006 Newsweek, Inc.
Feb. 27, 2006 issue - America's health-care "system" looks more like a lottery every year. The winners: the healthy and well insured, with good corporate coverage or Medicare. When they're ill, they get—as the cliche goes—"the best health care in the world." The losers: those who rely on shrinking public insurance, such as Medicaid (nearly 45 million of us), or go uninsured (46 million and rising).

To slip from the winners' circle into the losers' ranks is a cultural, emotional and financial shock. You discover a world of patchy, minimal health care that feels almost Third World. The uninsured get less primary or preventive care, find it hard to see cardiologists, surgeons and other specialists (waiting times can run up to a year), receive treatment in emergencies, but are more apt to die from chronic or other illnesses than people who pay. That's your lot if you lose your corporate job and can't afford a health policy of your own.

There are other ways that winners might become losers today. New types of corporate health plans put you at greater financial risk if you (or your spouse or child) get seriously ill. They're spun as "consumer-driven health care" (or CDHC), because you decide what you're willing to pay for and what not. But "employer driven" would be a fairer name. CDHC cuts your company's medical costs by shifting more of the burden onto you. Elizabeth Dudek of Thomson Medstat, which gathers and studies health-care data, believes that these plans are "absolutely going to take over as the primary type of insurance offered to employees over the next several years."

CDHC plans come in various designs. What they all have in common is a high upfront deductible that workers pay. For example, in a family plan, you might be responsible for the first $4,000 in medical bills each year. After that, the company might pick up 90 percent of the expense. Your employer also might deposit some money into a special health-care savings account that you can use, tax-free, for bills paid out-of-pocket. Alternatively, you might be left to fund the savings account yourself, through payroll deductions.

Backers of CDHC are making some pretty extravagant claims. The plans, they say, will spark competition and lower national medical costs, because everyone will shop for care at a better price. For that to work, however, you need to know the price. We're a long way from having decent cost and quality information, even assuming that—when you get a chest pain—you'd shout, "Call the cheapest doc."

Having a high-deductible plan does cause workers to cut back on care, the Employee Benefit Research Institute reports. They're more likely to skip or delay getting treated, especially if they're in poor health or earn less than $50,000 a year. In short, they let themselves get sicker to avoid the upfront cost. Eventually, they may consume more medical care, because they didn't attend to themselves.

There's a plus to high-deductible plans. The annual premiums are a bit lower because you're insured for less. Still, you're buying a lottery ticket. You'll save some money if you stay well. But you might struggle financially if a lingering or chronic illness strikes. Laurel Pickering of the New York Business Group on Health is less sure than Dudek that CDHC plans will win, precisely because they don't help workers manage or improve their health.

Still, President George W. Bush loves high-deductible plans and is pushing them for the individual-policy market, too. He wants to raise the amount you're allowed to stash in health-care savings accounts to as much as $10,500 per family this year and sweeten the plans with bigger tax breaks, too. That's fine if you're healthy, in a high tax bracket and can afford to save that much. But of the 3 million HSA policies sold so far, only 1 million are said to include funded savings accounts. They're a luxury product, not for the working stiff.

But at least consumers with health plans get to ration their care themselves. The working poor, on Medicaid, face rationing that's growing more severe. The Center for Studying Health System Change has been studying 12 metro areas since 1995. Its 2005 report concluded that, for the unprivileged, "access to basic care is worsening." Because of cutbacks to Medicaid payments to providers, more docs are shutting their doors to the working poor. State-of-the-art hospitals and clinics are opening in affluent suburbs, not downtown. States are paring their Medicaid rolls—and if you're uninsured, you're less than half as likely as the insured to get any medical care. Brutal cutbacks in services for the mentally ill are adding to homelessness—raising costs for shelters, jails and emergency rooms. Fewer specialists are even serving emergency rooms, let alone offering follow-up care.

We like to tell ourselves that, in America, everyone gets health care if it's really needed. But except for certified emergencies, such as a broken bone, doctors and hospitals may turn you away unless you can pay upfront. You don't want to lose your health insurance—even the high-deductible kind. Our lottery system of health care is sicker than you think.

Reporter Associate: Temma Ehrenfeld