NCPA - National Center for Policy Analysis


August 26, 2009

They're not at the center of the great debate over what the president and his allies call the "reform" of American health care.  Nor are they even at the periphery.  But health savings accounts (HSAs) are still alive and growing.  Not only that, they seem to be working as planned, says Investor's Business Daily (IBD).

This should be big news, but it's something you'll probably read only here.  There are several reasons for that, says IBD:

  • One is that the number of Americans covered by HSAs and associated high-deductible health insurance policies is still small, though growing; it hit 8 million earlier this year, industry figures show, but that's still less than 5 percent of the insured non-elderly population.
  • Another reason is that the Republican Party, which put HSAs on the map when it controlled Congress, is now preoccupied with stopping the Democrats' health agenda rather than aggressively putting forth one of its own, so HSAs don't have a champion.
  • Finally, the Democrats never liked the high-deductible plans and the savings accounts that reward patients who make price-conscious decisions about their care; their bias is toward plans that cover just about everything with little or no co-payment.

In fact, the reform schemes pushed by Obama and Democratic leaders in Congress would almost surely mean the end of HSAs, says IBD.  Even without well-funded government coverage to compete with private insurers, the proposed insurance "exchange" at the heart of the Democratic plans would require something similar, a top-of-the-line private plan, from its participants.

It would have no place for cheap, basic plans that -- like true insurance -- cover just the big costs and require policyholders to pay out-of-pocket for routine care and drugs.  And if the exchange doesn't kill HSAs, Congress could do the job by axing the tax-deductibility of HSA contributions.

Source: Editorial, "HSAs: Real Reform," Investor's Business Daily, August 26, 2009.

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