Don't Kill Health Savings Accounts With Regulation

Why would a group of politicians want to do anything possible to deny most Americans the means to provide themselves with affordable medical care? Why would those who maintain that most Americans cannot afford their own medical care insist that they can afford to first pay taxes on the money they use to pay for it? ("Health Savings Sabotage," Review & Outlook, April 19). The proposals you describe in the House Ways and Means Committee to require government bureaucratic review and approval of each individual expense funded by a Health Savings Account are a transparent attempt to destroy such accounts.

Perhaps what is really intolerable to these congressmen is the idea of Americans depending on their own choices and resources, rather than being forced to depend on politicians as their only source of medical care. That requires them to relentlessly oppose anything that makes health care affordable for most Americans as an obstacle to implementing politically-controlled medicine. Americans must decide if they want to control the medical care of their own bodies, or if medical and most other decisions of our daily lives must pass through the hands of those whose priority is maintaining a political spoils system.

Richard E. Ralston
Executive Director
Americans for Free Choice in Medicine
Newport Beach, CA

Labels: HSA, LTE

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Health Savings Sabotage

...This week, the House passed legislation that included a provision to require every HSA transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod. In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs.

...A key player here is Ways and Means Health Subcommittee Chairman Pete Stark, whose main purpose in politics is to give the U.S. a government-run health-care system. He is a known opponent of HSAs – once comparing them to "weapons of mass destruction" – because they introduce more individual choice into the health-care marketplace.

...This is health insurance many Americans can afford, and it doesn't force those who have better use for their scarce dollars to buy gold-plated insurance with special-interest mandates (cover the chiropractors!) that Democrats want to force on everyone. HSAs also give consumers more reason to care about prices, bringing much-needed market discipline.

...Having lost the policy argument when HSAs were created, Democrats are now trying to kill them with regulatory subterfuge. The new scheme purports to ensure that money saved tax-free in an HSA is actually used for health expenses. But this is a nonproblem: Any withdrawal from an HSA is already subject to a federal tax audit, just as individual tax returns are. In any case if people cheat on their HSAs, they are only cheating themselves. When a medical expense arises below the insurance deductible, they will be the ones paying for it, whether from their HSA or another bank account.

Labels: HSA

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The Truth About Health Costs
By INVESTOR'S BUSINESS DAILY | Posted Thursday, January 10, 2008

Health Care Reform: Democrats claim high medical costs are a "failure of the free market," and they demand a government takeover. But a new study says government's to blame.

Public health programs account for almost half of the $2 trillion spent on U.S. health care, a Hoover Institution report says. An astonishing 80% or more of all medical-care pricing is based on government reimbursement rates set by Medicare.

As for private costs, they would be lower if government didn't interfere in the market. Regulations imposed on the industry cost more than $330 billion a year, Hoover says.

Perverse tax policies have created a third-party payer system. Patients no longer have first-dollar responsibility for medical bills thanks to employer insurance.

Someone else is paying, so inflation goes unchecked and unabated.

"Patients have no idea what their doctor visits, surgeries, diagnostic studies or other medical services — whether urgent or elective — will cost until the bill comes weeks later," said Dr. Scott W. Atlas, a senior Hoover fellow and chief of neuroradiology at Stanford University Medical School.

Even then, they seldom flyspeck the bill. Why bother, when they're responsible for just 10% to 20% of it?

Meanwhile, demand climbs higher and higher, and insurance premiums along with it, taking a bigger bite out of employer paychecks and putting health care completely out of reach for a growing number of Americans.

So if Uncle Sam made health care so unaffordable, why do so many voters like Democrats' plans to expand government control of health care? Because they've bought into the myth that the private sector has failed and begs for government rescue.

Democrats' solution to this failed government-heavy system is more government in the form of mandatory health coverage. Public plans offered by Hillary Clinton, John Edwards and Barack Obama all boast of "using government to lower costs and ensure affordability for all."

But if you think health care is expensive now, just wait until government makes it "free."

Hillary calls for expanding coverage through public health plans like Medicare or the Federal Employees Health Benefit Program. Yet Medicare already costs more per capita than any other industrial nation's public medical program.

The way to control costs isn't to expand a health care bureaucracy that already is divorcing patients from market-price decisions. The answer is letting them choose between health care and money.

Most of the Republican plans would help patients make that choice by expanding health savings accounts with high-deductible insurance plans. HSAs are tax-deferred accounts that patients set up to pay for routine medical care and to save for future unexpected medical expenses.

The key, however, is making the accounts attractive enough to shift incentives from the current employer-based system of insurance to the individual market.

