AMAC In The Media / Politics

The New HSA

President Elect Donald Trump has said he will replace Obamacare by using Health Savings Accounts (HSA’s). What will these new HSA’s look like and how will they work? While present laws would have to be altered and various scenarios could be used to create the ultimate Health Savings Account, there is a strong likelihood the final version would be a simple plan composed of three parts: a local primary care provider, a savings account and a high deductible insurance policy to cover major expenses.

The HSA would act like a funnel receiving all contributions, including payments from an individual, from an employer, and from those receiving government assistance. The HSA would automatically make a monthly payment to the Primary Care Physician and the catastrophic insurance policy, with the balance being deposited in the savings account.

The first part of the New HSA would pay for a Direct Primary Care Physician. Direct Primary Care is where the patient (or HSA) pays a monthly fee for basic medical services directly to the doctor. Each patient would select a local participating doctor or practice for routine office visits, annual physicals, annual vaccinations, and various tests. There would be no copayment and no deductible for this care, although some additional tests performed in the office might require a small discounted fee.

The second component of the New HSA would be a savings account. The purpose of the savings account is to accumulate money on a pre-tax basis to pay the deductible for surgery or other medical bill not covered by the Direct Primary Care Doctor. The savings account would build up over time and part of those funds could eventually be used for retirement.

The third and most critical part of the HSA is a high deductible Catastrophic Insurance policy.  The deductible could start at $6,000 and be raised to $10-15,000 after the savings account builds up.

Why Direct Primary Care

DPC practices are popular because they allow doctors to spend their time with patients, instead of doing clerical or administrative tasks. As a result, physicians earn more income which is especially important at a time when many doctors are retiring or leaving medicine. In addition, these practices typically have lower operating costs, enabling savings to be passed on to the patient with lower fees. Conversely, the Affordable Care Act increased the regulatory burden for family physicians, but now the Direct Primary Care model all but eliminates them.

Doctors are opening Direct Primary Care practices or converting their present practices into Direct Primary Care offices at an astonishing rate. In 2005 there were only 140 practices, by 2014 there were 4,400 according to a report from the Heritage Foundation, and that number continues to increase.

Why Savings Account

The “Savings Account” within the HSA is simple. A portion of the deposit into an account is directed to savings. Those funds are reserved to pay for the insurance policy deductible or copayment. Should a patient require a surgical procedure before the funds have grown to cover the deductible, an automatic loan provision is activated to cover the shortage. The loan is paid off with future deposits.

Why High Deductible Plan with Cost Savings                  

The HSA is able to do something that Obamacare could not do: reduce medical care costs! It accomplishes that amazing feat in several ways. First, the Direct Primary Care component will lower the number of visits to the Emergency Rooms at hospitals. Since there is no charge to see their local doctor, patients will learn to see the doctor at the first signs of trouble. According to the Medical Expenditure Panel Survey a typical visit to the ER costs $703.

Direct Primary Care practices cover many services in their offices either at greatly reduced costs or via included in the basic monthly fee. (see chart). For example, a DPC practice in Florida charges $4.50 for a urology test compared to the area hospital that charges $231.79.

* This is an example of a typical Direct Primary Care Savings where the total charges represent 98% savings on the Hospital ER charges. This also allows Hospital ER’s to be utilized for their intended purposes – to render treatment of injured people and those afflicted with sudden, severe illness.
Note: These are actual charges by a Direct Primary Care practice in southwest Florida.

Another way medical care costs will be lowered is with preventive care. When the doctor knows the patient he or she will be aware of changes in the patient. A suspicious mole, for example, would be noticed early as possible cancer, not only reducing costs but more importantly, saving the patient’s life.

The approximate monthly cost of an HSA for a couple, age 35 in Florida would be: $125 for local doctor, $150 Savings account and $325 for high deductible insurance. At $600 per month with an employer paying half, we can have truly affordable health care. The free market competition allowing a patient to shop for services will likely serve to moderate any pressure to raise fees.

The new Health Savings Account, if properly constructed and administered could easily be phased in for groups and individuals to replace Obamacare. It will provide much improved benefits with a realistic opportunity to control health care costs.

