Thursday, December 13, 2012

HSA's--One Important Way to Address Healthcare Cost Inflation

Health Savings Accounts are a recently developed tax incentive for saving to pay for your own healthcare.  They are different from Health Reimbursement Accounts that require you to spend all the money each year.  You can rollover the money in the account if you don't spend it.  The website I have linked above is a company that offers health savings accounts.  If your employer offers high deductible medical insurance, you may be qualified to enroll.  The website describes the whole process.  They are simple and easy to use.

The more important question is why this is a good approach.  As you can see, an individual can contribute up to $3200 and a family more than double that each year.  The idea is that you start this plan when you are young and have few medical costs and you keep it until you are old and have lots of medical costs.  In the meantime, you have invested it and your investment income has made it grow to a tidy amount.    You don't pay taxes on the money when you invest it and you don't pay taxes when you use it for medical expenses.

The plan offers a debit card and checks to pay for medical expenses directly.  No claims to file.  No third party decision makers deciding if you "need" the medical care recommended by your physician.

But how, you may ask, does this type of plan address the issue of medical costs?  I will let John Mackey make the first argument.  Mackey makes the legitimate argument that, for the most part, people don't even ask what a medical procedure costs.  They don't shop for the lowest price or the best value.  And the reason, he suggests, is that, when you have conventional medical insuranee, you are not paying for it.  If you are paying for it, even with tax advantaged funds, you will ask.  And you will make choices based, not on some insurance company guidelines, but on the basis of what is important to you.  Only you know if that very high priced latest drug for pain control is worth it to you.

In my case, my physician prescribed a drug that cost more than $200 for pain relief. At the time I didn't have drug coverage in my Medicare plan.  To say the least, I asked a few questions and did a little research and concluded that a) my pain wasn't that bad and b) there were much lower cost alternatives that would provide as much pain relief as this very expensive drug.   No other person really knows how much pain you are in.  No one else should be making that decision, really.  But under regular insurance plans, some faceless nameless insurance company employee looks at a guideline and decides if you need that expensive drug.  With an HSA, you make that decision.  In my case I decided I would rather forego the expensive drug.

HSA's also, simply put, reduce costs.  They are better for individuals, who have much more freedom of choice than with a regular insurance plan where a third party makes the decisions, and they are better for medical care providers, who get paid right away.

Many medical offices employ a full time employee just to process medical claims.  Insurance companies and third party administrators enter into contracts with Medicare to process the claims.  It costs billions of dollars each year just to process all the claims.  Health Savings Accounts would reduce that cost substantially since only very large medical costs would be part of the claims process. If you have an HSA, you pay the equivalent of cash for your office visits and your medications.  It is only when you have very large expenses that you file a claim.  Experience, on a broad scale, shows that HSA's save both employees and employers a lot of money.  The State of Indiana offered HSA's as an option for employees in 2004.  By 2009, 90 percent of Indiana State employees had opted for them.  AS the report shows, those enrolled in HSA's  were more likely to use generics rather than name brand pharmaceuticals, used urgent care centers rather than emergency rooms for non ER problems and used preventative services more often.  The moral of that story is that if you, the consumer, are the person who benefits from using a more cost effective alternative in medical care, you will use it.  If the insurance company is paying for it, no matter what choice you make, why should you save the insurance company money.

So, if HSA's are so great why are there so few advocates for them?  Please note what I said above.  Insurance Companies and Third Party Administrators make billions of dollars from processing claims.  Many of them will go out of business or see a substantial reduction in revenue if HSA's are widely adopted.  They have lobbies.  There are only a few HSA administrators and only a few employers who care enough about their employees to advocate on their behalf.

You might think that Unions would be advocating for something that benefits employees.  You would be wrong.  The reason?  Many unions sponsor health care plans and receive a percentage of the premiums.  Like the AARP, which sponsors Medicare plans and makes billions in the process, they are far from an impartial advocate for the insurance that they sell.

The first step is for people to at least know what HSA's are and to ask their employers to establish an HSA.