Right now only about 17 million Americans buy their own health insurance. If 50 million did so through HSAs, we'd see at least a 30% reduction in medical costs, studies show, thanks to increased competition in the market.

By putting the patient back in charge of health care, making him a buyer as well as a user of care, a nationwide HSA rollout would create a large enough consumer-driven market to control costs.

Then the health care market would work more like a real market.

The medical costs Americans complain about were caused by government, not the private sector. This is a little recognized fact.

More government will not only ramp up costs, but deteriorate the one thing American patients seldom complain about — the quality of their health care.

The plight of the uninsured is a SYMPTOM. It is NOT the disease. If our attempts at health care reform do not recognize this fact, the real disease will continue to metastasize. What is the real disease? Perverse incentives caused by a series of government interventions in the health care market, not the least of which being misguided tax breaks for employer-provided insurance.

Labels: Analysis, HSA, Insurance

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Inventions of prudence
By Jackie Avner

To what degree are we, as individuals, personally responsible for the health care crisis?

Americans blame insurance and pharmaceutical companies, doctors and the government — and perhaps rightly so. But curiously missing from the list of culprits is us. Are we to blame for skyrocketing costs, as well?

Some Americans choose to buy things other than health insurance. Nearly 40 percent of the uninsured reside in households with earnings greater than $50,000. Their health care costs are spread among everyone else.

Most Americans choose to overeat. According to the World Health Organization, 74 percent of U.S. adults are overweight or obese. Obesity contributes to expensive, chronic conditions such as diabetes, hypertension and heart disease.

Americans over-consume pharmaceutical drugs, tests and procedures from the buffet of health care options, including those our doctors think will be marginally effective. Our reasoning is, "If it doesn't cost me anything extra, why not try it?"

We over-consume emergency room services. One extensive study showed 74 percent of patients who sign themselves into the ER have health issues that could be treated by a primary care doctor. Most ER visits occur during hours when less expensive alternatives for care are available. When surveyed, patients explain their preference for the ER by citing easy access to diagnostic testing, higher quality of care, access to specialists, and convenience. There's little incentive to take overall cost into consideration.

Annual U.S. health care expenditures are $5,711 per person, far greater than in any other country. But spending the most money doesn't give us the longest lifespan. We rank 38th in life expectancy. Cuba ranks 37th — and has a per capita health care expenditure of $229.

All of us should be more responsible. We should acknowledge that death, pain and illness are a part of life and can't be avoided through copious consumption of health care services. We should have a living will so we won't be subject to treatments we consider inappropriate. We should show a greater willingness to care for our elderly parents at home, rather than placing them in expensive assisted living or nursing care facilities.

But we're all spoiled, and pointing it out isn't likely to transform our "health care consumer" mind-frame into a "good citizen" mind-frame.

Don't fight human nature

Our own history may offer a solution. America's founding fathers designed the Constitution around an ingenious concept: Don't fight human nature; work with it. Harness our selfishness with "inventions of prudence" such as checks, balances, and wide dispersal of power, and make self-interest work for the public good. Why not apply the same principle to health care reform?

In 1993, Congress introduced Health Savings Accounts, which provide financial incentives for people to make responsible, cost-effective health care decisions. My family signed up for an HSA last year. We now have a health insurance policy with a high deductible, and use our HSA to pay for all medical expenses we incur before meeting that deductible. Our annual costs and health benefits are exactly the same as before. However, each year we get to keep whatever money we contributed to the HSA but didn't spend. These savings will grow, tax-deferred, for us to use in retirement.

I now shop for the best prices in dental and eye care. I buy generic drugs, and consider costs as well as benefits when choosing among treatment options presented by my doctors. My behavior is entirely different, and entirely more responsible as a result of a simple incentive from the government.

America's founding fathers would applaud the way the HSA plan can change individual attitudes and behavior without reducing individual liberty. Why can't the government offer similar financial incentives to Medicare and Medicaid patients, and to doctors and insurance companies?

Human nature may never change, but the right incentives can change human behavior for the better. That's health care reform.

Jackie Avner of Highlands Ranch (Jackie.Avner@gmail.com) worked in the U.S. Senate and is now a full-time mom. Her husband is a physician.

Labels: HSA, OpEd

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Some 15 percent of Colorado employers offer, or plan to offer, a health-savings account - or HSA - for next year's health care plans, more than twice as many as last year, said the Mountain States Employers Council. Nationwide, about 20 percent of companies plan to offer HSAs, according to Hewitt Associates.

"This is a way of passing more of the cost to employees, but it also allows the employee to have more control over their destiny," said John Martie, president and general manager of Anthem Blue Cross Blue Shield in Colorado.

