FRONT STUFF: Health Savings Accounts: Planning for Prosperity; SECTION ONE: HSA and its Competitor, in Brief
Editorial material for book construction.
It's only a beginning, but the reader now has a summary of where the Classical Health Savings Account stands, with a few suggested amendments to make it better. Remember, with essentially no changes and with minimal marketing effort, C-HSA has acquired fifteen or so million subscribers. Certain features need to be emphasized before it can extend to the rest of life, and harmless modifications made to accommodate the extensions. At the moment, the appeal is mostly to people between the ages of thirty and fifty, while with a few additions it could extend to everyone who wants it. Beyond that, it stumbled onto some features which would make an excellent foundation for wealth creation, for those who don't believe everyone should just invent something and become a billionaire. But to achieve it we have to get past the idea that everything in the public sector must disappear into a black hole, never to return to private hands. Read on, but handle with care.
FLEXIBILITY: Health Insurance, plus Retirement Income if you survive.
Hidden Advantages, Mostly Unexploited. C-HSA has the flexibility to manage the transition between health insurance and retirement income. Health insurance is the primary need of the past, retirement income the primary need of the future. It's a lucky feature that relatively few people have both problems because very few of us could afford to address both of them. At one time, health care was a major concern of employees; nowadays, it is a major concern of retirees. The day will eventually come when so few get seriously ill, other than terminal care, that we can fund retirees for retirement living, and let them dip into the savings if they occasionally get sick. But that's at least a generation away. At every stage, there must be some who generate a surplus, because otherwise, some will remain impoverished.
The C-HSA lets you judge your own needs as they come up, rationing what you think you need less of, in order to pay for what you suppose is your likely future need. That's the 2015 problem, and it has no good solution except flexibility -- and good luck. Because of the fruits of research, the 2050 problem is going to be retirement income, and it will need a source of revenue. The flexibility of C-HSA allows this choice to be made individually and eventually permits Medicare to be liquidated to finance it. C-HSA scarcely needs any changing to make this adjustment; Medicare is the program which needs to face the future, make itself modular, and provide ways for people to buy their way out of it, in pieces. Until changes are made to invite partial buy-outs, there is little HSA can do except buy out of Medicare entirely. It will be a long time before many people will take such a big step, but much sooner, they will surely see parts of it they would like to drop in favor of -- flexibility.
BOUNDARIES: Any surplus belongs to the subscriber.
Substantial Improvements, Without Disturbing the Basic Structure. Much will depend on the early administration of the Affordable Care Act. If it cannot accommodate the needs of big business in their suspended negotiations, or if it proves to be inordinately expensive, it will collapse. Most of the many Republican candidates for President have endorsed HSA as a substitute policy, and Mrs. Clinton has yet to reveal how she will get out of her HMO proposal of ten years ago. By this time, she surely has learned how distasteful the American public finds HMO when run by non-physicians. In coming chapters, we will describe how essentially the same idea was earlier proposed by physicians, and blocked by the Maricopa Decision of a minority of the United States Supreme Court. Physicians never dreamed anyone would direct a medical organization, except physicians, so there is room for revised opinions; but the twists and turns of politics will eventually dictate where physicians will stand. It is amazing how many people want to run medical care, but how few of them want to go to medical school.
Once we all have basics, we can look around for luxuries.
The present stance of HSA proposals is that the Affordable Care Act would be improved by substituting Catastrophic health insurance, or else First and Last Years of Life Insurance, for the present hodge-podge collection small mandatory benefits. The alternatives, either the employer-based system or the European single-payer system, similarly become unaffordable when made universal. Universal coverage is indeed desirable, but not to the point of defining that nothing is permitted unless it is universal. If we must have mandatory health insurance, let it cover basics alone --either universal experiences like birth and death or universal fears, like a massive expense. Any degree of choice by politicians or bureaucrats is intolerable, and choice by physicians is barely tolerable. Once we all have basics, we can look around for luxuries. Is that too much to ask?
WEALTH CREATION: Tax Exemption, Compound Interest, then Passive Investing.
The Golden Surprise. In this book, once we have explored some of the Hidden Economics of Healthcare, we will be ready for the big surprise, which is how much money can be created by changing the insurance design. It might take us a decade to perfect, and several chapters to describe. When lifetime coverage seemed to become possible through the pathway of the tax-exempt Savings Account, supported by Catastrophic fail-safe coverage, we made an amazing discovery. As one of the creators of the idea, I can tell you we had no idea the invested income in these accounts could generate so much money.
That came about by our determinedly avoiding government control and seeking new pathways the government could not follow. It may be a delusion on my part, but I believe the temper of the public will never tolerate government ownership of a private business. Although some far Eastern nations have tried it, their present direction is away from it. Even the Indian subcontinent and the more socialist members of the European Union have found it doesn't work. Very few American college students, however liberal, persist in the notion of government running a business, once they emerge from the campus into the real world. The African and South American dictatorships wallow in failures of the oligarchy approach, even when supported by economies based on natural resource discoveries. Consequently, I believe we will emerge from this and future recessions with the cultural belief that collective government ownership of the means of production, is a bad idea. I believe the wide-spread distribution of common stock will make us stronger capitalists, not weaker ones. That's a hint of what follows.
Originally published: Monday, August 10, 2015; most-recently modified: Wednesday, May 15, 2019