The second step is to improve the legislation on HSA's.  The Obamacare legislation took it a step backward by eliminating coverage for non-prescription drugs.  For those of us who are cost conscious this is an abomination. It leads to people choosing expensive prescription drugs when an over the counter drug would do just fine.  It's a stupid policy.  Example:  if you ever have a twisted ankle, a wrenched knee or other musculo skelatal injury that is not major but very painful, the chances are that your physician will prescribe 600 or 800 milligram ibuprofen.  The last time I was offered a prescription like that I asked this question:  Is there any  difference between taking 3 or 4 200 milligram tablets of the type that I can buy at Costco, $14 for 1000 tablets and the 600 milligram tablet that requires a prescription?  Answer: No.  Except that 3 over the counter tablets are cheaper than one 600 milligram tablet.  Many of the drugs that are now sold over the counter were once prescription drugs and are very effective for the purposes for which they are sold.  Why should consumers pay the difference for a prescription?

Saturday, December 08, 2012

How Changing One Government Dietary Recommendation Could Greatly Reduce Healthcare Costs.

Those who know me know I am a little bit of a low-carb fanatic.  Off and on anyway.  I like cupcakes as much as the next person, but, periodically, I go on a low carb diet and, most of the time, I limit the amount of carbs that I eat.  I treat french fries, cupcakes and pasta the same-- they are all occasional treats not dietary staples for me.  I eat a low carb bread (Sara Lee's Delite ful brand that has about 5 carbs per slice) and have bacon and eggs for breakfast, not cereal.

The evidence is accumulating that for a person like me, who most likely has an inherited predisposition toward diabetes (both parents, older sister and cousin are diabetic), a low carb diet is the best way to prevent the onset of diabetes. I worry about diabetes enough that I bought my own glucose testing kit just so I wouldn't have to go to the doctor all the time to find out what my blood glucose is.  They are not necessarily expensive-- Walmart sells its cheapest one for less than twenty dollars.  So far so good for me.  My last Ha1c test was 4.5 which is, to quote my physician, stellar.  Harvard Researchers recommend lowering the glycemic index of your diet to help prevent or postpone diabetes.  Clinicians say, simply, your choice is medicine or lay off the carbs.  If you reduce your blood sugar levels you can prevent the onset of type 2 diabetes. Type 2 diabetes is also called adult onset diabetes.  It is a different disease from type 1 diabetes.  In type 1 diabetes your body doesn't make enough insulin to handle the carbs that you eat.  In type 2 diabetes your body manufactures plenty of insulin, but your cells, over time, develop a resistance to the insulin and don't use it properly.  The second type of diabetes can be prevented by keeping both your blood sugars and your insulin low.  When your body is functioning properly, it generates large amounts of insulin whenever you eat refined carbs and sweets.  That insulin can, over time, do damage to your organs just as the sugar in your blood can cause damage to your organs.  That accounts for the horrible diabetes related problems: kidney disease, heart disease, blindness and peripheral neuropathy which eventually cuts off circulation to your extremities.

After decades of recommending low fat diets to diabetics based on very questionable science, researchers have begun to perform clinical studies of the effect of diets on blood sugar for people who are pre diabetic or diabetic and not being treated with medication.  The results are stunning.  Even short term low carb diets reduce blood sugar very significantly.  Weight loss is also much greater, even while consuming the same number of calories, for people with metabolic syndrome who follow low carb vs. low fat diets.

Clinical trials where subjects are matched and one group follows one diet and one follows a comparison diet are the gold standard in scientific research for diets.   This study, published in the American Diabetes Association Journal shows that over a fairly short period the blood glucose for subjects following a diet with 20 percent carbohydrate (about 100 grams per day if you are eating a 2000 calorie diet, more if you are eating more), was dramatically lower than the blood glucose of those who followed a low fat diet.  119 vs, 198,  For those of us who follow these things, neither of those readings are terrific but 119 is a lot better than 198.  It is close to normal.

If clinical trials comparing like subjects are the gold standard, this study, performed with people in the clinic so that actual consumption of food could be closely monitored, is the platinum standard. It was performed in hospital so that energy expenditure and food consumption could be closely monitored.
It shows that women whose carbohydrate consumption was controlled, but who were allowed to eat as much protein and fat as they wanted, spontaneously ate less.  This is a claim made for low carb diets by both Atkins, and other proponents like Drs, Mary and Dan Eades who offer the Protein Power diet.  Put simply, the study concluded that people who have metabolic syndrome will be less hungry if they eat fewer carbohydrates, will eat less and will lose more weight simply because they are less hungry.

