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Seemingly the main topic of discussion right now is how to fix health care and make it more affordable and accessible
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to the general public. Part of that discussion is about the ACA tax credits. And now a new proposal is coming forward
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from Senator Bill Cassidy for a different option using prepaid health savings accounts instead of the credits.
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Mark Paulie is professor ameritus of healthcare management here at the Wharton School and he joins me to
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discuss this topic. Mark, great to catch up with you again. How are you, sir? I'm fine, Dan. Thanks.
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>> Thank you. Obviously, this is a huge topic and realistically healthc care has
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been a topic for quite a while. Uh, but with what we see going on right now, and
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I'll get into Senator Cass Cassy's proposal in a second. Are are you confident that maybe we're starting to
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think like we need to tackle the issue of of what's going on with healthcare?
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Well, tackle, I guess, fix is a bit is a bit more of a reach. It's easy to try um
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because health care is intrinsically expensive. It's hard to produce a solution that um satisfies all the
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stakeholders. >> What were your thoughts on Senator Cassid's idea? >> Well, he's trying to repurpose an old
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Republican idea of health savings account. And the intuition in favor of it is uh well, we're going to create
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this account with dollars in it, but it's funny money. So the dollars can only be spent on health care. So that
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they like, but the idea is that provides you with an incentive then to economize
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on your use of health care yourself or economize on the health insurance premium plan you choose because if you
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use money from your account for one thing, you don't have it left for another thing. So it provides not a high
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power incentive but at least an incentive to be for individuals to be more economical in their use of health
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care services. So that's the logic of it. Of course the the details matter and
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particularly what matters is how much money and to whom uh which is really what is much more important to a person
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than uh than this uh uh rather um limited incentive. Well, and and I think one of the questions in, you know, in
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regards to counteracting that idea, uh, is if you're providing these HSA accounts, these people still need to be
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able to get insurance. And the question is, would they be able to get insurance in the first place?
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>> Yeah. The political backstory here is insurers are ripping off the public. And
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of course, you never can go broke by attacking insurers. Uh so uh and uh the instead of uh doing what what the
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Obamacare does which is when you choose your plan your your subsidy if you're
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eligible for subsidy and most people are goes straight to the insurer. Instead the subsidy comes to you. But your
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comment is quite right. If you then turn around and say well I'm going to need
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insurance. Uh, and most people would say that because they don't want to be exposed to the risk of financial
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disaster if they got really sick. You're going to pay money to the insurance
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companies anyway. So, they'll get you coming and they'll get you going. Uh,
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one way or another, uh, the only um advice you would offer to a person is, well, be careful what insurance you buy
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and try to find one that doesn't um, charge you excessive amounts for what you're expected to get. So, is there a
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direct link to what's being discussed right now of what we've seen play out
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with the Affordable Care Act and the higher costs and the higher prices of healthcare in general over the last few
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years? Well, there's a political link which is that uh we we are seeing in 24
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and 25 an upward blip in health insurance premiums. My diagnosis is it's a delayed response to the end of COVID,
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but nobody knows for sure the reason. And that's made people uh look for a solution. Uh uh obviously the solution
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in the Biden plan, which just um was what the Democrats were holding out for but they didn't get, was to provide more
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money to pay for the extra cost. Republicans don't want to do that. They want to economize. And so the idea is to
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convert uh at least some fraction of what would have been the Biden subsidies to health insurance plans to payments
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directly to individuals for these accounts. But as I said, uh we would expect that the great majority of people
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would then turn around and uh use most of that money for health insurance anyway. So the insurers aren't going to
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be crying crocodile tears over this development. I know you and I have talked for many years about health care
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in general. Let me put you in the big chair for a couple of moments and think about what moves can be made as we move
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forward here to improve healthcare in general because seemingly that's that's
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going to be the biggest talking point for it feels like quite a while into the future.
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>> Yeah. >> Yeah. Well, from an economic point of view, I'm a card carrying member of
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Health Economists Associated and we always pick on the subsidy to employer provided health insurance. So, when I
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was still working at Forton, I figured about $15,000 a year was what um Pennaid toward my health insurance
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and I didn't have to pay taxes on that. So, and that pro probably did and did
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make me choose the most generous plan. Uh, because after all, uh, Penn was paying for it. Um, although we
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economists think sooner or later you're paying for it yourself out of your wages. But at least you get this tax
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break. The Treasury was helping me as a upper middle income Wharton tenure professor to afford health insurance.
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And of course, it's a crazy subsidy because for my assistant or for a lower income person, uh the subsidy isn't
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nearly as great because they don't have as high a marginal tax rate. So that's
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what we would think of as but that doesn't have political uh uh political uh appeal. Uh the other of re
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rearranging the health care system. Well, a lot of people have tried and so far uh you know, they come up with with
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nothing, but they keep trying to change the way they pay providers of health care to try to get them to either offer
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lower prices andor recommend the most, I would say, cost-effective services as opposed to services that are of
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relatively low value. But so far, uh nobody's come up with a with a magic formula for that. And it and and it
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feels like that that we're going to continue to kind of ride down that road for for the foreseeable future.
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>> Yeah. Um I mean it's not it's the sky is not falling. The fraction of GDP going
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into health care in 2023 was essentially the same as what it was in 2009. Healthc care spending wasn't running
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ahead of people's ability to pay for it. Although because income is unevenly
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distributed, the people who didn't get that bump in GDP translated into their
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income were the ones who are complaining about it's getting less and less affordable.
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>> Right, Mark? Great to talk to you on this. Thank you and uh have a great day.
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Thank you, sir. >> All right, you too. Thanks. Bye. >> Thank you. Mark Paulie, professor
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ameritus in healthcare management here at the Wharton School.