BOYCOTT WHOLE FOODS

HEALTH SAVINGS ACCOUNTS and WHY THEY DON’T WORK:

Mackey writes: “Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees’ Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan’s costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.”

I have been shopping at Whole Foods for over 20 years, first when doing my post-doctoral training in Houston, then when working in Dallas, then in Philadelphia (called Fresh Fields), and now in my hometown of San Diego. In all that time I can’t recall seeing anyone but young employees. Perhaps, there are a few older employees at their corporate offices? Since the odds of someone young experiencing a catastrophic health problem is small, the Whole Food approach gives a false impression. For those who have studied economics, the “fallacy of composition” is the term used for the logical fallacy of arguing that what is true for the parts is also true for the whole. In the study of economics, this takes the form of assuming that what works for parts of the economy, such as households or businesses, also works for the aggregate, or macro-economy. 

“Health savings accounts (HSAs) are promoted by insurers as the ‘consumer-directed’ solution to the health care crisis, and by some conservatives as a way to make individuals more ‘responsible for their health care choices.’ Advocates of HSAs contend that health insurance ‘disguises’ the true cost of health care. Patients with health insurance, advocates say, see the health services they receive as being ‘free,’ and therefore overuse them, causing health care costs to rise. Health savings accounts purportedly solve this problem by forcing consumers to purchase health services ‘with their own money.’ When patients pay for care out of private accounts, the theory goes, they will cut back on ‘frivolous’ health services and demand price competition from doctors, hospitals, and other providers, thereby lowering costs. Patients with a serious injury, illness or chronic disease, however, will rapidly deplete their HSA savings. Patients don’t decide what to “buy,” they rely on doctors and nurses to guide treatment decisions, and hospitals to have all necessary personnel, equipment, and supplies at the ready. The information to compare prices and quality (such as when car shopping) does not exist and would be extremely unreliable anyway, since the easiest way for a provider to improve quality and lower price would be to shun the sickest patients. Finally, patients are poorly equipped to “shop around” for health care at the time in their life they are most vulnerable and in need of guidance and compassionate care.” [1] 

“A small share of people accounts for a significant share of expenses in any year. In 2004, almost half of all health care spending was used to treat just 5 percent of the population, which included individuals with health expenses at or above $13,386. Just under a quarter of health spending (22.5 percent) went towards the treatment of the 1 percent of the population, which included individuals with health expenses at or above $38,688 in 2005. Because the onset of disease [or injury] is unpredictable and can require intensive technology and time to treat, the distribution of health spending is highly concentrated.”[2]  Further, 73.6% of healthcare was for expenses greater than $5,191 and 80.3% of healthcare for expenses greater than $3,735. Given that health savings accounts usually come with a high deductible plan with a deduction of either $2,500 or $5,000, between 73.6 and 80.3% of costs exceed the deductible (ibid). 

“Cost-sharing deterred contact with the medical system across the entire spectrum of illnesses and problems seen in the outpatient setting. . . . We found no evidence that the imposition of cost-sharing led individuals to make appropriately selective decisions about the problems for which they will seek care. Not all complaints and symptoms require medical attention, so cost-sharing does reduce ostensibly inappropriate use of ambulatory care. It appears to invoke a considerable risk of foreclosing medical diagnosis and treatment for conditions in which such intervention can be expected to be effective and to benefit the patient (p. 78).”[3] 

In summary, health savings accounts will not affect overall healthcare spending, will increase administrative costs, and could actually lead to costlier care by reducing beneficial health care visits. Even so-called “frivolous” visits for, e.g. the common cold, can detect high blood pressure or a missed childhood vaccination. For a more complete discussion of health savings accounts see Physicians for a National Health Program Fact Sheet: “Health Savings Accounts – No Savings,” at http://www.pnhp.org/facts/hsa.pdf  

Joel A. Harrison, PhD, MPH 

REFERENCES:

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[1] Physicians for a National Health Program Fact Sheet: “Health Savings Accounts – No Savings,” at http://www.pnhp.org/facts/hsa.pdf

[2] Kaiser Family Foundation, “Health Care Costs: A Primer,” August 2007, http://www.kff.org/insurance/upload/7670.pdf

[3] Lohr, Kathleen N. et al., “Use of Medical Care in the Rand Health Insurance Experiment: Diagnosis- and Service-Specific Analyses in a Randomized Control Trial,” reprinted from Supplement to Medical Care, vol. 24 (8), September 1986, S1 – S87, http://www.rand.org/pubs/reports/2006/R3469.pdf