HSA Crusader Web Log

I was talking with a 44-year old about applying for an individual health insurance policy. This person was not happy with insurance companies. Frankly, the following is not my favorite conversation to have with a client:
     “I’m afraid the insurance company will decline your application for health insurance.”
     “But why? I’m healthy!”
     “I understand, but let me see if I can explain the problem. You are indeed healthy, but you are also taking three quite expensive medications. You take a cholesterol medication, an allergy medicine, and a sleep medication. The cost is about $300 per month or $3,600 per year.” (To show the client the real cost of prescriptions, I usually visit a site that shows prescription drug prices, such as www.drugstore.com.)
     “But, I’m healthy. I exercise every day. My doctor only gave me the Lipitor because my cholesterol is slightly elevated. Lots of people in California have allergies. My job is stressful and the occasional sleep medication helps me sleep.”
     “I understand, but look at it from the insurance company’s perspective. At age 44, the premium would be $275 per month for the $1,500 deductible plan. While you would pay a $25 co-pay for each drug, the real cost is $100 per drug. The insurance company would have to pay the remaining $75. Each month, they would pay out almost as much for these prescriptions as your premium.
     “Well, can I get a plan without prescription drug co-pays? I only want insurance for the big expenses.”
     “That’s a reasonable request. Normally, when people are declined for coverage, they realize they want insurance for what it was intended to do — provide protection from large, unexpected medical bills, such as a three to four day hospital stay that averages $30,000. Insurance companies include prescription drug coverage with their traditional HMOs or PPOs. There is an HSA-qualified high deductible health plan without drug co-pays, but the cost of your drugs contributes towards the deductible. Let’s say the insurance company has a $3,500 deductible plan. If your drug costs were $3,600, you would satisfy your deductible with your drug costs alone. Now, if you had to go to the hospital at the end of the year, all your hospital expenses would be covered since you would end up having a zero deductible plan.”
     “Can’t they just exclude drug coverage altogether?”
     “I wish they could, but virtually all plans include benefits for prescription drugs and office visits.”
     “Can’t they exclude coverage for these conditions and give me insurance for big problems, such as a serious accident, heart surgery, or cancer?
     “Insurance companies in California no longer exclude certain conditions; they accept or decline your coverage.”
     Finally, the client says with frustration, “What good are insurance companies? When you want to get pure insurance, you can’t get it. I hope we end up getting some form of national healthcare so that those greedy insurance companies get their just rewards.”

Pure Insurance Is the Solution

Guaranteed-issue plans are too costly for many people who end up becoming part of California’s uninsured population. I can offer a guaranteed-issue HIPAA health plan with a $450 per month premium to a person who is coming off of COBRA. For those not coming off COBRA, I could write the guaranteed-issue MRMIP plan with substantially reduced benefits and a $600 premium.

The solution may be pure insurance, which is strictly for the large, unexpected medical bills. It may provide options to the major risk plan or HIPAA.

California is poised for change; people are increasingly angry and frustrated with insurance companies for denying coverage and constantly raising premiums. The California legislature passed single-payer legislation, which Governor Schwarzenegger vetoed; he later presented his own plan for California, which featured a mandate for all Californians to have health insurance. With mandatory insurance, the insurance companies would no longer be able to deny coverage. Governor Schwarzenegger proposed a $5,000 deductible health plan with a $7,500 out-of-pocket maximum as the minimum level of coverage. Surprisingly, California duplicated Massachusetts’ mistake of choosing a non-HSA qualified plan as the core plan.

I hope that they will correct that oversight. Insurance companies could go a long way towards solving the uninsured problem by offering pure catastrophic coverage that is HSA compatible. I call it “The HSA Strategy,” in which you buy insurance for large unexpected medical bills and use the HSA to pay routine costs and save for future expenses. The following are some options to consider:

• A Starting point – An HSA-qualified plan with a $3,500 deductible and a $100 a month premium (age 40 to 44) – This could be a popular option. It most resembles pure insurance and has a very affordable premium. The insured pays everything under the deductible and the insurance company pays everything over deductible. To keep the premiums low, this plan excludes maternity coverage. Also, preventive exams are subject to the deductible. Following the age-rating system, premiums for younger people would be lower, while premiums for older people would be higher. Premiums would be $60 a month for a 25-year old and $200 a month a 55-year old.

