So the big news this week is that Wal-Mart will be offering health insurance to more of its employees , in an attempt to get some positive publicity, provide more adequate health care for its workers, and encourage healthier workers to work there. This health insurance comes in the form of HSAs, health savings accounts.

The general idea is this: employees and employers can contribute to a tax-free health fund, just like a retirement fund. That health fund can then be used by people for spending on health care. The carrot is that any money people don’t use during the year they get to keep, tax-free. The stick is that they’re now spending their own money for their health care.

This HSA idea comes from the consultants at McKinsey. If you’d like, you can read the entire proposal here (pdf). The problem I’ve always had with HSAs, and the gigantic LEAP McKinsey consulting makes in recommending HSAs for Wal-Mart, is assuming medical knowledge. The whole theory of consumer economics assumes that the consumer can make informed decisions on what is a valuable purchase to them, and informed decisions require information. The McKinsey report uses Singapore’s health care system as a exemplar model of HSAs, but Singaporeans are different from Americans–they’re more educated.

But I’m sure almost anyone–Americans and Singaporeans alike–would be hard-pressed to know which common conditions are worth seeing a doctor for, and which are probably viral, and just require rest and fluids. A sore throat? A cold? The flu? Food poisoning? Pneumonia? Bronchitis? Sinusitis? Ear infection? Diarrhea? Which of these could be life-threatening if you don’t see a doctor?

For healthy, middle-class people that are well-educated, I can see that HSAs might save them some money, and give them more options and control over their health care. But those people are not, generally, Wal-Mart workers. The problem is the same with copays: for a middle-class person, a $10 or $20 copay is not going to keep them from seeing the doctor if they are sick. But it *may* keep a lower-income person from doing the same. Or take, for example, the case of hypertension. About 95% of the time, we don’t know what causes it. That’s called “essential” hypertension. But in 5% of cases, there’s actually some underlying cause that we can probably fix, and fix the person’s hypertension. Now, will someone want to pay for a series of lab tests to workup the 5% chance they have hypertension? (Hopefully yes, because then they wouldn’t have to be on chronic medications; many people are just not that long-term of thinkers.)

Or take the idea of chronic medications, like those for hypertension. Most people with hypertension have no symptoms whatsoever. They feel fine. But then the doctor gives them a medication they have to take daily, and they have a few side effects. Will the person that’s paying full price out of pocket buy the medication again, or save the money for later when he or she may really “need” it? If they take it, they get the side effects plus pay for it. If they don’t, they save their money and feel better, but down the line, in a couple decades, they’re much sicker, and require much more expensive care. Are these really the incentives we want in our health care system?

( Wal-Mart Watch has a similar analysis looking at some of the other effects.)

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