Say Anything Blog

We spend a lot of time in this country talking about health care everybody wants, but nobody wants to pay for it. There are lots of ideas floating around about how to provide health care for everybody. Politicians across the political spectrum seem to be making entire careers out of promising ways to give Americans the health care they desire at next to no cost, or next to no cost, to them.

The problem, though, is this: Health care is never, ever free.

There seems to be two camps on the health care issue. One side wants the government to pay for health care; the other side wants employers to provide health care for their employees. But in either case, who really pays for the health care?

Having the government pick up the tab for your doctor's visits would seem like a pretty sweet deal to most people, but where does the government get the money to pick up that tab? From tax-paying Americans, of course. And since Uncle Sam would never take on an initiative as large as state-sponsored health care without sticking his hand even deeper in our collective pockets we could all expect an immediate hike in the taxes we pay as a result.



Those higher taxes would be a disaster for our economy. The richest Americans would spend less of their money in the economy, which would mean fewer jobs for the poorest Americans. Middle-class Americans would be forced to tighten their already too-tight belts to make ends meet with a heavier tax burden, which would mean even more time away from their homes and families and even less money spent on luxury items and leisure time activities. Another blow for our economy and our society. And as for the quality of care under a state-sponsored health care system, imagine the same people who are in charge of Post Office (that marvel of inefficient bureaucracy) in charge of scheduling your exams and surgeries. One need look no further than Canada's government-backed health system, where citizens wait months to get in for surgery, to see how well that works.

So, what about employer-backed health care? That has its problems too. For one, employers don't really pay for your health care. You do, either as an employee or as a customer. After all, employee health care is just another business expense to be dealt with by raising product or service prices and/or cutting employee wages.

No matter how you slice it, whether the government picks up the tab for your health care or your employer, you're still footing the bill in the end.

"So what," you'll say. "If we just pay for it anyway, what's the big deal? Its still better than having to deal with paying medical bills directly." But is that really true?

How often do you really look at how much a doctor's visit costs you? How often do you see how much that bottle of medication set your insurance company back? Maybe you're aware of these things, but do you really understand the cost or do you just shrug your shoulders and think to yourself, "Not my problem."

Well, it should be your problem. Why? Because health care costs in this country are out of control and getting worse. The next time you or a family member go through a hospital stay ask for an itemized invoice. It will blow your hair back. Hospitals are charging patients five dollars for an Aspirin and fifteen dollars for the use of a pair of scissors that, once they're done being used on you, will be sterilized and used on another patient. Even routine hospital stays run in the thousands of dollars.

Maybe you're wondering how they get away with charging such outrageous prices. Well, that's simple. It's because you aren't cognizant of the costs. When you're buying something like a car or a new computer you shop around, don't you? You compare the costs, advantages and disadvantages of making your purchase at various places and then you make an informed decision. Why do you do this? Probably because you're a responsible person and want to get the best product for the money. But in the health care industry this doesn't happen. People don't shop around for the best prices, they go where its convenient to go regardless of cost.

So why don't you spend much time shopping around for health care? Could it be because you think price doesn't matter because you're not paying for it? That's probably a big part of it, along with convenience and lack of options. But the truth of the matter, as I explained above, is that you do pay for medical care, whether it be through increased taxes, reduced wages or higher prices, only you pay for it at inflated prices thanks to a lack of bargain shopping and true competition in the health care industry. Which is, of course, the direct result of paying for health care through a convoluted system that insulates citizens from the true cost their paying for their medical care.

What’s the solution? I’m not sure, but lately I’ve been spending a lot of time thinking about health savings accounts. Right now, as a relatively healthy 25 year-old non-smoking male, I pay about $165/month for health coverage through my office. That is matched, in part, by the business, but that’s deceiving. I’d probably get more take-home pay were the business not having to pay for my health coverage. Regardless, all of that money goes, every month, to the insurance company. They get to keep all of it (nearly $2,000/year) whether I get sick or not.

Now, like I said, I’m pretty healthy. I go to the doctor only once or twice a year for checkups and minor illnesses, so my yearly medical bill is maybe $200 or $300. Even were it as high as, say, $500 that would be a fraction of what I send to the insurance company, never to see again.

With a health savings account, I get to keep a lot of that money. I’m not 100% sure on the specifics, but my understanding is that instead of having a comprehensive medical insurance plan (where my insurance company is responsible for all costs outside of a co-pay) I would have a catastrophic plan that would kick in should something major happen (broken leg, cancer, etc.) and would require the payment of a relatively large deductible (say $1,000 - $2,000). This plan would, of course, cost me a lot less per month than the comprehensive plan I’m getting now. So the extra I would tuck into the health savings account, which is something equivalent to an IRA but with conditions that allow me to make payments from it for routine medical care like checkups and prescriptions.

Why do I like this plan so much? Because it allows me to keep more of my money instead of throwing it down the pipe to the insurance company. If I lead a healthy life I’ll should quite the nest egg waiting for me when I retire, in addition to my other retirement accounts.

If these accounts were to come into widespread use I think the effect on the healthcare industry would be positive. For one thing, since people are actually seeing the bill for routine medical care, it would inspire some comparison-shopping among citizens and price competition among care providers. Which would mean that health care prices would come down from the outrageous amounts they are now. And when they come down we will all be keeping more of our money.

Doesn’t that sound nice?