Here's what the enemy(Progressive Policy Institute) has to say about Health Savings Accounts...note why LIB/DEM's like health insurance and why they think it important to force healthy people to subsidize the health care of sick people. And who says that DIRIGO CHOICE is a benefit for healthy people?:
[quote]3.) [b]Subsidizing Consumerism in Health Care [/b]
The debate over health savings accounts is heating up again. Following their favorite health care script, Republicans have begun to push for an expansion of health savings accounts (HSAs), which were enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
House Speaker Dennis Hastert (R-IL) and Chief Deputy Majority Whip Eric Cantor (R-VA) have proposed expanding HSAs by raising the annual limits on the tax-free contributions to HSAs. Their bill: the Flex Health Savings Accounts Act of 2005 (HR 4511), would also expand the use of HSAs at companies that offer similar kinds of tax-favored accounts (e.g., flexible spending accounts).
It's important to remember that economists generally frown upon a tax break for any specific good or service. The problem is that people end up buying more of the tax-preferred items than they would otherwise. [b]Economists often make an exception for health care insurance because when more people have health insurance, fewer rely on the government to pay for health care when they need it. [/b][b]HSAs are different, however, because they do not by themselves provide insurance. They are designed for health care expenses that are not covered by insurance -- everything from doctor visits to cold tablets bought at the grocery store. [/b]
Why give people a tax break for health care that is generally affordable and available? HSA advocates argue that it is necessary to counter overly generous job-based health insurance, which is tax-free through a job. Insurance insulates consumers from the true cost of health care when the insurance company, not the consumer, is paying for it. That is a problem, but only up to a point. The whole point of insurance is to pay for costly care. If the government gives ever-greater tax breaks for health care not covered by insurance, then it will eventually undermine the insurance itself. Moreover, the tax breaks for HSAs will become more expensive to the federal government and of course, any tax break insulates consumers from the true cost. As the nation's top health care economist, Mark Pauly has suggested, two wrongs do not make a right.
HSAs are expensive in another way. Jonathan Cohn recently wrote in The New Republic:
[b]The trouble with HSAs is that they change the [health insurance] equation, dramatically, allowing people in relatively good health to keep much more of their own money. "One hundred percent of the time it makes sense for a healthy person to take the savings account," one benefits consultant explained in The Tampa Tribune. "That's a no-brainer." But, once that happens, there's less money to subsidize care for the people with high medical bills -- which means those people must either make up the difference themselves or simply go without care[/b]. "[b]A wholesale switch to [HSAs] would redistribute the nation's overall financial burden of health care from the budgets of chronically healthy families to those of chronically ill families[/b]," Princeton economist Uwe Reinhardt has written. "One should simply not brush these ethical issues aside."
HSAs could easily become another big tax shelter. There's no limit on how much tax-free money people can accumulate in their HSAs. Over a lifetime, the amount could become a hefty sum, which would be fine if the tax revenue lost from the HSA tax break wasn't desperately needed for other purposes like covering the 46 million Americans who have no coverage today.
The debate about expanding HSAs will occur against a backdrop of mounting skepticism about the potential for HSAs to restrain costs. HSAs only give consumers responsibility for a fraction of health care costs. Even with high-deductible insurance plans, the insurance companies still pay for the bulk of health care costs because a small number of sick patients account for most health care costs in any given year.
For that reason, consumers are unlikely to face an unfriendly marketplace as long as HSAs are the only strategy for cost restraint. The LA Times reported recently that people who have to pay for their own health care are beginning to demand better information about prices and quality, but doctors and hospitals resist providing that information in a form that people can use. Doctors typically don't provide cost estimates the way an auto repair shop or a home contractor does. Since insurers will continue to pay the bulk of the bills under HSAs, the incentive for providers to release such information will be minimal.
Instead, the focus of cost restraint should be improving the way insurance companies pay doctors so that doctors do not have incentives to provide too much or too little care. That's the idea behind pay-for-performance and other reforms that PPI has highlighted in the report "Fixing America's Health Care System." We'll continue to investigate this issue over the coming months.
For more information:
"The Danger Of Consumer-Driven Health Care: Crash Course,"
by Jonathan Cohn, The New Republic, November 7, 2005:
"In the Dark on Medical Pricing,"
By Debora Vrana, LA Times, December 11, 2005:
"Fixing America's Health Care System: A Progressive Plan to Cover Everyone and Restrain Costs,"
By David B. Kendall, Progressive Policy Institute, September 22, 2005: