April 29, 2005

About HSA's...

In a comment on the post about HSA's below, our friend Andrew Cory asked some good questions. I started to write a comment, but now I've just made it a new post...

What I want to know is:
How much are HSA’s costing these people compared to employer-sponsored care?
Are HSA’s giving comparable coverage to employer-sponsored healthcare?

Also if you wouldn’t mind defining HSA’s a bit better in your post-- I have a vague notion of what they are, but no concrete idea...

Good questions. I don't have any answer to the first. But I think HSA's cover almost anything--it's your choice. We've used ours for eyeglasses and teeth-whitening.

As for the definition, an HSA is a Health Savings Account (formerly called Medical Savings Account). It works in conjunction with a health insurance policy that has a high deductible, which is expected to cover the really big health problems.

Imagine having insurance with a $2,000 deductible--you pay everything up to a total of $2,000 a year. AND, you put $2,000 into your HSA. (Or an employer can do either of these) You use that HSA to pay your out-of-pocket medical expenses...(You get a checkbook or a VISA card to pay with)

Your HSA contribution is not taxed, much like an IRA contribution. And it is invested in an interest-bearing account or a mutual fund, and can grow tax-free like an IRA. Unlike insurance, it's not "use it or lose it." It's your money, and you can add more every year. It's an especially good deal for young healthy folk, who can accumulate a big nest egg to use when they are older and creaky-er.

The big advantage is that people have a powerful incentive to spend wisely and to try to stay healthy, which they don't if someone else is paying. Will this make a big difference in overall health care costs? We shall see.....

Also, the situation tends to be non-bureaucratic--your doctor is working to please you, not an HMO, and will often be able to avoid the considerable frustration and overhead of dealing with HMO's and insurance companies. And employers can provide health coverage without the considerable trouble that setting up a "plan" entails.

And, perhaps most important in the long run, with an HSA you become a more autonomous person taking more responsibility for yourself, rather than being a dependent on government or some big organization. (Of course since Democrats have fought and blocked this concept for decades, it's possible that they prefer that people be weak, and dependent upon government or large bureaucratic organizations. But no, I won't think such an ill thought about them.)

Posted by John Weidner at April 29, 2005 1:38 PM
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