NCPA - National Center for Policy Analysis

Health Accounts

September 12, 2003

Many more Americans could save for current and future health care expenses in tax-free "health accounts" proposed by House Ways & Means Committee Chairman Bill Thomas (R-Calif.) and included in the House version of the Medicare prescription drug bill.

There are a number of different health accounts under current law. The House bill would simplify and consolidate the existing types, and broaden eligibility. Most would allow individuals to save pretax dollars to pay out-of-pocket medical expenses, premiums and copays and deductibles.

Opponents want to strip health accounts from the Medicare bill. However, expanding health accounts would dramatically improve health care in America, according to Michael F. Canon, an NCPA senior fellow. The advantages for consumers are many:

  • Health accounts increase patients' control over their health care dollars, reducing the need for managed care rationing.
  • Health accounts are designed to be portable, so that changing jobs no longer means losing coverage.
  • Health accounts allow people to save for their retirement health needs.
  • Health accounts help reduce the number of uninsured Americans by making coverage more affordable -- for example, 73 percent of Americans with Medical Savings Accounts (MSAs) were previously uninsured, according to the Internal Revenue Service.
  • Health accounts help contain medical inflation by giving consumers incentives to forgo unnecessary care and become prudent shoppers.
  • Health accounts eliminate waste and bureaucracy in the health care system by giving patients a stake in the savings.

Finally, health accounts are popular. For example, a January 2003 Zogby International Poll found that 74 percent of likely voters want the option of opening an MSA.

Source: Michael F. Cannon, "Answering the Critics of Health Accounts," Brief Analysis No. 454, National Center for Policy Analysis, September 12, 2003.

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