February 11 2013
At the recent National Prayer Breakfast, Dr. Ben Carson, the Director of Pediatric Neurosurgery at Johns Hopkins Hospital gave his solution to our nation’s health care crisis. He said, “When a person is born, give him a birth certificate, an electronic medical record, and a health savings account to which money can be contributed -- pretax -- from the time you're born 'til the time you die…And also, for the people who were indigent who don't have any money we can make contributions to their HSA each month…Now they have some control over their own health care.”
Even though 13.5 million Americans are covered by health savings accounts (HSAs), a lot of people have not heard of them. HSAs enable individuals covered by high deductible health plans to save money in tax preferred savings accounts.
When I first heard of HSAs, admittedly I yawned. It wasn’t until I was an HSA holder that I understood the potential for this reform, often called “consumer driven health care” to bring down health care costs while giving patients more control over their health care.
I first took a high deductible plan while with an employer 10 years ago. My employer paid the premium and filled my HSA with $1,000 to cover the deductible. Eight years ago I became self-employed and self-insured and the high deductible plan ($3000) paired with an HSA was the only affordable option. Bear in mind that I’m not one of those of lucky folks that HSA critics allege are the sole users of HSAs; despite my dedication to healthy food and exercise, I’ve had three surgeries in five years and numerous procedures.
Because I pay the first $3,000 of my health care, I pay attention to costs. When I was covered under typical insurance arrangements, I didn’t care about the true cost of services or medication because I paid a small co-pay. I had no skin in the game, or at least I didn’t think I did. Under the HSA model, I have an incentive to find cost savings.
For example, I get tested every two years for glaucoma, the imperceptible destroyer of sight that runs in my family. To save money, I called three eye doctors, compared prices and chose the least expensive. Last year, I went on a new medication for a chronic condition. When the pharmacist told me the price, I researched the drug online, found a generic version, and asked the doctor to call in the new prescription. The incentive to pay less plus the information at my fingertips on the World Wide Web, allowed me to access a cheaper option.
In both cases, my smart shopping had the effect of keeping my health care costs lower. When many people act as smart shoppers, costs in general go down. That’s how the free market works. Conversely when people are willing to pay more, prices go up. Health care costs will start to go down only when more Americans become health care consumers rather can just health care users.
HSA’s aren’t just about lowering costs, of course; they're also about returning control to patients. Under this model, I don’t have to get permission to see a specialist. I don’t wait in line. Because I am responsible for costs, I am religious about preventative care from glaucoma tests to mammograms to brushing my teeth twice a day. I follow my doctor’s orders to the T. I don’t mess around because I spend less when I take care of myself. My incentive to care for my body and care for my pocket book are aligned.
Interestingly my experience with HSAs is the norm among HSA users. A McKinsey study found that patients like me are twice as likely as patients in conventional plans to inquire about cost. They are three times as likely to pick a less expensive treatment option. Patients with chronic health issues are more like to follow their doctor’s orders with care.
The research and my personal experience demonstrate the tremendous potential of HSAs. Compare this to socialized health care models where patients routinely wait for procedures (the average Canadian waits 22.5 weeks for orthopedic surgery whereas I haven’t waited a day for my three procedures), or our own government-run system, in which too many patients find they cannot see their preferred provider because they’ve dropped Medicaid patients and emergency rooms are jammed with patients because they have no cost incentive to schedule a routine appointment.
Unfortunately, the Affordable Care Act takes us in the wrong direction, to greater government control instead of consumer driven health care. As it goes into effect next year, the ironically named law will force my premium and that of other self-insured people to double and I won’t be able to afford insurance any longer. I just hope the politicians were listening when Dr. Carson prescribed health care reform. Otherwise I don’t have a prayer.