Second Edition, Greater Savings.
The book, Health Savings Account: Planning for Prosperity is here revised, making N-HSA a completed intermediate step, and L-HSA a distant mention. Whether to make CCRC next after that, followed by Retired Life, followed in turn by HSA as a Currency Standard-- is left undecided until it becomes clearer what reception the early steps receive. There is a difficult transition ahead of any of these proposals, so perhaps transitions require more commentary. On the other hand, transition can be consolidated, so Congress may prefer more speculation about destination.
FRONT STUFF: Health Savings Account: Second Edition, Greater Savings
Skipping past a long history of healthcare payment reform, you might say the Affordable Care Act ("Obamacare") and Health Savings Accounts just offer different approaches to the same new problem. Science has mostly wiped out disease in younger people. Disease has been chased into the retiree age group by a combination of employer basing, and medical research. It is essentially true that people earning money don't have much disease, while the people with disease don't have much money. At the rate things are going, some day there will be very few health costs, except in the first and last years of life. Nobody earns much money in those two years.
But we aren't there yet, although even the present structure looks top-heavy. In 1965 we adopted Medicare and Medicaid, for the elderly and the poor, respectively. Medicaid has always been underfunded even though shared between Federal and State sources. Medicare however is one-quarter funded by payroll deductions, one-quarter funded by the elderly paying premiums, and one half subsidized by general federal funds (borrowed from the Chinese). Projected costs were greatly underestimated, the deficit grew to unmanageable size. One way or another, 75% of Medicare's costs are drawn from non-elderly sources. The ultimate result is a gigantic transfer system, transferring money from non-sick people to sick ones. It hasn't provoked rebellion yet, but it looms as a threat. The people paying the bills don't get much for their money, but Medicare patients get a dollar's worth of care for fifty cents.
That leaves young people, nearly a third of the population, neither sick nor subsidized. The Affordable Care Act appeared, and made it compulsory for well people to buy insurance, to fund a transfer pool for the illness of other people; and they angrily resisted. Described as short-sighted, "the young invincibles" had to recruit subscribers from a highly underfunded Medicaid. As Medicaid funding was increased to attract participation, Obamacare became more costly. By contrast, Health Savings Accounts offered voluntary participation to those Invincibles, with the promise their surplus premiums would earn investment income for many years into the future, when the investments would lower the big costs of old age. If accounts got overfunded, income might be diverted for retirement. By the year 2015, enrolments to each approach were roughy equal, but there is little doubt Health Savings Accounts met with more approval from its users.
George Ross Fisher
...Also by the same author:
Health Savings Accounts: Visions for Prosperity The Hospital That Ate Chicago, Saunders Press, 1980
Health Savings Accounts: A Handbook, Ross & Perry, Inc. 2015 (Forthcoming)
Ross & Perry Book Publishers
3 South Haddon Avenue
Haddonfield, New Jersey 08033
ISBN #: 978-1-931839-44-0
For advice and support about the thrust of this book, I owe spiritual debts to John McClaughry of Vermont, the late F. Michael Smith, Jr. of Louisiana, and the late Bill Niskanen of Minnesota and Washington, DC. It's heartening to remember strong support coming from wide corners of America, and from strata of society ranging from a country doctor, to the former Chairman of the President's Council of Economic Advisors. All three of these men worked their way up to being either a candidate for Governor of his state, the President of his State Medical Society, or the Chairman of a famous Washington think-tank. All three brushed aside the problems they created for themselves by constantly thinking outside of the box. My fellow Philadelphian John Bogle, whom I have only fleetingly met twice, deserves a lot of credit for demonstrating in his books how to invent a complicated concept, and then simplify it for outsiders. I've adopted his investing strategy.
And for personal support and tolerance from my family editorial board, consisting of my two sons and two daughters. My son George took time out from climbing the tallest mountains in the world, to develop a computer algorithm that instantly created the answers to a multitude of math problems hidden in certain assertions I blithely make, but now have confidence in. Likewise, my CPA daughter Miriam, told me some things which may be commonplace among corporate Chief Financial Officers, but astonish the rest of us. And her siblings Stuart and Margaret, who understood my tendency to wise-crack, but having long practice with its consequences, talked me out of most of it.