Enhancing Access Via Medical Freedom --- Call It MSA Empowerment
Miguel A. Faria, Jr., MD
Despite the assurances by managed care proponents that health maintenance organizations (HMOs) and other forms of managed care would solve the duel problem of spiraling health care costs and the rising number of the uninsured, that has not been the case. Public-private partnerships and managed care health initiatives which have been promoting the herding of workers and Medicaid and Medicare patients into HMOs have likewise failed to alleviate those problems, at least for the long haul. Health care costs exceeded $1 trillion in 1999 and the number of the uninsured stands now at 44 million (i.e., 16.3 percent of the population). In fact, managed care, once seemingly an irresistible juggernaut, today seems to be at the verge of caving in and collapsing from its own bureaucratic weight.(1)
Public discontent for HMOs has mounted and continues to rise not only because of these concerns and lack of choice, but also because of the manifest deterioration in the quality, as well as the unexpected difficulties encountered with decreasing access brought about by overt rationing of health care in the name of cost containment.
Then, there are the serious concerns over the new,
evolving, seemingly flexible ethics of the corporate practice of medicine
being brought about by the concept of managed care. The ethics do not seem
to be centered for the benefit of the sick, individual patient, but for
the financial profit of the HMOs and the sponsoring giant health care corporations,
as well as for the political benefit of the state.(2) Some authorities have
even begun questioning whether the ethics of Hippocrates may already be
obsolete and should, therefore, be replaced with more up-to-date, contemporary
codes of bioethics.(3,4)
The cost containment measures of HMOs have not solved the problem of providing coverage for the chronically uninsured. Indeed, the number of the uninsured has risen, and yet this must be viewed in the proper perspective. The most recent Census Bureau statistics report that despite all the regulatory gadgets put in place by Congress, the number of the uninsured has risen to 44 million Americans or 16.3 percent of the population. These figures constitute a one-month, snap shot of the uninsured population, with most of the uninsured being so simply because they are "in and out of insurance, which is, of course, job-related in the U.S.," according to Robert Moffit of The Heritage Foundation. Moffit has shown that "about 50 percent of the uninsured in the past year comes from households with annual incomes of about $75,000 per year," representing people who are self-employed or who work for small companies which cannot afford to provide medical insurance for their employees.(5)
A solution for this growing segment of the population could well be Medical Savings Accounts (MSAs). If MSAs were made 100 percent tax-free, more available and competitive, these would be the very people who would be prime candidates for opening their own MSAs, private health accounts, which could then be utilized and used more efficiently and more affordable in conjunction with high-deductible, catastrophic (true indemnity) insurance.
Politicians should understand rather than pursuing
more government solutions and more public-private partnerships that leave
patients and their physicians out of the equation, individuals should be
empowered with their own MSAs.
Towards "Universal Access"
Of all the presidential candidates for the year 2000, Steve Forbes (who has since dropped out of the race) was the most knowledgeable and firmest proponent of MSAs. Forbes wisely favors the use of MSAs for extending universal access for all Americans, including senior citizens. While the Health Insurance Association of America (HIAA), sponsor of the popular "Harry and Louise" TV commercials aired during the 1993-1994 health reform debate, has proposed creating a new federal program modeled after School Children Health Insurance Program (SCHIP) for those with incomes below 100 percent of the poverty level, others have proposed the establishment of vouchers in the form of MSAs for individuals who are truly uninsurable.6 While vouchers may be theoretically a form of wealth redistribution, this novel and promising solution would be a step in the right direction and a definite improvement over the present chaotic situation.
We must admit the fact, for the most part, federal intervention in medical care, which is not even authorized in the U.S. Constitution, has caused most of the problems that plague American medicine today.(6) We must also accept the reality the poor will always be with us. And yet, according to the twin pillars of Western civilization --- our Graeco-Roman inheritance and our Judeo-Christian legacy --- the poor and the indigent should be treated with compassion (Lat., misericordia). The former, crystalized in the teachings of Hippocrates called this human quality philanthropy (Gk., philanthropia) and humanitarianism (Lat., humanitatis). The latter called this brotherly love, charity (Gk., agapés and caritas). In the Renaissance, the great English physician, Sir Thomas Browne, wrote in Religio Medici, true charity begins at home, and it is not government-mandated, but freely and voluntarily given by individuals because of their love for their fellow man (philanthropy). So, perhaps the best way to help the poor and the uninsured gain access to care would be through the dispensation of charity, pro bono publico.
