* Minimum OOP: $1606
* Maximum OOP: $1906
* Expenses paid by plan before first out-of-pocket expense: $0

With Carl’s HSA approach we get the following:

* Minimum OOP: $0
* Maximum OOP: $2500
* Expenses paid by plan before first out-of-pocket expense: $5000

So – if my total coverable expenses are less than $6906, then Carl’s HSA is a better deal for me, because up to that point, my out of pocket will be less than the $1906 I’d pay under Too Expensive’s traditional insurance. With a catastrophic illness and expenses more than $7500, the traditional insurance approach saves me $594.

Most families will not consume $6906 of medical expenses in a single year, and – unlike FSAs – HSAs carry over the unused balance from year to year. When examining total actual OOP expenses across multiple years, Carl’s HSA approach will be less expensive for most employees than Too Expensive’s traditional insurance approach. For the rest, there’s a pretty small difference in the maximum out of pocket for these two specific examples.

Even so, we’re comparing a relatively average HSA proposal with a relatively generous traditional insurance plan. An employer with a generous 100% coverage after deductible could be just as generous by funding the HSA at $5600 instead of $5000, or by capping the max out of pocket at $1900 instead of $2500. For example, my employer’s HSA plan is more generous than the one Carl proposed, and I’ll actually pay less than $1900 of my own money even with a pregnancy or catastrophic illness – making it a better deal for me in every single case than even Too Expensive’s generous traditional insurance plan. I don’t want to go back to the old traditional insurance after finally “getting” how the HSA really works.

It’s a good thing for patients to become informed about their healthcare. The HSA approach, when done right, can be a very effective carrot. It doesn’t have to be a stick.

Look what happened recently with the mammogram screening mess. Using an evidenced based medicine analysis a federally sponsored group comes out and says screening women under 50 years old is not only cost inefficient, it can be medically harmful.

What happens? The lobbying groups scream…every woman should have the ‘right’ to get screened. And it should be covered by insurance or government.

From my 35 years experience in this health industry, both as a consumer and provider of health care, I have come to the conclusion that in order to control the costs of health care you must get ALL parties to agree on one question first.

That question is: Is health care a ‘privilege’, or is it a ‘right’?
If a right then all care at all levels must be free (paid for by society in general), if a privilege then your idea might work, and if both (where we really are now and have been for decades) where does the ‘right’ end and the privilege begin? Unfortunately it’s a tug-o-war that will go on infinitum.

The key benefit that I see for me with this approach is that for the first $5K, I pay absolutely *nothing* out of pocket, because it comes from the employer-funded HSA. Only when my total medical expenses exceeds $5K do I have to pay anything, and then, my out of pocket is still capped at $2.5K. With traditional insurance, I was paying a co-pay for each visit, plus the initial deductible for services, plus a constant percentage after the deductible is met (10% for a generous plan) for in-network inpatient services. That brought my maximum out-of-pocket (OOP) much higher than the simple $300 deductible under traditional insurance.

You can’t compare the $2.5K max OOP against the $300 deductible. You have to compare max OOP against traditional insurance’s max OOP, which (in my limited experience) is often more than $2.5K for a family.

Once I got past the initial ?huh? factor, and realized how much information and control over my care I now have, I finally realized what a great deal this HSA strategy is.