I owned an Employee Benefits business for over 25 years. I watched Health Savings Accounts (H S A’s) and found them to be the best value to fund your medical expenses.
When Health Savings Accounts came out in 2002 (approximately) Kaiser offered a plan with a $1500 deductible and 100% Coverage thereafter. Their next cheapest plan (It was more expensive) was a $50 copay plan with a $500 per day hospital copayment limited to 5 or 6 days. It was a loss leader. Over time Kaiser increased the deductible to $7000.
The following is a case study based on the experience I had with this client. It not necessarily a valid analysis. One of my client’s purchased a Health Savings Account this in 2002. Over time Kaiser increased the deductible from $1500 to $7000.
We looked moving him to a fully insured plan. We found that only 3 people out of 30 spent $1000. Of the 3 only one was for a catastrophic illness. The other two were for prescriptions. The average expenditure was $300 per person.
The average person has a catastrophic illness once every 17 years. The industry considers males under the age of 30 as free money. They joke that men under 30 only see a physician when they have a motorcycle accident. Most people under 40 have minimal usage. Based on the current cost of insurance, they pay more to their company for their portion of the medical insurance premium than they incur in medical expenses in a year. The average person would be better off contributing the same money they pay to their employer to a tax-deductible Health Savings Account. The problem with this solution is that current Health Savings Accounts do not cover prescriptions until you meet your deductible. The cost for prescriptions can deplete your savings account. I believe we need to add a prescription benefit to Health Savings accounts. This will reduce the cost to fund medical insurance by 30% to 50%. The reason for the spread in the savings is that I do not know how much making everyone enroll in Health Savings Account will increase the cost. Currently the cost may be artificially lower than if everyone participated because currently people with fewer medical problems mare more likely to elect this option. In addition, Health Savings Accounts are not offered by the majority of corporations.
We will need to mandate that people contribute a certain amount of money each month towards their Savings account to be used towards their insurance to make sure they have enough to pay their claims during the year and have enough saved at retirement to fund their expenses when they convert to Medicare.
How to Implement
Increase HSA Deductibles to $20,000 to $30,000 the amount will need to be calculated by an actuary to be confirmed by the Government Accounting Office. The citizens using Medicare will need to contribute the amount they currently pay to Medicare to their HSA account. This payment is tax deductible They will need to use that money before they receive any additional reimbursement money from the government.
The government will cover 100% of the deductible for the first 5 years
After 5 years the maximum reimbursement will be reduced by 5% per year This actual amount will need be calculated by an actuary. and confirmed by the Government accounting office
In addition. those who are fortunate enough to remain health after they are 65 will have money to be used for other services not covered by Medicare.
They offer a similar medical plan in Singapore which has proven to be highly successful and satisfies their citizens
We spend$1.05 trillion on Medicare. Health Savings Accounts will allow us to reduce the cost to fund Medicare aby $300 to $500 Billion unadjusted for inflation.
