Thursday, May 01, 2008

We've Been Saying Health Savings Accounts Don't Help the Average American

Now here is a study from the Government Accountability Office reported by Healthline that shows that the wealthy are using it as a tax shelter.

Even if the average American could put savings into these accounts, it would be forever and a day before they had enough to cover a major illness.

It was estimated that if Elizabeth Edwards had to rely on John McCain's health care plan, she would have to wait a year before the insurance would start paying for her chemo treatments. That comes to about $100,000 out of her pocket before the pre-exisiting clause was satisfied.

At the rate you would be able to put money into an HSA, how long would it take you to build up $100,000? I would be over 100 years old.

There is of course the better way: nationally HR 676 and in California SB 840. Single-payer universal health care. No pre-existing conditions, no waiting periods. You choose your doctor---no more gate-keepers. Everybody in; nobody out.

Welcome to California Healthline.
Health Care Costs
May 01, 2008
Government, Insurers Scrutinize Use of Health Savings Accounts

On average, people enrolled in high-deductible health plans with health savings accounts in 2005 had adjusted gross income of $139,000 compared to $57,000 for other taxpayers, according to a Government Accountability Office report released on Wednesday, CQ HealthBeat reports(Reichard, CQ HealthBeat, 4/30).

Separately, a report released on Wednesday by America's Health Insurance Plans found that enrollment in HSAs increased by 35% since early last year to 6.1 million people (Knight, Dow Jones, 4/30).

HSAs allow people to deposit up to $2,900, or $5,800 for families, per year in the account tax-free, and the funds roll over from year to year. The funds can be withdrawn for medical expenses or saved "for future needs, including retirement," according to the AP/San Francisco Chronicle (Freking, AP/San Francisco Chronicle, 4/30).
GAO Report

According to the GAO report, HSA contributions reported to the Internal Revenue Service in 2005 were more than twice withdrawals at $754 million and $366 million, respectively (Dow Jones, 4/30). GAO also found that 41% of HSA users who made contributions in 2005 did not withdraw any funds that year (Johnson, CongressDaily, 4/30).

In addition, the report found that four out of 10 people who enroll in high-deductible plans did not open an HSA although they were eligible to do so. People cited a lack of information, cost or the belief that they did not need the accounts as reasons for not enrolling.

The GAO report is available online (.pdf).
AHIP Report

The AHIP report found that more than a quarter of new enrollees in high-deductible health plans paired with HSAs previously were uninsured. The report also found that enrollment in the plans represents 3.4% of the private insurance market (AP/San Francisco Chronicle, 4/30).

The AHIP report also is available online (.pdf).
Democratic Scrutiny

House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) and House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said that the GAO report shows that HSAs are not being used by low- and middle-income U.S. residents who are the most likely to be uninsured.

Stark said, "The GAO confirms that HSAs are not the way to meet the health care needs of most Americans," adding, "Instead, they are an effective tax shelter for people whose average incomes are nearly triple that of average tax filers."

Waxman said, "This report provides further evidence that we need to re-examine whether this is the right way to use the government's resources to address our health care needs" (CQ HealthBeat, 4/30).

Waxman and Stark said that Congress should require HSA enrollees to prove withdrawals from the accounts are for medical expenses.
AHIP Response

Karen Ignagni, president and CEO of AHIP, [shill for the rip-off private health insurers] said that the GAO report shows that a typical HSA enrollee deposited $2,100 and withdrew $1,000 in 2005. However, Ignagni said those figures are too low to describe what could be considered a tax shelter for wealthy people, the AP/Chronicle reports (AP/San Francisco Chronicle, 4/30).

Ignagni said that "newer data indicate that individuals are not storing assets in these accounts but using them for health care services" (McQueen, Wall Street Journal, 5/1).

By the way, if you would like to join me and hundreds of nurses and other health care advocates in protest of AHIP, come to San Francisco on June 19th outside the Moscone Center where AHIP will be having a convention.


Blogger J Keith Johnson said...

All the facts, as laid out in the article are true.
The one thing that is seemingly always left out of an article like this is the premium savings that the high deductible plans provide.
It is the premium savings that should fund the HSA (health savings account).
Actual example:
Male 49, Female 44, combined annual income <$40,000
Standard Copay plan premium, $784
HSA, $5000 deductible premium, $382
Savings, $402 per month
That provided $4,824 of the $5000 family deductible, which is placed in the tax free HSA. You can go to the doctor often with $4800 cash.
The attendant HDHP (high deductible health plan) is a one deductible plan, much like your car insurance. Until you reach the deductible, the insurance company does not pay. After you reach the deductible, you don't pay. Every doctors office visit, every specialist, every prescription, every hospital stay goes toward that one deductible. This is a very real out of pocket limit.
The reason "rich " people like the plan is not because they can afford it, but because they know how to use money effectively. They understand the premium reduction, out of pocket cost reduction, and the tax savings of the HSA as an additional way to keep what they have earned. There is absolutely no reason why any working American cannot do the same thing.
So why send an additional $4800 to an insurance company and let them trickle down dollars to health care providers when we can keep the money, pay our bills and pocket the rest?

9:28 AM  
Blogger Sue Cannon, PhD, RN said...

Thanks for your input. There's a problem with the HSA if you have a hospitalization before you've saved up enough for your deductible. Unfortunately, we can't schedule illnesses and accidents.

These plans do not offer as much security as a guaranteed plan like Medicare for all. HR 676 improves and expands Medicare to all in America. Under that plan, we are all covered. No pre-existing conditions. We can choose our own doctors and go to the hospital of our choice. Medical decisions will be back in the hands of health care providers (your doctor or nurse practitioner or PA), not some bureaucrat at some far off private insurance company.

It will also be cheaper for all of us. So you can take the extra that you don't need to put into premiums and HSAs and save it for whatever you fancy.

9:08 PM  

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