HSAs, introduced by federal legislation in 2004, are like a 401(k) for health care. They allow employees to save for medical expenses with pretax dollars, and they're portable. The excess rolls over year after year, and employees take it with them to a new job or if they retire.

Labels: HSA

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How to Access Dental Care Without Insurance

Chris J. Wiant, M.P.H., Ph.D., wrote the following comments for the October 7 Rocky Mountain News:

While 770,000 Coloradans are without health insurance, twice that number of citizens do not have dental insurance and, therefore, lack access for preventive and restorative services. They must wait until their dental problem becomes a medical emergency before they are likely to get service. ...

Therefore, it is my hope that Colorado’s Blue Ribbon Commission on Health Care Reform takes seriously the need to include dental care as part of an overall strategy in fixing our health-care system in Colorado.

Wiant's assertion is false. It is simply not true that people who lack dental insurance therefore "lack access for preventive and restorative services." They have all kinds of access. Since Chris J. Wiant, M.P.H., Ph.D., is apparently ignorant of this fact, I'll describe how people may access dental care.

Step One: Locate a phone book.

Step Two: Look up "dentist" in the phone book. It's under "D."

Step Three: Using a telephone, call a dentist in the phone book.

Step Four: Make an appointment to see the dentist.

Step Five: Go to see the dentist at the appointed time.

Step Six: Pay the bill.

As an alternative to the first two steps, look on-line -- I found 2,080 dentists listed through DexKnows -- or ask friends for a referral (which is what my wife and I did).

My wife and I do not have dental insurance. Indeed, we have never used our high-deductible insurance to cover any medical cost. We pay all of our medical and dental costs out of pocket (or out of our Health Savings Account, which is an extension of our "pocket"). And we like it that way.

My wife and I have both been very proactive in seeking out (and purchasing) "preventive and restorative" dental services. For example, just within the last few weeks, I had my first cavity filled (which was tiny because I went in as soon as I noticed it), and my wife had a filling replaced. Months ago I had a cracked molar repaired. We both get regular check-ups and cleanings.

Our dentist does an outstanding job. He is worth every cent that we've ever paid him -- and much, much more. We get a spectacular value for our money with him, and I am proud to pay him for the services that he renders. Now that's "access."

We don't need Chris J. Wiant, M.P.H., Ph.D., to force us to purchase dental insurance that we neither want nor need. And that's really what he's saying here. It is now common knowledge that the 208 Commission has endorsed an "individual mandate" for Colorado, meaning that the Commission wants to force people to buy "insurance" that's approved by politicians and bureaucrats (as opposed to, say, removing the political impediments that make insurance too expensive for some people to purchase).

But Wiant is concerned with the fraction of people lacking dental insurance who have trouble with Step Six. But they don't need "insurance" (i.e., government-managed, pre-paid care that others are forced to fund) in order to have "access." Those without funds to pay for dental services can and should set up payment plans or turn to voluntary charity.

Wiant's article is indicative of what we can look for if the political takeover of medicine advances. Special interests will continually lobby to have their favored services included in the politically-enforced mix. As people "access" more of the "free" (or nearly free) services, the result will be price controls and rationing. Real "access" will be reduced.

By the way, "Chris J. Wiant, M.P.H., Ph.D., is president and CEO of the Caring for Colorado Foundation." And what manner of group is that? According to its web page:

In November of 1999, Anthem Insurance, a for-profit company, purchased Blue Cross Blue Shield of Colorado, which had non-profit status. This sale yielded proceeds of $155 million. As mandated by Colorado state law, the profit from the sale was dedicated to benefit the health of the people of Colorado. Caring for Colorado Foundation, a non-profit 501(c)(4), tax-exempt Foundation, was endowed to fulfill this responsibilty (sic).

Let us leave aside the absurdity of state laws stacked on federal tax codes micromanaging mergers. Chris J. Wiant, M.P.H., Ph.D., is, by advocating more political control of medicine, actively undermining " the health of the people of Colorado."

Labels: 208, CO, HSA, Insurance

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HSA Plans Gain Popularity as Premium Costs Rise

About half of all employers are expected to soon offer Health Savings Account (HSA) plans to their employees. This projection offers the best hope for restraining runaway health care costs, according to John Goodman, president of the National Center for Policy Analysis (NCPA).

"The best way to control health care costs is to put patients in control of more of their health care dollars," said Goodman. "The increasing popularity of HSAs is a result of managed care's failure."

According to a report released this week by Hewitt and Associates, a global human resources company, "account-based plans are gaining traction by employers as a way to control costs." Hewitt's research found that more than 20 percent of companies offer, or plan to offer, a high-deductible health plan with an HSA by the end of this year and almost half are considering offering one at a future date. While just 3 percent of employees elected these plans last year, most companies anticipate that enrollment will grow to 20 percent in 5 years.

