HEALTH CARE IMPROVEMENTS
June 21, 2002 - WAR REPORT NUMBER 25-2002
This is the first in a series of WAR Reports adapted from articles in FACT AND COMMENT by Steve Forbes in the 5/27/02 edition of Forbes magazine. This article is titled, "We're Dim Bulbs On Health Care."

Mr. Forbes observes that inflation is dormant, yet health care costs are skyrocketing. Insurance premiums for corporations increased by double digits last year and will do so again this year. Companies are responding by raising co-pays and deductibles and cutting back benefits. However, the author indicated that if we applied free enterprise, we could get better health care at more affordable prices. Why the current crisis? Because of the disconnect between providers and consumers. Most health care costs are paid via third parties -- employers, the government or insurers. Bluntly stated, these parties are the problem. Business executives should understand that bad (expensive) things happen when customers don't control the purse strings. Patients would get better value for the dough spent on health care than third parties do.

Mr. Forbes says that one approach to get more free enterprise in the medical marketplace are Medical Savings Accounts (MSAs). Each year employers and consumers put money into individual accounts that workers can use for medical expenses. What they do not use stays in the account and grows, tax-free, just like an IRA. Individuals would have comprehensive insurance policies for major medical expenses and the cost would be cheap because the deductibles are high. (Most of the deductible is covered by the money in the MSA.)

Congress authorized MSAs in 1996, but they have been strangled by idiotic restrictions. Lawmakers put a low ceiling on the total number of policies that could be sold, thus guaranteeing that most insurance companies would make no effort to market them. In case insurers did not get the hint, Congress also imposed expiration date on these policies. Another limitation: No employer with more than 50 people is allowed to offer MSAs, and deductibles were mandated at very high levels to discourage buyers. (Why shouldn't consumers choose what their deductibles should be?) And on it goes. The solution is obvious - get rid of the restrictions. More next week on Flexible Spending Accounts (FSAs).

Stay tuned! Why? Because I tell it like it is and it's your money.

God Bless America.