• Step 1: Increase the deductible – An HSA-qualified plan with a $5,250 deductible and a $100 a month premium. Insurance companies could decrease their risk by using the maximum allowable deductible for an HSA-qualified plan (currently $5,250). By charging the same premium as for the $3,500 plan, they could collect some additional premium to offset the higher risk individual.

• Step 2: Modify the plan to be more like pure insurance – An HSA-qualified plan with no coverage for office visits or prescriptions, a $5,250 deductible, and a $100 a month premium – People who face the prospect of having no insurance and who worry about big claims would find this policy appealing. A visit to a family doctor is a cost of daily living, just like taking the car to an auto shop is a cost of owning a car. These routine expenses are not insurable events since they are neither large nor unexpected. A prescription that costs $100 per month or $1,200 per year is expensive, but it is a small cost compared to a $500,000 spinal cord injury. The premium is the same as the regular $3,500 plan, but the insurance company doesn’t have to pay for office visits or prescriptions and the deductible is $5,250.

• Step 3: Reasonable Rate-Ups – Some level of moderate rate = +10% up would be appropriate if the insurance company is still worried about the risk of insuring someone who is taking several medications or who has another underlying risk factor:
     A 25% rate up = $100 x 1.25 = $125
     A 50% rate up = $100 x 50% = $150
     A 100% rate up = $100 x 2 = $200

If I could offer one of the plans above, I would be able to get coverage for a person who was declined. Premiums under $200 are more appealing than $400 to $600 premiums. Also, the insurance company’s risk is greatly lessened with these plans. These HSA-compatible plans are also simple to understand.

When Governor Mitt Romney of Massachusetts proposed the universal health plan, he projected the premium for the pool of people to be around the $200 a month. In reality, the policy ended up costing $380 per month. Massachusetts tried to have the plan cover too much and included too many state-mandated benefits. They would have reached their cost projections if they had they offered pure insurance like the plans above.

The Real Role for the Major Risk Pool

The plans listed above might not work for uninsured people who have impending surgeries or large ongoing medical bills. Now we have a place for the major risk pool; it should be for people who indeed have major risks. If Governor Schwarzenegger is serious about the uninsured problem, the government and the insurance companies should team up to subsidize this high-risk pool. Over the years, some of these people will regain their health and move out of this risk pool into a regular plan.

Insurance companies need to lead the charge in changing how they deal with people who have higher levels of risk. If they fail to do so, it may be time for the government to mandate some form of guaranteed issue plans. I think it’s better for the insurance company to act than for the government to compel action.
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Robert Hopper, Ph.D., is the owner of Hopper Insurance Services in Santa Barbara. He is the author of a continuing education textbook for insurance agents on HSAs and “Healthcare Happily Ever After: A Friendly Little Tale of the Health Savings Account and How It Won the Heart of a Nation.” To reach him, call 805-966-4900 or visit www.BobHopperInsurance.com.

This article was published in HIU (Health Insurance Underwriter), the professional journal for health insurance agents who are members of the National Association of Health Underwriters.
Author: Robert Hopper, Ph.D.
Issue: July 2006

Every American should have a high-deductible health plan (HDHP) coupled with a Health Savings Account (HSA). I call this “The HSA Strategy” because it provides an opportunity for individuals to maximize current health and plan and save for future expenses, including expenses not covered by Medicare during retirement.

I recommend this strategy to all my individual and group clients because I am convinced it is in the best long-term health and financial interest plan for just about everyone. The HSA Strategy can also provide significant solutions to two significant, national issues: skyrocketing health insurance premiums and rising health care costs.

All Americans can benefit from a health care system that will make health care more affordable, increase access to providers, and protect their health and wellbeing in the future.

According to Steve Forbes, “The problem with American medicine is in the way we finance it—almost all of it through third parties, primarily insurance companies and the government. In any market where there is a disconnect between provider and consumer, bad things happen.”

Scott Atlas, in his book Power to the Patient, said, “The third-party system of payment—the absence of direct payment from patient to doctor for most medical expenses—has shielded Americans from considerations of cost and imparted the illusion that ‘someone else is paying’ for medical care. The forces of supply and demand have become lost amid the sea of governmental regulation and oversight in the third-party payer system. The essential step to remedy this is to change the nature of health care insurance so that patients make direct payments to their health care providers.”

Agents Play a Key Role
Einstein provides two ideas for solving problems:
Idea #1: “Insanity: doing the same thing over and over again and expecting different results.”
Application: We cannot continue to offer health plans that focus on first-dollar coverage and expect premiums and health care costs to subside.

