Los Angeles Times
November 27, 2003
Savings Accounts Key to Drug Law
By Vicki Kemper
… when Republican leaders were scrambling to attract or hold onto the votes of the most conservative members, their most powerful argument was reduced to a three-word mantra: health savings accounts.
… these unique tax shelters never had anything to do with Medicare or prescription drugs.
“It’s a double tax break,” said Gail Shearer, director of health policy analysis for Consumers Union. “Your money does not get taxed when you put in it; it does not get taxed when you pull it out. It’s an unprecedented tax shelter, especially for wealthy people, who are in a higher tax bracket.”
Shearer and other critics warn that the accounts will undermine the nation’s employer-based health-insurance system, leave additional low- and moderate-income workers unable to afford health insurance and further deplete the federal treasury.
“They will be attractive to the affluent and the healthy,” said Edwin Park, senior health policy analyst at the liberal Center for Budget and Policy Priorities. But he argued that premiums for conventional policies, which would be held by workers who are sicker and have higher medical expenses, could then skyrocket, leading some employers to stop offering such coverage.
“This is terrible policy on the tax, fiscal and health fronts,” he said.
http://www.latimes.com/news/nationworld/nation/la-na-savings27nov27,1,6319399.story?coll=la-headlines-nation
Comment: These medical savings accounts, renamed health savings accounts
(HSAs), have nothing to do with Medicare nor with the prescription benefit.
But they have everything to do with the efforts of conservatives to shift our private health coverage to “consumer-directed” models.
HSAs are much more tax policy than anything else. They allow tax-free contributions to personal, segregated funds for health care payments.
Those in higher tax brackets benefit whereas those with incomes below the
taxable threshold receive very little benefit. Thus this is a highly regressive tax policy, providing generous tax subsidies to the HSAs of the wealthy not available to the same extent to lower income individuals.
But the greatest concern is that HSAs will selectively attract those who do not believe that they will have to pay much out of their HSAs. Obviously, it is the healthier individuals, who happen to be the majority, that will be attracted to these plans. By concentrating those with higher health care needs into our traditional individual and employer-sponsored health plans, costs will go up. With increased costs, premiums will skyrocket. With this “death spiral” of premiums, traditional health insurance will become less and less affordable, and the numbers of uninsured will increase. Thus an extraneous program, HSAs, which has been included in the Medicare prescription bill, threatens the future integrity of the private health plans on which most of us depend.
Once a large number of these tax-preferred accounts have been established,
reversal of this program will be very difficult. It is essential that this provision of the Medicare bill be repealed immediately since it goes into effect January 1, 2004, only a month from now. That means that it must be the very first item of business when the members of Congress return! It is no coincidence that the conservatives made sure that this program would be up and running immediately as others begin to work on repealing sections that will not be in force for some years to come.
CONTACT YOUR SENATORS AND REPRESENTATIVES IMMEDIATELY TO DEMAND URGENT REPEAL OF THE HEALTH SAVINGS ACCOUNT SECTION OF THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003!
(Because of the urgency, please circulate this message immediately to as
many concerned citizens as possible. HSAs will be a permanent fixture of our
health care system without an immediate groundswell of opposition.)