There is some interesting discussion on the Central Missouri Community Action (CMCA) blog regarding rising health insurance premiums. The irony here (to me) is that a non-profit focused on alleviating poverty seems to be far more preoccupied with maintaining their existing level of employee benefits, even it means cutting resources targeted for poverty assistance to do so.

But maybe that’s just me and my cold Grinch heart (is it too late for Grinch references?). Anyway, not to get on a tirade here, but the author of the post seems to be completely oblivious as to why their health insurance premiums are rising in the first place.  (He thinks it’s an unfortunate side-effect of employing a mostly female workforce . . .  oh that cruel insurance agency and its bias against women).

The reality is that health care costs are rising (for CMCA as well as everyone else) because we continue to view health care as a collective right. And in treating health care as a group decision, we are only guaranteeing continued abuse and rising costs. The problem is similar to that of the long-noted “Tragedy of the Commons," which argues that common resources without ownership or management will inevitably be over-exploited and abused. This occurs because the benefit of use accrues to individuals, while the cost is spread over the “commons.”

In the healthcare case, individuals do not pay for the benefit of the free doctor visits and prescription drugs they receive; the cost is borne by all premium-payers. And because costs and benefits are out of whack, individuals have an incentive to overuse their care, since their individual “cost” of such care is negligible. Naturally, this leads to abuses of the system (on both the doctor and patient side). Health insurance abuse has been the trend at most places I have worked in the past. As long as somebody else is picking up the tab (the insurer/employer), employees have every incentive to visit the doctor for every ache, sniffle, or cramp they suffer.

And then there’s “sick pay.” Most employers budget vacation and sick time separately. And since employees generally can’t trade unused sick days for vacation days (despite some rather vocal prodding on my part), it provides additional incentive for employees to skip work for doctor visits which will justify a paid-day off from work.

Health care costs are never going to decrease (let alone stabilize) under our current model of “group health.” The only way we can guarantee “reasonable” health care costs in the future is if we put the budgeting decision in the hands of the individual consumer, not the “collective pot” as it were. The Show-Me Institute has been a strong advocate of health savings accounts (HSA), which allow for employer contributions to health care on an individual basis. HSAs allow employees to pick portable insurance plans that work for their individual needs, regardless of their employment status.Employers can contribute to their employees' HSA plans or help defray costs of individual insurancepremiums directly.These HSA contributions are also tax-free, which allow contributions to be invested and used for future medical payments. And SMI practices what we preach too. The CMCA’s post ends with the following question:"Any guesses as to what the most effective way to decrease our health insurance cost is?"I can think of a few…