President George W Bush's suggestion to make health savings accounts (HSA) more attractive to the general public to take care of the burgeoning cost of healthcare in the United States has met with mixed reactions, most of it negative. A tax-advantaged saving plan, HSA is an account where enrolees can deposit money to pay for current and future medical expenses. The amount deposited can be used tax-free for medical expenses.
Supporters assert that making the public pay for their own healthcare might go a long way in making them more responsible about the options available to them. But opponents feel that HSAs would only make them shy away from seeking treatment for minor ailments that have the potential to become major problems later.
Bush suggested that the health savings, which are now restricted to US$ 1,050 deductible for singles and US$ 2,100 for families, should be hiked to US$ 5,250 for singles and US$ 10,500 for families. As of now, these accounts have 3 million takers, a figure that could climb to 21 million by 2010, if White House statistics are to be believed. “As people spend more money over which they have discretion, they're going to be more concerned about spending it wisely,” feels Allan Hubbard, who heads the White House's National Economic Council.
Consumers for Health Care Choices spokesperson Greg Scandlen, agrees that patients might end up asking more questions about low cost drugs and more reasonably priced medical procedures due to HSAs. He, however, feels that the doctors' assistance is required for patients to make the right choice. “It's not do-it-yourself medicine. This is about being the final decision-maker for what's appropriate for your family,” Scandlen adds.
But Ron Pollack, of comprehensive coverage group Families USA, isn't sure if the HSA way is an effective one to combat the increasing cost of healthcare. “'I'm glad he's (Bush) making the health affordability crisis a priority. But this proposal, unfortunately, will make the affordability crisis worse,” he says, pointing out that those who suffer from chronic illnesses will be the worst affected.
Opposing the HSA plan, a report released by the California Department of Insurance, labelled it as a system that would “benefit the wealthy at the expense of the poor.”
“…There is clear reason to believe that consumer-driven HSAs are the wrong approach for California's health care system. Far from a solution, I believe HSAs are a threat to the health of individuals and the stability of the overall health care system,” said California's Insurance Commissioner John Garamendi.
Fuelling opponents' protests are fears that HSAs might lead people to postpone getting treatment for illnesses that are 'not very serious'. A McKinsey & Co study last year gave both the good news and the bad one. It found that those who have consumer-driven insurance policies were more likely to research into the low cost options available to them, but less likely to seek medical intervention for minor ailments. “They are seeking to get the best value from the different medical options available to them,” said Vishal Agrawal, who authored the study.
Another study, by the Commonwealth Fund, said that enrolees for HSA plans were more inclined towards postponing medical help. “Are they going to end up with much more serious illnesses later on that are much more costly to treat?” asked Sara R Collins, a spokesperson for the Commonwealth Fund.
Perhaps Californian Democrat Representative Pete Stark sums it up best when he says that high-deductible plans associated with HSAs 'are designed for healthy, wealthy people'. “Despite this reality, President Bush is pushing them on low-income workers – not to provide them with better health insurance, but to meet his long-term goal of dismantling employer-provided health care,” he said.
