Can HSAs restore the doctor patient relationship?

by Charles W. Patterson, MD

Is it possible that some do not understand that to promote Healthcare Savings Accounts is the most effective thing we could do to preserve traditional medical practice? In a true doctor-patient relationship only doctors and patients discuss the options agree to the treatments and handle the money. No third party touches any of these.

If everyone had a HSA it would be just like the good old days, only better. Everyone would write a check when they went to the doctor, and the checks would be good.

The HSA law of 2008 was a big step toward establishing a rational and effective system that treats HSAs similarly to IRAs. The new law reduced the tax deferred contribution a little, under insurance company pressure, no doubt. But it is not necessary to have a tax deferral to start your own HSA. Just put money in the bank, in the tradition of having “something for a rainy day.” This kind of rainy day account has the advantage that you can use it for any kind of bad luck; auto repair or earthquake. The most expensive bad luck is often bad health so try to hold back a little unless you also have a tax advantaged HSA.

Some despair of people learning to save again. But the Great Depression taught our grandparents, the Great Recession may teach us.

Until you have saved a lot you also need catastrophic insurance. But the more you have saved, the higher your deductable can be, and the more you save.

If everyone saved the amount the average person spends on healthcare, half the population would die with a surplus in their accounts. An inheritance tax on that could cover the costs of those with greater than average needs, and no one would need catastrophic insurance any longer. If everyone saved the amount they now spend on health insurance premiums that point would be reached much sooner.

To promote HSAs you don’t need to get involved in politics. You can ignore what the politicians and insurance companies are doing. Just talk to you patients and friends. If everyone wanted one, the politicians would provide them. Henry Ford didn’t become a politician, He just built cars. Then the politicians build roads for him.

Another nice thing, you may be swimming with the tide. The use of HSAs continues to rise since the 2008 law, and if insurance premiums continue to increase, as some predict, HSAs may soon become the only viable alternative. And you can say, “I told you so.”

If “Obamacare” will cause insurance premiums to rise, as some say it will, then to repeal it now, as some would like, might be the worst thing we could do.

Charles W. Patterson is a psychiatrist.

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  • family practitioner

    Sounds good but in reality ….

    This is the patient’s perspective:
    1. I already pay way too much for my health insurance, which I need.
    2. I have to pay more when I go to the doctor, which I may or may not need.
    3. Therefore, I will try to avoid making appointments as much as possible, call for free telephone advice as much as possible, call after hours as much as possible so I can get to the doctor directly because it is “urgent”, and, if I am forced to make an appointment, I will bring a long list and cram in as much as possible, because it is costing me money.

    Good luck pcp’s.
    Be careful what you wish for.

  • HJ

    “If everyone saved the amount the average person spends on healthcare, half the population would die with a surplus in their accounts.”

    First of all, the average can be found by adding up the data points and dividing by the number of data points.

    For example, if the average health expenditures is $5000 in a given year, four people could spend $0, $3, $4, and $19,993. Notice that more than half of these points are less than $5000.

    Now let’s say the average is still $5000 but the four people spend $4490, $5030, $5123, $5357. Notice that half of these points are greater than $5000. Also notice 100% of the surplus covers the cost of those spending more-meaning all excess money from HSA’s would go to others.

    The statistic you want is the median. The median is the number in the middle. This, of course, is an issue in the following scenario. Four data points again with a median of $5000: $4440, $4990, $5010, $100,000. Notice that the surplus of the lower half is $60. Even if the lower half didn’t spend any money, it would not cover the expenses of the those needing a great deal of health care.

  • Winslow Murdoch

    As a primary care doc, I agree with the above comment.
    Additionally most HSA accounts are done through the insurance companies in network provider pool where the doctors charge is not what the doctor agrees to collect. As an in network provider the primary care doc can only can only charge the patient the discounted network reimbursement fee.

    There is no payment for calls, coordination of care etc.

    Some kind of retainer based enhanced fee structure is the way of the future toward a medical home. Face to face fee for service models are becoming obsolete.