Those physicians, hospitals, and miscellaneous
providers who refuse to provide medical care to the indigent pro bono
publico should be ostracized, like in the old days, by their peers.
Yes, their colleagues should stop referring patients to those who refuse
to provide charity to the needy and dispossessed. Professional ostracism
was effective in the past and can be effective today. Moreover, this practice
will reaffirm that medicine is a profession, a learned profession, a sacred
calling --- not an industry, a business, or a trade union.
Tax Equity and Patient Empowerment
Then, there are individuals who choose not to have insurance, even when it is offered to them. We have seen this in Medicare and, particularly, in Medicaid. We know millions of children and adults are eligible for Medicaid benefits, yet they do not enroll. But that is the essence of a free society --- the freedom to choose. They do, however, still have access to medical care. We also know physicians provide over $50,000 worth of (or 150 hours ministering) medical care pro bono publico to the indigent annually.(7)
The Dallas-based National Center for Policy Analysis (NCPA), a long-time advocate of MSAs, has wisely noted that the employer-based system of health care is a tax exclusion system. "Unlike wages, employer payments for health insurance are excluded from the employee's taxable wages," and this tax subsidy is estimated at $125 billion a year.(8)
While we think the NCPA has a good plan, some of us favor tax deductions over refundable tax credits for privately held MSAs.(9) The vouchers can be extended as refundable tax credits to the uninsurable.(7) With tax deductions there will be less bureaucracy and government intrusion while accomplishing the same objective for those who can establish their own MSA.(10)
The need for MSA liberalization by Congress remains. MSAs should be expanded as advocated by free market proponents(6-11) from the ceiling of 750,000 placed by the Kassebaum-Kennedy law to the limits placed by the unfettered free market. MSAs should be offered to everyone including the working uninsured, the self-employed, small businesses, federal employees (i.e., as an option in the Federal Employee Health Benefit Program [FEHBP]), and Medicaid and Medicare recipients.
Allowing seniors to become prudent consumers of health care and avoid waste via the incentives provided by the use of MSAs, will be beneficial because Medicare expenditures are also continuing to increase by 10 percent annually, despite the cost containment measures placed by Congress. Medicaid remains unattractive to physicians as well as beneficiaries. Yet its cost to individual states is also rising. Recently, Tennessee had to consider doing the heretofore unthinkable, establishing a state income tax to pay for its failed Medicaid-HMO, TennCare. Thus, improving access to health care should be pursued within the purview of the free market and in accordance with the Oath and ethics of Hippocrates. These ethics insist the physician place the interest of the patients first, above monetary considerations or the interest of society at large. And what is more, when that happens, not only the individual but also society as a whole benefits.(12,13)
The free market solution for improving health care access is patient empowerment, whereby individual citizens are given the same tax advantages as employer-provided coverage benefits and are allowed to establish MSAs either via tax deductions or via fixed refundable tax credits.
Allowing citizens to keep and letting them accumulate what they do not spend in the MSA encourages them to act as prudent consumers of medical care and to remain healthy, providing yet another incentive to avoid self-destructive behaviors and unhealthy lifestyles. What money they or their employer deposits in the MSA must be used for medical care, and individuals (and their familes) get to keep what they do not spend. And for those who become seriously ill or require surgical procedures or expensive treatments, they will have the piece of mind of knowing after their MSA deductible has been satisfied, their indemnity insurance kicks in, providing coverage, so they don't forfeit their savings or possessions of a lifetime to impoverishment or lose their lives to illness.
