Control Your Own Health Care

Whole Foods circumvented the health care "crisis" by giving its employees greater control. The result? Lower expenses, healthier employees, and less money thrown away on insurance.
John-stossel

Candidates for president have plans to get more people health insurance. Some would compel us to buy it; others would use the tax code to encourage that. Regardless, insurance is the magic that will solve our health-care problems.

But contrary to conventional wisdom, it’s not those without health insurance who are the problem, but rather those with it. They make medical care more expensive for everyone.

We’d each be better off if we paid all but the biggest medical bills out of pocket and saved insurance for catastrophic events. Truly needy people would rely on charity, not government, because once government gets involved, unintended bad consequences abound.

If people paid their own bills, they would likely buy high-deductible insurance (roughly $1,000 for individuals, $2,100 for families) because on average, the premium is $1,300 cheaper. But people are so conditioned to expect others to pay their medical bills that they hate high deductibles: They feel ripped off if they must pay a thousand dollars before the insurance company starts paying.

But high deductibles may be the key to lowering costs and putting you in charge of your health care.

Five years ago, the Whole Foods grocery chain switched to a high-deductible plan. If an employee has a sore throat or a sprained ankle, he pays. But if he gets cancer or heart disease, his insurance covers it.

Whole Foods puts around $1,500 a year into an account for each employee. It’s not charity but part of the employee’s compensation. It’s money Whole Foods would have otherwise spent on more-expensive insurance.

Whole Foods CEO John Mackey
Here’s the good part for employees: If they don’t spend the money on medical care this year, they keep it, and the company adds more next year.

It’s called a health savings account, or HSA.

CEO John Mackey told me that when he went to the new system, “Our costs went way down.”

Yet today, some workers have $8,000 in their accounts.

“That’s their money,” Mackey said. “It builds up over time because the money is compounding for them.”

It will cover all sorts of future out-of-pocket expenses.

Most important, since employees control the money, their behavior changed. Whole Foods workers started asking “how much things cost,” Mackey said. “They may not want to go to the emergency room if they wake up with a hangnail in the middle of the night. They may schedule an appointment now.”

There was no need to ask about costs before because the insurance company seemed to pick up the tab. But that drove up costs for everyone. Now, saving money makes sense to employees because the money belongs to them.

HSA critics ask whether individual accounts will encourage people to save money at the expense of their health.

Mackey has the right response. “The premise in those kinds of questions is that people are stupid. They’re not smart enough to make these decisions for themselves. It’s sort of an elitist attitude. The individual is the best judge of what’s right for the individual.”

And apparently, most individuals are making smart choices.

Harvard Business School professor Regina Herzlinger says studies show that “people who have these high-deductible health-insurance policies take a lot better care of themselves. They have more yearly physicals. Because they’re saying, ‘If I keep myself healthy, in the long run, I’m going to be spending less money.’”

The critics also argue that spending on health care is too complicated and important for individuals to control.

Mackey isn’t buying it. “Should we allow people to make decisions about whether they have children or not? I mean, that’s a pretty important responsibility!”

I pointed out that most people know nothing about complex cancer treatments.

“I don’t know anything about cars,” he said. “But if I buy a Toyota or an Audi or a Lexus, I know I’m going to get a pretty good automobile because competition ensures that it will be that way.”

It does. And competition will do the same in medical care. All we need to do is put the individual in charge of his own money.

Next week: Where competitive health care is already working.



John Stossel is co-anchor of ABC News’ “20/20” and the author of Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media (January 2005) as well as Myth, Lies, and Downright Stupidity: Get Out the Shovel — Why Everything You Know Is Wrong (May 2007), which is now available in paperback.

4 comments from readers  

To post comments, please log in first. The Atlasphere is a social networking site for admirers of Ayn Rand's novels, most notably The Fountainhead and Atlas Shrugged. In addition to our online magazine, we offer a member directory and a dating service. If you share our enjoyment of Ayn Rand's novels, please sign up or log in to post comments.
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You rock, John!

I've often wondered why we don't price health insurance more like homeowners insurance. If you get a higher deductible the premium is lower, but you have to pay for that screen door that is ripped off in a storm. With a low deductible if the screen door costs $100 to replace you still might pay $50 from your pocket, but you generate another claim that costs a lot to process. So the premium is much higher.

In addition to the unwanted paperwork, most friction between clients and the insurance company results from relatively small claims. So some lawsuits are avoided as well with higher deductibles.
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John's show was excellent. I'm making a movie with very similar points. It should be out in 2008. Watch the trailer at http://www.sickandsickermovie.com

You'll be able to tell the movie was made by an objectivist!
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Insurance company control of patient care often prevents or delays needed care, stuffs the pockets of insurance company executives ($124 MILLION in one year to the head of United Healthcare, plus stock options, equal to yearly premiums for 12,000 families), and subverts the doctor-patient relationship.

First dollar coverage is wasteful and expensive.

Karl Stecher, Jr., M.D.
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This was a very informative broadcast. I enjoyed the fact that many different options and opinions were addressed. I learned alot! I was not going to watch the program because, I figured it was going to promote government run health-care and I am tiried of feeling like everyone thinks that people are to stupid to think for themselves. I do not need the government to think for me or my family. THANK YOU for acknowledging that people have a brain and should be using it!!!
To post comments, please log in first. The Atlasphere is a social networking site for admirers of Ayn Rand's novels, most notably The Fountainhead and Atlas Shrugged. In addition to our online magazine, we offer a member directory and a dating service. If you share our enjoyment of Ayn Rand's novels, please sign up or log in to post comments.