I am a staunch believer in establishing health savings accounts (HSA) as the way of financing healthcare.

How will it work?

Each person gets an account very much like a retirement account. Pretax deductions – paid by employer and employee are paid into this acount. The only thing the money in this account can be used for is buy health insurance, pay medical bills and/or the costs of preventive services like gym fees. Like social security, everyone would be mandated to have one over a certain age.

With this account, one would either decide to pay fee-for-service and/or buy insurance to cover certain needs or for all health needs..

For example, a healthy 28-year-old man may decide to forgo any kind of insurance and pay as needed since he has no demanding health needs or he may buy insurance to cover emergency surgery. A 28-year-old woman may decide to buy insurance to cover OB/GYN needs if she desires to have kids. An older patient may have other healthcare needs. What this does is, it allows people to spemd their healthcare dollars based on their needs while saving if they basically are healthy. The money that is not used rolls over year after year and can be invested.

The health insurance marketplace would have several levels of insurance. From insurance for preventive care to insurance for major surgery and chemotherapy. Hospitals and physicians would have to affordable fees for their services, allowing patients to shop around for elective services.

What happens to the unemployed as well as in cases where care exceeds the amount saved?

That is where the government comes in. Even in those cases, they do not provide the care – the government subsidizes the care of these patients. They pay a percentage. Instead of a blanket insurance for all, the government is able to selectively help those who need it.

As I wrote in 2007, such a system

• forces the population to take better care of itself,
• makes the patient directly responsible for health-care decisions,
• induces a market-style competition between health-care providers which will ultimately lead to pay-for-performance and lower prices and
• saves for the latter years when the majority of healthcare dollars are used.

Now I  am sure those opposed to this idea will pick this apart. Well let’s have a discussion.

This entry was posted on Sunday, July 26th, 2009 at 4:49 pm and is filed under Healthcare. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.