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Health savings account is a beautiful thing

| Sunday, Sept. 30, 2007

You're switching to a high-deductible health insurance policy! You're going to go broke!

You have it backwards. My high-deductible policy will save me money. And it allows me to set up a health savings account, which might make me a bunch of dough.

You're going to have to explain.

Did you know America's health costs have risen 140 percent in the last decade• We spend $2 trillion on care every year -- twice as much per capita as other industrialized countries.

How come?

There are lots of reasons, but the chief reason is this: health care consumers are completely divorced from health care costs.

Divorced?

Before World War II, health insurance was designed to protect people against catastrophic events. People paid for doctor's visits and prescriptions out of their own pockets.

They paid for that stuff!

Yes, and because they spent their own money, they shopped around for the best quality of care at the lowest-possible cost.

What did the war have to do with health insurance?

During the war, the government imposed wage and price controls. Companies were unable to raise wages. To keep employees, they began offering health insurance.

That's why everybody expects their employer to provide health insurance?

Yes, and as the economy boomed after the war, powerful unions were able to demand ever-better policies for their members.

Sounds good to me.

It WAS good while it lasted. But it took away the incentive for consumers to shop around. Once nobody cared what things cost, nobody shopped. That's when costs began to soar.

We should bring back shopping?

Exactly. Instead of unleashing more big-government programs, we need to unleash individuals and give them more control over their care.

That's why you're switching to a high-deductible policy•

Correct. I'm 45 and self-employed. I buy my own health insurance. I just applied for a new policy that has a $1,200 deductible. I'll pay 10 percent of all care up to $10,000. If I become ill, the most I'll be out of pocket will be $2,200, plus the cost of my premium.

But your premium has to be high.

Nope! It's only $135 a month. Here's what's better: I'm able to sock away up to $2,850 each year in a health savings account -- my contributions are tax deductible.

And you can only spend that money on health care?

Until I'm 65. Then I can use the money for anything. And if I take care of myself and keep healthy, there will be a lot of money in that account.

But what if you get sick and need to go to a doctor?

Then I'll draw out some of the money. And because it is my money, you better believe I'm going to shop around for services and goods. I'll do my part to keep doctors and pharmacies honest.

But won't people avoid getting needed care if they have to pay for it with their own dough?

You don't have much faith in the average person. Most people will do what is best to take care of themselves and their families.

But don't health savings accounts attract healthy people• And won't that drain big bucks out of insurance companies, forcing sick people to pay more?

As more people move into high-deductible policies, insurance companies will SAVE money. As for people who are ill, we need to reform current laws so they can afford to buy high-deductible policies, too.

I don't know. I'm afraid I'm not smart enough to make all my health-care decisions.

Look, you have car insurance, don't you. Your policy doesn't pay for gasoline, brake pads, tune-ups and transmission repair. You had to figure out how to take care of these things.

If only the government provided universal car insurance!

The way some of our politicians are talking, it's only a matter of time before they will.

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