  • Margalit Gur-Arie

    I don’t quite understand this solution. Have people continue to pay exorbitant premiums to insurers, then have them save money for a “rainy day” in addition to that, so they can afford to pay for ever increasing prices of health care. The assumption being that prices of health care services are what they are and we need to accept them.
    Would it be possible to challenge this last assumption? Could we explore the possibility that health care services are now priced beyond what the “market” can bear?
    Perhaps there are other lessons available from the Great Depression….

  • ninguem

    We have five years national experience with HSA’s. The data is coming in, and contradicts all this.

    I look at the “exorbitant” premium I would pay for a traditional PPO plan, and look at the HDHP plan that would accompany the HSA. Premium is reduced by the amount of the HSA, almost exactly. So it’s a no-brainer. I buy the HDHP and fund the HSA for myself, and my employees. They love it.

    The data is coming in, and people with HDHP’s and HSA’s do not skimp on preventive care, they seek it as frequently as those with traditional insurance. Actually, my own HDHP pays preventive care first-dollar anyway. No excuse for skimping on preventive care.

    “……Additionally most HSA accounts are done through the insurance companies in network provider pool…..”

    Not sure what you’re saying. Most HSA accounts are in banks these days, completely separate from the insurance. The same bank that handles my checking, savings, mortgage, personal and business banking, handles my HSA. All under one roof. My employees, I fund the HSA wherever the employee wants the money to go, after that, it’s no longer my problem.

    My HDHP is just a Blue Shield PPO with a high deductible. Same rules, same provider discounts, as any Blue Shield PPO.

    This is the patient’s perspective:
    1. I already pay way too much for my health insurance, which I need.
    This patient pays the same, and gets to keep savings. Same for this patient’s employees.
    2. I have to pay more when I go to the doctor, which I may or may not need.
    This patient pays the same, it being the same PPO discount, and being grown-up enough to realize it’s “my” money being paid, whether it comes from my HSA and HDHP, or from a PPO first-dollar, with a big cut to administration.
    3. Therefore, I will try to avoid making appointments as much as possible, call for free telephone advice as much as possible, call after hours as much as possible so I can get to the doctor directly because it is “urgent”, and, if I am forced to make an appointment, I will bring a long list and cram in as much as possible, because it is costing me money.
    This doctor gets that already…….from Medicaid. Like when they finally get their Medicaid card and want to cram in all the stuff that’s bothered them in the years they didn’t have Medicaid. Or they want to get everything crammed in if their Medicaid is due to expire. And called after-hours to avoid copays and all that.
    My HSA patients ask about generics and shop price among labs and imaging centers. They rarely call after-hours or engage in abusive nickel-and-diming practices. In return, I help them shop price.

    More money is spent on treatment of incontinence than coronary bypass and renal dialysis put together. An old factoid. So writ large, patients looking to save money on ordinary day-to-day medical care will save the system a lot of money. This is reflected in lower premium rises for HDHP’s compared to traditional insurances, and last year , some insurers actually lowered premium for their HDHP product, compared to traditional products.

    After several years of national experience with HSA’s, I have to say the ignorance I see now has to be deliberate.

    Just another FP who actually has had a HSA for five years, uses the HSA to fund healthcare, including major surgery, for a family, has them for employees in a medical practice (they love the HSA), and sees patients with them, every day.

    • family practitioner

      I do not disagree with anything you have written.

      I have a high deductible plan with a HSA that is working out fine for myself and my family. I also provide this for my employees.

      However, not every person with a high deductible plan has a HSA; in fact, my experience has been that more often than not, they do not have a HSA. For these people, the money is not set aside for medical care.

      I agree that high deductible patients do not have the monopoly on laundry lists, calling after hours, etc., but our anecdotal experience has been that they are doing this more often than other patients.


    I have found that some HDHP patients with or without HSAs that I have treated surgically for emergent situations have not and continue to refuse to pay me.

    Very few things in the reimbursement arena feel as bad as providing emergent surgical care to a stranger with “health insurance” and not get paid one red cent.

