NCPA - National Center for Policy Analysis

Consumer-Friendly Health Care Reform

December 15, 2003

Health care experts who opposed the addition of a new drug prescription entitlement to Medicare say it will mostly replace coverage seniors already have, while substantially increasing the future tax burden.

  • Although estimated to cost $400 billion in the first 10 years, the Congressional Budget Office projects the cost will be $2 trillion over the decade following.
  • Projections by economists at the National Center for Policy Analysis indicate only $1 in $16 of that $400 billion will actually buy additional drugs for seniors -- the rest will shift payments for drugs seniors are already getting onto the backs of taxpayers, rather than employers or the seniors themselves.
  • HSAs would allow any individual, regardless of income, and with a health insurance policy with a deductible of at least $1,000, to contribute (or let his employer contribute) as much as $2,600 a year for a single person and $5,150 for a family.
  • HSA contributions would come from pretax dollars, and the buildup of interest or capital gains would be untaxed.
  • The account holder could withdraw money for premiums, costs under the deductible and other health-care expenses.
  • HSA balances can be rolled over from year to year, and could accumulate $20,000, for example, that someone could use in retirement or leave to survivors.

"This gives people an opportunity to control more of their own health-care dollars," says Goodman. "In stead of giving all the money to Blue Cross, you're now going to be able to control some of them yourself." As patients shop around, and directly negotiate with doctors, costs should come down with the government having to ration care, says Goodman.

Source: John Berlau, "The Two Faces of Medicare Reform," Insight on the News, December 23, 2003. 


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