Bush To Propose Expansion of HSAs
President Bush in his State of the Union address on Tuesday plans to announce proposals that provide consumers with "more control over -- and responsibility for -- their medical spending" to help reduce health care costs, the Wall Street Journal reports. The proposals likely will focus on the expansion of health savings accounts, which are available with some high-deductible health plans.
In addition, the proposals likely will include improved availability of health care price information and expanded use of information technology (Lueck, Wall Street Journal, 1/29).
Bush also plans to propose additional tax breaks for individuals who purchase their own health insurance, similar to the tax breaks that employers receive when they provide health coverage for employees.
According to the Philadelphia Inquirer, "Bush sees this as a fairness issue" because the "working poor and uninsured often must pay out of pocket for insurance and get little tax relief" (Hall/Pugh, Philadelphia Inquirer, 1/30). Bush also plans to propose to allow individuals to retain their health coverage when they change jobs without additional costs (Washington Post, 1/29).
Bush likely will announce proposals that have previously failed in Congress, such as a plan to allow small businesses to form association health plans across state lines and a plan to cap damages in medical malpractice lawsuits (Philadelphia Inquirer, 1/30).
The Bush proposals on HSAs likely will include provisions to allow individuals to use funds from the accounts to pay health insurance premiums and to increase the allowable annual contributions to the accounts. According to the Journal, the provision that would allow premium payment is "meant to sweeten the tax benefits of HSAs for people buying their own coverage" because they currently "pay premiums with after-tax dollars in most cases, while people with employer-sponsored insurance don't pay tax on their premiums."
The provision that would increase allowable annual contributions is "intended to make the accounts more attractive to people with high medical expenses," the Journal reports (Wall Street Journal, 1/29).
Opponents of HSAs, such as the National Coalition on Health Care, have said that the accounts allow employers to pass more of the cost of health care to employees (Philadelphia Inquirer, 1/30).
In addition, opponents have said that the accounts attract healthier, higher-income individuals from traditional health plans, which can lead to increased costs for lower-income individuals and those with chronic illnesses (Appleby, USA Today, 1/30).
In related news, the New York Times on Sunday examined how "Congress returns next week in a volatile climate that will test whether President Bush can reassert himself" this year on issues such as the Medicare prescription drug benefit. According to the Times, how lawmakers address problems with the Medicare prescription drug benefit, which "is creating considerable confusion among older voters," will serve as one "indicator of Republican independence." Some Republicans have said that they would consider a proposal supported by Democrats that would allow Medicare to negotiate directly with pharmaceutical companies for discounts on medications, a plan that the Bush administration has "steadfastly opposed," the Times reports (Stolberg, New York Times, 1/29).
The New York Times on Sunday compared the health care proposals that Bush plans to announce in his State of the Union address with those announced by former President Bill Clinton in 1993. According to the Times, the Clinton proposals were "driven by a desire to guarantee health insurance for every American," but Bush "is focusing primarily on health costs, which he says are swamping employers and threatening economic growth."
In addition, Clinton supported a large role for the federal government in health care, but Bush "has a fundamentally different philosophy, built on the idea that placing more responsibility in the hands of individuals will create market pressure to hold down costs," the Times reports (Pear, New York Times, 1/29).
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Baltimore Sun: "Making health care choices is not like buying an automobile -- nor should it be" -- but Bush in his State of the Union address on Tuesday is expected to argue that "Americans would be getting more value for the billions of dollars the nation spends on health care if comparative shopping was part of the process," a Sun editorial states. According to the Sun, the proposal does not address "the major source of expense, which is the relatively small share of the population who are very sick," and would "discourage preventive care and screenings ... that can save the big bucks of late-stage treatments for patients whose ailments are caught early" (Baltimore Sun, 1/30).
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Dallas Morning News: No U.S. resident "can argue seriously against the president making health care a central theme in his State of the Union speech," but the "problem isn't only for the government to address," a Morning News editorial states, adding, "If we're really going to reshape the system, the solutions will range from Washington to the boardroom to the kitchen table." The editorial recommends additional tax breaks for health insurance, with the cost offset by reduced spending or subsidy limits; additional health care price information for consumers; a requirement that health care providers provide more information about costs and quality; and a provision to allow employers to pay health "coaches" to help employees manage chronic conditions. The editorial states, "When you link together these ideas, you have the conceptual hallmarks of a more rational system" (Dallas Morning News, 1/30).
- Bai, New York Times Magazine: Bush has a "general absence of ambition" on the issue of health care and has focused on "modest initiatives that don't begin to address the structural deficiencies in the system," reporter Matt Bai writes in an NYT Magazine opinion piece. He writes that HSAs, which "are the centerpiece" of the health care proposals that Bush plans to announce in his State of the Union address, "will help some families afford their doctors' bills -- but that's assuming they already have enough money to both buy a plan and save extra money in the first place." According to Bai, "That Bush embraces such proposals, at the expense of more lasting reform, fits the larger pattern of his presidency." He concludes that the U.S. requires "dynamic leadership to usher us into a century in which employees do not have to depend on their bosses for the ability to see a doctor and in which businesses will not be forced to buckle under the soaring costs of what should be an American birthright. It is possible that the president intends to show such leadership when he comes before the nation. In Bush's Washington, however, the possible and the actual grow ever more estranged" (Bai, New York Times Magazine, 1/29).
- Washington Post: Proposals by Bush to make U.S. residents more responsible health care consumers through increased out-of-pocket costs are "misguided," in part because most "consumers aren't equipped to distinguish between good medical service and bad," a Post editorial states. In addition, the editorial states that such proposals would require health insurers to cover costs after out-of-pocket costs exceed a certain limit likely between $3,000 and $5,000, adding that, "if chronic care and procedures costing more than $5,000 aren't going to be disciplined by consumers," the "gains from consumer-driven care can only be limited." According to the editorial, "Bush may be about to go after the wrong target using the wrong tool" (Washington Post, 1/30).
Several broadcast programs included related coverage:
- APM's "Marketplace Morning Report": The segment reports on increased enrollment in HSAs and includes comments from Ron Pollack, executive director of Families USA (Wicai, "Marketplace Morning Report," APM, 1/27). The complete segment is available online in RealPlayer.
- KCRW's "To The Point": The program on Monday is scheduled to include a discussion on the effect that the Bush proposals on HSAs will have on consumers and the financial industry (Olney, "To The Point," KCRW, 1/30). The complete segment will be available online in RealPlayer after the broadcast.
- NPR's "Weekend Edition Sunday": The segment interviews Sens. Robert Menendez (D-N.J.) and Craig Thomas (R-Wyo.) about health care and other issues that they hope Bush will discuss in his State of the Union address (Hansen, "Weekend Edition Sunday," NPR, 1/29). The complete segment is available online in RealPlayer.