Idea #2: “We cannot solve our problems with the same thinking we used when we created them.”
Application: We need new thinking about the problems of skyrocketing premiums and heath care inflation. A central role of the insurance agent in today’s rapidly changing marketplace is to educate clients and help them transition to the new thinking.

The old thinking is expecting third-party insurance companies to pay for routine and expected health care costs in addition to protecting against large, unexpected medical bills.

The new thinking? Consumer-directed health plans.
The original purpose of insurance was to protect against large, unexpected medical bills, and NOT pay for smaller bills. Think of home or car insurance as good examples of protecting against large expenses. Insurance companies can do a good job providing these high deductible health plans at affordable premiums. So let’s have insurance companies focus on what they do best and provide a variety of high deductible health plans for consumers.

HSAs let us self-insure routine and expected health care costs. Use a tax-advantaged Health Savings Account to pay smaller bills and save for future bills and deductibles.

Health economists suggest this is a smarter way to insure your health. They believe that The HSA Strategy is a smart move in the short term, and the consumer is way ahead in the long run.

When consumers stop paying additional premiums to get copays and low deductibles, they save substantially (30% to 70%) on insurance premiums. They can put those savings into a tax-advantaged account to pay current expenses and save for future expenses, including retirement years. With good health, money accumulates quickly over time. This puts consumers in charge of their own health care dollars. They will shop for the best values, providers will compete for their business, and competition will begin to control prices at their proper level.

Congress acted on this new thinking and, beginning in 2004, authorized HSAs as a tool for individuals, employers and employees to take control of their own health care costs. In the future, the growth of these plans will be exponential across America.

The Strategy
Step 1: Replace your current low-deductible PPO or HMO plan(s) with an affordable HDHP to protect against large, unexpected medical bills. Protection from large claims should be the real reason for having insurance.

* Benefit: Save 30-70% on premiums
* Average savings based upon rates for a 40-year-old person:
Individual: $1,000-2000 per year
Family: $2,000-4,000 per year

Step 2: Put those premium savings into a tax-advantaged HSA to pay for routine expected medical bills and to save for deductibles.

* Key statistic: 68-73% of Americans spend $500 or less on health care each year, and unused HSA dollars will roll over to the next year.

Step 3: Set a goal to “save and invest” those unused dollars over 10, 20, 30 or more years. Then use those tax-free dollars to pay for future health care costs, long-term care insurance premiums and health care expenses not covered by Medicare during retirement.

The number-one reason to get an HSA: the potential to plan and save for a lifetime of benefits.

The first option for using HSA dollars is to spend them now in order to maximize one’s health. This might mean paying for services not normally covered by traditional health plans. For example, a diabetic or a person with heart disease risk factors, such as elevated cholesterol, blood pressure or stress, might use tax-free HSA dollars for nutrition counseling from a registered dietitian to lower cholesterol and weight; exercise counseling to develop an exercise program; and stress-management counseling to lower stress in life. It can mean using HSA dollars to pay for “health coaching” from a wide variety of traditional and alternative health care professionals.

The second option is to save for future deductibles. Accumulating enough money in the HSA to pay several deductibles creates a comfortable feeling—you know you have already saved for your future health care expenses.

The third option is to accumulate unused dollars to spend during retirement. Fidelity Investments estimates that the average couple going into retirement will spend $190,000 in health care expenses not covered by Medicare. In a perfect world, maximizing health and savings now will lead to a substantial accumulation of money that ultimately pays health care expenses for the rest of one’s life.

Susan, Age 40
* The premium for a low-deductible health plan with office visit and prescription copays is $300/month.
* The premium for an HSA-qualified HDHP with no office visit or prescription copays is $150/month.
* The $150/month premium saving can be used to self-insure routine, expected expenses.

If Susan spent $50/month for routine expenses—just like 68% of all Americans—and $100/month grew in her HSA with compound interest, by retirement she would have a pool of money to pay for health care expenses as well as long-term care premiums. At age 70 she would have $100,000 in her HSA to pay her LTC premiums and expenses not covered by Medicare. Note: This is especially important to people in their 20s and 30s who will reach retirement when Medicare might be dramatically different. Young people truly do need to plan now for an unknown future.

If Susan had ongoing health problems that totaled up to $1,000/year (an estimated 24% of the population), she could use a portion of the $1,800 from her HSA to pay those bills. She would still accumulate unused dollars each year.

If Susan had a major hospital bill, her out-of-pocket expenses would be roughly similar to the low-deductible PPO. After two years of good health, she would have saved sufficient dollars in her HSA to pay the out-of-pocket maximum in full.

With reasonably good health, at retirement Susan could have $75,000 in her HSA to pay her long-term care premiums, as well as expenses not covered by Medicare, including annual exams, dental, vision and alternative care.

For Individuals and Businesses
Individuals: High-deductible health plans are often among the most affordable health plans on the market, and consumers can save substantially on premiums. Congress wants to encourage consumers to make this switch from traditional health plans to the HDHP, and provides a triple tax benefit for HSA contributions:

* tax-deductible contributions
* tax-deferred growth
* tax-free withdrawals for medical, dental, vision, alternative and long term care premiums

Business Owners: Business owners and HR professionals can finally get control of the skyrocketing health insurance premiums. They can now buy very affordable major-medical coverage instead of offering a variety of traditional HMOs and low-deductible PPO plans. These HDHPs are geared to pay for large, unexpected bills, which normally are not subject to consumer preferences. Premiums are based upon incidence of major claims, and insurance company actuaries have a good handle on those costs.

The intent of Congress is for employers to pass these premium savings to employees, thus there are substantial tax benefits. The HSA contribution avoids payroll and income taxes, and is excluded from computation of workers’ compensation premiums. The HSA Strategy is a tax-efficient way to pass on “tax-free compensation” to employees. In addition, an employee can use a cafeteria plan and payroll deduction to make additional contributions to the HSA up to the maximum allowable amount.

Employees: Employees get “cash” instead of copays. Now employees control the money for health care. If they are healthy, the tax-free money grows with compound interest. If they have ongoing health problems, they have a pool of money to pay for those expenses. Once employees understand the power of these accounts—their deductions create tax-free cash—they will happily use payroll deduction to maximize HSA contributions. Money grows tax-deferred and can be used tax-free for health care expenses. Since it is an IRA, at retirement, they can pay taxes on any amounts they use to supplement retirement.

In Summary
Once your clients have this smarter way of doing health insurance for a few years—and see money grow in their HSAs—they will never want to change health plans again. Early data suggests that once employers switch to this smarter way of doing health insurance, they rarely switch back. The net result is that both you and your clients will feel good about playing a role in healing America’s health care system.

For more information, visit www.HSACrusader.com. This Web log is dedicated to proposing new ideas that will increase the adoption of Health Savings Accounts.
About the author:
Bob Hopper is the author of The HSA Strategy: The Future of Health Insurance in America. This book is approved for continuing education in some states, including California. For more information on CE credit, please call the publisher, A.D. Banker & Company, LLC, at 800-866-2468, or log on to www.adbanker.com. Bob is a member of the Santa Barbara AHU and can be reached at 805-966-4900.

Link to actual HIU article: http://hiu.nahu.org/article.asp?article=1409

June 11, 2006 12:00 AM, Santa Barbara News-Press, Santa Barbara, CA
If we ran our economy the way we run health care, America would be in financial chaos

Imagine driving into a gas station. You pull up to a pump and look around for a sign advertising gas prices, but no luck. No prices flashing on the screen, either. Your befuddled look draws the attendant to your side.

“What’s the price of gas this week?” you ask. He looks at you quizzically and answers, “Just pump the gas. When the total shows up on your credit card, you’ll know how much you spent.”

Or the next you go to the department store. . . . This morning’s newspaper advertised cashmere sweaters at 50 percent off. As you carry the sweater of your dreams to the fitting room you search for a price tag.

The salesperson meets your confused look with, “May I help you with something?” You ask for the price. You are met with a vacant look and told, “Don’t worry. If you like it, I’ll take your credit card and your receipt will show how much you’ve paid — and how much you saved today!”

Frustrated, you forgo the sweater and head to lunch. But the menu doesn’t list a single price, and the waiter thinks you’re goofy for asking about prices and adds, “You haven’t even eaten yet, how am I supposed to know how much to charge you?” You stumble out, hungry and a little angry, wondering, what the heck is going on?

You reach your last stop — the doctor’s office–where your dermatologist will remove a small spot from your forehead. But here, you don’t search for a menu; you don’t ask for the price; you never even wonder about the actual cost.

You know that eventually you will receive an undecipherable explanation of benefits (EOB) from your insurance company, and shortly after that you’ll be required to pay your portion.

Think about this for a moment. Doesn’t this system of paying for health care expenses seem bizarre when compared to every other product or service in America — we blindly engage in commerce without ever asking the cost? And you would be appalled if you knew the amount of paperwork that goes on behind the scenes just to pay for one simple procedure.

• Doctor provides service — five minutes to freeze a spot.

• Doctor submits bill for list price of $100.

• Service representative at the insurance company consults a fee schedule and “allows” the negotiated fee of $65. Doctor writes off the $35. In exchange, the doctor is listed in the preferred provider directory given to every policyholder; in effect, advertising in exchange for lower fees.

• Insurance company sends you an explanation of benefits that says: “$65 negotiated fee credited towards your deductible; you saved $35 by going to a doctor on the network; you are instructed to pay $65 since you have not met your deductible.”

• Insurance company sends an EOB to the doctor.

• Doctor bills you $65.

• You mail a check to the doctor for $65.

This process occurs for every transaction in the entire health care system. Because each physician has a high number of visits and procedures each day, an extra employee is dedicated to insurance billing, and this cost is built into the doctor’s fees. And the insurance company needs to have a football field of customer service representatives to handle all the paperwork — and that cost is built into your insurance premiums.

Yet, if you knew the price, you could simply pay at the time of service, or exercise your consumer freedom and look for a better deal — exactly the way health care used to operate before “managed care” and “negotiated fees” became the norm.

Unfortunately, negotiated fees are hidden from view and prevent consumers from making decisions based upon quality, service and price. Test this yourself. Next time you go to a doctor, lab or hospital, ask for the negotiated fee before the service is rendered. Good luck. Insurance companies view this information as proprietary and are very protective.

Luckily, there is a huge movement afoot to make health care costs transparent to the consumer. One company — Aetna Insurance Company — has come to its senses and is conducting a pilot program that may transform the health care system.

Policyholders can go online for lists of doctors and common procedures, and the actual negotiated fees for each service, before making an appointment with a health care provider. Several other insurance companies are also experimenting with making negotiated fees available to policyholders.

Transparency took a giant leap forward on June 1 when the Centers for Medicare & Medicaid Services (CMS) announced they would post — for the first time — what Medicare pays for 30 common elective procedures and other hospital admissions. By the fall CMS expects to post physician services as well!

Finally, if all negotiated fees become transparent or public, wouldn’t it be easier to let physicians determine their own fees?

That’s the way it used to be in health care. That would eliminate a disturbing element of our current system.

We overcharge the uninsured. One in six Americans is uninsured, and many because they cannot afford insurance. When these people go to the doctor, they pay the “list” price of $100, instead of the negotiated fee of $65.

If doctors were not forced to discriminate among their patients because of negotiated arrangements with different insurance companies, we would have a truly egalitarian system.

When Americans have comprehensive and personalized information on quality and cost, they will be wise consumers and have the tools to shop for the best values in health care.

Likewise health care providers will compete for patients based upon quality, service and price. This real marketplace will control health care prices at their proper level, just like it does for every other product or service in America.

Robert Hopper owns Hopper Insurance Services and is the author of “The HSA Strategy: The Future of Health Insurance in America.”

May 14, 2006 12:00 AM Editor’s note: Today the Santa Barbara News-Press begins a monthly column on the economics of health care by local insurance agency owner Robert Hopper, author of “The HSA Strategy: The Future of Health Insurance in America.” His book is available at Chaucer’s Bookstore or at www.HSAStrategy. com. The opinions in this column are Mr. Hopper’s and not necessarily those of the newspaper.

Let’s face it: American health care is a heated topic. In our next presidential election, it may be the No. 1 domestic issue dividing Republicans and Democrats. Yet it has the potential to unite us.

By now, most of you have heard of an insurance product called the “health savings account,” or HSA. To many it is known as the darling of the Republican Party, where it is part of a movement called “consumer-directed health care.”

Because of its supposed Republican affiliation, many Democrats and progressives regard it as poison, preferring the “single payer” model touted by such august politicians as Sen. Ted Kennedy.

But what if this simple insurance product were the balm to heal an ailing nation, a tool to save all of us time, heartache and headache, and save our nation billions of dollars? What if it also liberated doctors to practice medicine and gave choice back to the people? What if a fusion of single payer and consumer-directed could be achieved, rewarding us with the best health care system in the world?

