As the Congress discusses the reconfiguration of our health care system, one “solution” that keeps coming up is various options related to health savings plans. These plans need to be recognized for what they really are, a con of the health care consumer. Sure, you can get health care, but you must pay for it yourself with money that you have saved. Saving money sounds like a good idea, and it is. It is great to have saved a little extra to cover those expenditures that fall outside of your normal budget. The problem here is that the cost of medical care can be so excessive that it would be virtually impossible to save enough.
Medical care is expensive. There are stories of Canadian tourists who find themselves with a two hundred thousand dollar medical bills for having a baby in the United States. Any serious medical illness can easily run into the hundreds of thousands of dollars. Think about an emergency situation such as a heart attack or a stroke. And for those who believe that they are too healthy for such an emergencies, think about getting hit by a car while walking or riding your bicycle.
That is why insurance is needed. Perhaps the best that you could ever hope for from a health savings plan is enough money to cover your deductibles and copays. That is pretty much what happened to me last year.
I have excellent medical coverage for myself and my wife through my employer. I have no deductibles and modest copays that are capped at $3,000 per year. I had a series of medical issues, nothing major and certainly nothing life threatening. I had three emergency visits, three nights in the hospital, and two outpatient procedures. The total cost paid by my insurance carrier was in excess of $65,000. My out of pocket cost was capped at $3,000.
When a patient does not have medical insurance the hospital will jack up the cost to well above what an insurance carrier would pay. If Blue Cross would pay $30,000 for a particular procedure, an uninsured patient will likely be charged $50,000. The reason for this is that the hospitals offer volume discounts to major insurance carriers. Thus, the $65,000 in medical expenses that I incurred last year could have easily been charged at over $100,000 if I did not have insurance.
It is one thing to save $3,000 to $5,000 to cover deductibles and copays. It is quite another thing to save the hundreds of thousands that a serious medical condition might require. And for many households, even saving $3,000 to $5,000 is virtually impossible. There are so many other priorities for our dollars. It is estimated that for 40% of the households in our country, an unexpected bill for $500 could be a financial calamity. What happens if the furnace goes out or the truck breaks down? For some, saving $3,000 to $5,000 in a Medical Savings Account could take 5 to 10 years, and that assumes that no withdrawals from that account would be required during that time period. .
The idea of offering up health savings plans as an alternative to health insurance is beyond ludicrous. It is a glib and irresponsible diversion tactic offered up by those who wish to deny coverage for medical care.