Thursday, January 12, 2006

Health Savings Accounts

According to the Wall Street Journal today (via Tapped), the Bush administration plans to push Health Savings Accounts (HSAs) as the major solution to the health care crisis this coming year. Apparently HSAs will serve as a focus of the State of the Union address coming at the end of this month.

Right now our health care system is mixed. Some people are insured by the government (mostly through Medicare), some people are insured through their employers (to varying degrees), some people are insured on their own (at a very high cost), and some people are not insured at all (at a very high societal cost). HSAs would help none of these groups gain better or cheaper access to health care, nor would they solve either of the two biggest health care problems facing the nation today: 1) high costs and 2) uninsured people.

The premise behind HSAs is that people will be able to opt for health plans that offer higher deductibles--thus saving money on a monthly basis because these higher deductible plans have cheaper premiums--and then pay those higher deductibles through their tax-free HSA. But, of course, much of the money that is saved by people via the cheaper premiums will need to be shifted into the HSAs.

Who, then, do HSAs benefit? Employers. For those who carry private health insurance through their employer (the majority of Americans who are privately insured fall into this group), most of the monthly premium is currently covered by the employer. The lower the premium, the less the employer pays. But this does nothing to lower the actual cost of health care; hence, the costs are just shifted from the premium/employer to the deductible/person.

What's more, HSAs encourage people to "shop around" for their care. The Bush administration and other conservatives tout this as a benefit because people will be able to seek out the best deal for their HSA buck. Unfortunately for this argument, when you're in need of health care is not the best time to be a consumer. If consumers choose not to buy an Ipod because they don't want to shell out the money, for instance, all they're out is a portable music player. People who are sick, on the other hand, don't have the option not to receive good health care, unless they want their sickness to not get any better or potentially lead to something worse. In a time when the US is already far behind on instituting proactive health care measures, adding to the system second-guessing in terms of whether to get medical aide is not desirable.

Lastly, HSAs do nothing to help the second major problem facing health care today: the uninsured. What makes the insurance system so great, whether it's through the government or an employer, is that you can get cheaper prices on quality health care because you're part of a group with the rest of the people in your health insurance plan. It's like buying in bulk. The person who is uninsured is charged many times the amount at a hospital or clinic as the person who is part of an insurance group (for more specifics, see the recent book Critical Condition by Donald Bartlett & James Steele). Only by bringing everyone under the same single-payer insurance umbrella can we stretch our purchasing power to the fullest and all receive the lowest cost, but still guaranteed high quality, health care.

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