Unless we act decisively to improve access --- i.e., via the private sector through tax equity, vouchers or individual charity --- for all Americans, politicians surely will take us down the path of the single-payer system of health care with cataclysmic consequences for the nation. The battle lines have been drawn. We will either take a decisive, necessary step towards the direction of freedom --- by severing employer-provided insurance coverage from the work place and ending the employer link that was established accidentally with the wage and price controls of World War II --- or we will end up with fully socialized medicine, with the government as the only payer.
We believe that with an individual-based, true free market in medical care and real competition, doctors would be required to discuss costs with their non-urgent patients (i.e., 90 percent of patients in their offices) just as surgeons discuss now fully informed consent information with their surgical patients, and although they will surely make less money than they do now, it should be worth it. Practicing physicians should be happier regaining their autonomy, their independence, and their lost liberties, not to mention taking, once again, control of their own practices.
Patients will also be happier because they will
also, once again, be able to trust their physicians, have more freedom of
choice, and health care would, again, become more affordable. Unfortunately,
this latter, liberating alternative --- that represents freedom --- strikes
fear in the hearts of politicians and will be fought tooth and nail by them
and policy makers --- because not only would they lose control over the
lives of citizens, but it would also make them superfluous.
Access Via MSAs
MSAs are the answer to universal access to health care. While MSAs are used for medical care needs, unspent MSA contributions could be automatically rolled over each year or used by individuals for experimental procedures, drug prescriptions, or cosmetic surgery, not covered by their insurance. In 1996, the Kassebaum-Kennedy law set up a pilot project for MSAs which, unfortunately, has had a slow start because, as we have already alluded to, its provisions were preordained to failure with a number of restrictions. For example, there is a cap of 750,000 MSA openings; there are required unwieldy deductibles; there are sunsetting provisions (i.e., the program closes after a four-year period); and availability is limited to the self-employed and to small businesses with less than 50 employees. All of these requirements predictably have made MSAs unattractive to insurers.(9) Therefore, one report found there were only 55,000 tax-free MSAs opened since they were made available January 1, 1997.(14)
For MSAs to work, the program must be expanded and liberalized by Congress. In fact, unrestricted MSAs, unleashed into a truly free market medical care system, are not the "poison pills" that Sen. Kennedy inveighed against, but the "magic bullets" that may be required to revive our ailing health care system, afflicted as it is today with an overdose of government and corporate socialism.(6)
Last year, Congress tried to implement an initiative by Rep. Bill Thomas (R-CA), a four-year test of Medicare MSAs. By this plan, beneficiaries would have been allowed to pay premiums for catastrophic coverage and deposit the rest in the MSA. The Clinton administration again insisted on keeping caps on the number of MSAs and keeping other restrictions in place which, as in the Kassebaum-Kennedy law, kept this option from being a viable alternative for our senior citizens in Medicare. Predictably, no insurers applied to the government for approval to enter this program and no high-deductible, catastrophic insurance policies were issued.
GOP legislation passed in the House of Representatives
last year would have allowed all employers, not just small businesses and
the self-insured, to offer MSAs as a health benefit and increase annual
limits on tax-exempt contributions to individually-owned MSAs. It would
also have made all insurance premiums fully tax-deductible. Unfortunately,
the legislation was not brought up in the Senate. In this pivotal presidential
election year, this legislation needs to be brought back, passed by the
full Congress, and, hopefully, signed by lame duck President Bill Clinton
--- who wants to transmute and rehabilitate his legacy for the history books
from that of Monica Lewinsky to anything else possible including health
care reform. And so a real window of opportunity may, in fact, be opened.
We believe medical costs have risen, and the number of the uninsured has escalated providing obstacles to access in medical care because of government intrusion and increasing interference of other third party payers in the patient-doctor relationship. Since World War II, despite the deceptive mirage, the fact is that we have gradually lost Adam Smith's invisible hand of the free market. When a patient (acting as a consumer of medical care) spends health care dollars, the perception is that someone else is footing the medical bill (be it the government, as in Medicare or Medicaid, or the insurer or HMO, as in employer-provided coverage). So, in effect, Adam Smith's invisible hand of the free market is shackled by the fetters of this perception --- which, increasingly, turns out to be correct, for indeed, someone else --- the proverbial third party payer --- is paying (i.e., directly by wealth redistribution in the case of government provided medical care, or indirectly via cost-shifting, as we see in the private sector).
