Flutterby™! : HSAs 2010-08-26 15:47:23.987226+00

HSAs

2010-08-26 15:47:23.987226+00 by ebradway 6 comments

I've always been a big proponent of nationalized healthcare. I grew up an Air Force brat, so I know how well socialized medicine works. Sure, the doctors weren't the best but the care was universal. I got to see the doc, had my prescriptions filled and it didn't matter how close my family was to the poverty line. I never lacked for treatment...

As an adult, I now work for the Federal Government. I have the same health insurance choices as President Obama and Congress (although I bet Obama can get the socialized medicine from the military since he's their Commander in Chief). In a complete reversal of my childhood medical experience, I chose a high-deductible plan with an HSA. Because the premiums the Government pays for the high-deductible plan are so much lower than regular plans, the difference is deposited in an HSA for me.

This arrangement is really nice because it gives me funds for medical care that don't have to come out of my regular budget. But the funds are limited, so it benefits me to shop around. I went to a walk-in clinic this Spring for a persistent cough due to allergies. The receptionist gave me two options: they would bill my insurance company $325 for the visit or I could pay $75 out of pocket. Since the $325 wouldn't begin to make a dent on my deductible, I paid the $75 out of the HSA.

I don't know why it costs the clinic 5X as much to bill my insurance. I'm just glad I had the choice!

My anecdotal evidence (from when I worked on pharmacy software - and my wife who works in medical billing) is that the [pharmacists, in my case] are in a constant back-and-forth struggle with the insurance companies - with each trying to get the financial upper hand on the other. It's such a massive hassle, though, that given the opportunity to get even a fraction of the amount cash-in-pocket (directly from the patient), the doctor will take it.

While it can certainly go the other way, my experience has been that the medical provider will almost always provide a significant discount for paying up front. If for no other reason than as an incentive to make an immediate payment when it could otherwise be months (or years) before the office is reimbursed.

There are standard forms the government issues when dealing with Medicare claims. You'd be amazed at how much is done to even get physicians/office staff to fill in boxes correctly. If we want healthcare reform, get physicians to fill in their forms correctly, that's at least 20% savings right there. Maybe the electronic medical records will change that, and help alleviate costs, but I've been working on that side of it for a little under 15 years - adoption is sloooooow.

It should also be noted that the process of billing insurance companies is complicated enough that there are huge firms who basically buy the bill from your doctor's company and transfer that information to the forms your insurance company uses. So there's a hell of a lot of economic friction in the billing process.

They won't get $325 from your insurance company. They bill a list price of $325, but probably have a contractual price with the insurance company for $75. Actually, you got away lucky. The usual practice is that people paying retail get the full monty on the bill. This story explains what happens a bit. The point is that the actual cost of the procedure is the hardest thing to find out of all.

They can charge 5X to your insurance because it's other people's money! The insurance will pay, and heck, even if it's contested and the insurance company will only pay half the listed price, it's still over twice the "street price".

I love my HSA. Granted, I work for an insurance company, but it really is cheaper in the long-run.