A Complex Problem
Published in The Journal Record
August 26, 2015
Take a look at the credit cards in your wallet or purse. If you think about it they are amazing instruments. A financial institution has deemed you credit worthy enough to allow you to purchase all manner of goods and services by simply showing this card. When you think about it the only reason for them to do so is their belief that you will repay what you have charged. As a matter of fact, in Latin the word credit means “to believe.” If I give you credit for some accomplishment I obviously “believe” you were worthy of the praise.
When any one of us goes to a department store we carry with us at most two to three credit cards. The retailer who accepts our card only has to deal with a small number of credit organizations. Contrast that to a typical hospital which may deal with as many as one hundred different insurance companies, all determined to pay the medical provider as slowly as possible.
Most people do not realize that twenty five percent of all health care expenditures go into simply collecting bills. That is to say that one-fourth of every health care dollar is spent by medical providers collecting what they are owed by individuals or insurance companies. One-fourth of a trillion dollar business! It is truly amazing.
On top of the complexity of dealing with insurance providers, collecting medical bills from individuals is often equally difficult. History tells us most people will pay their credit card bill for a refrigerator or television long before they’ll pay a medical provider.
A standard problem with a health savings account is that many families do not have the discipline to maintain a healthy balance. It is simply too tempting to use the money for other purposes. When a family member finally does need to meet a growing deductible many health savings accounts have already been bled dry. More recently this problem has been compounded by the significant surge in the level of deductibles. For the family of four with an average deductible of $1,000 per family member, it essentially means that family is uninsured. They cannot meet their deductible.
Perhaps now I will get some “credit” for shedding some light on this complex problem.