President Bush Opens Health Savings Account for Himself and Family
President Bush this week established a tax-deferred health savings account despite the fact that, as commander in chief, he receives health care at no cost from the military, the Los Angeles Times reports. Bush set up the account, which allows people to save money tax-free to spend on medical expenses, "for practical as well as political reasons," according to the Times. Trent Duffy, a White House spokesperson, said Bush felt the account was "the best move for his current and future health care needs," adding that Bush wanted to set an example. Although Bush already receives health care, he has a private insurance plan for his family similar to that offered to all federal employees.
To qualify for HSAs, individuals must be covered by a catastrophic health insurance policy with an annual deductible of at least $1,000, or $2,000 for families. The accounts are portable and individuals can contribute as much as $2,600 annually and families can contribute up to $5,150 annually. In his closing remarks at a two-day White House conference on the economy on Thursday, Bush said that he was "pleased to report that ... health savings accounts are beginning to work their way through our markets. After all, I just signed up for one two days ago. When it makes it to my level, you know it's going to be widespread these days. But HSAs are making a difference."
Although some analysts believe HSAs will help address rising health care costs, others believe use of the accounts by the young and healthy could "deplete the large pool of health insurance consumers, thus destroying the concept of shared risk, resulting in higher premiums for those in traditional plans," according to the Times.
Drew Altman, president of the Kaiser Family Foundation, said, "The fair thing to say about HSAs is there isn't a lot of experience with them yet. ... HSAs may be good for some people but may be bad for the health insurance system." Some labor unions and economists have said that the accounts could prompt businesses to eliminate traditional health plans in favor of policies that cover only catastrophic expenses, leaving employees to pay "routine expenses" from HSAs, the Times reports (Chen, Los Angeles Times, 12/17).