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Knowledge Base

Giving Patients Control Over Their Health Care

What is a deductible?

Your deductible on your insurance plan is the amount of money you have to pay for eligible services before your insurance company starts to pay for the services.  For instance, if you have a $5,000 deductible, you pay up to $5,000 for services, at which point the costs after $5,000 is covered by the insurance company.

What is a health savings account?

Health savings accounts are very similar to other types of savings accounts where you can contribute to a special account that typically earns some form of interest. The main difference with health savings accounts, however, is that both contributions to it and withdrawals from it (as long as the withdrawal is for an eligible healthcare-related expense) are tax-free. In addition, they are portable, i.e. attached to the individual not to an employer, inheritable by the individual’s beneficiaries, and the funds roll over each year.

What is competition?

Competition is the economic force between rival providers of goods and services. When there are multiple providers of the same or similar good or service, those providers will seek to convince consumers to purchase their good or service by offering the best combination of price, quality, or service. It is the only force that reliably results in lowering costs and improving quality.

Why focus on high-deductible plans combined with HSAs?

High deductibles with catastrophic coverage restore the essential purpose of insurance – to reduce the risk of large and unanticipated medical expenses. Because individuals would pay for most of their medical care directly, they would have the incentive to choose wisely. Provider prices would consequently become more visible and align with what consumers value rather than being set artificially or by government decree.