Monday, April 24, 2006

Charge it!

Growing up, “be careful what you wish for” was always a popular saying around my home. And, as a vocal (and vociferous) proponent of Consumer Driven Health Care, I should have seen this coming:
It seems that the convenience of these cards may also have a downside: as consumer credit card debts continues to climb (according to the article, it’s about $2,300 for the average citizen), charging health care could contribute to a substantial increase in such debt.
Now, I must confess that the concept of a “credit” card for HSA’s, FSA’s, and the like is somewhat foreign to me: I’ve always considered these to be more in the nature of debit cards. That is, they simply replace my checkbook when I’m paying for health care. Whatever funds are in the account represents the amount I have to spend; no more, no less.
So it came as a surprise to me (must be my sheltered existence) that financial service companies would set these up as unsecured lines of credit, as opposed to merely account balance conduits. But that’s apparently what is happening:
The card, at a 12.96% interest rate, may be used to pay for elective or quality of life procedures, such as laser eye surgery, cosmetic dental care, orthodontry [sic] and hearing aids. Prices for such services easily go into the thousands, but Citi Health Card enables patients to "structure payment plans of up to 48 months, so members can customize their payments to fit their overall financial planning and medical spending."
The first two items, at least, aren’t even “kosher” by IRS standards; that is, they’re not eligible for tax free reimbursement under Section 213d. The beauty of our capitalist system is that folks are free (for the most part) to buy the things which are important to them.
Maybe I’m just a fuddy-duddy, but I’m skeptical that a credit card is the best vehicle for CDHP’s. Still, it will be interesting to see if the idea takes off.
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