Prompted by the great Jay Tea over at Wizbang, I'd like to illustrate how I, personally, have reduced the cost of healthcare for my family. It required some cooperation from the folks involved - my boss, my doctor, my wife, and my son - but you'll see the dramatic impact on my cash flow, my savings, and my retirement.
It all started when my employer offered a high-deductible PPO with a $5000 deductible. He's a very smart guy, so he made it easy to switch; he kicks in enough premium so that the normal PPO costs $5000 more a year.
So, having joined the high deductible plan, here's the deal...
- If I have a disaster medical year, I'll go through the whole $5000. After that, everything's covered 100%, except prescriptions which are covered 80%. I'm no worse off than if I had just paid the extra $5000 in healthcare premium and paid a copay every time I went to the doctor.
- That's not what happened the last two years though. The last two years, I've spent $3600 less than my deductible. That money stays in my HSA and is mine forever. At retirement it behaves exactly like 401(K) money. This has the opposite effect that the Flexible Spending Account (FSA) has. With the FSA, if you don't spend the money, you lose it. With the HSA, if you don't spend the money, you keep it. Big difference.
- I now care how much a specialist charges. This is where you need a good doctor. You need your primary care physician to help you figure out whether a given specialist is worth, say, $60 a visit more than the next guy. He needs to remember that you pay for prescriptions out-of-pocket, so he needs to present options for the drugs you buy. Bingo. This is the free market component that has been missing from the US healthcare system. Some of my doctor's patients actually care how much he charges, and he has to adjust. I now know which antibiotics are cheaper, and if he thinks they'll work, I try those first. I use lots of generics. I am forcing the healthcare industry to compete on price for my business, the way I do with everything else.
You know, just like the rest of us.