The health savings account has the potential to do so, making health care a nonpartisan issue and freeing us to devote our energies to the education of our children, the well-being of our nation and the health of our planet.

To understand how this might be achieved, we must first understand the most pressing failures of our current system. Today’s column will be devoted to how and why things got so messed up.

• Why is health care inflation two to three times that of normal inflation?

• Why are health insurance premiums skyrocketing?

Basically, our American economic system operates under the ideology of the two-party transaction. Someone sells something; someone buys it.

The first party is the seller; the second party is the buyer. This holds true for groceries, iPods, lingerie and Porsches.

Seller.

Buyer.

Retailers compete for consumer dollars by manipulating the three variables of quality, service and price.

The most common tool of competition is the sale. Its purpose is to change buying behavior, and its power lies in the size of the discount.

20 percent off! Buyers who need a widget will buy one.

40 percent off!! Buyers are seriously tempted to get two widgets.

70 percent off!!! Buyers are suddenly purchasing widgets for the entire office.

In America, if quality and service are comparable, price is the deciding factor. If Pop’s Hardware Store offers widgets for $75 and Mom’s Hardware Shoppe offers them for $60, and they both treat you right, most Americans will pop for Mom’s. But if a business continually puts its inventory on sale, it soon gets into financial trouble.

Now, back to insurance. Here is where the two-party system morphs into a three-party system.

When I was a child, the doctor (first party) provided an examination and a tetanus booster. My mom (second party) paid the bill — cash, on the spot.

On the way home she visited a kindly, silver-haired pharmacist (first party) who dispensed medication. My mom (second party) paid the bill — cash, on the spot.

However, when I had pneumonia at age 6, my parents did not have savings enough to pay hospital expenses, so they used their health insurance policy — the old-fashioned kind, with no co-pays for office visits or prescription drugs. No rice, no beans, just the enchilada, which meant hospital care only. This kept premium costs low enough to be affordable for my working-class parents.

Today’s health insurance plans are very different, providing low co-pays for office visits and prescription drugs, and low deductibles (such as $500), coupled with low co-insurance (such as 20 percent), making health care costs seem affordable.

In reality, by having the third party — the insurance company — pay not only for the enchilada but also for the rice and beans, we have sold our health care system down the river.

Here’s how and why:

A $25 co-pay for an office visit or for a brand-name drug, either of which actually costs $100, represents a “sale” of 75 percent off.

These sale prices initiate a feeding frenzy — remember the widgets? — that directly triggers a rise in premiums.

Frankly, health insurance companies cannot afford all these co-pays and co-insurances for the small stuff, so they raise the rates.

Here’s the progression:

• Co-pays mask the costs of health care. A $25 co-pay masks the real cost of a $65 routine medical office visit, or a $100 charge for a specialist. The doctor turns to the insurance company for the balance of the fee.

• Co-pays put the cost of health care on sale. A $25 co-pay for a $100 prescription is a 75 percent-off sale. The pharmacist turns to the insurance company for the balance of the fee.

• Sale prices modify behavior and increase use of health care services.

Remember the feeding frenzy? For a cold or flu, the best treatment might be to take two aspirin, drink plenty of fluids and rest. But with low co-pays, why not see a doctor, request lab tests and demand a prescription? You’re not paying the full price, so why not?

• Co-pays prevent price competition among providers. If all doctors collect a $25 co-pay for a doctor visit, there is no competition based upon price. The most qualified and experienced physicians get paid the same as less experienced practitioners. Nationally, we are seeing a phenomenal number of experienced doctors leaving PPO networks.

• Increased use of health insurance leads to increased premiums. The insurance company cannot raise the rates on an individual person; instead, it raises the rates for everyone and thereby covers the costs of frequent claims. Home or auto insurance would never operate in this fashion. When you get a dent in your car, you avoid making an insurance claim because you know a premium increase will follow.

In his 2005 book “Power to the Patient,” Scott Atlas, M.D., professor at Stanford University, writes that the third-party system of payment — the absence of direct payment from patient to doctor for most medical expenses — has shielded Americans from considerations of cost and imparted the illusion that “someone else is paying” for medical care. The forces of supply and demand have become lost amid the sea of governmental regulation and oversight in the third-party payer system. The essential step to remedy this is to change the nature of health care insurance so that patients make direct payments to their health care providers.

This consumer-directed health care model is already being implemented across America and has been described as the fastest-growing new innovation in health insurance history.

By removing co-pays and low deductibles, we return to two-party transactions for most of our health care expenses.

