President George W. Bush has made health savings accounts one of his central campaign remedies for U.S. health care problems. It's a remedy that flies in the face of continuous attempts by governments and politicians to impose a major universal medicare program on the whole nation. Just this week, Bush told a rally in Iowa "We'll expand health savings accounts so more small businesses can cover their workers, and more families are able to get health care accounts they can manage and call their own."
Presidential endorsement of health savings accounts marks a major turning point for the concept itself, but also for U.S. policy-makers after a decade of struggling to come to grips with a major national preoccupation. A decade ago this fall, the Health Care Security Act collapsed, ending Hillary Clinton's attempt to impose a massive national system -- HillaryCare -- on an unsuspecting country.
A lot has changed politically over the last 10 years. Republicans gained control of the House and the Senate; George W. Bush was elected President; 9/11; Bill Clinton retired and wrote his memoirs. And yet, at least one constant remains -- America's worry about health care. In a Market Strategies poll, 86% of people expressed deep concerns about rising costs; two-thirds fretted the difficulties of obtaining the best medical treatment; and six out of 10 regarded the likelihood of bankruptcy due to major illness as a serious problem.
If the problems are familiar, so are the solutions. While the grand designs of the Clinton White House went unrealized, some type of national effort appears more and more popular. Just this summer, the National Coalition on Health Care, a bipartisan organization chaired by former presidents Bush and Ford, announced support for a universal coverage scheme that would centralize key health decisions to a government committee. It's not that the coalition, comprised of such big businesses as GE and AT&T, as well as union interests, holds a statist bias -- but that the status quo appears untenable. Americans appear to be coming full circle, returning to their starting point a decade ago.
Perhaps that's what makes the writings of Sally Pipes so interesting. Around the time Canada's premiers met to hash out their deal to save medicare "for a generation," Ms. Pipes was putting the finishing touches on her book, Miracle Cure: How to Solve America's Health Care Crisis and Why Canada Isn't the Answer. Ms. Pipes, a Canadian citizen who runs a feisty California think-tank, offers a unique perspective. Born and raised in Canada, she is intimately familiar with our medicare system. For the last dozen or so years, she has lived and worked in the United States. As a result, she offers a clear-eyed view of both systems. Her book is a must-read on both sides of the border.
Ms. Pipes notes that for the last decade two ideas have dominated the health debate in the United States: government expansion and managed care. After the collapse of HillaryCare in Washington, many state houses pushed ahead with similar reforms. Consider that in Vermont, a family earning more than US$50,000 is still entitled to some Medicaid benefits.
Surveying the situation -- from HillaryCare-lite south of the border to Canadian medicare here -- Ms. Pipes finds little compelling. She argues that a robust role for government in the payment of health care quickly leads to a robust role in the management and rationing of health care. Canadians are well familiar with this: Some wait more than a year for an MRI and millions can't find a family doctor, according to Statistics Canada.
Ms. Pipes has more patience for managed care. Though its reputation has been shattered, she observes that managed care actually did contain costs. She also reviews a raft of studies, concluding that health outcomes weren't affected by their cost-containing techniques. But she finds managed care unsatisfactory. In an age of consumerism, she thinks that allowing HMO bureaucrats to dictate your care for you is unpalatable.
But if not Canadian-style medicare or American-style managed care, then what? American experts are scrambling to find a meaningful answer, not unlike economists in Eastern Europe after the collapse of the Berlin Wall -- everyone knows what doesn't work, but no one quite knows what to put in its place.
Ms. Pipes finds an alternative in the concept of consumer-directed health care. Rather than leave important decisions up to others, she wants to "put consumers in the drivers' seat." She notes that one of the most basic problems with American health care is that patients don't pay directly for the services they receive. In the United States, consumers pay just 14 cents on every health dollar spent. The economics are clear. Consumers pay little directly -- and demand expensive, inefficient service. With a third party paying the bills, key decisions are left to payers, not patients. It's a prescription for universal dissatisfaction.
Ms. Pipes is particularly enthused about health savings accounts. Created by last year's U.S. Medicare bill, health savings accounts (or HSAs) put consumers in charge. HSAs marry real insurance (that is, coverage for high and unpredictable costs) with contributions to a savings account that can be used to pay for smaller health expenses and "rolled over" from year to year.
Ms. Pipes advocates HSAs for Americans; others have experimented with variants of the concept. In Singapore, coverage for many medical services comes from compulsory health savings accounts. Today, Singapore boasts more MRIs and CT scanners per capita than Canada and has almost no wait lists for surgeries. Singapore, incidentally, spends a third as much as we do (as a percentage of GDP on health care). In South Africa, health savings accounts are the most popular form of private health insurance. Even in China, several cities are experimenting with the idea.
Why are authoritarians in Singapore, entrepreneurs in South Africa and central planners in China all finding utility in this concept? Because increasingly, there is acknowledgement that health care decisions can't be made without involving the people they affect.
Ms. Pipes doesn't consider HSAs for Canada. But if the idea is deemed meritorious in China and Singapore, perhaps it might be useful here at home. I made just this point in 1999 in my book Code Blue. My cerebral friend Lawrence Solomon has also argued for health savings accounts. He went a step further, hiring one of the most reputable actuaries in North America to calculate the cost of such a system. (Milliman & Robertson estimated billions in savings.) But Canadian academics continue to give HSAs a cool reception. Professor Joseph Heath of the University of Montreal wrote in the pages of Montreal's The Gazette that the idea was "stupid." The Manitoba Centre for Health Policy and Evaluation produced a study, based on absurd parameters, suggesting that health savings accounts would cost taxpayers money. The Canadian Medical Association Journal spent an issue laying the idea to waste, including an essay suggesting that HSAs were too libertarian for Canada (though, strangely, not too libertarian for China).
Ms. Pipes sees great hope in the idea of consumer-directed health care. Do politicians share her enthusiasm? On the issue of health care, conservative-minded North American politicians have chosen to follow, not lead, offering warmed-over proposals from their left-leaning opponents. This year, Stephen Harper even suggested that the federal government provide catastrophic drug coverage -- attempting to out-liberal the Liberals. For their part, American Republicans haven't been much more provocative -- or successful.
But that may be changing. It must delight Sally Pipes and her like-minded colleagues to find that these ideas have infused the Bush re-election campaign.
Time will tell what becomes of the U.S. experiment with consumer-directed health care. In the meantime, this much is clear: Ms. Pipes has done a great service to citizens on both sides of the border.