Every year millions of Americans struggle to cope with the soaring cost of health care. In fact more is spent on health care in the US, on a per capita basis, than in any other nation in the world. In 2007 alone, the U.S. spent $2.26 trillion on health care. That works out to over $7,400 per person.

For most consumers health care expenses are out of control and with no end in sight many are looking for innovative ways to cut costs yet still provide protection for their family. Is there a way to do this? Can you really cut costs and still maintain quality health care services?

It sounds impossible but there is a little known technique that combines a health care insurance product known as a High Deductible Health Plan (HDHP), together with a Health Savings Account (HSA) to dramatically reduce your costs and still maintain high quality health care.

The first thing you need to understand about medical insurance is the relationship between the premium, that is the amount you have to pay each month for coverage, versus the yearly deductible. The yearly deductible is the amount the insurance company deducts from your covered expenses before they assume any liability. As a general rule of thumb, the higher the yearly deductible, the lower the monthly premium and vise versa.

Catastrophic health care insurance takes this concept to its logical conclusion. In return for a very large yearly deductible you are covered for the serious (and expensive) medical emergencies and life threating conditions with an affordable monthly premium.

Understand that from the perspective of the insurance company a deductible is simply a method used by their actuaries to adjust the premium in order to offer as many options as possible. In the long run the insurance company is going to realize the same financial result regardless of which deductible any one policy holder selects. This simple fact can be used to your advantage.

In the past most people shied away from catastrophic coverage health insurance because they did not want the take the risk of having to come up with such a large out-of-pocket expense in the event of a medial emergency. But what if you magically had the cash available to pay the deductible? The savings on the premiums alone would make this a very cost effective solution to the problem of high health care costs.

The way to combine the cost advantages of catastrophic health insurance plans (HDHPs) while greatly reducing the risks of high out-of-pocket expenses is to set money aside in an associated Health Savings Account (HSA). This one-two combination allows you to enjoy low monthly premiums, receive the same high quality health care, plus greatly reduce the threat posed by high deductibles.

The savings are further enhanced because you can fund your HSA with pre-tax dollars. As long as you stay within the IRS approved limits your HSA contributions can be deducted from your taxable income. Depending on your tax bracket this could result in a sizable tax saving. (Most states follow federal guidelines and do not tax HSA contributions. Check with your tax advisor.)

There are a few situations that you should consider before making any changes to your current health plan. Catastrophic health insurance typically does not include routine doctor's visits and most therapeutic treatments. You will be responsible for these expenses, but you can opt to pay for them using funds from your HSA.

If your family is in general good health and does not utilize your current health plan that much you will almost certainly save money with catastrophic coverage health insurance in combination with a HSA. In the unlikely event you're faced with a serious medical emergency your hospital and other covered expenses will be paid by your catastrophic health insurance policy and your deductible with your HSA. Depending on the exact coverage terms of your policy and how much is available in your HSA you could eliminate your out-of-pocket expenses completely.

On the other hand if your are in poor health and need to visit your doctor frequently you will probably exhaust your HSA account balance early on. This will leave you financially vulnerable in the event you are later hospitalized as you will now be responsible for the policy's deductible in full, plus any co-pays.

If you suffer from a pre-existing condition, such as AIDS, heart disease, diabetes, multiple sclerosis, or emphysema you will almost always be prevented from obtaining affordable catastrophic health insurance on your own, although you might obtain coverage under a group plan offered by your employer.

Nearly all catastrophic health plans have a maximum lifetime payout. This is typically between $1 million and $3 million dollars. If your medical expenses ever reach this threshold during your lifetime the insurance company will void your policy and will have no further obligation to you. In this extreme situation you will be left to fend for yourself.

Catastrophic health insurance coupled with the tax advantages of a HSA can reduce your monthly health insurance premiums yet at the same time provide quality health care for you and your family. Since the HSA is under your control you are free to manage routine medical expenses as you see fit, without the constant interference and second-guessing of your insurance company's claims department.

In the event of a medical situation requiring hospitalization you have peace of mind that you are protected from serious financial liability.

This unique combination of savings account and insurance policy can go a long way to resolving the health care crisis we all face today.