Motivated Consumers And Health Care Cost Containment

Virtually every American, at some point in their lives, has had to cut back and adjust their spending habits.  It may have been when they were saving for a honeymoon or a special gift for a loved one, or it may have been when they scrimped to put a child through college.  Sometimes the decision is forced on us, such when we are laid off or find ourselves dealing with unexpected expenses, like an unanticipated home repair.  For many people who have lost their jobs in the current recession, the time for careful personal budgeting is right now.

In my experience, consumers who are personally focused on cost containment can, and do, contain costs.  They eat out less or buy the “un-brand” alternative at the grocery store; they decide to drop a magazine subscription or two, drive instead of fly on a trip, or forgo a vacation altogether.  As the sacrifices mount, so do the savings.

That is why this article by Indiana Governor Mitch Daniels seemed sensible to me.  He reports on the Health Savings Account option offered to Indiana state employees and the significant cost savings it has achieved.  Under that system, the state deposits a set amount in an account for each employee for their health care costs for the year, and whatever the employee does not spend becomes their personal property.  The employee has an incentive to be a careful consumer — to think about what they really need, to hunt for a cheaper provider, to choose the generic alternative rather than the name brand, and so forth — and that is precisely what has happened.  The employees want to keep as much of the money in the accounts as they can manage, and as a result the State is realizing substantial savings in its health care expenditures.

I think one significant step toward bringing our health care costs under control would be to introduce the concept of naked financial self-interest to the health care choice equation.  Currently, individuals whose care is paid for by third parties, whether a government-sponsored plan or an employer-sponsored plan, have no incentive to engage in penny-pinching.  They don’t look for the cheapest alternative or consider whether they can reasonably forgo the service because someone else is footing the bill.  I think if they saw an impact on their pocketbook they would make those kinds of careful judgments, and the federal and state governments — and ultimately taxpayers — would benefit as a result.

Down Low For The Big Ten Champs

Last night our friends, the Carpenters, invited us to join them for the Ohio State-Illinois game.   We had a fine time at a great game.  The seniors and their family members were recognized before the game, the student section was clad in “Club Tril” t-shirts and in full-throated glory, the Buckeyes pulled away for a victory, and in doing so the Buckeyes locked up at least a share of the Big Ten championship.

Evan Turner and David Lighty celebrate a Big Ten championship

The Carpenters have great seats, only two rows from the floor, and it gives you a difference perspective to watch the game in person from up close.  On TV, the players all look about the same size, and you lose perspective on just how big they really are.  When you watch a game from the down low vantage point, you can’t help but be impressed by the quickness and athleticism of the players and the physical nature of the game, with all of those big bodies pushing and leaning and hand-checking.

The Big Ten trophy above the celebration

At the end, the players celebrated, the students rushed onto the floor, and the fans cheered lustily.  Creative students had fashioned ersatz versions of the Big Ten championship trophy and the Player of the Year Trophy and chanted “One More Year!” in hopes of enticing Evan Turner to return for his senior year.  The players then had the chance to hoist the real Big Ten trophy and to look ahead to the Big Ten tournament and NCAA tournament contests to come.