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