What we need is an unfettered free market in
medical care with less government intervention, less regulation, more choice
and more competition. Take for instance
the requirements for federal mandates or state-mandated health insurance
benefit packages, which is another way government intervention has had the
unintended consequence of causing yet another reason for the swelling of
the ranks of the uninsured. The actuarial firm Milliman and Robertson estimates,
for example, that the cost of seven common state mandated benefits, e.g.,
minimum maternal stay, speech therapy, drug abuse treatment coverage, etc.,
increase the cost of health insurance as much as 30 percent.(15) By another
estimate, one out of every four uninsured persons was priced out of the
market by state mandates.(16) Other misguided state-level reforms, as in
the case of New York and New Jersey, have been the issues of community
ratings and guaranteed-coverage that have forced insurance premiums
through the roof causing families to drop coverage. Community ratings and
guaranteed-issue requirements in the insurance market increases the probability
that an individual will become uninsured by 11.3 percent.(17) In other states
such as Tennessee, expansion of Medicaid HMOs to achieve universal coverage
via TennCare was a failure and an unmitigated disaster with an unaffordable
price tag.(18) Ditto for similar reforms in Kentucky. Less government, not
more government, is the answer.
Why Not the Single-Payer in the
Much undeserved praise has been heaped upon Britain's National Health Services (NHS). And yet, socialized medicine has been riddled with inefficiencies, rationing, and poor quality of medical care since its inception by the father of the British health system, Aneurin Bevan, who said he would quiet physician opposition by filling their mouths with gold. Indeed he did with dire consequences for the former empire. In 1978, 33 percent of the dialysis centers refused to treat patients over the age of 55, and in 1992, there were 800,000 patients waiting for surgery.(19) Since then, if anything, the system has worsened. One report found, for example, that on average the NHS surgical suites worked at one-third capacity because there were no systematic appointments and follow-up systems. Sometimes surgeons didn't even show up to perform surgery. It is only in the last ten years that the NHS hospitals have been required to keep records on their patients so that the government could keep track of who was leaving the system or died. Dr. Eamon Butler, Director of the Adam Smith Institute in London, writes: "Policy analysts in the U.K. derive wry amusement from the fact that Americans seem determined to model its health care system on what we, in the U.K., are trying to get away from."(20) He has pointed out the British National Health Service survived because the U.K. has a safety valve --- the 10 percent private medical insurance program in Britain. Furthermore, "over the last 15 years, the demand for private health insurance has grown dramatically and networks of private hospitals, some of them American owned, have sprung up to cater to this burgeoning demand. In other words, British citizens are leaving the NHS in droves just at the same time that U.S. policy makers seem determine to recreate it in America."(19)
When this information came to light, not only about the rampant inefficiencies, discriminatory rationing, and non-existent services in the British NHS, but also in Canada's socialistic National Health Insurance (NIH) system, the American people wisely rejected these collectivist options. In fact, the American people even rejected our own version of socialized medicine envisioned in the Health Security Act of 1993.
