Bush Proposes Expansion of Health Savings Accounts in State of the Union Address
President Bush in his State of the Union address on Tuesday proposed an expansion of health savings accounts and "pledged to slow the rising cost of health care by making it easier for individuals and small businesses to buy insurance," USA Today reports. Bush said, "We will strengthen health savings accounts by making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get" (Appleby, USA Today, 2/1).
In addition, Bush said that he hopes to eliminate "all taxes on out-of-pocket spending" for health care, reduce costs and help "people afford the insurance they need" (Toner et. al, New York Times, 2/1). Although Bush provided few details about his proposal to expand HSAs in his speech, he outlined a plan in a document provided to congressional committees (Freking, AP/Long Island Newsday, 2/1).
The proposal would make the premiums for the high-deductible health plans required with HSAs tax-deductible and would increase the limit on annual contributions to the accounts by employers and individuals (Hirschfeld Davis, Baltimore Sun, 1/2). In addition, the proposal would allow employers to contribute larger amounts to HSAs for individuals with chronic illnesses and would provide refundable tax credits of $3,000 for families of four with annual incomes of $25,000 or less to help purchase health insurance and make contributions to HSAs (AP/Long Island Newsday, 2/1).
In his speech, Bush also proposed to allow individuals to take HSAs with them when they change jobs (USA Today, 2/1). According to the Post, the proposals are "modest" at a time when 45 million U.S. residents lack health insurance (Balz/VandeHei, Washington Post, 2/1).
In addition to an expansion of HSAs, Bush in his speech proposed to increase use of electronic health records and "other health information technology to help control costs and reduce dangerous medical errors."
Bush also proposed several plans that have previously failed in Congress, such as a proposal that would allow small businesses to form association health plans. The National Governors Association, the National Association of Insurance Commissioners and the BlueCross BlueShield Association oppose AHPs because they are exempt from many state laws that regulate health plans and require them to provide certain benefits (New York Times, 2/1).
Bush also proposed a plan to cap damages in medical malpractice lawsuits and limit the number of lawsuits filed (Baker/Fletcher, Washington Post, 2/1).
Bush in his speech did not discuss the new Medicare prescription drug benefit and "avoided any reference" to the program, the Philadelphia Inquirer reports (Polman, Philadelphia Inquirer, 2/1). However, Bush proposed a bipartisan commission to examine the effect that baby boomer retirees will have on Medicare, Medicaid and Social Security (Lochhead, San Francisco Chronicle, 2/1).
The complete transcript of the State of the Union address is available online. A video excerpt of comments in the speech related to health care is available online in RealPlayer.
Virginia Gov. Tim Kaine (D) delivered the Democratic response to the State of the Union address and said that "there's a better way" to address the issue of health care than Bush proposed. For example, Kaine said that many states "have set up simple ways to help our seniors purchase safe, American-made prescription drugs from other countries at a fraction of the price they would pay here" through reimportation programs, adding, "The administration actually fought against that Democratic effort!" (Hardy, Knight Ridder/Richmond Times-Dispatch, 2/1).
Los Angeles Mayor Antonio Villaraigosa, who delivered the Democratic response in Spanish, criticized the Bush administration on a number of issues, including the implementation of the Medicare prescription drug benefit and tax cuts (Simon/Fiore, Los Angeles Times, 2/1).
Other Democrats questioned the likely effectiveness of the health care plans that Bush proposed. Rep. John Tierney (D-Mass.) said, "He's had five years to get it done. Where are the big ideas? We've heard the rhetoric before."
Many Democrats criticized his proposal to expand HSAs. Senate Minority Leader Harry Reid (D-Nev.) said that the proposal will not reduce health care costs or expand access to health insurance and might increase the budget deficit.
Sen. Edward Kennedy (D-Mass.) said, "The cure (Bush) prescribed tonight will only make a bad situation worse" (Klein, Boston Globe, 2/1).
Rep. Ben Cardin (D-Md.) said, "American families are already struggling to pay for health care costs, and this proposal is a step backward because it will increase their costs, not lower them" (USA Today, 2/1).
Kennedy added, "Like the fiasco of his plan to privatize Social Security, his health savings accounts are a windfall for Wall Street and other special interests and a nightmare for the vast majority of families. The obvious answer is to make Medicare available to all" (Koffler et al., CongressDaily, 2/1).
Rep. Pete Stark (D-Calif.) said, "The president's proposals for health savings accounts are tilted toward the rich. They give disproportionate benefits to wealthy people and do almost nothing for low-income people" (New York Times, 2/1).
Several broadcast programs reported on health care issues related to the State of the Union address:
- APM's "Marketplace": The segment reports on HSAs and includes comments from Paul Bennett, vice president for health policy at the American Benefits Council, and Karen Davis, president of the Commonwealth Fund (Dimsdale, "Marketplace," APM, 1/31). The complete segment is available online in RealPlayer.
- CBS' "Evening News": The segment reports on the number of uninsured U.S. residents and includes comments from Wisconsin Gov. James Doyle (D) and Ed Haislmaier, research fellow in the Center for Health Policy Studies at the Heritage Foundation (Regan, "Evening News," CBS, 1/31). The complete segment is available online in RealPlayer.
- NBC's "Nightly News": The segment reports on Seattle-based Harborview Medical Center, one of many facilities nationwide affected by increased health care costs and the increased number of uninsured U.S. residents, and includes comments from administrators and patients at Harborview (Bazell, "Nightly News," NBC, 1/31). The complete segment is available online in Windows Media.
- NPR's "Talk of the Nation": The program on Wednesday is scheduled to include a discussion of HSAs (Conan, "Talk of the Nation," NPR, 2/1). The complete segment will be available online in RealPlayer after the broadcast.