Chingo De Dinero

Maybe they won’t save the world, but they could sure help the economy.  First, let me start with what they are, HSA are a tax free savings account which can be used to pay for medical related cost.  High Deductible Health Plans are just like regular insurance, except much cheaper and with a higher deductible.  Using the two together, you can control the cost of insurance without sacrificing care.

Let me explain in a little more detail…the idea of health insurance is to protect you from the high cost of low occurrence activities, sure as a coma, or life threatening disease.  But, because typical insurance has low deductibles, many people use it to pay for normal doctor visits, or prescription drugs that they do not necessarily need (fun debate to have with people who use them).  It also removes the cost of not taking care of ones self, which commonly leads to diabetes, which is extremely expensive.  Before I get too far off subject, all of these little cost, and lack of effort of people to stay in shape has lead to more use of the medical system, which has increased cost.  Because people are pooled together, they do not pay cost directly, so there is little individual incentive to take corrective action.

To fix this, the government has allowed for Health Savings accounts.  If a person wants to take responsibility for their health, is willing to pay for the low cost doctor visits or prescription drugs, and wants coverage for the high cost low occurrence accidents this is perfect.  How it works is you and your employer pay your respective portions for health insurance…but unlike typical insurance, not all of it goes to premiums.  Because of the High Deductible insurance, premiums are less (this is because it does not pay for many of the low dollar items which make up a large portion of typical insurance claims).  The savings from the low premiums is then deposited into a Health Savings Account, which can be used to pay for the low dollar items.  Any dollars left over roll from year to year, and can be used for anything although a penalty is levied if not used for health cost.

This situation produces a very favorable outcome, people take responsibility for their health, use less of the low cost items which add up to be a majority of health cost, and are insured for any high cost health issue.  Wow, people will be healthier and the cost will go down.  It is amazing what happens when people are given responsibility for their actions.

We are what we are, humans act how they act, right or wrong, there is no reason to be idealistic and think people will change.  We are selfish and do what is best for us.