Garamendi To Issue Report on Health Savings Accounts, Association Health Plans
Insurance Commissioner John Garamendi (D) on Wednesday plans to issue a report that criticizes health savings accounts and other "consumer-driven" health plans as contributors to increased health care costs, the Los Angeles Times reports. The 74-page report, prepared by Garamendi staff members, examined health care costs and the increased number of uninsured residents in California. The report called consumer-driven health plans, which offer limited benefits to reduce costs, "symptoms of a worsening situation, not solutions."
In addition, the report stated that consumer-driven health plans "put the entire health system at risk" because they attract healthy individuals from traditional HMOs or PPOs, a situation that makes the plans more costly in the long term. As a result, the number of uninsured individuals, as well as the number enrolled in public health insurance programs, could increase, the report said. The report also found that health insurance premiums increased by 61% in California between 2000 and 2004.
Garamendi, who supports a universal health coverage system, said that the state health care system could face a "complete breakdown" and that the report could prompt legislation to establish minimum coverage requirements for all health plans. According to Garamendi, the state must ensure that residents have access to affordable and effective health coverage to reduce the number enrolled in public health insurance programs.
Garamendi said, "The extraordinary run-up in costs is pricing out an increasingly large part of the population who can't get insurance," adding, "We think there should be a basic health care program that everyone can participate in."
Garamendi plans to hold several hearings -- with the first scheduled for next month in San Francisco -- to examine consumer-driven health plans.
The report also criticized a bill (HR 525) passed last month by the House that would allow small businesses to form association health plans across state lines and would exempt the plans from a number of state laws that regulate health plans and require them to cover certain benefits. According to the report, AHPs would "operate across state borders, free from any state's oversight."
White House spokesperson Trent Duffy rejected the criticism of consumer-driven health plans and AHPs, both of which President Bush supports. He said that Bush is "very focused on innovative solutions" to address the issue of health care costs.
Peter Lee, president of the Pacific Business Group on Health, questioned the potential for a universal health coverage system. "There's no question that universal coverage is one of the solutions we need," he said, adding, "The question is how to get there. ... This is where universal care efforts, for 25 years, have always run ashore" (Vrana, Los Angeles Times, 8/3).