This done, competition in the marketplace can begin to control health care costs at their proper level, just as it does for every other product or service in America.

To some, this is a terrifying thought. How will they survive without their co-pays?

Here is the power of the health savings account and how it can work for the average American. Enroll in an affordable high-deductible health plan.

These provide for major medical expenses and are 30 percent to 70 percent less expensive than traditional HMOs and PPOs. Put the savings into an HSA to pay for a vast array of routine expected medical expenses.

The unused dollars roll over at the end of each year to accumulate for future expenses, turning the HSA into a medical IRA. And, miraculously, it works just as well for Democrats as it does for Republicans.

Introducing Robert Hopper, Ph.D., a.k.a. an “HSA Crusader”

My name is Bob Hopper, and I am an insurance agent in California as well as the author of The HSA Strategy: The Future of Health Insurance in America, a book on health savings accounts.

The purpose of this web log is to encourage all Americans to join the consumer-driven health care movement that has the potential to revitalize our increasingly dysfunctional health care system. All Americans want to get control of ever-rising health insurance premiums and health care costs that rise two to three times faster than normal inflation. I believe HSAs may provide the best solution.

Here is the goal.
Every American should have a high deductible health plan (HDHP) coupled with a health savings account. I call this “The HSA Strategy.”

• The HDHP provides affordable insurance protection against large and unexpected medical bills. That’s the real purpose for having health insurance.

• The HSA acts like a tax-advantaged “medical IRA,” allowing the individual to use tax-free dollars to pay current health care expenses and to plan and save for future expenses including medical bills not covered by Medicare during retirement years.

In the future every American should get an HSA, preferably at birth, and keep it for a lifetime. HSA contributions will accumulate and grow rapidly during the individual’s healthy years, and the resulting pool of savings will grow over the decades to pay the unreimbursed health care expenses (those not covered by insurance) over a lifetime.

The ability for a health plan to provide a lifetime of benefits is the #1 reason every American should have a health savings account. No other health plan can make such a claim.

The HSA Crusader Goals:

• Encourage every American to get a high deductible health plan coupled with a health savings account (the HSA Strategy).
• Make the case that the HSA Strategy is in the best long-term health and financial interest of all Americans.
• Provide compelling information that will encourage individuals and businesses to drop their current HMO/PPO plans and switch totally to this smarter way of doing health insurance.
• Provide educational programs and resources to help people make the transition to the HSA Strategy.
• To make the case and promote the idea that the HSA Strategy is the solution to our health care system’s problems and will evolve naturally into our national health care system.

6 Reasons for getting the HSA Strategy

• The HSA Strategy is a consumer-driven health care strategy that reigns in skyrocketing health insurance premiums and controls health care costs.
• The high deductible health plan (HDHP) is the most cost-effective way to insure against large unexpected medical bills.
• The health savings account (HSA) is the most cost-effective way to pay for routine expected medical bills.
• The HSA Strategy will work for all Americans.
• The HSA Strategy will provide a lifetime of benefits, instead of benefits for just the current policy year.
• The HSA Strategy will evolve into the most affordable way to offer national health care.

For in-depth discussion of the HSA Strategy:
In December 2005, A.D. Banker & Co. published The HSA Strategy: The Future of Health Insurance in America. More information on the book is available at the book’s website, www.hsastrategy.com. (You can purchase this book online directly from the publisher at www.adbanker.com.)

Think Global.
Health savings accounts will transform America’s healthcare system. Believing strongly in this newer way of insuring one’s health, I will recommend various ways to enhance the growth of HSAs.

• Recommendations that individuals and businesses can follow to play a role in fixing our health care system. Each individual who gets an HSA casts a vote for improving our health care system. Each business that switches to HSAs casts votes equal to the number of employees.

• Suggestions that insurance companies can implement to enhance the growth of HSAs. Insurance companies that are early innovators will lead the HSA revolution and have a head start in building market share.

• Ideas that need to be enacted by the government to facilitate HSA growth. Government plays the vital role by formulating public policy that encourages highly functioning health care markets.

Act Local.
The HSA Strategy is usually in the best long-term health and financial interest of individuals, families, employers and employees, especially when analyzed over a period of 5 or more years. Thus my goal is to get other insurance agents to join me in acting locally by helping individuals and businesses switch from traditional HMOs and PPOs to HSAs.

Thank you for reading. Please feel free to make comments; I will enjoy hearing what you have to say.