In the early 1990s when President Clinton’s wife Hillary was trying to cram Americans into Health Maintenance Organizations rationed by Medicare price controls, a group of insurers and scholars countered with what has become the most important part of a health plan for uncovered expenses: the Health Savings Account (HSA). 30 million families now use them, and not only for Out-of-Pocket expenses - but also as a vehicle to build $100,000 by retirement (when folks REALLY need help with long-term care expenses).
Tax time makes a good opportunity for businesses to consider adding an HSA because owners will get asked by their CPA: “did you max out your HSA”? That is, did you as an individual shelter $3,650 in the account, or as a family, $7,300? These annual contributions reduce taxable income. Balances roll over every year and are investable, and tax-free. Withdrawals for IRS-approved medical expenses aren’t taxed. The accounts have more tax advantages than an IRA or a 401(k).
But HSAs artificially are limited, by the government and even by health insurance agents. The Government won’t allow retirees to fund HSAs, a crime when stories abound of the multi-hundred thousand dollar exposure they face with long-term care and Medicare gaps. HSAs could attract so much more funding, if not politically limited - thus enabling more of the panacea of price-sensitive competition. Agents, too, seem ambivalent on HSAs, at least with larger employers with blue-collar workforces.
These agents see worker HSAs as insufficiently funded or utilized, allowing Democrats to scapegoat HSAs for delayed care or bankruptcies that tragically plague many who HAVE insurance. HSAs need more political support, in order to do their job in helping patients and upgrading the health system.
Mr. Ramthun has been an influential professional in HSA politics and business for decades. He knows their advantages as well as how government handcuffs their potential. None of us are satisfied with the status quo in health care. Cash patients via HSAs need to play a larger part in the future of medicine.
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