Just Who Should Control Your Healthcare Spending?

The RAND Corporation recently published a study of 360,000 families who used Health Savings Accounts (HSAs) to control their own spending on routine medical expenses. These HSAs were coupled with high-deductible insurance to cover unlikely-but-expensive serious accidents and illnesses.

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Recently, it's become fashionable for pundits to blame rising health costs on the "fee for service" system, where doctors and hospitals are paid for each service they provide. But as Greg Scandlen noted, we routinely pay "fee for service" for food, clothing, and electronics, and this hasn't resulted in out-of-control inflation. This is because consumers directly control their own spending for these items. HSAs allow patients to similarly control their medical spending.

Scandlen notes that the real cause of rising health costs is not "fee for service" but rather a third-party payer system that encourages wasteful spending.