A Better Healthcare Solution

With the turning of the calendar year a small but important revolution in healthcare has taken place without any help from professional politicians, government health agencies, or media blabbermouths. It has occurred as a significant number of businesses switch from traditional comprehensive health plans to leaner and meaner health savings accounts. What’s more important is that while presidential candidates were proposing complicated and far-reaching healthcare reform many doctors, insurance agents, HR departments and insurance companies had already discovered and started implementing what could well be the solution to America’s healthcare affordability woes. Those individuals and organizations have been quietly taking advantage of a remarkably simple and affordable health insurance combination that came into existence in 2003 – a high deductible health plan (HDHP) combined with a health savings account (HSA). This combination could easily be the answer to our healthcare cost concerns if it were given enough time to grow and eventually replace the entire comprehensive health insurance concept, which has been almost solely responsible for the skyrocketing price of healthcare. Unfortunately, I believe our current president is about to take the exact wrong course and extend our broken and unsustainable system of comprehensive health insurance to even more people rather than looking at this better alternative.

Once understood, anybody who currently purchases health insurance for themselves or others will immediately see the great value of this combination as compared to overpriced comprehensive insurance. Simple economics is why this quiet revolution has begun, starting with the first people to be exposed to it, self-employed doctors and insurance agents, and now rapidly spreading throughout the business community. With this combination of HDHP and HSA even the smallest of small businesses and the largest of corporations can afford to offer their employees health protection in a much smarter way than ever before, thereby providing insurance to even more Americans. Individuals without employer-provided or government-provided insurance, such as the self-employed, can also afford to have security against catastrophic injury and illness. And there is even room for the government to utilize this new system to distribute healthcare dollars however it wishes without the current hassles and bloated bureaucracies involved in regulating, pricing, and policing every aspect of healthcare.

So how does it work. An HDHP is a health insurance policy that begins paying for medical care after a high deductible has been met. A “high deductible” is defined as starting at approximately $1,100 and going higher depending on the price you or your employer are willing to pay for coverage. In this way a HDHP is much more like real “insurance” in that it will typically only be used for catastrophic illnesses or injuries and not for routine care.

So how do routine and non-catastrophic doctor visits get paid. That’s where the Health Savings Account (HSA) comes in. An HSA is a type of bank account that any person or employer can open. Money can be deposited into this HSA tax free by an employer, the individual, the government, or any combination of the three. In all cases the individual is the one who owns the bank account and can spend that money on almost any healthcare expense they wish. Regardless of who put it there, the money in the HSA always belongs to the individual and it never expires. To recap, an HSA can be funded by an individual or employer to help save and pay for routine and elective medical needs while an HDHP will cover the individual in case of high cost disasters such as auto accidents or cancer.

If a complete government takeover of the healthcare industry can be avoided then widespread use of HDHPs and HSAs will eventually bring the era of managed care and comprehensive medical insurance to an end, taking with it the tremendous havoc it has brought to our nation with its massive insurance bureaucracy, complicated insurance plans, skyrocketing prices, and restrictions on both patients and doctors. Market forces would return to most of healthcare, sparking a rise in competition for prices, quality, and innovation as doctors, hospitals, and pharmacies all compete for healthcare dollars that patients themselves control free from the artificial price inflations and extra payroll costs caused by comprehensive insurance. The complexity of modern health insurance would be replaced with a nearly unimaginable return to simplicity.

As an example, a company that is currently providing comprehensive health coverage to one of its employees for $600 per month could stop providing comprehensive health coverage and instead provide an HDHP for perhaps $200 per month. The additional $400 being saved could, if the company decided, be put directly into that employee’s HSA. Now that employee accumulates $400 every month to use on more frequent medical expenses or to save for future deductibles while having the protection of an HDHP in case of catastrophe. A small business, which could never afford $600 per employee per month for comprehensive health coverage, could instead offer an HDHP by itself and may also contribute a small amount per month towards the HSA, thereby offering medical benefits where it couldn’t before and expanding the number of people who are insured. That money will always belong to the employee for their lifetime or until they spend it, and the employee would always decide what doctors, what procedures, and what medicines they spend it on. The same scenario could apply to government health programs as well.

This combination of HDHP and HSA has the potential to tear down the restrictive bureaucracy and escalating costs of our current healthcare model and completely revolutionize the way healthcare in America is funded and accessed. The results would be more freedom, lower costs, less bureaucracy, and more people insured – a winning solution for citizens, businesses, and the nation.

More information about HSAs can be found at the U.S. Department of the Treasury website http://www.ustreas.gov/offices/public-affairs/hsa/faq.shtml.


Sweet Visions,

Dr. Eric Stamper, Optometric Physician
http://www.visionary-eye.com