Labels: HSA, Insurance

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"Health Savings Accounts: Putting Patients in Control"

Don't you hate that high deductible on your insurance policy? You have to pay thousands of dollars before insurance covers your care. That's terrible, some say, but is it really? A version of it may be the key to lowering costs and putting you in charge of your health care.

Five years ago, the grocery chain Whole Foods Market switched to a different kind of health insurance, a policy that puts patients more in control.

...Whole Foods has an insurance policy with a high deductible. That means an employee like Braden Weirs must pay about $1,000 before his insurance kicks in. If he gets cancer or heart disease, his insurance covers it.

But if he has a sore throat or a sprained ankle, he pays.

To help workers pay, Whole Foods puts money into an account for them. Weirs got $1,500 this year. If he doesn't spend it on medical care this year, he keeps it and the company adds more next year.

"And I have plenty of money left over," Weirs said. "So I can go get my new prescription glasses at the end of the year."

Labels: HSA, Insurance

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Health Savings Accounts

Health Savings Accounts offer fairness and choice to rich and poor. The tax code’s discounting employer-based insurance is unfair. It ties us to our employer’s expensive non-portable policies and hence limits insurance companies’ incentive to satisfy patients.

Imagine you want a more economical insurance plan. A less expensive plan could save you $50 per month, which you could save for medical expenses without your insurance company interfering. But since you’ll be taxed on this investment, you’re left with much less. To avoid this penalty, you’ll probably keep the expensive plan, hence wasting money on premiums instead of saving for medical expenses in the future.

Health Savings Accounts are the first step in eliminating this injustice. If a qualified high-deductible insurance plan is best for you, you can invest income saved on premiums in a tax-free HSA - equivalent to a 401(k) plan for medical expenses.

Since the tax code should not discriminate between money spent on health care or health insurance, HSAs should be available to anyone, regardless of their insurance policy. Further, to free us from our tax-preferred employer-based plans, we should be able to buy health insurance with funds from our Health Savings Accounts.

Brian T. Schwartz, Boulder

Labels: HSA, LTE

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Health Care You Control

One family finds that health savings accounts may be the smart choice

In the name of academic research, finance professor Stephen T. Parente got his physician wife to agree, reluctantly, to make a radical change in their family's medical coverage. The health-economics specialist who teaches at the University of Minnesota's Carlson School of Management had realized he knew a lot about health savings accounts (HSAs) as a scholar. But he had no experience with them as a consumer. So two years ago he enrolled himself and his family in a high-deductible insurance plan linked to a tax-sheltered HSA for medical expenses.

... The HSA contributions are made with pretax dollars. Withdrawals are tax-free as long as the money goes toward qualified medical expenses, which include everything from acupuncture to organ transplants to quit-smoking programs. The money is usually parked in a bank-like account, and beneficiaries of the plan receive a checkbook or debit card for paying bills. It's like a flexible spending account—except that with an FSA, you forfeit what's not spent in a calendar year while unused HSA money rolls over.

The idea behind the high-deductible/HSA plans is this: Catastrophic coverage prevents serious medical illness from financially crippling an individual or family. Patients, who will now have more financial skin in the game, spend their health-care dollars more carefully, putting downward pressure on health-cost inflation. "Besides doing research in the area, I liked the idea of having more control over our medical spending..."

So what has he learned as a consumer? Just as with his previous insurance, he doesn't worry that medical bills will cause financial ruin. Once he exhausts his $5,000 deductible, his insurance kicks in and his family is protected against disaster. In addition, he is now fully covered for preventive care to encourage sound medical habits, a relief with three children, ages 2, 5, and 10. Such services includes immunizations and well-child care, as well as annual physicals and mammograms. Some 82% of high-deductible/HSA plans follow this practice, according to the Kaiser survey.

...The tax-sheltered savings account does have an impact on his health-care spending, he says, just as his scholarly work predicted. "When the account is your money, and when you get to keep it, you do act differently," he says.

He draws an analogy between this sort of health plan and auto insurance. If there's major damage to your car, you file a claim with your insurer to defray the cost of repair. But if you just have a cracked windshield or dent in a door, chances are you'll shop around for the best deal and pay out of pocket, rather than file a claim and risk getting a premium hike next year.

The same applies to your family's health care. If someone develops a major illness, the catastrophic insurance will cover the expenses. But if your child has strep throat, you can pay for the strep test and doctor's visit from your HSA. If Parente sticks with in-network doctors and laboratories, he pays the same rates insurers pay in other university health plans.

Labels: Analysis, HSA, Insurance

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Labels: HSA, Insurance

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