Repealing Obamacare

Republicans have been making noises about repealing and replacing Obamacare for some time now.  It's no secret that repealing it is high on their list of priorities.  I've seen news stories over the last few weeks saying that their replacement would be some type of HSA, or Health Savings Account, so I decided I should find out more about HSAs.

According to the information I could find, an HSA is an account where you can deposit pre-tax money to be used later to pay for your qualifying healthcare costs.  If you don't use it, the money just sits there until you need it.  If you are lucky enough to go through your entire life without any qualifying healthcare expenses, you can eventually withdraw it and pay taxes at the time of withdrawal.  You also pay a penalty if you withdraw your money before you reach a certain age, just like the penalty you would pay if you withdrew money  early from your 401k.

So let's do some simple math.  If your Obamacare insurance costs you $150 per month, you'll pay about $1800 per year in premiums.  If you're healthy and you don't incur any major healthcare expenses, your $1800 is gone.  You will never see it again.  If you took that $1800 and put it in an HSA, you might eventually see your money again if you don't use it.  Depending on what you use it for, you may be able to withdraw that money after you reach a certain age and get it back, but you may have to pay tax on it at that time and you may also have to pay a penalty for withdrawing it.  Your Obamacare premiums are not ever taxed.

But what if you have a major medical expense?  I'll give you an example from my own experience.  A couple of years ago I had an adverse reaction to some medication and had to be taken to the hospital in an ambulance late one night. I was unconscious and could not make healthcare choices on my own.  When I woke up the next afternoon, I learned that the hospital suspected a stroke and had done a bunch of tests, including a CT scan, EEG, and  an MRI.  I went home the same day and a few days later I received a bill for my 12 hour hospital visit.  It was about $25,000.  My insurance company paid all but $500.

What would have happened if I had an HSA instead of insurance?  I would have had to pay the hospital bill out of my HSA.  If there wasn't enough money in my HSA to cover the entire bill, I would have had to pay the rest myself.  At that time I was paying about $130 per month for my insurance.  If I had been putting $150 per month into an HSA instead, I would have had to contribute to my HSA for 192 months, or 16 years, to cover the cost of my hospital visit.  And that's if I didn't have to use any of it to pay for any yearly check-ups or any preventative healthcare during those 16 years.  And, assuming that I had contributed for 16 years, all my HSA money would be gone after my hospital visit.  What would happen if I needed another hospital visit before another 16 years ticked by and I had replenished my HSA?  I would have to pay for it out of my pocket.  That's what would happen.

You don't have to be a rocket scientist to see that paying $130 each month for insurance makes more sense for me.  Republicans are saying that Obamacare is too expensive for people to afford, but the bottom line is that if you can't afford to pay $130 per month for Obamacare, then you aren't going to be able to afford putting $130 per month into an HSA either.  

Think about it and see if you still feel the same way about repealing Obamacare.