Pearls on a String: Further Extending Health (and Retirement) Savings Accounts

Spending for healthcare crowds toward the end of life, while money to pay for it is generated before age 65. Potentially, the two age groups could unify their finances and get dual savings. Only the transfers need to be unified, using Health Savings Accounts as the transfer vehicle, allowing compound interest beyond the boundaries of individual insurance programs. The incentive is created to keep what you don't use, for your retirement.

That's not all. There is no way for a newborn to pre-pay his expenses. Someone must give children some money. Indeed, adding children to a new HSA system might add twenty-some years to the compound interest in Health Savings Accounts, if they only had some money. They don't.

So two systems need a change, roughly the opposite of each other. One faces toward the beginning of life and the other, faces toward the end. (Even this conception finds the working class in the middle, largely funded by employers who change often and have other concerns foremost.) Working people aged 25-65 support this whole system, but have so many constraints on their financing it is not possible even to discuss them until the politics subside a little. Connect, yes; unify, only when you can.

Essentially, it is proposed: The HSA expanding into a unifying financial bridge between programs, one account per individual lifetime, serving many largely unchanged programs. Phased-in finance, minimizing changes in the delivery system. It's surprising at how simple some dilemmas become, once the individual patient decides what others now decide for him.

Prepare yourself for one big rearrangement of thinking. Extended retirement is a direct consequence of superior healthcare. Retirement could become five times as expensive as healthcare itself, and still be described as a predictable outcome of good healthcare. Where are new revenues -- to keep both of them -- to come from? Read on.