Tag: health savings account

Obama’s HSA Gambit a Net Minus?

President Obama evidently thinks that if he promises not to kill health savings accounts (HSAs), opponents will swoon for his government takeover of health care.  If that doesn’t do the trick, he should make clear that his health plan would not eliminate other things too, like the Defense Department and puppies.

Of course, that hollow gesture didn’t win the president any Republican support.  But it may have cost him some Democratic support – or at least frayed the nerves of a few House Democrats.  According to CongressDaily:

Liberals, meanwhile, are fuming over an addition Obama made to his proposal to make the effort appear bipartisan and possibly switch the votes of moderate Democrats who opposed the House bill last year.

The Congressional Progressive Caucus co-chairman, Rep. Raul Grijalva, D-Ariz., said Wednesday he is disturbed and bitter about an addition he said goes against Democratic principles.

“I’ve been leaning ‘no’ for a long time. That hasn’t changed,” Grijalva said about voting for the healthcare overhaul the Senate passed in December and a package of changes that would move through a separate bill through reconciliation.

Obama indicated he might be open to a provision that would encourage the use of health savings accounts, a tax-exempt savings account that typically is used in conjunction with a high-deductible plan. The provision would allow the exchanges to offer high-deductible plans.

“For some of us, the bitterness about HSAs in and the public option completely out, I don’t know how long that’s going to linger,” Grijalva said.

Which tends to confirm what HSA supporters have long feared: killing HSAs is the Left’s game plan.

A Government Man

This afternoon Politico Arena asks:

Will the president’s health care remarks today sway enough votes to pass ObamaCare through “reconciliation”?

My response:

Who knows? What they show beyond all doubt, however, is the mind-set of the president and the bill’s proponents. Consider just a few of his opening words: “Everything there is to say about health care has been said and just about everyone has said it. So now is the time to make a decision about how to finally reform health care so that it works, not just for the insurance companies, but for America’s families and businesses.”

Notice first the insinuation that health care works today for the insurance companies, but not for the rest of us. Obama has to have his foil, this man with no experience in the private sector and little understanding of how that sector works. But notice, more importantly, that we need “to finally reform health care so that it works” – the implication being that this is a collective undertaking, the only question being how to do it. “We’re all in this together.” In the private sector, if we can’t reach an agreement about some proposed undertaking, we walk away. That seems inconceivable to Obama. He’s a government man: conceiving public solutions to private problems is what his life is all about.

I suppose you could say that government is so enmeshed in health care today that there are only public solutions to the problems government is largely responsible for having created – starting with the favorable tax treatment employer-provided health care affords. But the direction of reform needn’t be toward even greater government. It might be toward less government, as with health savings accounts. But that approach has been rejected from the start by Obama and his Democratic supporters. They move in only one direction.

Before Administering the Lethal Injection, Dr. Obama Offers to Sterilize the Needle

In a letter to congressional leaders, President Obama wrote of his openness to including Republican proposals in his health care legislation.

Dropping a few Republican ideas into a government takeover of health care is like sterilizing the needle before a lethal injection: a nice thought, but the ultimate outcome is the same.

This is not bipartisanship.  President Obama is creating the illusion of bipartisanship while taking the most partisan route possible: forcing his legislation through Congress via reconciliation.

(Cross-posted at National Journal’s Health Care Arena.)

Don’t Fear the Freedom, Higher Ed!

It’s not often that I can transition from my education beat to other hot topics, but an Inside Higher Ed story on colleges’ health-care benefits includes this little nugget:

One trend documented in the survey that may concern many employees is the increase in “consumer driven” health insurance plans by colleges. These typically involve employees setting up tax-free accounts to pay for some care, and then high deductibles for major medical expenses. This year, 17 percent of colleges were offering the plans, up from 11 percent two years ago.

So what’s so terrible about “consumer driven” health care, which from the article sounds like health savings accounts ? The story doesn’t say – nor does it give any details on who puts the money into the accounts or other minimally useful info – it just suggests that employees should be a little scared of controlling their own health care funds. 

Unfortunately, this kind of reflexive fear of markets and freedom is a hallmark of both education and health care debates, so this thoughtless little passage hardly comes as a surprise. But I want to help Inside Higher Ed: If you folks want to be informed next time you cover health care, give these guys a call. They’ll be more than happy to help you, just as I am with all of your education-related needs!

Operators, as they say, are standing by…

Nader Supports Health Savings Accounts?

In a recent article Ralph Nader attacks several critics of Obama’s health care reform proposal, including Cato:

Now enters the well-insured libertarian Cato Institute with full-page ads in the Washington Post and The New York Times charging Obama with pursuing government-run health care. A picture of Uncle Sam pointing under the headline “Your New Doctor.” Nonsense. The well-insured people at Cato should know better than to declare that this “government takeover” would “reduce health care quality.”

I agree that Cato employees are “well-insured” – a description so appropriate that Nader used it twice in a single paragraph. At Cato we have Health Savings Accounts, which are probably the closest thing to free market health insurance allowed by law.

It’s nice to see Nader, a proponent of socialized medicine, praise HSAs. But it’s unfortunate that his preferred options for health care would abolish HSAs entirely.

The Attempted Murder of HSAs

There may be nothing that more scares advocates of government-controlled health care than giving patients control over their medical treatment.  Thus, it should come as no surprise that the current versions of health care “reform” would kill off Health Savings Accounts (HSAs).

Explains John Fund in the Wall Street Journal:

Eight million Americans, according to the Treasury Department, are covered by plans with low-cost premiums and high deductibles that are designed for large, unexpected medical costs. Money is also set aside in a savings account to cover the deductibles, and whatever isn’t spent in one year can build up tax-free. Nearly a third of new HSA users, according to Treasury figures, previously had no insurance or bought coverage on their own.

These policies will be severely limited. The Senate plan says a policy deemed “acceptable” must have insurance (rather than the individual) pay out at least 76% of the benefits. The House plan is pegged at 70%. That’s not the way these plans are set up to work. Roy Ramthun, who implemented the HSA regulations at the Treasury Department in 2003, says the regulations are crippling. “Companies tell me they could be forced to take products off the market,” he said in an interview.

This level of micro-management is a good argument in principle against the sort of “reform” currently being promoted on Capitol Hill.  But the proposed rules likely were drafted in order to eliminate HSAs as an option.  Explains Ryan Ellis of American Shareholders:

If an insurance plan must pay for 70 or 76 percent of all health care costs, it would be next to impossible for it to qualify as a high-deductible health plan.  No HDHP, no HSA contribution.

The only hope a plan would have would be to do the following:

  • Have a deductible no higher than the HDHP minimum ($1150 single, $2300 family in 2009)
  • The out of pocket limit would have to be an identical amount
  • The plan would have to cover all allowable preventive care on a first-dollar basis (annual physical, prenatal and well-child, immunizations, smoking cessation, weight loss programs, and early screening services)

Any HDHP which is this generous would have very little premium savings relative to a tradtional health insurance plan.  If the typical HDHP today shaves about 33 percent off your premium, a plan like this might only shave off about 10 percent.  There would be very little incentive to get an HSA-qualified insurance plan.

HSAs are an imperfect vehicle, an attempt to deal with the perverse incentives created by Washington’s favorable tax treatment of employer-provided health care.  But the limitations inherent to HSAs should impel us to expand, not eliminate vehicles to enhance consumer choice.  The more we find out about health care “reform,” the more obvious it is that patients would be the biggest losers.