Issue 5 - April 2004

Health Savings Accounts
Returning healthcare choices to patients
By Steven P. Weiniger, DC

It is ironic that the 2003 Medicare reform law, also known as the Prescription Drug Benefit Law, will greatly benefit the chiropractic profession. How? This new law gives patients greater choice in how they spend their healthcare dollars with a new kind of tax-free account.

Health Savings Account (HSAs) will allow people to replace their old HMO/PPO/H&A insurance with a high-deductible insurance policy for catastrophic health expenses, coupled with contributions to a self-directed savings account. Instead of filing claims with insurance companies for small expenses, or getting approval to see a doctor on a list, patients will be able to use money put aside in their HSAs to go their doctor of choice.

Large expenses (over the $1,000- $3,000 deductible) are paid by the catastrophic insurance policy.

Economically, the important thing about HSAs is that money is deposited tax-free, just like an IRA. Also, dollars put into an HSA accumulate from one year to the next, so over time money can accumulate with compound interest.

Unlike a traditional IRA, however, withdrawals from an HSA are also tax-free, provided they are used for healthcare expenses. When a patient has a healthcare expense — for example, a series of eight visits to a chiropractor for a low back problem — he simply writes a check from his HSA account.

As an alternative, a patient can budget how much she chooses to spend on her chiropractic care during the year and put it into an HSA, thereby paying for her care with pre-tax dollars.

Big corporations buy health insurance with pre-tax dollars, benefiting corporate employees with insurance that self-employed (and many other employees not covered by group health insurance) had to buy with after-tax dollars.

Potential impact of HSAs

According to the Wall Street Journal,1 this change “may well be the most important piece of legislation of 2003…and has the potential to transform healthcare finances, bringing costs under control and making healthcare reflect what patients and their doctors really want.”

This is potentially big. Really big. According to John Goodman, president of the National Center for Policy Analysis, a major think tank, HSAs “will help correct a major distortion in the tax law, one that has shaped our entire healthcare system in a very perverse way.”2

Why? Because people behave differently when they deal with other people’s money (OPM) than when they spend their own money. Our current OPM health insurance system encourages people to spend a lot more money than they would spend on their own because, “it’s not my money, the insurance company is paying.”

Increased utilization of healthcare services in the1980s and 1990s, presumably due to third-party reimbursement, caused skyrocketing health premiums.

The insurance industry reaction was managed care, which curtailed freedom of choice with lists of providers, pre-authorization and mountains of paperwork to manage costs by increasing the hassle factor. The joke became that “the miracle of managed care was if you managed to get any care.”

Healthcare rationing by the insurance industry has been expensive and unproductive. More money has been spent on claims reviewers and less on healthcare providers, creating our present unfair and inefficient system.

Some insurance coverage seems to be designed with the premeditated knowledge that many, if not most, providers would not be able to track exactly how much the patient and insurance company owes and unknowingly write off uncollected dollars.

Freedom of Choice

HSAs provide a radical alternative to insurance industry rationing as a way to control costs: Freedom of Choice.

Patient choice levels the playing field for our profession, allowing an economic parity for disease care with wellness care. According to best-selling author Paul Zane Pilzer in The Wellness Revolution (Wiley and Sons, 2002), “Individuals with MSAs [medical savings accounts] can make intelligent wellness investment decisions for their own continued wellness — weighing choices like the cost of vitamins and better nutrition today versus the cost of treating a chronic disease later on.”

HSAs are similar to medical savings accounts, which have existed since 1997 on a very limited, and largely impractical, basis. The new HSAs will be available to everyone, and will contribute to a far more consumer-oriented healthcare marketplace. “Money can be tapped for anything from, say, a current orthodontia bill to future nursing home costs”3.

I have seen many patients choose to go to an orthopedist or a physical therapist instead of a chiropractor solely because of insurance company policies. For covered patients, HSAs will end the ability of an insurance company to dictate their treatment. HSAs will allow participating patients to choose care according to their own perceived value and spend healthcare dollars seeing a chiropractor for acute care, for rehab care, or for wellness care. Patient choice is the best cost-management option for chiropractic in America.

Patients will be able to make better economic choices. If a patient looks at a bill from an orthopedist, a PT or a chiropractor, and sees a bill with exorbitant charges that he doesn’t see the value of, he will be more likely to vote with his feet when it is his dollars paying the bill.

The Best of Times

2004 may well go down in history as the turning point for the chiropractic profession. To paraphrase Dickens’ A Tale of Two Cities, chiropractic practically began as a tale of two professions. Originally split into straights and mixers, over time chiropractic has morphed into a uniquely pluralistic profession. Our colleagues use an amalgam of literally hundreds of different techniques to adjust the human frame.

The one thing that all viable practices have in common is this: Someone is paying the bill. Despite our different practice models, we are economically bound together. Insurance coverage has been a blessing and a curse.

Ultimately, patient satisfaction and patient choice for chiropractic have been, and shall be, the source of our profession’s success. Research shows patients are far more satisfied with their chiropractor than with other healthcare providers. Despite a less than stellar public perception of chiropractors as a group, regardless of the DC’s philosophy, patients really like their chiropractors. We succeed admirably in patient satisfaction. Current clinical studies show spinal manipulation effective for low back pain and headaches and promising for a variety of other conditions as well.

I am delighted with the prospect of seeing how a level playing field, with patients allowed to choose chiropractic, can benefit our patients, our country and our society. u

Dr. Steven P. Weiniger is managing partner of BodyZone.com, the online resource helping people to move naturally, feel good and be well. His seminar on Integrating Chiropractic with Posture Rehab exercises is sponsored by University of Bridgeport Chiropractic College. He can be reached at DrWeiniger@bodyzone.com.

Editor’s note: For more information on how Health Savings Accounts benefit you as an employer, see “A new option for controlling healthcare costs” in Vol. 50, Issue 4 of Chiropractic Economics.