Archive » November 30, 2007
By David Phillips, Contributing Writer
Health savings accounts
According to the U.S. Treasury Department, health savings accounts were created by the Medicare bill signed by President Bush on Dec. 8, 2003, and are designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis.
Some pros and cons for HSAs
Opponents argue that HSAs have the potential to undermine the healthcare system, will do little more than add another tax shelter for the wealthy, and will increase the number of uninsured Americans if they encourage some employers to drop healthcare coverage for workers. (J.B. Finkelstein, “New Health Savings Account Perk Pushed,” American Medical News, June 2004) In addition, critics say they will not help the uninsured working poor, who do not have discretionary cash to contribute to HSAs.
Another problem with HSA plans is that insurance doesn’t cover anything until the consumer pays a large deductible. Some HSAs pay for basic preventive care, such as annual physicals and mammograms, but others do not. For example, a patient with a suspicious mammogram may have to pay $1,000 out of pocket for a biopsy to find out whether the cause is cancer. Because there is no mandatory funding minimum, there may be a temptation by some users to underfund the account and later be caught short of funds. Expenses may also be incurred before planned funding has taken place through scheduled payroll deductions. (Source Wikipedia)
In testimony before the U.S. Senate Finance Committee’s Subcommittee on Health in 2006, Commonwealth Fund Assistant Vice President Sara R. Collins, Ph.D., said that all evidence to date shows that health savings accounts and high-deductible health plans worsen, rather than improve, the U.S. health system’s problems.
Proponents of HSAs counter that, in the long run, the plans will reduce an employer’s health costs and are “consumer-directed,” designed to let a participant select the timing and level of health expenditures. (R.B. Barker and K.P. O’Brien, “Health Savings Accounts: Many Issues, Fewer Solutions,” Benefits Law Journal, Summer 2004) The growing popularity of HSAs is evidenced by the increased number of employers who are adding this option to their employee benefit plans. A survey by the U.S. Chamber of Commerce found that two-fifths of the 1,000 employers surveyed were likely to offer an HSA in 2005, and almost three-quarters indicated that they were likely to do so in 2006. (Finkelstein, 2004) The number of HSAs reached 391,000 in 2005, and some experts expect the number to reach 6.3 million by 2008. (Lee Conrad, “For the Enterprising, Health Savings Funds Are Anything But Bitter Medicine,” US Banker, June 2005)
According to the Congressional Budget Office (CBO), there are currently 47 million Americans with no healthcare at all. The CBO report also said that in 2006, 87 million Americans went without healthcare at least part of the year.
One more note from the CBO report that should open up the minds of Republicans: the report said that due to the escalating costs of healthcare, by 2012, 150 million Americans will no longer be able to afford any healthcare.
In 2001, a family of four was paying $5035 for health care; in 2006 the average family of four was paying $11,500, with the employer paying much of the costs. Instead of Bush trying to move the costs to the individual, he might try to streamline the actual costs of healthcare and give a bigger tax break to the employer for his part of the costs of healthcare.
HSAs will give less healthcare to those that need it, and will result in more people with no coverage at all.