Philadelphia Reflections

The musings of a physician who has served the community for over six decades

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Some ruminations about health financing, written while we wait for the Supreme Court to announce its decision on King v.Burwell.

Using Escrow to Estimate Health Costs (2)

Because so many people's circumstances are so different, we offer two ways for Grandpa to transfer one grandchild's health care to one grandchild, and skip any description of pooled transfers of the rest.

Grandpa can either transfer a lump sum single-payment upon the birth of the lucky grandchild or through his will if that is more suitable. Alternatively, the Health Savings Account of one generation can transfer $365 yearly to the grandchild's escrow account, which is set aside for grandchild to buy his way out of Medicare -- if he later chooses -- at the 66th birthday. Grandpa will only do this for 21 years, after which it is the child's own responsibility. According to my math, that will pay for the estimated costs of Medicare, stop the foreign borrowing to pay for deficits, and perhaps make a dent in the accumulated foreign debts.

What it won't do is pay for the grandchild's health costs if they escalate out of control between now and then, or if Medicare is forced to add on all manner of deductibles, copayments, taxes and other out-of-pocket exceptions to pay for cost escalation. His catastrophic health insurance is supposed to protect against that, and within limits, it will. But at the present time, catastrophic health insurance has been so jumbled that you cannot get a salesman to make an average quote for publication. It will only become possible to make sensible judgments after the United States Supreme Court has made a final judgment, or if Congress assembles a sufficient majority to clarify the situation. As matters stand right now, there is no need for excess coverage, and the money in the escrow account should be released to an Individual Retirement Account (IRA). The amounts of accumulated funds in HSAs are illustrated in accompanying tables, grouped in multiples of $365 contributions. For very high-cost over-runs, catastrophic health insurance would normally be an alternative to consider.

But that -- encompassing childhood costs and Medicare buy-out -- is only half of the proposal. The rest has to do with the age group 21-66, which is now tangled in the courts, under King v. Burwell and I cannot go further.

Originally published: Wednesday, June 24, 2015; most-recently modified: Wednesday, June 05, 2019