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Health Savings Accounts center on the individual

By Ira Zunin

LAST UPDATED: 11:37 p.m. HST, Aug 5, 2011

The collective conscience of our nation determined that together we must find a way to provide health care for the tens of millions of Americans who suffer without it.

The Patient Protection and Affordable Care Act signed into law last year expands Medicaid eligibility, subsidizes insurance premiums for those who earn up to 400 percent of the federal poverty level and gives incentives for businesses to offer health care benefits to employees. Under the act, parents may keep children on their policies until age 26, insurances cannot exclude people with pre-existing conditions and health insurance exchanges are to be formed to offer plans from different insurers in a transparent manner.

The projected costs for health care reform are projected to be close to half a trillion dollars over 10 years, but they will be far greater. The provisions to cover the national costs of increased access to care are not well thought out. In the years to come, care will be increasingly rationed and homogenized, and it will become more difficult to ensure quality of care for those who have it. For providers, there is a fight on to preserve and protect the very soul of medicine.

It is a supply-side strategy we have taken to achieve health care reform. This requires tremendous government oversight and control. The strategy fails to enlist the intelligence and capacity of individual citizens to take personal responsibility for the health care services they utilize.

Health Savings Accounts, in contrast, emphasize a demand-side perspective of health care and establish a direct relationship between the health and money of participating individuals. HSAs have the ability to reduce national health care costs and to increase efficiencies.

Key elements are:

1. Low-premium, high-deductible health plan: This is still insurance as we know it, but it does not kick in, in most cases, below $5,000 of medical costs. The high deductible enables a low premium.

2. Fixed annual deposits made into individual accounts: These deposits can be made by individuals, private employers or the government, as the case may be. The point is that the account is flush with cash for all potential out-of-pocket costs, especially funds required to meet the deductible.

3. Embedded preventive services: It is imperative that preventive screening services are part of the plan without additional cost. If preventive services are not embedded, there are those who will defer important screening to save money today. To the extent they do so, we all pay tomorrow.

4. All other expenditures are determined and paid for by the individual holding the HSA. Aside from preventive services, at no cost, and up until the deductible is met, all health care spending is discretionary. Caveat emptor.

5. Individual retains surplus funds to be used at one's discretion. At the end of the year, if the funds regularly paid into the HSA account are more than what might be needed to cover the deductible and associated costs for that year, the cash may be withdrawn and used for any purpose.

Unfortunately, HSAs are not permitted under the Hawaii Prepaid Health Care Act. U.S. Sen. Daniel Inouye has worked to ensure that the PHCA would not be jeopardized by federal health care reform, and Gov. Neil Abercrombie ensured this month that the state would not repeal it. It has protected employees for years but is not compatible with HSAs.

In many states, HSAs have worked well and demand has grown. Last year, in Indiana, 30,000 individuals representing more than 70 percent of state workers were on a government HSA plan. It has resulted in 67 percent fewer emergency room visits and thousands of dollars of additional take-home pay, and in 2010, at least $20 million in cost savings to the state.

Indiana Gov. Mitch Daniels wrote in the Wall Street Journal, "Americans can make sound, thrifty decisions about their own health. If national policy trusted and encouraged them to do so, our skyrocketing health-care costs would decelerate."

Ira Zunin, M.D., M.P.H., M.B.A., is medical director of Manakai o Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to

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