HSAs, Favored by McCain, Grow in Number—Slowly
They may have grown 35 percent in the past year, but the fact is that health savings account (HSA) plans—which are high-deductible health plans that can be linked to tax-advantaged health savings accounts—are still pretty thin on the ground. In 2007, the number of Americans covered by these plans grew to 6.1 million, up from 4.5 million the year before, according to a new survey by America's Health Insurance Plans, a trade group. With total private insurance coverage topping 170 million, however, that's small potatoes indeed.
In case you haven't come across them, these plans (also sometimes described as consumer-driven health plans, though that phrase can also refer to other plans) must have a deductible of at least $2,200 for families and $1,100 for individuals in 2008, among other criteria. An HSA that links to the plan allows people to accumulate money tax free to pay for medical expenses.
When Congress authorized the creation of these plans beginning in 2004, critics charged that they would primarily act as tax shelters in which healthy, affluent people would park their money, while many regular Joes wouldn't be able to afford to set aside cash in HSAs. Supporters said the premiums would be more affordable and that requiring people to have more financial "skin in the game" would give them an incentive not to be healthcare spendthrifts.
It's still too soon to know the long-term effect on healthcare costs, but we're beginning to be able to examine the experience of individuals. A few weeks ago, I wrote about new research showing that many uninsured people don't have enough assets to cover the deductibles in high-deductible plans. Now a Government Accountability Office report says that the average adjusted gross income of people with HSA activity was $139,000 in 2005, more than twice as high as the $57,000 AGI of a typical income tax filer. No surprise there, says Gary Claxton, vice president of the Kaiser Family Foundation, a healthcare research organization. "That's who [HSAs] make the most sense for," he says. People with HSAs contributed $2,100 on average to their accounts and withdrew $1,000.
Presumptive Republican presidential nominee John McCain, in a major healthcare speech this week, said people need to make their own healthcare decisions, and he said he supports HSAs as one way to help "put the family in charge of what they pay for."
But in the long run, it's going to be employers who will probably decide the fate of consumer-driven healthcare, says Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute. "If the savings aren't there in a few years, there will be a backlash by employers against these plans."
Tags: healthcare | health insurance | John McCain
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Reader Comments
HSA's are great, if you have plenty of money
Modern American medical professionals LOVE the best of the new MRI scan machines. They can provide 64-slice images for some of the best (so far) known tools for early diagnoses of cancerous tumors, for instance, at a time when treatment is most life-effective and cost-effective. The machines cost millions, often owned by doctors, and must be "used a lot" to pay for themselves. A physician proceeding from the safety of the best MRI is also one perhaps most safe from allegations of malpractice. So, doctors order expensive tests. Hard to blame them.
If my wife goes to the doctor with a pain and he orders the MRI, am I a "medical spendthrift" if I go along with it? Am I supposed to tell my wife, "Now, honey, this thousand-dollar test is on our own dime in the HSA, so maybe we'd better just defy that doctor's recommendation and ask him about Celebrex for the pain instead---like on TV ad----you "probably" don't have anything bad anyway"?
Consumer-driven medical plans and the HSA models are chock-full of precisely those kinds of dilemnas, recommended to you by Republicans as the wonderful option of having "choices". HSA's in general, are fine for the wealthy, and nice tax shelters, too. For everyone else, not so much. McCain also is fine for the wealthy.
and again, for everyone else, not so much.
HSA vs. PREPAID HEALTHCARE
We don't really have Health Insurance in this country. It is prepaid health expences.
If you don't need it, you lose it.
More recently, as in my own experience, it is not entirely prepaid as I now must also give up a so-called Co-Payment.
The usual complaint regarding the so-called uninsured is that when they have a hangnail, they take it to Emergency. These are the healthcare spendthrifts.
I have a suggestion for anyone who has some doubts about the healthcare situation. Visit any large Medical Facility. You will find that a majority of the patients are older persons. This might be, in part, a result of Medicare. However, it is primarily because it is the older persons have more health problems. I know this because I am one of them.
When I was young, I hardly ever needed a Doctor, and then it was for a broken bone or as the result of an accident.
In my view, many young families understand this and have opted out of the so-called health insurance rip-off.
The HSA is first of all a SAVINGS ACCOUNT. We are told that we should save more in this country. Why not save for that rainy day? Kill two birds with one stone. Keep control of your own money?
High Deductible Health Plans & HSA's
I'm happy to say that I've had a high-deductible health plan with an HSA for about 3 years now. Although I wasn't able to accumulate much money in my HSA the first year, because I needed the account balance to pay for my share of the costs for gallbladder surgery, I still believe that it is the right plan for me and for this nation.
Most of these high deductible plans give you an incentive to stay healthy by covering a yearly "checkup" with your primary care physician. This helps alert you to potentially costly and deadly medical problems before it's too late. Most people only go see a doctor when they have symptoms and by then, a condition or disease that was minor has become a costly and possibly deadly problem.
Of course their are those with conditions like multiple sclerosis and juvenile ( Type 1 diabetes ) who have costly conditions due to no fault of their own. To make high-deductible plans more appealing to those people, perhaps the government should give them a refundable tax credit equal to the deductible on their plan. This would make sure that those who have medical conditions due to no fault of their own will not have to suffer financially, while those who choose to be careless with their health pay significantly.
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