This study, sponsored by Jenny Craig, shows that low carb diets are more effective in achieving weight loss as well as helpful in reducing  insulin resistance (a precursor of diabetes).  I should note for the conspiracy theorists that Jenny Craig sells pre-packaged foods to help attain weight loss.  They have no investment in either low fat or low carb.  Their investment is in selling a combined counseling and weight loss program that actually works.  Doubtless, their research was designed to find out which approach was more likely to be effective so that they could incorporate it in their products.

There are many more studies than I have listed.  The three I have listed are more recent and closer to the gold standard of clinical trials than other studies so I cited them.  To be more specific, they came up on the first page of a google search and were from reputable sources.

If you look on the labels of many packaged foods that you buy, you will discover that the USDA (your government) recommends that 60 percent of your diet should consist of carbohydrates.  These studies show that such a diet, for people predisposed to diabetes or with diabetes, is not good for them.  Their blood sugar and all their other diabetes related measurements are better on a diet which is 20 percent carbohydrates.  Rather than consuming 300 grams of carbs a day, as recommended by USDA, if you are pre-diabetic, or have insulin resistance (which is probably the case if you are overweight) you should be limiting your carbs to 100 grams and making up the rest with proteins and fats.

And what would be the consequence if a significant percentage of the diabetes prone population would change their dietary habits in this fashion?  According to this congressional study, about 32% of Medicare expenditures are related to treatment of diabetes and the consequences of diabetes.  While the figure is a smaller percentage for the overall population it is still very high, about 10 percent of health care dollars for treatment of diabetes and another significant percentage for treatment of diabetes related illnesses.  Getting people to just change their diets could reduce medicare expenditures by  10 or 20 percent.

Can the government change people's behavior?  Yes, if the science supports it.  Tobacco use has dropped dramatically since the government and medical leaders began talking about the harm that smoking does to health.  More and more the science supports the recommendation that people who have diabetes or who are prone to diabetes should limit their carbs.  100 grams of carbs a day is, by the way, not all that low.  Protein Power recommends a maximum of 50 grams a day and Atkins starts you off with 20 grams a day.  100 grams a day would allow you to have 2 glasses of milk (26 grams) a small orange and an apple ( about 40  grams) and a couple of slices of bread or a small baked potato.  The rest of your diet would be fish, meat, eggs, leafy green vegetables, lower carb fruit (strawberries are very low in carbs) and nuts.  (Peanut butter without sugar added is pretty low in carbs).

People who call themselves nutritionists sometimes are adamantly opposed to low carb diets.  The new school lunch guidelines, supposedly designed to reduce obesity and the early onset of type 2 diabetes, advocate a diet that the research I cited above, is likely to CAUSE obesity and high blood sugars.  This is what happens when the self designated experts capture an agency.   Some of these zealots are people who advocate vegetarian eating almost like a religion, in the face of the substantial evident cited above and in other journals. For them, it is not so much that they are pro-carbs as it is that that is what you eat if you eschew animal based food. You can follow a low carb diet if you are a vegan.  It's just very difficult and consists of a lot of tofu and tempi.    Some may simply be in the pay of industrial giants like Kellogg, Archer Daniel Midlands, and General Mills.  The natural result of the widespread adoption of low carb diets by the diabetes prone would be a reduced consumption of grains and starchy vegetables.  Since I doubt that the potato farmers have a huge lobby, I am going to finger Archer Daniel Midlands and the cereal producers as the lobbyists who support the present dietary guidelines.   I don't have a lot of data to back it up, I admit.

If you are among the diabetes prone, you don't have to wait for the government to act.  Following a limited  carb diet will make you feel better fairly quickly and will reduce the chance that you will develop diabetes.  I want to point out for those of you who eat a high carb diet and have normal weight and blood sugars, that I am not advocating a low carb diet for everyone.  The evidence is strong that different people process carbohydrates differently and that diabetes is a genetically linked disease related to the processing of carbohydrates.  It just appears that a lot of us have that condition and should be aware of it and respond appropriately.