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Posts Tagged ‘Health Savings Accounts’

With what appears to be an imminent repeal of Obamacare/the ACA, Republicans are starting to offer some alternatives and I wanted to discuss one that is featuring very prominently in discussions at the moment: Health Savings Accounts.

My understanding is that health savings accounts are similar to IRAs or 401Ks. They’re tax-advantaged savings accounts that can be used towards medical care. For more specific details, I suggest you go deeper into the internet and start familiarizing yourself with them.

Now, why doesn’t this work? Well, let’s for example, look at my fictional friend Sue. Sue is in her mid-thirties and works two jobs. Her ex-husband won’t pay child support for their two children and she hasn’t heard from him in over a year. Her parents are retired and are living off of a small pension and social security, so Sue will never ask them for money. All of Sue’s money each month is accounted for. She is getting by on a budget, but barely. Sue’s personal savings account currently has $56 in it and she doesn’t have a retirement plan. She’s just worried about how she’s going to buy winter boots for her son because he’s had another growth spurt this year. Sue is struggling, but doesn’t qualify for government programs. Now, for obvious reasons, Sue can’t put any money into a health savings account and therefore will have nothing if she or her kids get sick.

But let’s say that Sue is really determined. Her daughter has asthma and Sue knows that she needs to prepare for an emergency. So Sue cuts down on the fruits and vegetables at the grocery store to cut costs and she tries to find some more overtime on weekends, leaving her daughter to baby-sit. So, every month Sue tries to put a little away in that health savings account. She tries her best, but she has to buy those boots for her son in November, and then she cuts into the amount in February so she can buy her daughter a birthday cake, but most months the amount grows. Sue’s daughter gets a bad spring cold and it goes into her lungs. Since she has asthma, she’s very susceptible to things like pneumonia. She starts having trouble breathing one night and Sue takes her to the hospital. They tell Sue that not only do they have to keep her daughter overnight to stabilize her, but they need to do an x-ray to see if she has pneumonia. Sue and her son sleep in her daughter’s room and in the morning, Sue’s daughter is able to breathe better after the medication and fluids. The doctor would like to keep her another 24 hours, because she’s a high-risk patient, but Sue can’t afford it. The hospital stay has already cost several hundred dollars in deductibles and cleaned out Sue’s health savings account. She’s going to have to scrimp next month to pay for the more expensive medication that the doctor says her daughter needs. Since her daughter is better, but still sick, Sue has to use one of her own sick days to take care of her the next day and make sure she’s okay. Sue is now back to where she started in terms of health savings and has nothing for more medical care, including for the asthma medication that she had budgeted for. She’s thinking about this when she slips on the recently-washed stairs on her building and dislocates her knee.

The fact is, most people aren’t going to be able to save enough, when they’re living month to month, to pay for their own healthcare without good insurance. Sue is lucky in this case in that she seems to be getting by, she’s employed, and she has a very basic insurance package that defrays a few of the cost, which will put her ahead of many Americans, but we know it’s not enough. Also, it’s really going to be a problem when an insurance company rejects her or raises her premiums sky-high because of her daughter’s asthma…

In summary, a solution in place of Obamacare has to actually be practical for every American, especially ones who might have more trouble with insurance in the first place. I can’t see how this is feasible on any sort of basic level.

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