April 4, 2005


HSAs offer option for those without insurance (TERRY SAVAGE, April 4, 2005, Chicago Sun-Times)

Health Savings Accounts are the most promising way to deal with the issue of rising health care costs and the growing number of uninsured Americans. But too many people don't understand what they are or where to sign up for them. Now there are some easy answers.

Health Savings Accounts are a concept that combines a high-deductible health insurance policy and a tax-favored savings account. Together they cover you against catastrophic medical expenses, while allowing you to choose your physician, and save the money you don't spend paying for health care.

Here are the two parts of the program:

High deductible insurance: Instead of buying a health insurance policy with a $250 deductible, you'd buy a policy with a $2,500 deductible for a lot smaller monthly premium. But you must pay for the first $2,500 in medical expenses each year. Don't panic about the high deductible. You're growing money in a separate account to pay those first health care bills.

The health savings account: The money you save on insurance premiums each year goes into a tax-deductible savings/investment account. An individual can contribute and deduct up to $2,650 in HSA contributions per year, although you don't need to put that maximum amount of money into the account to set it up. For families, the maximum tax-free contribution level is $5,250. And if you don't spend it this year, the money rolls over to future years for medical expenses, and keeps growing tax free.

Make health coverage mandatory and cover these costs for the poor.

At what cost?: To keep health coverage, more workers are cutting back on food, heat and other necessities. Still, many of them eventually will lose the battle. (Daniel Costello, April 4, 2005, LA Times)

Terri MATTHEWS, a teacher's aide in East Palo Alto, spends $613 a month for her family's health insurance — 24% of her take-home pay. Rather than go without coverage, she skimps on other needs; her heat has been turned off twice in the last year and she recently had to drop her car insurance.

Peggy McPhee, a 52-year-old bridal dressmaker in Santa Rosa, spends more than a quarter of her salary on health insurance. She's recently given up her cellphone, buys clothing only at garage sales and no longer turns on her heat in the winter.

Ron Dybas, of Los Banos, chose to close his lumber company two months ago after 17 years in business. He says he took a job with a company that offers benefits after he no longer could afford to spend nearly a third of his income insuring his family.

Such sacrifices for health insurance are far from rare. As employees continue to absorb more of their healthcare costs, an increasing number of people — even healthy ones — are drastically altering their lives simply to hold on to their insurance. They are delaying homeownership, putting off saving for their children's education, or otherwise sacrificing their financial security to guard against a catastrophic medical bill.

Many people, especially lower- and middle-class workers and the chronically ill, are beginning to spend a once-unimaginable share of their income on health coverage. In some cases, health costs have become the single biggest expense in family budgets.

Between 2000 and 2004, the number of people spending more than 25% of their earnings on healthcare — a figure normally associated with homeownership — rose by nearly a fourth to 14.3 million people, according to Washington, D.C.-based Families USA, a healthcare advocacy group. Over the same period, according to the Kaiser Family Foundation, health premiums rose an average of 59%; federal data show the average employee's earnings rose 12.4%.

"Healthcare has always been expensive. But it's become more than that now," says Glenn Melnick, a Rand Corp. economist and a USC professor of healthcare finance. "How much of someone's income is too much to spend on healthcare? 10%? 30%?"

What a waste.

Posted by Orrin Judd at April 4, 2005 11:56 AM

Talk to anyone in the health care business and they'll tell how much money is wasted on administrative and clerical costs to keep up with the bureaucratic nightmare. A friend of mine managed the office of a surgical team of five doctors. There were nine (9) people who did nothing but process forms and keep the paperwork going.

Posted by: erp at April 4, 2005 1:21 PM

I had a contract with a large dairy in Boston a few years back where I was in charge of the computer programs that handled their benefits/personnel/payroll systems. They had options from 10 different companies. By the time you got all the possible permutation of coverage and the different rates in there they all changed. It was almost a full time job just handling it from the standpoint of the employer let alone from the standpoint of the healthcare provider. I also got a real education in the true cost of health insurance. The employees were complaining but they just did not realize that the company was covering 80-90% of the bill for the insurance.

The processing of all that paper must be a nightmare for a small medical office. I cannot imagine how they are able to keep up with it because they provide the service on the basis that the company will pay for x amount and then they have to wait to see what the company does pay. If it doesn't, then they have to go back over all the services and determine just what was paid and what was not and then bill the patient by which time the patient is back for his next appointment. It must be a lose/lose situation at best.

One of the big hospitals here in NYC that I also had a contract with for a time actually took over the paper processing for the doctors who were affiliated. They charged the doctor a percentage based on his billing and then did all the processing for him. That seemed to me to be a real winning solution for the doctors. They even took in the money and then provided the doctors with the accounting for what was billed, what was paid by the insurer and the patient and what the charge by the hospital was and then gave him the tax documents he needed - and the doctors were not employees, just affiliates.

Posted by: dick at April 5, 2005 1:23 AM
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