We know that Canada rations medical care through the back door, with progressive reductions of medical benefits it had previously promised its citizens. In addition to the well-known queues and waiting lists, the methods include delisting of procedures and medications that were previously deemed appropriate and medically necessary, progressive underfunding and reductions in the funding of mandated services, and the issuing of government guidelines or directives to reduce costs at the expense of quality.(21)
When Canadians become seriously ill and are financially able, they come across the border, via the safety valve available to them, our medical care system, to our hospitals in the United States to get their bypass surgery performed or mothers to have babies delivered. Those who are not able to cross the border are statistical casualties of socialized medicine.(22) The Canadian single-payer system is also superlatively unfair. Those officials who are "more equal than others" have perks and privileges that others, not so politically favored, don't have. While the seriously ill in Canada have to wait in queues (and many die waiting for treatment), high-placed bureaucrats, senior businessmen, and even politicians come to the United States.(23) According to Michael Walker of the Vancouver-based, Fraser Institute, "The average wait for all types of surgery is 6.8 weeks. The wait to see a specialist (i.e., before being referred to a surgeon) is 5.1 weeks and the wait for an MRI scan is 11.1 weeks in Ontario."(22) In a study done by Dr. Bill Mackillop, the head of radiation therapy, Kingston Regional Cancer Center in Ontario, and a proponent of the Canadian socialized system of health care, found that "Canadian patients were waiting an average of three times longer than patients in the U.S. for treatment"; this included cancer treatments and radiotherapy. NHI has been the "defining characteristic" of the Canadian nation. However, recent polls show public opinion has changed dramatically.(24) In 1988, and then a decade later in October 1998, Canadians were polled by researchers at the Harvard University School of Public Health and The Commonwealth Fund:
* In 1988, 56 percent selected the most favorable option --- "On the whole the system works pretty well and only minor changes are necessary to make it work better" --- whereas in 1998 only 20 percent agreed.
* A decade ago 37 percent averred that "There are some good things in our health care system, but fundamental changes are needed to make it work better" --- while in 1998, 56 percent agreed.
* And in 1988, only 5 percent agreed that "Our health care system has so much wrong with it that we need to completely rebuild it" - while in 1998, 23 percent agreed.(25)
When another poll, conducted by the Angus Reid Group in December 1998, asked whether "Canada's health care system" had "improved, stayed the same, or worsened" over the preceding 5 years, 73 percent perceived it to have worsened.(24)
Also released in December 1998, a poll by the firm Pollara found that 20 percent "strongly agree" and 43 percent "somewhat agree" that individuals should be allowed to "upgrade to the best possible health care treatments and techniques available using their own private resources" --- although this is illegal under the Canada Health Act.(24)
There is no free lunch. The things that matter most come with a price tag, and this is true for medical care. The truth is health care is not a basic human right, as we have been led to believe, for numerous reasons. Objectivist and freedom philosophers have denounced it as immoral because it demands a service from someone, a physician, who, as another individual owns himself and is entitled to personal autonomy. Moreover, carried to its logical, pragmatic conclusion, the concept leads inevitably to socialized medicine, and socialized medicine, in any of its incarnations, has been shown not to work.(26-28) Socialized medicine leads to rationing, involuntary government rationing, and the equal distribution of misery.
I do agree with reformers that assert change is needed, but that change should be in the direction of choice, freedom, and less government. The proper vehicle should be MSAs, unbridled by government regulations. MSAs, an issue immersed in partisan politics, unfortunately, have not been given the attention they deserve by the media or a serious chance to succeed by Congress and the present administration. MSAs empower individual patients and restore the quickly vanishing principles of freedom and trust inherent to the practice of medicine. The Association of American Physicians and Surgeons (AAPS) has espoused the concept of tax free MSAs used in conjunction with high-deductible, catastrophic insurance coverage for many years. Let us give it a try as a real alternative to improve health care access for all Americans. And while we are at it, let us also sever insurance from place of employment and establish tax equity for health insurance.
MSAs provide the only free market alternative to
the present "one-size-fits-all" option of managed care that herds
patients into employer-provided HMOs and other rationed, health care arrangements
that only benefit politicians and profiteering special corporate interests.(29)
The solution to our present health care woes is not for us to follow the
British (or Canadians) over and down the precipice of socialized medicine,
but to restore freedom of choice through the implementation of MSAs. The
time to act is now!
1. Faria MA Jr. Medical Warrior: Fighting Corporate
Socialized Medicine. Macon, GA, Hacienda Publishing, Inc., 1997, pp. 137-161.
2. Faria MA Jr. Transformation of medical ethics through time, part I: Medical oaths and statist controls. Medical Sentinel 1998;3(1):19-24.
