Health Savings Microphilanthropy

SlideShare Presentation: http://www.slideshare.net/waynejsmith/health-savings-account-microphilan...

What is your signature innovation, your new idea, in one sentence? - Give donors the opt-out from paying 0.1% pretax into a common HSA, which will be distributed in $1000 blocks to individuals without health insurance.

Describe what makes your idea unique--different from all others in the field. - This is a social business model. The idea allows people to give small amounts of their pretax paycheck each week to pay for others' health care without any incurred risk and by bypassing government channels. It is privatized health care philanthropy administered on an individual payout basis.

0.1% (or some other small amount) will be the default giving level. Members of the HSA will be signed up automatically and informed that they may choose to opt-out or increase their giving. The objective is to set the default option low enough that people will not be motivated to opt-out. There is also the opportunity to allow individuals to donate the balance of their HSA to the program at the end of the year (potential default option), and to the program as the beneficiary upon an individual's death (another potential default). The idea may also be able to leverage the Thaler & Sunstein idea of Give More Tomorrow, since the contributions will be withdrawn from pretax individuals' pay.

Do you have any existing partnerships, and if so, how did you create them? - None. I am currently pursuing partners in the non-profit, private, and government sectors.

In which sector do these partners work? (Check all that apply) - Citizen sector (non profits, NGOs)

Provide one sentence describing your impact/intended impact. - Provide significant support to those without health insurance without a need for significant individual donations and risk.

Please list any other measures of the impact of your innovation. - The impact will primarily be measured by the number of recipients served. Secondary measures include the reduced reliance on government resources, increase in revenues for HSA companies, and a potential tax deduction for the donor.
Since recipients are chosen via a lottery, this randomization allows comparison of "healthiness" to those who are not chosen to receive donations and provides a direct measure of the effectiveness of the program.

Is there a policy intervention element to your innovation? A federal tax policy change may be necessary in order to allow donors to give to a for-profit company such as an HSA, which will hold and ultimately distribute the funds to recipients. Naturally, HSA will have to change some of their operations (slightly) to allow for this type of giving and distribution. Eligible recipients will be drawn in a lottery from the rolls of CHIP (or Medicaid) to help those most vulnerable to gaps in health coverage: children.

How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation? - The number of children without health insurance served scales with three factors: 1) donor opt-out rates 2) % given 3) the payout cap.

Scenarios assuming 4.5 mil potential donors, average salary $40,000 give estimates of:
Default Case- 0% opt-out, 0.1% giving, $1000 cap = 180,000 people
Moderate Case- 20%, 0.1%, $500 = 288,000
Good Case- 20%, 1%, $500 = 2,880,000
Bad Case- 90%, 0.1%, $1000 = 18,000

These order of magnitude estimates show this project to be a potential Changemaker.

What is the key decision that you are trying to influence through your innovation/design? - Influence people to avoid not giving (using default option) a small percentage of their pretax income to those without health insurance via a private company in an opt-out, low risk program, with the incentive of a tax deduction.

What have you learned about how people respond to your innovation/design? I am most interested in seeing comments from the other entrants to the competition. Thus far the idea has been well received. This may have fewer risks and downsides to the Health Insurance Microphilanthropy idea I contributed earlier as a separate standalone idea. I am currently searching for an organization to partner with and may file to organize a 501(c)(3).

How is your initiative financed (or how do you expect your initiative will be financed)? - The initiative will be financed by customers of socially conscious HSA companies willing to implement this change. Barring that, a separate non-profit may be established but this is not optimal for reasons outlined below. Ultimately the initiative will be self sustaining, running on micro-donations.

What are the main financial barriers, and how do you plan to address them? - The main financial barriers are those involving tax law. It may be necessary to drop the incentive of a tax deduction for donors if the gap between philanthropic giving on the donor side and the for-profit nature of HSAs cannot be bridged with a reasonable policy.

More input is needed for this, since the project is in the idea stage.

Aside from financial sustainability, how do you plan to grow and scale the initiative? - This plan can be implemented by existing HSA companies with some effort as a pilot program. If necessary, the plan can be implemented as a stand-alone non-profit organization, but this is not optimal since it decouples the donor's typical HSA service from philanthropic giving, and thus turns the program into a clunkier opt-in program rather than an opt-out program managed by an existing company.