Thursday, 13 July 2006
A Vote Of Confidence For Health Savings Accounts
In his recent book The HSA Strategy: The Future Of Health Insurance in America, Dr. Robert Hopper offers a convincing argument for the controversial new insurance model.
For those of you who haven’t been keeping up, Health Savings Accounts (HSAs for short) are tax-free savings accounts specifically designed to pay for healthcare expenses. HSAs were created as part of a bill that was signed into law by President Bush in December 2003. To take advantage of an HSA, you need to enroll in a High Deductible Health Plan, or HDHP.
The idea behind them is to give people more control over their healthcare and help curb the always-increasing cost of medical bills.
In his book, Dr. Hopper makes the case that the American healthcare system has created an expectation that third parties — employers and the government — pay for routine care and major expenses. Dr. Hopper points out that most insurance programs don’t work under this assumption. For example, auto insurance pays for damages from an accident — it doesn’t pay for an oil change.
With an HSA, individuals pay for routine care. The insurance plan is only used for major (and expensive) medical care — like stays in the hospital, surgery, and costly specialist care.
Since plans with higher deductibles (the amount you have to pay toward medical bills before your coverage starts) have lower premiums (the monthly cost of being enrolled in a plan), your monthly cost is less than with a traditional health plan. According to Hopper, a high deductible plan can save you as much as 70% on your monthly premiums.
But the real benefit in Hopper’s view is that by removing the third parties, America will create a “buyer’s market” for healthcare, bringing much-needed controls to the rising costs of the medical industry. Since people will be paying for most trips to the doctor themselves, they’ll have an incentive to “shop around.”
“When Americans have comprehensive and personalized information on quality and cost, they will be wise consumers and have the tools to shop for the best values in health care,” said Dr. Hopper in a column for the Santa Barbara Newspress.
“Likewise health care providers will compete for patients based upon quality, service and price. This real marketplace will control health care prices at their proper level, just like it does for every other product or service in America.”
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