Why I, Not We, Must Ration Health Care

The infamous Peter (A-Three-Toed-Sloth-Has-More-Rights-Than-Your-Newborn) Singer has been favored by the New York Times with a lengthy Op-Ed today entitled “Why We Must Ration Health Care.” Would that he had written it in 1965, so that our forefathers could have read it before first turning down this broad road leading to socialized medicine (the destination of which is just coming into sight).

As you read Singer's article, I believe you'll soon note that his argument in favor of health care rationing is flawless. The rabbinic philosophy which he cited in the article, he also soundly refuted. Health care absolutely must be rationed.

What Singer has not addressed is the more pertinent and important question: Not whether health care should be rationed, but WHO should do the rationing?

I believe that I should do the rationing. I should be entitled to all of the health care that I'm willing to fund out of my own pockets. I should be entitled to all of the insurance that I can afford and wish to purchase. Beyond my insurance coverage, I should be entitled to all of the health care for which I am willing to write a (non-bouncing) check. Some people will not be able to afford basic health care for themselves, and I should be entitled to decide whether I would like to help them or not. I should be constrained in my decisions by the compassionate example of Christ, which will compel me to give generously to help the infant born with a defective heart, but will likely not lead me to fund a Viagra prescription for anyone.

I support the HealthSaver formula of combining a High Deductible Health Plan with a Health Savings Account (see more about this option here or here). The best thing about this medical option, in my opinion, is the fact that it puts decisions about the rationing of my health care right where they belong—in my hands. My insurance does what insurance exists to do: It protects me from being destroyed financially by a calamity. My HSA money is money that I use either to save for a rainy day or to spend on medical care today. To decide which I'm going to do, I ration my health care. Before I go to the doctor, I ask myself, "Is this really worth spending my money?" Before I fill a prescription, I ask myself, "Maybe I should wait a day or two and see whether I feel better on my own before I spend money on an antibiotic?" Sometimes I spend the money; sometimes I don't. It depends upon how my own rationing decision works out.

And by the way—about that Health Savings Account—my health insurance has given me $2,829.61 in the last three years, all of which is socked away in a Money Market account and a Bond Fund. Furthermore, I haven't spent a penny out-of-pocket for health care in three years (the "pocket" not including my Health Savings Account, which is extra money I wouldn't have under any other plan). Switching to the HealthSaver 2800 was the best financial decision I've made in a long time.

Many of us will want insurance coverage that provides extensive coverage for major unforeseeable injuries and disorders that could affect us or our families. As those in charge of our own health-care rationing, we negotiate with insurers, shop around for coverage, and decide how much we're willing to pay extra for how much extra coverage.

This is not a perfect system, but neither is it the worst possible outcome. I can't think of a system with better appeal, personally. The only area in which the Big Brother system can tout its superiority over the free market is with regard to providing health care for the deserving poor. But the free market system can address that need as well, when it is populated by the compassionate and generous. And apart from the compassion and generosity of individuals, any system is doomed to failure.

That's one reason why I favor free enterprise so much. It cultivates compassion and generosity. In the free enterprise system, people know that those who have fallen down will not be able to get up unless I help them. I am motivated to show compassion and give generously. But if I have fallen for the lie that it is somebody else's job to help—the government's job—then I have delegated away the tasks of compassion and generosity (as well as administering a death-blow to gratitude on the part of the recipient) and can comfortably look the other way. "The government has programs for that."

Certainly I am more comfortable with making my own decisions about health-care rationing than I am with putting those decisions into the hands of the Federal Government or (may God protect us all!) into the hands of Peter Singer. There will be little compassion and generosity in either case. But between the two of them, at least Singer is being honest. Socialized medicine will always involve bureaucratic rationing of health care. We need to read Singer's article and think long and hard before our government steals away from us the ability to make our most critical and private decisions for ourselves.

In summary, I provide three reasons why I, not we, must ration health care:

1. Because rationing is ultimately a moral question, and we cannot trust utilitarians like Peter Singer nor the Federal Government to make such moral decisions. If they advise that a severely disabled fetus should be aborted, what rationing decision will they make about extending treatment to such a child if the mother rejects their opinion on moral grounds and bring the baby to term?
2. Because the tendency of people toward selfishness—toward over-valuing one's own life—has not been demonstrated historically to pose nearly the problem that has been inflicted upon humanity by the tendency of governments to under-value the lives of people. Strange as it may seem, people often courageously put aside their own needs and value their own comfort below the needs of others. Ask the disabled veteran. Ask the good mother. Ask the first-responders of September 11. Government? Put the needs of others ahead of its own needs? I'll let my good readers cite all of the examples of that phenomenon that they find in history.
3. Because the shift of rationing away from the individual and toward the insurance company and the government has contributed greatly to the increase of health care costs that threatens us today so much.

