More than two years ago John Mackey, the co-CEO of Whole Foods caused a storm of hostility, picketing and boycotting from his own liberal customers by advocating the use of Health Savings Accounts combined with high deductible Health Insurance ( a plan Whole Foods follows with its employees ) as an alternative to Obamacare.
As Mackey explains, health savings accounts are tax exempt accounts (meaning the money deposited into them is not taxed as income) that can be used at the employee’s discretion to pay for medical expenses.Up to $3000 a year can be deposited in such accounts. The money in the account belongs to the employee and can be invested in normal investments. If the money is not spent it stays in the account from year to year. It is thus possible for a healthy young person who makes minimalus use of benefits to accumulate a large sum and have it available for major medical expenses when necessary. Governor Mitch Daniels lead the way in adopting such accounts in Indiana for state employees. The plans, shunned by employees at first, have become extremely popular because of the flexibility that they offer.
At the present time such accounts can only be set up by persons under the age of 65, the age when people become eligible for Medicare.
Contrary to what many people believe, Medicare is not free for seniors. It is heavily subsidized, but it isn’t free. My understanding is that Paul Ryan’s proposal for cutting Medicare costs includes and HSA option. He is right so that seniors can benefit from managing their own healthcare costs.
All medical care is, of course, optional. People have a right to reject medical care if they choose. Just about everyone knows that, but what most people don’t think about is that there is a lot of honest debate about routine “preventative” care like mammograms. Recently there was a huge uproar when a proposal was made to reduce the frequency of mammogram screening from 1 year to 2 years for women over 40. If insurance companies followed the proposal, and Medicare followed the proposal there would be a substantial cost savings. The cost of a mammogram can vary between $75 and $200. So, without doing a whole lot of research, I think most people can afford that if they feel they have to have a mammogram and their insurance of Medicare won’t pay. The prior “standard” advocated by breast cancer awareness advocates, was a mammogram every year. Adoption of the new standard would save insurance companies and Medicare a lot of money. Good. But following the new standard wouldn’t save the patient one thin dime. Because health insurance rates and Medicare rates are the same whether you use medical services or not.
This is the problem John Mackey points out. Because individuals receive no benefit at all from being judicious and careful about spending health care dollars, they have zero incentive to do so. And procedures like mammograms are examples of the kind of procedure where a lot of money can be saved.
What about me and mammograms? I had my first one in over 10 years last week. As evidenced by this post I am still alive, and so far as I know, breast cancer free. But I pay the exact same health insurance as the lady I met in the waiting room who visits the doctor every month and gets a mammogram and a bone densitometry every single year because someone else is paying for it.
Now I might note that I consider high speed internet service a necessity of life, but I don’t ask others to pay for it. A mammogram for a woman(or man, yes men can get breast cancer) who is well, has no history of cysts or other problems with her breasts, hasn’t been on hormone therapy and has no family history of breast cancer is an optional procedure. If a woman has an HSA and she thinks it really is necessary, then she can choose to have one. And if she chooses not to, the money will be there for other procedures. So simply giving patient consumers the ability to choose what they will and will not pay for, saves money.
The other feature that saves money is cost consciousness. As I noted in another post, my doctor recently wrote me a prescription for some wonderful new drug to deal with pain prolems without knowing what the costs was. It turned out that it costs $270 for 30 pills. I told him I wasn’t in $270 worth of pain. We found another drug that was $8 per month. When consumers become even aware of costs, that fact combined with knowing they will benefit from reducing the cost is inevitably going to lead to lower expenditures. That has been JOhn Mackey’s experience at Whole Foods and Mitch Daniels’ experience in Indiana.
Victoria Coates
Daniel Horowitz
HSAs + high deductible/low premium insurance is the way to go
JSobieski (Diary) Tuesday, September 20th at 11:22AM EST (link)I wish our presidential candidates would speak out more on this topic.
My rules of the road for primary season.
Rule #1: Vote for YOUR first choice in the primaries
Rule #2: Vote for the R in the general.
Rule #3: Don’t let anyone convince you to violate Rule #1 or Rule #2
Rule #4: When in a center-right argument, reaffirm Rules #1-#3–it will help us all to get along better.
Rule #5: If you are using the language of the left, you probably aren’t furthering conservativism
Rule #6: The priority is issues first, candidates second, and supporters third. Nobody is bigger than the issues. Conversely, if you spend your time focusing on supporters, you are wasting everyone’s time.
STOP THE MADNESS!
A reduction in the rate of spending increases is NOT a cut!
In-state tuition for illegals is NOT amnesty!
Requiring someone to pay their medical bills is NOT an individual mandate!
Reducing tax rates is NOT a tax increase!
