RespiteMatch.com Health Blog

Wednesday February 1, 2006 11:46 PM
By KEVIN FREKING
Associated Press Writer

WASHINGTON (AP) - President Bush will try to get more people to enroll in health savings accounts by providing additional tax breaks and establishing rules that would make it easier to keep the accounts when getting a new job.

For some, health savings accounts offer the potential of saving money on health care. But there’s a catch: To qualify, a person also must purchase a separate health insurance policy with a high deductible.

Such high deductible policies require individuals to pay for at least $1,050 in medical expenses; families have to pay the first $2,100. Some policies carry even higher deductibles.

Enrollment in the high-deductible insurance plans has tripled over the past 10 months. Bush seeks to keep that rate going by letting consumers put enough money in the accounts to cover all their health insurance costs, not just the deductibles, as provided by current law. This would allow them to set aside more money tax-free.

Bush also wants to let employers make higher contributions to health savings accounts for the chronically ill. Under current law, employers must contribute the same amount to each employee’s account.

The proposals to expand health savings accounts did not win over many Democrats on Capitol Hill on Wednesday.

“As with many things in this administration, it doesn’t help those who need the help,'’ said Senate Minority Leader Harry Reid, D-Nev. “And it helps people who are already being helped.'’

Bush confronted claims that health savings accounts don’t help the poor by proposing a tax credit that would enable low-income families to put $1,000 in their HSAs, and have enough money left over to help buy insurance for major medical expenses.

Al Hubbard, director of the president’s National Economic Council, said HSAs do help poorer people because the policies cost less than traditional insurance, and they’re growing at a slower pace than traditional insurance.

“Some people say, ‘Well, HSAs are just for the rich and the well. As it turns out, of the 3 million people who have taken up HSAs, 37 percent were previously uninsured, and 40 percent earned less than $50,000 a year,'’ Hubbard said. “Obviously, HSAs are very attractive to people on the lower side of the income scale.'’

Hubbard said the health savings accounts also make for smarter health care consumers because people shop around more when they have to pay, rather than an insurance company. In coming weeks, Bush will stress that health care providers must make more information available to their patients so they can make smarter choices.

“The frustration we’ve heard from people with HSAs is that they don’t have the information they need to be good consumers, and that’s why the president is going to be talking about this and working with employers and insurance companies,'’ Hubbard said.

Sen. Ted Kennedy, D-Mass., said the accounts shift more health costs onto ordinary consumers, or force them to go without health care altogether. He called the accounts a gimmick that only makes it harder for people to access health care.

Several Democratic lawmakers said Wednesday they would have preferred that Bush focus his State of the Union health care comments on the new Medicare drug benefit - not health savings accounts. They said they were surprised Bush never mentioned the program, which is often called Medicare Part D.

During the program’s first month, some of the poorest beneficiaries had trouble getting their medicine and were charged well above what they had paid under Medicaid. Dozens of states were forced to step in to help pay for their medicine on an emergency basis.

Hubbard said the president is proud “of what Part D and what the new drug benefit is going to do for retired Americans.'’

He acknowledged that the rollout of the benefit hasn’t been a “perfect and seamless conversion, but we’re making an enormous amount of progress.'’

Problems still persist.

“I don’t see how the president could ignore the 800 pound gorilla in the room - the failing Medicare prescription drug plan,'’ said Rep. Charlie Rangel, D-N.Y. “I guarantee you that all members of Congress have heard from seniors about how confusing the plan is, and how difficult it is to get the medicine they need.'’

Individuals or employers can establish HSAs. Contributions to the account are free from federal taxes, as is any income that accrues. The maximum that can be contributed to an HSA this year is the amount of the deductible or $2,700 for individuals and $5,450 for family coverage, whichever is less.

There is no “use it or lose it'’ rule. Any balance remaining at the end of the year can be carried over to the next, or invested in stocks and bonds, like an Individual Retirement Account.

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