Roland Benjamin: A Saving Health Reform

It should be no surprise that great unrest arises when our representatives casually dismiss health care reform ideas that are contrary to their agenda. Senator Reed’s comment demonstrates this:

Health savings accounts — another proposal dear to conservatives — are not effective for people who have lost their jobs, Reed wrote. “In addition, with the demands facing many families today, including saving for college, there is a pressure to set aside funds for health care rather than other needs,” he added.

Health savings account (HAS)-eligible health plans have achieved great progress toward the major stated goals of reform, yet the ideological left dismisses them out of hand in ways similar to the above. The HSA route provides for the highest level of individual accountability and liberty. The antithesis of the HSA, namely the public option/co-op/insurer of last resort, does the exact opposite. By leaving benefit design to elected officials and bureaucrats, the public option strips away preferences one might have as an individual buyer of insurance.
Few issues frame the ideological divide better than healthcare reform. The conservative looks to increase individual liberty, while the liberal does not believe individuals can handle that responsibility. At root, this is driving the anxiety we see in town halls across America. Most may not completely understand the details of a 1,017 page bill, but we know our liberties may be compromised in the name of reform from the ideological left.
I began this as a reply to a legitimate question posed by a commenter on Anchor Rising regarding HSAs:

So do you have an HSA? How about you folks with kids?

I have an HSA and three kids. We made the decision to switch while trying for our third child back in 2006, knowing full well that we would hit the $5,600 deductible when my wife eventually got pregnant.
I pay for the healthcare we use from the premium savings of about $4,000 per year for the plan plus approximately $2,000 in tax savings I get by pushing it through the HSA. In the three-plus years that we’ve had the plan, we’ve hit the max out of pocket in two of the years. I now have roughly $4,000 in the HSA and have saved another $800 or so in taxes that, had I chosen a more conventional plan, would have gone to United Health Care in the form of higher premiums.
And the HSA has literally transformed the relationship we have with our kids’ pediatrician. We are in at least once a month for one thing or another, and happily find value paying out of pocket for much of it in ways that most never do when paying a $15 OV copay. Because routine physicals are covered fully, we haven’t missed one yet.
I have 38 of 50 employees who have selected the $2,850/$5,600 plan over the $300/$600 deductible plan in the same boat as me. Collectively, these employees have more than $80,000 in their HSAs amassed in the last two-plus years. (None opted for the plan the first year, although many kicked themselves after looking at their 2006 spending) that otherwise would have gone directly to United Health Care. These employees are not simply the healthy ones. Most have kids, some are single professionals, others require treatments that cause them to hit the $5,600 deductible in February. Not one person has dropped the HSA once they got on the plan, and all have saved money. I wrote to the Providence Business News about the early success of this option.
Inflation of the healthcare spending in our group has stayed flat to moderate (0% to 3%) according to our account manager, although HIPAA prevents United from seeing actual spending data, as our group is relatively small. And because there is no coshare for the HSA-eligible plan, all employees who want insurance can have it.
So, for at least 50 people, I have an insurance option that:

  • Trims the inflation rate of health care spending,
  • Provides universal coverage to all who want it
  • Provides a better experience when accessing the healthcare system (i.e., better quality)
  • Encourages greater access to primary care and preventative behavior.

That sounds like the Holy Grail of healthcare reform to me. But to our Senator and most on the left, such an approach would leave too many Americans without a dependence on the government.
The only thing missing is breaking the linkage that requires my employees to buy this plan through me. The tax incentive individuals receive when buying insurance through their employers deters all from going out on the market to select their own plans. Increase the HSA contribution limit to $15,000, and you erode that linkage.
Once that link is severed, the states will need to free up the insurance market to sell to individuals. In Rhode Island, this is the most heavily regulated of all segments. ObamaCare, as defined by HR 3200, would eliminate this private segment altogether. I guess they do not trust people to select their own health plans, thinking it is bad enough when their employers do it. The left is confident that it can design a better choice for you and then force you to make it. Hayek actually has a term for this.
Mine is not the only company to experience the above. Whole Foods accomplished identical results and detailed it recently in the Wall Street Journal. The response from the left: boycott the heretic offering proven solutions that differ from their agenda.
When the response to opposing views is that aggressive, you have to wonder: Is this really about reform?

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Russ
Russ
11 years ago

Here’s what the GAO found

HSA-eligible plan enrollees who participated in GAO’s focus groups generally reported positive experiences, but most would not recommend the plans to all consumers. Few participants reported researching cost before obtaining health care services, although many researched the cost of prescription drugs. Most participants were satisfied with their HSA-eligible plans and would recommend them to healthy consumers, but not to those who use maintenance medication, have a chronic condition, have children, or may not have the funds to meet the high deductible.

“Is this really about reform?”
Uh oh, you caught us. The health care reform debate was just a ruse to get to our true agenda, destroying upscale supermarkets. You’ve been warned Trader Joe’s!

Sean Gately
Sean Gately
11 years ago

What was the total out of pocket annual cost that you paid? Just curious to know.

Roland
Roland
11 years ago

Sean,
This year I’m on pace to spend about $3000 Out of pocket. That’s roughly 30 Office Visit transactions and I’ve filled about 24 Rx so far. Those 30 visits and 24 Rx would have cost me about $1000 in copays that as an S-Corp owner would have been with after tax dollars. And I would have been paying another $4,000+ in premiums for the traditional plan. So for a “better” plan, I would have had to spend close to $6k between copays, premiums and taxes compare to the $3k baseline I have now with my HSA plan.
Last year I had 65 OV and Procedure related transactions and had 30 Rx filled. I was out of pocket on the HSA plan $5,600 having hit the deductible. On the “better” plan, I would have spent $2400 in copays, $1600 in taxes on income needed to make the copays and $4000 in increased premiums. So again, though out of pocket was high, I spent $5600 versus having to spend $8000 to buy up.

Phil
Phil
11 years ago

Very interesting piece. Your link to HR3200 however is not working.

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