JSob, are you referencing
lineholder (Diary) Tuesday, September 20th at 11:32AM EST (link)catastrophic insurance? Those policies work well for people who are relatively healthy and have no significant history of diseases that might be genetic, but they can provide a problem for those who genuinely need surveillance of their condition in order to prevent further complications.
How does a high deductible plan cover less of those expenses than a low deductible plan?
JSobieski (Diary) Tuesday, September 20th at 11:58AM EST (link)Once you hit the annual deductible, you have 100% coverage.
There is no “anti-surveillance of condition” clause in high deductible plans. To the contrary, those plans can actually have fewer carveouts, exceptions, etc.
So if your insurance kicks at $5k, you have the HSA to take care of the $5k, and the insurance to cover the rest.
This is another example of how a shorthand phrase is misleading.
My rules of the road for primary season.
Rule #1: Vote for YOUR first choice in the primaries
Rule #2: Vote for the R in the general.
Rule #3: Don’t let anyone convince you to violate Rule #1 or Rule #2
Rule #4: When in a center-right argument, reaffirm Rules #1-#3–it will help us all to get along better.
Rule #5: If you are using the language of the left, you probably aren’t furthering conservativism
Rule #6: The priority is issues first, candidates second, and supporters third. Nobody is bigger than the issues. Conversely, if you spend your time focusing on supporters, you are wasting everyone’s time.
STOP THE MADNESS!
A reduction in the rate of spending increases is NOT a cut!
In-state tuition for illegals is NOT amnesty!
Requiring someone to pay their medical bills is NOT an individual mandate!
Reducing tax rates is NOT a tax increase!
Not exactly what I meant, JSob
lineholder (Diary) Tuesday, September 20th at 12:47PM EST (link)Let me put it this way. I’m under the poverty level right now in income. I do purchase my own insurance through my employer. For years, I’ve been relatively healthy, so I’ve been able to go with a high-deductible catastrophic type of policy. My health care out-of-pocket costs didn’t even come to close to meeting deductible, but it’s been worth it to me to carry the insurance for the sake of preventing family members to have to take on the burden of paying any costs of care in my behalf if some catastrophic event took place.
My health status has changed. I’m now into the territory of requiring greater surveillance. My out-of-pocket costs are increasing dramatically and I can’t afford it. I can’t afford a high-deductible plan, JSob. At this point, it is far more practical for me to decrease the deductible, even if it increases my premiums every week, to keep from absorbing potentially high debts.
My insurance renewal will be coming up next month and I’ll be going with a lower deductible, at least for the time being, to keep me from getting any further in debt.
I do qualify for Medicaid, and I could have gone that route. I’m choosing not to do so, for more reasons than one. It’s been tempting, I admit, because if I went the Medicaid route, there are cases where a doctor wouldn’t be allowed to bill me for any amounts above and beyond Medicaid acceptable payment rates. I would face less risk of accumulating debt due to medical costs that way. Still, I’m paying for my own insurance all the same.
It’s just a matter of situational context, JSob. I didn’t explain that very well. Hopefully this provides a better idea of where I was coming from.
kowalski, and to add to that explanation
lineholder (Diary) Tuesday, September 20th at 12:49PM EST (link)my employer doesn’t offer a HSA. That isn’t any option for me.
Ideally,
gmscan Tuesday, September 20th at 1:42PM EST (link)you would have started an HSA a long time ago and had funds built up while you were healthy to pay for your expenses today. It’s a shame that didn’t happen. Today your out-of-pocket spending may be higher, but to have first-dollar coverage means you will have to pay more in premiums.
There is no magic here. Low deductibles = high premiums, high deductibles = low premiums. You are paying in either case. The question then becomes which is more efficient — processing the funds through an insurance company or paying directly for the care? You will get more services by avoiding the insurer’s admin add-on.
The "magic" in HSAs is that we get a market to actually function
JSobieski (Diary) Wednesday, September 21st at 6:48AM EST (link)pricing/quality information is made accessible, competition drives down prices/increases quality
Its far more than the administrative add-on, its being able to access the power of capitalism.
If devices like smart phones and computers were purchased through third party payors, we would still be buying Apple II’s and they would cost $10k
My rules of the road for primary season.
Rule #1: Vote for YOUR first choice in the primaries
Rule #2: Vote for the R in the general.
Rule #3: Don’t let anyone convince you to violate Rule #1 or Rule #2
Rule #4: When in a center-right argument, reaffirm Rules #1-#3–it will help us all to get along better.
Rule #5: If you are using the language of the left, you probably aren’t furthering conservativism
Rule #6: The priority is issues first, candidates second, and supporters third. Nobody is bigger than the issues. Conversely, if you spend your time focusing on supporters, you are wasting everyone’s time.
