Catching on to Health Savings Accounts

Recently I had the chance to speak with Alex Bellinger of the SmallBizBlog.

Alex podcasted our conversation. That simply means that Alex recorded the conversation and turned it into an MP3 format that can be downloaded to an iPod or a computer. Alex is a terrific interviewer who did a nice job.

I spoke about affordable healthcare, the number one issue for small businesses in the United States.

A friend heard the podcast and said jokingly I sounded like a socialist! Heaven forbid! I believe in free markets, not socialism. I suggested in the podcast that we need government intervention in the U.S. when it comes to healthcare. However, I wasn't clear on what kind of intervention.

Let me clarify. I think this statement of health care is a good start on the type of legislative intervention needed in the United States. Small businesses will benefit from market-oriented legislation...legislation that lifts existing restrictions that are driving up costs...legislation that:

• Eliminates mandated coverages that only add to our health insurance costs (can we all really afford Rolls Royce health insurance coverage, or is Chevy coverage more realistic?)



• Removes state regulations that serve to restrict free-market competition for insurers and the options that small businesses have for affordable coverage.

In other words, we need legislation that enables more choice, not less choice.

Congress and President Bush's passage of the bill creating Health Savings Accounts (HSAs) is a positive move in that direction.

Having set up an HSA in the Small Business Trends household not long ago, we are sold on their benefits. Why? Because the HSA lets us choose how we wish to spend our healthcare monies.

HSAs may not be right for those with chronic illnesses who are heavy consumers of health services. But for two adults in good health (knock on wood), HSAs put us back in control. We are not paying for coverage we don't need, want or use. If we choose our health expenditures wisely and do not use all of the money set aside in the HSA, that money can be rolled over year-to-year. It will be available later for our retirement.

We'd much rather be socking away money into an account over which we have control how the money is spent, instead of paying that same money to an insurance company that may provide more benefits than we ever use.

The insurance industry has been a little slow in catching on to HSAs. Last year at this time we had trouble finding insurance agents and insurance companies that knew much about HSAs. The same goes for the banking industry and HSA bank accounts (you need both a high deductible insurance policy and a special bank account to take advantage of the HSA program). Last year at this time there were few banks whose employees even had heard of HSA accounts, let alone offered them.

All that is now changing. Choices are more available. Insurance agents and bankers are much more knowledgeable.

Programs like HSA accounts -- giving us more choice -- are an example of positive government-enacted, market-driven programs benefiting small business. I expect more small businesses to catch on to HSAs this year. The time is ripe. The benefits are significant.