Betsy Hart: Real reform begins at home

A high-deductible health insurance policy could save you a lot of money in the long run.

By BETSY HART, Scripps Howard News Service

Last update: July 20, 2009 - 10:10 AM

The Chicago Sun-Times headline read, "Job Seekers Putting Health Benefits First." The story chronicled a divorced woman in her mid-40s, college educated, presumably healthy, who lost her job last year. Right now she is a contract employee without health insurance.

As unemployment rises and the health care debate rages in Washington, stories like Cindy Wellwood-Burke's are becoming increasingly sensationalized.

Much of Wellwood-Burke's story could be mine. Same age, marital status, healthy, I'm also a contract employee. But I have good, permanent, low-cost health insurance, and she doesn't.

What's going on?

Wellwood-Burke said she would take a 25 percent pay reduction for good health insurance benefits. But if she's pretty healthy, that's likely foolish.

We regularly hear that there are 40 million to 50 million people without health insurance in the United States. But, according to Dr. Robert Moffit, director of the Center for Health Policy Studies at The Heritage Foundation in Washington, "The uninsured are disproportionately young, between the ages of 18 and 34, and healthy. Studies consistently show that most don't suffer chronic uninsurance over time, but rather periods of uninsurance due to job changes."

Still, those "periods" can last up to a year. The health insurance plan I'm on spells out one solution for addressing this mess that could work for millions of such people.

For starters, I understand my medical insurance is, well, to insure me, not to pay all my medical bills for me. Just like I see that my homeowner insurance is there to insure me against significant losses, not to pay for my landscaping.

Anyway, I'm covered by an insurance company that provides some preventive and prescription benefits upfront. But my policy has a high annual deductible -- in my case $10,000 -- before the company jumps in and pays for everything else. Yet my premium cost is less than $200 a month. (Lower deductibles are available for higher premiums.) What's most important is that I cannot lose the insurance if I get sick.

My insurance causes me to be a wise health care consumer because it's my money I'm spending up to my deductible. On a micro level, the best part is that the insurance is not tied to my employment. That means, unlike Wellwood-Burke, I'm free to pursue work on the merits, and, conversely, I don't have to worry about losing health insurance because of losing a job.

Sure, it's still more than $2,000 a year in premiums. And if I just need a series of MRIs, I'm on the hook for some real money before health insurance kicks in. So it's imperative to save for exactly that possibility, which my low premiums help me to do.

Where the feds could be useful is to treat those savings favorably in the tax code (expanding so-called medical savings accounts). Moreover, I should get a tax deduction for my premium outlays, just like a business would. Still, if needed, I could babysit for five hours a week and cover my monthly cost.

It's also key to get onto one of these "catastrophic" policies while one is still healthy enough to do so.

Such a policy is not the answer for everyone. The federal government would likely have to step in for those who cannot be insured at any cost because of health issues, or who can't pay for medical care, period. Others will happily keep the gold-plated policies some employers provide.

But encouraging generally healthy people -- through the tax code -- to consider the kind of insurance I have would be a huge piece of solving the health care puzzle at a fraction of the cost now being proposed. Forget the sensationalist headlines. Unlike the nonsense Washington is considering, such a plan might actually make sense, and save dollars and cents, for the millions of Cindy Wellwood-Burkes struggling right now without health insurance.

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