STOP THE MADNESS!
A reduction in the rate of spending increases is NOT a cut!
In-state tuition for illegals is NOT amnesty!
Requiring someone to pay their medical bills is NOT an individual mandate!
Reducing tax rates is NOT a tax increase!
Even in that situation, you would be better off with HSA + catastrophic coverage
JSobieski (Diary) Tuesday, September 20th at 1:27PM EST (link)The aggregate cost of funding the HSA up to X with X deductible on coverage is less than buying lower deductible insurance and paying the deductible post-tax.
If you are paying expensive insurance bills, it is cheaper to divide up that money into HSA deposits and catastrophic coverage.
Low deductible policies are induly expensive because people are perceived to have little skin in the game.
The key issues are really (1) most people can’t get HSA/high deductible policies and (2) pre-existing conditions.
(1) can be fixed by changing tax law.
(2) will be less of a problem if people get HSA/deductible policies on their own that are independent of employment
My rules of the road for primary season.
Rule #1: Vote for YOUR first choice in the primaries
Rule #2: Vote for the R in the general.
Rule #3: Don’t let anyone convince you to violate Rule #1 or Rule #2
Rule #4: When in a center-right argument, reaffirm Rules #1-#3–it will help us all to get along better.
Rule #5: If you are using the language of the left, you probably aren’t furthering conservativism
Rule #6: The priority is issues first, candidates second, and supporters third. Nobody is bigger than the issues. Conversely, if you spend your time focusing on supporters, you are wasting everyone’s time.
STOP THE MADNESS!
A reduction in the rate of spending increases is NOT a cut!
In-state tuition for illegals is NOT amnesty!
Requiring someone to pay their medical bills is NOT an individual mandate!
Reducing tax rates is NOT a tax increase!
JSob, you'll get no disagreement from me re:
lineholder (Diary) Tuesday, September 20th at 2:36PM EST (link)the validity of HSAs. It is an option that should be considered.
But for people who at or below the poverty limit and trying to remain independent of government assistance (which I am), the ratio of gross income to disposable income ends up becoming a critical factor.
A low deductible plan that will cover my projected costs for next year equals roughly 28% of my gross income. A high-deductible plan + HSA to cover those same costs equals 42% of my gross income.
By going with the low deductible plan, my ratio of gross income to disposable income is higher, leaving more disposable income available for me to pay my own bills and to remain independent of government assistance programs.
It’s only 14% difference, but it’s the difference between buying my own food or depending on food stamps, JSob.
That doesn't make any sense to me, and is contrary to the data I looked at when I bought insurance
JSobieski (Diary) Wednesday, September 21st at 6:51AM EST (link)This is what makes no sense to me:
“A low deductible plan that will cover my projected costs for next year equals roughly 28% of my gross income. A high-deductible plan + HSA to cover those same costs equals 42% of my gross income.”
I found the math to be quite the opposite.
My rules of the road for primary season.
Rule #1: Vote for YOUR first choice in the primaries
Rule #2: Vote for the R in the general.
Rule #3: Don’t let anyone convince you to violate Rule #1 or Rule #2
Rule #4: When in a center-right argument, reaffirm Rules #1-#3–it will help us all to get along better.
Rule #5: If you are using the language of the left, you probably aren’t furthering conservativism
Rule #6: The priority is issues first, candidates second, and supporters third. Nobody is bigger than the issues. Conversely, if you spend your time focusing on supporters, you are wasting everyone’s time.
STOP THE MADNESS!
A reduction in the rate of spending increases is NOT a cut!
In-state tuition for illegals is NOT amnesty!
Requiring someone to pay their medical bills is NOT an individual mandate!
Reducing tax rates is NOT a tax increase!
sdsali, I'm a staunch advocate
lineholder (Diary) Tuesday, September 20th at 12:30PM EST (link)of patient-centered care. If I had my way, every patient with a chronic medical condition would have their own PHR and equipment needed that would allow them to track their medical status (within reason, of course). Most health care providers would prefer to see a greater emphasis on patient-centered care. It makes their job easier.
I’m currently studying third-party payment policies and procedures. Our Medicare payment system is a disastrous mess. Medicaid is even worse! Prices for services have become artificially inflated, due primarily to government intervention to try to keep prices low. Incentives that are being offered are misaligned and do nothing to address underlying problems.
There are new incentives being put into place that emphasize quality of care (which I favor) but the manner in which the new incentives are being applied (i.e. via performance measures) can encourage an increased level of preventative care, even when it isn’t entirely necessary.
It’s another government act of “meaning well” but going about it the wrong way!