For all of these reasons, and more, let us avoid Peter Singer's solution and ration our own health care.

Changes to Guidestone's Health Savings Account

I've blogged previously about our move over to the Health Saver 2600, and the great advantage it has been to us. Not long ago I received a rather ominous letter from Guidestone warning me that the HS2600 was being discontinued and replaced with the new HealthSaver 2800. The language of the letter led me to believe that the changes would amount to a weakening of the benefits of the HS2600.

I guessed correctly.

Nevertheless, we're staying with the new HS2800 plan, for reasons that I will detail in this post.

The Current HealthSaver 2600

Under our current coverage, we have a deductible of 2600/5200 with 100% coverage for in-network care above that level. Our church provides the HealthChoice 1000 plan for pastoral staff, but agrees to buy the cheaper HealthSaver 2600 for us and deposit the savings on the monthly premium bill into our Health Savings Account. For this year that amount deposited into our Health Savings Account will top $2700. So, if we spend $2700 on health care out of our pocket, we actually don't spend any money out of our pocket, because we have $2700 that we used to spend on premiums sitting in a debit card account for us to use before we touch any of "our" money. And any of that $2700 that we don't spend really does become our money, to save until next year, or until retirement, accumulating in our Health Savings Account year after year until we use it on health care expenses. Our kids can inherit any of it that we don't spend. It's our money.

This year, there is no level of health care expenses at which the HealthSaver 2600 plan isn't a better deal for us than the HealthChoice 1000—no level of health care expenses where we aren't money-ahead for having the HS2600.

The New HealthSaver 2800

The HealthSaver 2800 features two primary differences from the HS2600. First, the deductibles have risen (as the name suggests) to 2800/5600. Second, (and most significantly) the plan no longer features 100% coverage once you have met the higher deductible. Instead, the plan duplicates the HealthChoice series model of 80/20 coinsurance to a maximum out-of-pocket expense after deductibles: in this case, 3000/6000. That, my friends, is a major difference! And it shows up in the numbers.

The chart given above depicts how much money we make by choosing the HS2800 instead of the HC1000 at varying levels of medical expense for the year. The blue line (generally the best case) represents the financial advantage of switching to the HSA plan if all of the medical expenses are incurred by one individual within the family. The red line (generally the worst case) represents the financial (dis)advantage of switching to the HSA plan if half or less of the medical expenses are incurred by the costliest individual in the family. If the costliest individual in the family represents 75% of our family's annual medical expenses, then the HSA advantage would fall halfway between the red and blue lines. You get the point.

This financial model includes some presumptions:

• It presumes that all of the money that we save on premiums is placed into our Health Savings Account.

• It presumes that all of the expenses given are "normal" medical expenses. In other words, none of the following "special" expenses:

  • "Wellness" care, covered at $25 per visit under the HC1000 and at $0 under our HS2800.
  • Prescription drugs, covered with a copay under the HC1000 and treated as normal expenses under our HS2800.
  • Doctors visits, covered at $25 per visit under the HC1000 and treated as normal expenses under our HS2800.

  And I recognize that this one is truly a false presumption, but failure to make it so complicates the math as to put the plans beyond comparison for me.

• It presumes that we start the year with a $0 balance in our HSA, which we aren't, but the comparisons become invalid if we're applying the benefits of previous years to this year's analysis.

So, in our case, the switch to the Health Saver 2800 is a "sure thing" if our health expenses for the year are anywhere from $0 to around $5400. From there through $17,800 of medical expenses for the year, we are exposed to a potential downside of $108 (if we have that level of medical expenses with no one person costing half or more of the expenses), with a potential upside of $1,332. From 17,800 to 21,000 our downside exposure remains the same, while our upside potential gradually increases to 1,972 bucks (where it stays through infinity). From 21,000 to 35,600 our downside exposure deepens from $108 to $2,828 (where it stays through infinity).