3. Faria MA Jr. Transformation of medical ethics through time, part II: Medical ethics and organized medicine. Medical Sentinel 1998;3(2):53-56.
4. Foubister V. Can the Hippocratic oath apply to managed care? AMNews, August 18, 1997, pp. 3, 28.
5. AAPS News, November 1998. Cited in Rising numbers of the uninsured. Medical Sentinel 1999;4(1):9.
6. Faria MA Jr. Medical Warrior, op.cit., pp. 61-64, 135-161.
7. Ibid., pp. 65-103.
8. Goodman JC and Matthews M. Reforming the U.S. health care system. Policy backgrounder 149, National Center for Policy Analysis, April 26, 1999, http://www.ncpa.org/bg/bg149/bg149.html.
9. Goodman JC and Musgrave GL. Patient Power - The Free-Enterprise Alternative to Clinton's Health Plan. Washington, DC, Cato Institute, 1994, pp. 75-110.
10. Matthews M, Strayer J. Expanding MSAs: Real patient protection. Medical Sentinel 1999;4(2):58-59.
11. Boyles JH. Health care reform: the solution is obvious. Medical Sentinel 1996;1(1):27.
12. Faria MA Jr. Slouching towards a duty to die. Medical Sentinel 1999:4(6):208-210.
13. Faria MA Jr. A slippery slope. Internal Medicine News, May 15, 1999, p. 14.
14. Love AA. Medical savings account off to slow start. Idaho Statesman, Oct. 1, 1998.
15. Goodman JC, Matthews M. The cost of health insurance mandates. Brief Analysis No. 237, National Center for Policy Analysis, August 13, 1997.
16. Matthews M. An easy way to make health insurance more expensive. Brief Analysis No. 2224, National Center for Policy Analysis, Feb. 21, 1997.
17. Custer WS. Health insurance coverage and the uninsured. Dec. 10, 1998, Health Insurance Association of America, 555 13th Street, N.W., Washingotn, DC, 20004.
18. Investors Business Daily, Oct. 22, 1999, http://www.investors.com. Cited in the Medical Sentinel 2000;5(1):38.
19. Faria MA Jr. Medical Warrior, op. cit., p. 36.
20. Butler E. The national health service in the United Kingdom: model for the United States? J Med Assoc Ga 1993;82(12):643-645.
21. Goodman WE. Health care in Canada: face-to-face with reality. J Med Assoc Ga 1993;82(12):647-649.
22. Goodman WE. Re-privatizing medicine in Canada - by the back door. Medical Sentinel 1997;2(1):15-18.
23. Walker M, Zelder M. More Canadians wait - and wait longer. Executive Alert, National Center for Policy Analysis, November/December 1999.
24. Wall Street Journal, March 5, 1999. Cited in the Medical Sentinel 1999:4(4):123.|
25. Canadian polls on health care. Fraser Institute, Vancouver, BC, http://www.fraserinstitute.
ca/forum/1999/february/medicare.html. Cited in the Medical Sentinel 1999:4(4):122.
26. Faria MA. Vandals at the Gates of Medicine: Historic Perspectives on the Battle Over Health Care Reform. Macon, Georgia, Hacienda Publishing, Inc., 1995, pp. 235-254.
27. Orient JM. Your Doctor Is Not In. Macon, Georgia, Hacienda Publishing, Inc., 1994, pp. 109-150.
28. Annis ER. Code Blue - Health Care in Crisis. Washington, DC, Regnery Publishing, 1993, pp. 79-111, 185-219, 242-259.
29. Faria MA. Managed care - corporate socialized medicine. Medical Sentinel 1998;3(2):45-46.
Dr. Faria is Editor-in-Chief of the Medical Sentinel, the official journal of the Association of American Physicians and Surgeons (AAPS), and author of Vandals at the Gates of Medicine (1995) and Medical Warrior: Fighting Corporate Socialized Medicine (Macon, Georgia, Hacienda Publishing, Inc., 1997).
Originally published in the Medical Sentinel 2000;5(4):123-127. Copyright
©2000 Association of American Physicians and Surgeons.