The heart of Donald Trump’s changes to Obamacare is the probable introduction of health savings accounts. Health savings accounts are not a new idea. In fact, they were introduced during George Bush Jr.’s years in office. They were intended for the rich and very rich as another way to pay their health bills with pretax dollars but the idea never caught on, even with them.
The way it works is that, in essence, you opt for very high deductibles. This has the effect of reducing your monthly payments on what would now be your “Obamacare” payments by, say, half. So instead of your monthly premium paid to your insurance carrier being $1,400 a month, it would be $700 a month.
However, you would need to take the other half and put that $700, or whatever you could afford, into your health savings account because if you don’t build up your account, a time will come when you do have a medical emergency and you get a bill from the hospital/doctors which could amount to everything you have saved in your account plus more. You have to bear in mind, too, that your deductible must be met before the insurance company pays out their part and this money will come out of your health savings account. In the long run, the only advantage to a health savings account is that it grows tax-free.
The problem is that no ordinary family has the money left over at the end of the month to pay into a health savings account. That is why this plan did not work then and it won’t work now.
As a long time insurance agent, I found this idea impossible to sell then, even to those who could afford it. People preferred to invest their money in accounts which could be used for multiple purposes, not just health, and pay the taxes on it when they had to, such as IRAs, Roth IRAs, 401Ks, etc.
It will be a good diversion and may placate the public temporarily until they realize they have been duped, but it will NOT work. None of the other advanced countries use this method, not because they didn’t know about it, but because the public did not want it. They use the single payor system and it is working. The single payor system increases everyone’s taxes but it is the easiest system to implement and monitor.
To see the pros and cons of a health savings plan click HERE .