Dan Weber is the President and Founder of the Association of Mature American Citizens (AMAC) with 1.3 million members. He has 35 years’ experience in the health Insurance field.

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20 Comments on "The New HSA"

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It should not take three years to eliminate Obama Care. I give President Trump 30 days and if he doesn’t have support from enough of the moderate Republicans we can start recalling them one at a time!

This is a good idea. As mentioned in a previous comment, serious tort reform is also needed. Does the country have enough primary care providers to make this work?

I like this plan and can afford it.

I would also suggest looking into getting our courts under control. Lawsuits against doctors and hospitals are obviously needed, but America has gotten way out of hand. We need some limits and common sense. Liability insurance is most business owners overhead, especially the medical profession. They factor these costs into the business model. Nothing is for free and it always gets passed on to the customer. That would be us!

How about tax preferences for health clubs, natural cures and natural supplements. The pharmaceutical industry isn’t the only avenue to keep folks healthy. We need to cut back regulations on who has a monopoly of what we do to keep ourselves healthy.

Funny. I’ve already been leading as many of my clients this way as possible. Not all can do it yet, but for those who can, it is the best thing going.

I am retired and over 65. Thr new HSA sounds great for younger people but it does NOTHING for seniors on Medicare. I would like to see tax law changed so all necessary medical expenses were tax deductible with no minimum expense threshold. That would benefit everyone.

I already had an HSA and high deductible plan before Obamacare, but my deductible was $750 and my out of pocket limit
was $1,500 a year.

Thanks to obummercare, my combined deductible and out of pocket limits are $3950 and $4000, and my premium went up by over 1,400%.

So now your “solution” is to further increase my limits by ANOTHER $2,000 a year???

This is NOT what we elected the Republican MAJORITY to do.
They campaigned, and we voted based on a COMPLETE AND TOTAL REPEAL of obummercare.
Repeal EVERY aspect of obummercare, restore every law and regulation to what it was before obummer was elected, and let everything settle out. Then and only then, start to identify and correct the problems in our health insurance one by one, based on what the voters wish.

That’s still government interference. Nobody should be forced to have a primary care physician or an insurance policy. Just as what happened with Obamacare, those requirements would quickly spin out of control

I could see an option such as: anyone who chooses not to have a policy for chronic or catastrophic illness would have to wait two years for new policies to apply. I could see a situation where people would agree that if they don’t have insurance, unless they can afford more care, would only receive is first aid.

DrZ (not a physician)
Some of the problem with high health care is us. One of the ways we encourage higher prices is that we have been trained to demand first dollar coverage. All of us have hear the analogy about oil changes. You buy car insurance for catastrophic events, accidents, theft, etc. Can you imagine how expensive car insurance would be if we demanded that the insurance companies paid for oil changes – it would go up, a lot. It’s the same for medical care. We want insurance companies to paid everything thinking we are getting something for free. We are not. We pay for this “want” in higher premiums. This is where the HSA comes in because it allows you to pay first dollar out of your account. In the case of Direct Primary Care, it allows you to pay a monthly fee to a doctor and receive unlimited services offered by… Read more »

I like this plan. I worked for a health insurance carrier for many years and if we add tort reform we can reduce the cost of health care by a very large amount. Let’s keep this simple and easy to use. Great plan.

This seem like a very good plan. Will the doctors and hospitals sign on to this? I am fortunate that I never had to sign on to Obamacare, but my Medicare cost, which are deducted from my Social Security checks, has more than doubled. Will this plan help to reduce that?

I have been a proponent of exactly the ideas that Mr. Weber puts forth in this article. The only enhancement I would add is to encourage the growth of cash-only surgical centers which are proving that high quality surgery can be performed at lower prices than we currently see currently. This is accomplished by posting prices for procedures online and by requiring cash which by-passes the overhead of paperwork and dealing with government or insurance companies. As pointed out in this article when the paperwork diminishes so does the overhead. The doctor has more time to spend with patients and provide services at lower cost.

The main reason for going to the emergency room or to urgent care is because your doctor doesn’t have an opening. And, what happens if you need a doctor while you’re away from home? Is there a network? Does your Direct Primary Care Doctor foot the bill? It’s a step in the right direction, but there is a lot not covered in this article.