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  •  David, I had a couple of thoughts about the (3+ / 0-)

    Republican proposal the Health Savings accounts are a viable alternative to Obamacare.  In a previous life I participated in an optional HSA offered by my employer.  This was in the mid to late Nineties shortly after HSA became available.  The company I worked for was relatively small (about 100 employees) and quite progressive and generous with their benefits offerings.  Maybe this was, in part, because it was an insurance company familiar with how the products work.

    If I recall the mechanics of how these accounts worked, the employee designates an amount they want to "save" to cover health care expenses that were not covered by other benefits. A portion of the designated amount is payroll deducted from the employee's check each pay period and deposited into an account to cover the anticipated medical expenses over the course of the year  On it's face it sounds like a good idea, but there are a few basic problems with the way they are structured.
    The amount to be saved has to be designated prior to the first payroll and cannot be amended until the next enrollment period.  That means the account may be good for covering easily anticipated expenses like copays, deductibles, or routine services that are often not covered by traditional health plans like eye exams, dental exams, and even some cosmetic procedures like Botox, cosmetic dentistry, etc.  The accounts are not good at covering emergencies or unanticipated catastrophic illness or injury because this type of occurrence is usually costly and difficult to "save" for in any case.  Also, unless this has changed, money in these accounts could not be "spent" until it had been earned and had to be used by the end of the payroll year.  If I remember correctly only 10 percent could be carried over from year.  If there were overages that went unused over and above the carryover amount, they were retained by the company.  They were not reimbursed to the employee.   As I recall this caused employees to schedule medical and dental appointments more frequently at the end of the year so they didn't "lose" the money.  This can cause two problems.  First, it is often difficult to schedule appointments at that time of year because of holidays and other year end activities.  Second, employees are naturally inclined to underestimate the amount they need to "save"  in order to avoid unused overages.  The result is that HSA are not as effective as they might be in helping employees to pay for unanticipated medical expenses.  Some of these issues could be addressed by changing the the way accounts are structured or administered.  In summary, HSAs can be a nice supplemental benefit, but probably won't be a viable alternative to Obamacare, nor do would it appear they will have much affect on reducing healthcare costs or increasing life expectancies.

    •  Also (2+ / 0-)
      Recommended by:
      Cadillac64, David Waldman

      I also worked for a company once that offered an HSA as a benefit and your description is pretty much what I remember as well. One other point to make is that the deductions were made pre-tax withholding, so the idea was that it could reduce your taxable income.

      But because of the 'gotcha' at the end of the year, I only knew of one person at the company that took advantage of the thing and that was because he had a child who needed predictable medication and treatment so they could anticipate how much they needed to save.

      "We are how we treat each other and nothing more."

      by Mr Bojangles on Wed May 07, 2014 at 08:23:31 AM PDT

      [ Parent ]

      •  Bojangles, I did take advantage of mine, but I (1+ / 0-)
        Recommended by:
        Mr Bojangles

        limited my designated amount to the my annual insurance deductible plus the cost of my annual dental cleanings and a new pair of glasses every year.  I remember having to scramble in November and December to use it all before I lost it.  Like the hallowed 401(k), it was an industry developed concept that isn't quite as good a deal as it's cracked up to be.  I think these were also developed at a time when tax rates were quite a bit higher, so I'm sure the "tax advantages" were a big selling point, but the "use it or lose it" component  turned out to be a windfall especially for large companies with a lot of employees.

        •  I actually have one of these right now. (1+ / 0-)
          Recommended by:
          Mr Bojangles

          And have, for twenty years or so. And it works pretty much along the lines you described.

          The initial Republican proposal, by which I mean the one floated by Newt Gingrich at the behest one of his top donors, J. Patrick Rooney of Golden Rule Insurance, allowed the Medicare beneficiaries to whom they were to be offered to keep their unspent balance at the end of the year.

          That was supposed to incentivize frugality on their part. But it also had the effect of saving Medicare zero dollars, in exchange for what might possibly be worse health outcomes, since the incentive is to skip every possible treatment.

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