In tonight's State of the Monarchy
, King George will be touting something called Health Savings Accounts (HSA's)
as the answer to everyones anxiety about rising health care costs.
Here's just a snapshot of Bush's record on health care over the last five years.-The cost of family health insurance is rising faster than wages.
Average premiums have increased 71 percent, growing from an average of $6,348 in 2000 to $10,880 in 2005. (Kaiser Family Foundation and the Health Research & Education Trust, September 2005)
-Deductibles are increasing.
The average in-network deductible for the most common type of health plan has grown 85 percent for single coverage, an increase from $175 in 2000 to $323 in 2005. The average deductible for family coverage for the most common type of health plan is now $679. (Kaiser Family Foundation and the Health Research & Education Trust, September 2005)-Drug prices are escalating.
Prices for commonly used brand-name drugs have been rising faster than the general inflation rate since 2000. Prices for these brand-name drugs increased 6.1 percent in 2005, twice the rate of inflation. (AARP, November 2005)-Rising health costs increase the chances that patients will receive large medical bills that they simply cannot pay.
Medical reasons – such as illness or injury or large uncovered medical bills – contributed to about 46 percent of personal bankruptcy filings. (Himmelstein et al., Health Affairs, February 2, 2005)-Health care spending is also consuming a larger share of the nation’s economic output.
National health care spending, which represented 13.8 percent of the gross domestic product in 2000, has risen to 16 percent. (Health Affairs, January/February 2006)
HSA's are also Green and Walkers answer to our health care crisis as it is for just about every Republican. Why? Because the health care industry that funds their campaigns like them.
They sound great but here's the reality when it comes to HSA's.HSAs provide the most benefit to those who need it least – the wealthy who can already afford health coverage.
HSAs primarily benefit upper-income people while providing little or no benefit to middle- and low-income families struggling to afford health coverage. It is upper-income people who have the resources to maximize their contributions to an HSA each year and who receive the greatest tax advantage from doing so. For example, an upper-income person in the 35 percent income tax bracket would be able to deduct 35 percent of their HSA contribution. But someone in the 15 percent income tax bracket – who is more likely to have difficulty affording health coverage – would only be able to deduct 15 percent of their HSA contribution. Ninety-four percent of the uninsured are in the 15 percent, 10 percent, or zero percent income tax bracket and would receive little or no tax benefit from HSAs. (Commonwealth Fund, April 2005) If the President proposes to increase the amount of money that individuals can deposit into an HSA, he will only further advantage the wealthy (who have the resources to make additional deposits) while neglecting low-income people (who do not have the extra funds to put into an HSA).HSAs increase out-of-pocket costs, harming those in less-than-perfect health and people with modest incomes.
HSAs are a lure to encourage people to switch to a high-deductible health plan (e.g., a deductible of at least $1,000 for individual coverage and at least $2,000 for family coverage). Administration officials and conservative economists advocate high-deductible plans because they believe people are over-insured and should be spending more of their own money on health care. But promoting high-deductible plans means asking people with chronic health conditions and other medical conditions to pay more for their health care. A recent survey found that people with “consumer-driven” health plans (i.e., a high-deductible plan with an HSA or a health reimbursement arrangement) are significantly more likely to avoid, skip or delay health care because of the cost and are more likely to spend more of their income on health care than people in more comprehensive health plans. (EBRI/Commonwealth Fund, December 2005) The people who most need and deserve assistance with their health expenses – the sick and those with low incomes – would actually be worse off under the President’s plan.HSAs could increase premiums for comprehensive health coverage.
The widespread use of HSAs and high-deductibles plans could segment the insurance market: the young and the healthy would likely disproportionately switch to HSAs with high-deductible plans while older and sicker people would want to remain in low-deductible health plans. This kind of risk selection would hurt older and sicker people. The greater the number of the healthy and wealthy who switch to HSAs and high-deductible plans, the higher the premiums will rise for the older and sicker people who want to retain their comprehensive coverage. Providing a tax deduction for high-deductible plans, as the President has proposed in the past, would increase the likelihood of this risk segmentation and its premium-escalating effect on comprehensive health plans. (Commonwealth Fund, April 2005)Providing a tax deduction for high-deductible plans would actually increase the number of uninsured Americans.
To expand the use of HSAs, President Bush has proposed in the past to provide a tax deduction for the high-deductible plans that accompany HSAs. But this type of tax deduction would adversely affect employer-based health coverage and, according to MIT economist Jonathan Gruber, would likely cause a 350,000 person increase in the number of uninsured Americans. Gruber’s analysis also found that the tax deduction would not be well targeted: 87 percent of those who would take advantage of the deduction would already have health insurance. (Center on Budget and Policy Priorities, May 10, 2004)HSAs will not lead to substantial containment of health care costs.
Proponents of HSAs and high-deductible plans argue that exposing people to more out-of-pocket health costs will make them more careful consumers of health care. But unlike most other goods and services, patients typically do not have the specialized knowledge to determine what health care services they need and often do not have the time to compare prices before seeking care. Information on price and quality of health care services is not available to most patients. Moreover, HSAs and high-deductible plans would do nothing to restrain the cost of expensive treatments, which would be covered by the high-deductible plan and are largely responsible for high health spending: only 21 percent of total health spending falls below the minimum deductible for an HSA (i.e., $1,000 for an individual and $2,000 for a family). (Commonwealth Fund, April 2005)
Let's hope the media in Wisconsin begin asking Green and Walker questions about their failed approach to health care reform. Not only is it one of the top issues on the mind of their readers (voters) but health care reform is going to be a big issue in the race for Governor. On no single issue could the choice be as clear as on health care.