Shedding the math and boiling it down to real life: Unless multiple people in our family have major medical issues next year that put us into the hospital, the Health Saver 2800 remains an upside situation for the Barber family. And we've never had a year like that. Someday, no doubt, we will. But if that kind of year happens as frequently for us as one in every three years (and again, we've NEVER had a year like that), we'll still accumulate enough money in years one and two to more than pay for our losses in year three. We've decided to roll the dice. I re-enrolled tonight.

Am I disappointed in the changes to the plan? You bet I am. But the HS2600, as it turns out, was simply too good a deal to be true (at least for very long). Let's hope that the HS2800 enjoys a longer life. My thanks to the fine folks at Guidestone for providing us with such valuable options for our health insurance needs.

How Much Money Have You Made Off Your Health Insurance This Year?

$1,333.21…that's my answer. Some of you may remember my post from last October in which I announced my decision to switch from Guidestone's HealthChoice 1000 plan to the HealthSaver 2600 plan. My new plan is a government-recognized HDHP (High-Deductible Health Plan), which qualifies me to have an HSA (Health Savings Account). My new plan's premiums are significantly less than the premiums paid for the HealthChoice 1000. The difference in cost is going each month into my HSA. Also, any medical expenses that I have paid out of my HSA this year, I'm reimbursing back into the account (even under my old plan, I would still be paying on my deductible). As a result, my HSA now contains the amount given above, about equally split between a Money Market account keyed to a Visa Checkcard and a set of investments in various Guidestone Funds. Folks, that money is mine. I get to keep it in that account as long as I wish. I could spend it on avgas if I wanted (with significant adverse tax consequences). But most importantly, by my calculations I'll enter 2008 with better coverage than my old health insurance plan provided (because I have this stockpile of cash to cover deductibles that I didn't have before), and not long after that, I'll basically have zero-deductible health insurance. And all of this has happened without me or my church paying a dime more than we've been paying all along. I don't plan to take advantage of zero-deductible health insurance, because I want to keep saving money into that HSA to carry into retirement. I regard my HSA as part of my retirement planning strategy. Let's face it, I'm VERY likely to have health care expenses in retirement if Jesus tarries that long and leaves me alive that long. I could pay for them out of my 403b (and pay taxes on the money withdrawn to do so), or I can accumulate money in the HSA (tax-free on the way in like my 403b) and pay for my retirement health care out of there (tax-free on the way out very UNLIKE my 403b). But the best thing about the HealthSaver 2600 is that I am doing my part to solve the health care crisis in the United States. My HSA has made me a consumer once again regarding medical care. My treatment choices now cost ME real money. As a result, I'm growing stingier every day. I don't run to the Farmersville clinic when I think I might have the flu—I tough it out. I always still had the flu when I left the clinic anyway…now I have the flu AND more money still in my HSA. One reason health care costs keep skyrocketing is because we have a system where the consumers are often not directly paying the bills. Well, I'm no longer a part of that problem. Has your health insurance given you any money this year? If not, right now, while next year's church budget is being planned, might be a really good time to start talking with your church leadership about the potential benefits of an HSA.

About Your Health Insurance

I am seriously thinking about changing my health insurance from Guidestone's Health Choice 1000 plan to their Health Saver 2600 plan and opening a Health Savings Account.

My premiums would decrease by $2,088 annually—an amount that I would ask my church to contribute to my HSA. I would also hope to contribute to my account up to the maximum contribution ($5,200). By my calculations, there are a few scenarios in which this plan could wind up costing me more money in any given year than what I'm paying now. On every year that I've had since I've been in the ministry, however, I would wind up saving boatloads of money. And whatever money I don't spend out of my HSA I can keep from year to year, accruing it indefinitely. It is my money. I can leave it to my heirs. I can spend it at any time on health-related expenses without paying taxes on it—it is tax-free both going in and coming out.

This is a great deal for retirement. Let's face it, we're all going to have some health expenses in retirement. All of that money you're socking away in your 401k or 403b? You're going to have to pay taxes on it as regular income when you withdraw it to pay your medical bills. We all probably ought to have a significant amount of retirement money in an HSA if we can manage to do so, just to decrease our post-retirement tax liability.

I'm seriously looking at this. I'm 99% sure I'm going to do this. I cannot advise you as to what is best for your family, but I recommend that you look at a Health Savings Account, and talk to a financial planner or someone else who can give you good advice about this.

Thanks, President Bush, for making this available!

Oh, by the way, I'm going on vacation tomorrow and will be out until October 30. I may try to log on occasionally and approve your comments, but I'm not going to comment myself (it wouldn't be a vacation...) :-)