Posted on 05/19/2004 3:39:52 PM PDT by SierraWasp
Health accounts heal pocketbooks
Supporters praise new tool, but some see disparity
By Tyler Pearson, Medill News Service Last Update: 6:09 PM ET May 19, 2004
WASHINGTON (CBS.MW) -- Congress received a glowing report Wednesday on the new Health Savings Accounts, including an endorsement from Treasury Secretary John Snow, but at least one dissenter said the plans create a two-tier system the benefits younger, healthier workers.
"Individuals should be able to manage some of their own health care dollars through accounts they own and control," said John Goodman, president of the National Center for Policy Analysis, a think tank that promotes limiting government's role in favor of the private sector."
He told a hearing before the Senate Special Aging Committee that "the plan is good for the pocketbook, good for the consumer and good for America."
Health savings accounts, or HSAs, became law in January as part of the Medicare reform bill Congress passed late last year. HSAs are meant to encourage employers who don't offer medical benefits to provide low-cost, high-deductible coverage.
With an HSA, workers with a health plan that has an individual deductible of at least $1,000 a year or a family deductible of $2,000 could set aside that amount in their account. The limit rises to $2,600 or $5,150 a year respectively if deductibles are higher. Read more.
Treasury Secretary John Snow also touted the HSAs.
"With an HSA, health care decisions are made by the individual and their health-care provider -- nobody else," Snow said in testimony prepared for delivery to the Senate Special Aging Committee.
"HSAs increase the ability of individuals to make decisions that are in their own best interest," Snow said.
While the high deductible of an HAS, in theory, keeps the premium low, Robert Greenstein, executive director of the Center on Budget and Policy Priorities, a think tank that researches federal policy's affects on the poor, said that claim is "significantly overblown."
"HSAs will likely be most attractive to healthy and more affluent workers," he said.
Younger and healthier people will shift to a Health Savings Account, while sicker and older consumers will stay with traditional comprehensive insurance, Greenstein contended, warning that may cause comprehensive insurance premiums to rise and even become unaffordable to older consumers.
Greenstein was the sole disapproving voice among those testifying, but he was joined by the committee's top Democrat, Louisiana Sen. John Breaux.
"It's good if you're young, and it's good if your not going to be sick, but if you're old and sick, it's bad," Breaux said. "If it's such a good idea why do we have to spend $16 billion subsidizing it?"
According to Breaux, funding the Health Savings Accounts with $16 billion of taxes over the next 10 years is an unprecedented and bad tax policy.
But Goodman said that the $16 billion levels the playing field between low- and high-deductible insurance.
Ronald Williams, president of Aetna, one of America's largest health insurers, told the committee that he and his family are personally enrolled in one of the accounts and that Aetna is able to "lower costs without compromising quality."
According to Dr. Edward Langston, a family physician in Lafayette, Ind., if spending comes from a patient's personal account, he will likely be more responsible with his health care. Langston said Health Savings Accounts are the first step toward successfully controlling medical spending.
I'm waiting for the premiums to become tax deductible, as Pres. Bush requested of Congress in his last SOTU. Then I'm in.
Breaux and one grumbler, grousing that being able to tax deduct something is a "COST" to government is an obscene disembling of the English Language!!!
If you're self-employed... They are!!!
I need to check into this.
Did not know this...will definitely be looking into this. Thanks.
I'm looking forward to Breaux's retirement next January.
This dissenter says that a prescription benefit creates a two-tier drug distribution system that benefits the most affluent demographic in society. About time people have an incentive (other than the obvious), and the opportunity to be involved in their own health care decisions. I can't figure out why the premiums are not deductible, though, as that would create tax parity with traditional plans.
^
The competition free environment in which traditional health plans has operated till now has done a marvelous job of keeping premiums affordable. < /sarcasm >
As opposed to the current situation, where community rating forces young and healthy people to pay rates more suited for the older and sicker. Thus young and healthy people who don't get insurance through their job make a rational choice not to purchase greatly overpriced health insurance.
AND... Like an IRA, your fund is portable and rolls over every year with tax free acumulation if used for the much broader IRS definition of legitimate health expenses than the underlying "High Deductible Health Insurance" that has the insurance companys normally long list of limitations and exclusions.
I may have to stay offa FR to keep up with the time I'm gonna need explainin this fantastic beauty to everyone!!! So stop "still thinking" interminably and ask your Employer to get the heck off the dime and switch to HDHI so you can qualify for this beauty!
If you're Self-Employed... Call your Health Insurance Broker and be careful NOT to drop ANY coverage you have now until you are accepted under the new HDHI plan of coverage!!!
Were you trying to say something?
Ping to #12
Thanks for the clarification.
P.S. I also use it to make the nose on a 'smiley face'.
o
:o)
Insurance is such a freaking scam. That's the weak part of the HSAs, you have to have a catastrophic health plan to be able to put aside the money tax free. I don't know who's got any cheap ones, and I really don't trust most insurance brokers.
Frankly, I don't even care if the insurance company exists except on paper, since I don't ever expect to collect a dime of reimbursement from one. Cheap as dirt, and provide the paperwork I need to cover my butt when I deduct HSA contributions, that's all I care about in this case.
How 'bout around a hundred sixty bucks a month for someone age 40 to 49... available from several providers? The real advantage, though, is the "discount" aspect of being insured. Those who can produce a card pay the group insurance company's approved reimbursement rate starting from dollar one. So, long before you hit the deductable you have savings that are often of in excess of fifty percent of the "rack rate". So I guess you can sort of think of them as a discount card with stop loss provisions.
The good rates are only available to the healthy though, so waiting to qualify until you're older and less healthy is unwise.
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