The next person who tells me the U.S. has a "free market healthcare system", I’m going to laugh in their face.
When I got a job that offered a Health Savings Account (HSA) plan as one of their healthcare options, I was kind of excited. I’m in favor of the HSA option – it puts consumers more in touch with the real costs of healthcare. It’s also an excellent way to save money – a tax-sheltered account that follows you from job to job and allows you a fair amount of leeway in how you invest. The idea is that you can build up a rainy day medical fund over time, and reap the benefits of a much lower insurance premium.
That’s the theory.
Remember that scene in Gladiator where they stab Russel Crowe in the side and then send him out to fight Caeser as he’s bleeding to death? That’s what the government has done with HSAs. They threw an apparent bone to the free-market crowd, sabotaged it just enough so that it can’t succeed, and sat back to watch the fun.
The IRS has capped contributions to HSAs. For a family plan in 2008, the cap was $5,800. Now, HSA health plans are, by nature, high-deductable plans. Up to the deductable you pay your own way (minus any discounts the insurance company negotiates with providers), and then once you cross the deductable line they pick up the entire tab. Our deductable is $5000.
It’s also important to understand that there are a lot of non-deductable expenses which HSA funds can still be applied to. For instance, over-the-counter drugs, eyeglasses, etc. can all be paid for with HSA money, but they won’t count toward your deductable.
So if I make my maximum allowable contribution, I get $5,800 worth of tax-free healthcare dollars in 2008. Of that, $5,000 goes to doctor bills and prescriptions until the deuctable kicks in. With a family of four-now-five, it’s not hard at all to hit the $5,000 mark. Especially if you have even a single emergency room visit – or give birth to a child. We hit the deductable before the middle of the year.
So that leaves a measly $800 that could theoretically be carried over to next year. However, as mentioned before, there are a lot of non-covered healthcare expenses which that can be applied to – and since the alternative is using after-tax dollars, you’d be a fool not to. Trust me when I tell you it’s not hard for a family of five to spend $800 in misc. health-related expenditures in a year.
End result: it is almost unthinkable that we would ever have HSA money left at the end of the year to carry over to the next year, invest, and build up a stockpile. The entire selling point of the HSA – the ability to save and invest – is mooted.
As currently implemented, HSAs are only worthwhile if you are young, single, and never go to the doctor. If you are in this category, by all means avail yourself of the HSA option! Make the maximum contributions a year. You don’t even have to use the money for healthcare – once you turn 65 it’s yours to do with as you please. Use it as a retirement account if you want!
Families with children and/or chronic health problems are screwed, however. Unfortunately, we don’t have any other option – it’s the only plan my company offers for PA residents.
There is no free market for health care in this country. Nothing even close. Honestly, I’m getting ready to say "bring on the nationalized healthcare, Obama!". Not because I think that’s the best way to deliver quality, cutting-edge healthcare to the populace. But this sham-free system we have is broken and seems to have inherited the worst properties of both private and state-administered healthcare. If the government is going to poke it’s clumsy fingers into every aspect of the healtchare system, let’s stop pretending otherwise and just be honest about it.