New health savings accounts — government issues guidance, sparking interest and discussion
December 31, 2003When the new Medicare bill was first passed, very little was said about its health savings account provision, which essentially had nothing to do with the senior prescription drug coverage, but was an add-on to the bill for political reasons. Now I am seeing some interesting and useful information on these provisions:
Here’s the IRS guidance for those wanting all the details
Here’s a summary from the Employee Benefits Institute of America (for those really interested in the subject, this organization offers a tele-seminar January 15).
Here’s a Department of Labor explanation of three methods of setting up employee consumer-driven health-care accounts predating this latest legislation: 1) flexible spending accounts; 2) medical savings accounts; and 3 ) health reimbursement arrangements.
Here’s a story from Dallas Morning News/ Knight-Ridder / Tribune Business News (brought to my attention by Catherine at sonria.org, whose additional thoughtful commentary is here) It discusses pros and cons and possible future implications of the new health savings accounts, including:
Some say they will push more people into high-deductible policies, where they’ll pay more attention to their spending. . . .Finally, from the great liberal state of Oregon comes this piece characterizing all this as nothing more than a tax shelter for “the rich.”
“We’re opposed to the concept of it,” says Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities in Washington, which studies the effects of government programs and policies on low- and moderate-income people. . . .
Experts predict that accounts such as HSAs will dominate the health insurance market in less than five years . . . .
The accounts could undermine comprehensive health insurance offered by employers, the budget and policy priorities center says.
“Healthy, affluent workers would have a strong incentive to opt out of comprehensive health insurance plans in favor of the new accounts,” it says.
“They would receive a large tax break, and they would not be much affected by switching to a high-deductible health policy, since they generally use fewer health services.”
If large numbers of those healthy workers pull out of comprehensive plans, the pool of workers left would be older and sicker, causing their premiums to rise significantly . . . .
“We think they’re bad policy on the health care side,” he says. “They are going to undermine the traditional employer-based health care system.”
[Like it's healthy as a horse?
Here's the other perspective:]
“Expanding HSAs will dramatically improve health care by reducing the need for managed care rationing, allowing workers to save for health needs in retirement, containing medical inflation by giving consumers incentive to forgo unneeded care, and eliminating waste and bureaucracy by giving patients a stake in the savings.”
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Discussion of consumer-driven health plans
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