PHILADELPHIA REFLECTIONS
Musings of a Philadelphia Physician who has served the community for six decades

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Investing, Philadelphia Style
Land ownership once was the only practical form of savings, until banking matured in the mid-19th century. Philadelphia took an early lead in what is now called investment and still defines a certain style of it.

Medical Economics
Some Philadelphia physicians are contributors to current national debates on the financing of medical care.

Personal Passions
My own personal short list; eight decades in retrospect.

Medicare/Health Savings Accounts Legislation

Why is it so important?

  • The Medicare/HSA Law is an historic and transformational step for the American system of health and healthcare. For the first time since in 1965, seniors will now have a prescription drug benefit as part of Medicare.
  • It returns decision-making control to the individual by allowing individual to put money into an IRA-like tax free account to be used for health related expenses.
  • Like traditional Medicare, the new Medicare/HSA law will take care of seniors who are already sick but it takes the next step to help keep them from getting sick in the first place.
  • The new Medicare /HSA law begins to transform healthcare into a 21st Century model that is market mediated yet still government regulated that will lead to higher quality care, with greater choice at lower cost.

What if I like the Medicare program I am currently enrolled in, do I have to switch?

  • No, it completely voluntary. You can stay in the traditional Medicare program and keep your Medi-gap insurance if you choose. However, seniors will now be able to choose other plans that better fit their unique healthcare needs.

I am not a senior but a young worker, why does this matter to me?

  • Young working now have an incredible opportunity to accumulate substantial health dollars in a personal health savings account (HSA) over a lifetime of work for their healthcare expenses after they retire.

What is an HSA?

  • HSA's are the most important change in financing healthcare since the advent of employer-based healthcare system in 1943.
  • An HSA is a Hhealth Ssaving Aaccount that allows an individual to contribute pre-tax dollars that can grow tax free while earning interest. The money in the account can be used to pay health related expenses also without paying a tax.

Who owns the accounts?

  • HSA's are like an IRA or a 401K, they are owned by the individual.
  • They are real assets that can be passed on to loved ones as part of an estate if account beneficiary were to die.

Who can contribute to my health savings account?

  • Individuals, their employers, and family members so long as they cannot claim you as tax dependent.

Who decides how my HSA health dollars can be spent?

  • You will control your health dollars as long as they are used for qualified health related expenses.
  • HSA's return the individual to the proper market role of the customer so that healthcare provides will complete for health dollars. This completion will improve service and quality and lead to greater choices and lower costs for every American.
  • HSA's are encourage every American to become a wise consumer of healthcare, which will lead to more knowledge healthcare consumers who are able to make better decisions about their own health, their treatment options, and staying healthy.

What if I change jobs, what happen to the money in my health savings account?

  • HSA's are completely portable, and because you own them and control them they follow you from job to job and into your retirement.

What expenses can I use my health dollars to cover?

  • HSA dollars can be withdrawn tax-free to pay for qualified medical expenses, such as prescription drugs, doctor visits, health insurance for the unemployed including COBRA and long term care insurance and services.

What if there is money left over at the end of the year in my HSA, do I get to keep it?

  • Yes, the money invented in an HSA is just like money invested in an IRA or 401K, it may earn interest and will rollover from year to year allowing you to accumulate health dollars for retirement.

How do I qualify for HSA?

  • To qualify you simply purchase a health insurance plan with a minimum deductable of $1,000 for an individual or $2,000 for a family.

How much can I contribute to my HSA?

  • You can contribute up to 100% of the insurance plan¿½s deductible amount but not to exceed $2,600 for an individual or $5,150 for a family.

If I am over 55, will HSA's be significant to me?

  • Yes, if you are between the ages of 55-65, you can make additional pre-tax contributions of up to $500 annually starting in 2004 and $600 in 2005 and an additional $100 more per year to a maximum of $1,000 per year in 2009. This will allow you to accelerate the growth of your health dollars for retirement.

How does this new law help the working uninsured?

  • This legislation will make health insurance more affordable because it provides incentives for people to get insurance so they can realize the tax-free savings benefit.
  • Insurance plans with higher deductible are more affordable and because more people who may now be playing the healthcare lottery by not having insurance will be encouraged to purchase a policy, which will increase the size of the risk pool and lower the risk, which will also make more small business companies offer insurance as a benefit. Moreover, competition for your HSA healthcare dollars will drive down cost for everyone.

What if I suffer from multiple diseases, such as obesity and diabetes, how will I benefit from this Legislation?

  • Because 5% of the entire Medicare population with an average of 5-7 diseases spends 50% of Medicare dollars or19 times more money per person, patients with multiple diseases will finally have access to coordinated care among all their care providers, thus reducing unnecessary, duplicate treatments, or dangerous combinations of prescription drugs. That will allow for better quality of care, dramatically higher safely at lower cost.

What happens to my HSA when I die?

  • When you die, your health savings account can be passed on to your surviving family member as part of your estate.

Can I pay for my healthcare premium from my health savings account?

  • If you are a retiree, your healthcare savings account can pay for your Medicare premiums and retiree health insurance premiums, other than Medi-gap.
  • If you are not a retiree however, your health savings account cannot be used to pay your health premiums, but you can still use your money for other health related services such as prescription drugs costs.

Will this new Medicare/HSA law really lower the cost of my prescription drugs?

  • Yes, in 2004, every senior citizen who chooses one, will be given a discount drug card allowing them to save significant amounts of money on their prescription drugs.

What about those with lower incomes, how will they be helped?

  • In 2004, low-income senior will receive an additional $600 credit on their drug card to be used for their prescription drug program.

$400 billion dollars is a lot of Money, doesn't this mean bigger government?

  • Healthcare is nearly 14% of the Gross Domestic Product and growing. To address the continuing rising healthcare cost it is necessary to make an investment into improving and changing the current system of health. This Legislation for the first time puts the consumer at the center of their own care and gives them more choices. Choice creates competition and that drives down costs while improving the quality of services not only for seniors, but for every American.
  • Moreover, for a reasonable cost, seniors will for the first time have a prescription drug benefit. Today, prescriptions drugs are indispensable in order to keep people healthy and out of the hospital. They also in many causes eliminate more expensive treatments if the drugs were not available.

Are preventative care services subject to my deductible?

  • NO.

What technology and Innovations enhancements were added to the Medicare bill?

  • The new Medicare/HSA law includes incentives for electronic prescription, grants to pay for physicians to implement a prescription drug program, pay for performance demonstration projects, and incentives for hospitals to invest in life-saving IT and reports quality outcomes.

What will the law mean for my local hospital?

  • Hospitals will receive additional reimbursement for providing quality information for 35 indicators. This will allow consumers to choose a hospital based on their quality of service.

How many people have signed up for HSA??

  • On January 1, 2013, there were nine million Health Savings Accounts.

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