The Health Savings Account and its proposed additions endeavor to provide the following four most important benefits, which existing payment systems do not provide:
1. A system which encourages the subscriber to keep the savings he makes by letting him spend them, although it does not compel him to do so. It thus encourages frugal health care spending, with savings up to 30% of outpatient costs.
2. It allows him to overfund his health coverage, even up to $3350 per year, get a second tax exemption if he spends it on healthcare, and keep the rest for retirement income if he doesn't.
3. It provides a framework to take advantage of recently extended longevity, and recently improved investment methods, to earn appreciable income from his savings, with compound interest greatly magnifying them.
4. The only feature which is hard to explain is to transfer funds across generations through reinsurance rather than hospital cost-shifting ("Last year of life insurance"). At present, there is little public awareness of how dangerous it is to have one-third of the population with diminishing health costs of their own, supporting the other two-thirds who increasingly have most of the health costs. As this realization grows, this feature will seem more important than it presently does..
The key to all this is to relax the ties between health insurance and the place of employment; the cooperation of business management and labor is essential to a peaceful transition.
This book suggests two dozen other small reforms. But if the public accepts the first three important goals, the fourth will come in time, and the rest is technicalities.