Patient's role in cutting healthcare costs

Of all the problems facing America's healthcare system, controlling costs seems to be the most urgent. It may even outrank covering the growing number of the uninsured (45.5 million people), for high costs are pushing people into those ranks.

In his State of the Union address Tuesday night, President Bush rightly highlighted the healthcare price tag. The nation is spending a record amount on care - $1.9 trillion in 2004, or one-sixth of the economy. The total is about twice what America spent on healthcare a decade ago. With baby boomers heading into their senior years, that tally, which includes government and private spending, will further balloon.

What's a president to do? Probably not try for earth-moving reform as the Clintons did. Mr. Bush himself learned with Social Security reform that big change is politically risky.

That leaves the one-foot-in-front-of-the-other approach, which Bush again took Tuesday. He emphasized medical liability reform; greater use of patient electronic records to cut costs and reduce errors, and stronger "health savings accounts" (HSAs).

Raising the savings limits on HSAs and making them accessible to more people, as the president proposes, is indeed a small step. The HSAs came into existence in 2003, and so far just over 3 million people have them (this in a universe of 180 million insured). But they point the country in a different and needed direction, toward "consumer driven" healthcare.

Bush believes that if consumers have more control over their health spending and are better informed about their choices, they will force competition among health providers, thus cutting costs. Now, because bills are mostly paid by insurance companies or the government, there's little incentive for doctors and patients to concern themselves about cost.

With an HSA, a person sets aside pretax dollars to cover out-of-pocket medical expenses, but also must sign up for high-deductible insurance to cover catastrophic expenses. Being responsible for their own health dollars should make people more judicious spenders. And high-deductible insurance means lower premiums (overall premiums have risen 73 percent since 2000).

Critics of HSAs raise some legitimate concerns. Less comprehensive coverage might cause people to forgo paying for regular checkups that could head off more expensive care. The accounts might drain healthy people from the pool of insured, raising costs for those left behind.

And will patients make cost-effective choices for such a high-stakes issue as health? To make wise choices, they at least need clear, comparable information on price and quality. The medical community is moving in that direction, but it's not there yet, and the White House should do everything it can to facilitate this trend.

Yet critics should remember that companies which offer HSAs have seen them significantly control costs, specifically the rise in premiums. These accounts have also attracted the uninsured, who make up about a third of HSA holders. And they support the welcome principle that health choice is an individual matter.

HSAs need to be put in perspective. At the moment, they're one tool among many. As such, they're an experiment worth developing.