    Further, the insurance company will not allow us to demand payment at time of service because they cannot certify whether or not the patient has met thier deductible. The patent knows and they lie, plain and simple.

  • Winslow Murdoch

    Again, the insurer “negotiated” discount to primary care often at a level well below the doctors cost of providing the service in monopolistic insurer dominant areas like mine where IBC pays 30%-50% lower than Medicare rates as well as no increased reimbursement for coordination of care makes the HSA just another wolf in sheeps clothing and further erodes the doctor patient relationship. Fully 75% of primary care Docs in my area are now employees of hospital or large corporate practices.
    I do not see the HSA or HDHP concept as marketed by the insurers as a panacea for primary care anyway.

  • Bruce Hopper Jr MD

    Why is everyone hellbent on designing one payment system for everything? Medical CARE is far too complex to whittle down to one payment structure. There are many, many healthCARE markets, each with its own unique needs. In the primary care market the genuine price of service can only be determined between a patient and their doctor. A third party will NEVER fund primary care.

  • Gary Lampman

    HSA’s will do little to tAke insurance out of the picture. Patients and Doctors are held hostage by insurance conglomerates. These doctor patient relationships will always be strained by exceptions,exclusions and deductibles.
    Hsa’s are only primed for higher profitability and stop loss. To achieve a relationship,patients must be empowered and not solely dictated by insurance number crunchers.
    It is a bold face lie to claim that HSA’s are the answer for all patients.

  • Alex Fair

    HSAs and HDHPs can go a long way towards empowering patients to take control of their health and their finances but what many of you say is true, they are only an adjuvant therapy. Only the active participation of patients AND providers in forming direct relationships that talk about care and costs will improve this situation. Most patients and many doctors are uncomfortable with this idea at the time of visit but perhaps online, it is a different story.

    Fortunately, the rise and growing adoption of Direct Provider Access platforms like the one we just launched makes this fast and easy. Millions of patients and tens of thousands of doctors are using these systems to connect, concur, and collaborate for care. In our first two months of operation we received 11,000 patient searches for direct-pay care. Now the providers need to get on board and list their services. In most cases it is free to get a basic listing.

    Sometimes the best choice is to try something new. Go direct and cut out the middlemen who look at medical costs as a “loss”. We thinks DPAs like ours are helping to put the care back into healthcare. HSAs and HDHPs put patients in the driver’s seat, but without a steering wheel or a map, you are right, they are not all that helpful. Or put another way, an HSA or HDHP without a DPA is like giving a patient a Lipitor script without telling them anything about diet or exercise.

    A few responses to other commenters:

    PAULMD – wow that is terrible. I have heard this before from other doctors (I interviewed 500 prior to designing my app.) This is why our system creates contracts for care. They don’t pay at the time of service, just give it to your collection agency or attorney and they will find success.

    Margalit – good question. On average our patients are saving over 37% off “list” prices. Doctors have a healthy fear of exposing their direct pay prices due to an assumption that Insurance plans who make fee schedules by saying “30% of regular fees” will penalize them for publishing actual acceptable fees. This leads to what I call “fee fear” – where patients look at their insurance statement and say “phew, I sure am glad I have insurance!” though it is really just a complex deception. Truth is that they can’t get away with actually reducing fees on this basis, but the fear is there anyway. This is why doctors on our site list whatever price they like and another low acceptable fee limit that allows automated contracting for care at a more reasonable one.

    Dr Hopper,
    You are absolutely right, it is far too complex for one person, or even one system to work out. That is why we took a platform approach and encourage creativity from providers like you. Some of the top doctors are on our site designing the care they want to give. Create the care paradigm or service offering you want or accept a patient’s version for a fair fee. We will track what is most popular and let you clone the best out there for your practice – as we say – let the mutation begin! We learned a lesson or two from Darwin and are bringing it to healthcare.

    Drs. Pho and Patterson – thank you for this post and allowing my exceptionally long and somewhat promotional post. Getting the message out about DPAs is important since most people still don’t know about them. That is why we are also speaking at Health 2.0 and hopefully South by Southwest too (vote for us there if you like the idea!)

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