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April 28, 2006

A congressman yesterday criticized the concept of high-deductible health insurance and Health Savings Accounts in a congressional hearing yesterday:

Rep. John Barrow, D-Ga., argued that insurance is a group enterprise in which individuals are pooled together to mitigate costs. Rather than empowering low-income individuals, Barrow said, the HSA initiative would force them into high-deductible health plans (HDHPs) that have been stripped of many needed services.

“Everything you’re doing is fundamentally opposed to the whole notion of insurance,” Barrow said. “We’re not insuring. It’s just pushing folks to go more and more bare.”

repbarrow.jpgIf Mr. Barrow entrusted an assistant with $100 and sent him out to buy his congressional groceries, he wouldn't consider that "grocery insurance." Yet somehow he thinks that "insurance" should be defined as giving Blue Cross money to buy your health-care groceries, like routine prescriptions and regular office visits.

In Mr. Barrow's world, "good" insurance covers day-to-day living expenses. As insurance companies aren't in business to lose money, they will include these costs in their premiums. The insured will pay these costs either directly through higher premiums, or through reduced wages if the employer pays the premiums.

That's where the magical money tree comes in. Mr. Barrow's concept works if the insurance company nurses a grove of magical money trees that blossom with cash every time the company loses money on a health insurance contract.

The idea of HSAs and high-deductible insurance is to make it easier to buy health insurance the same way they buy auto and home insurance: to protect against catastrophe. After all, you don't turn in your oil changes or house painting to State Farm. Why should you run your Rogaine through Blue Cross? Except, of course, to pick the fruit of the magical money tree.

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