Thursday, November 15, 2007

Bush's Measurement Errors on Health Savings Accounts

What would you think if you read the following "3.2 million covered by HSA type insurance plans"? Need help with the definition of an HSA? It's a health savings account where an employee or individual sets aside money tax free for uncovered or out of pocket health care costs. They can only be opened in conjunction with what's known as a high deductible health plan.

Now are you ready to answer the question? The phrase makes it sound like 3.2 million people have high deductible plans and have set aside money for those possible future expenses. Yet, the statement on the Department of Treasury website doesn't mean that at all. It means 3.2 million people are covered by high deductible plans.

How many actually have a health savings account? That's a horse of a different color. While 3.2 million are covered by HSA type insurance plans, only 26% or 820,000 have any tax free money sitting in an account. Nearly 2.4 million potentially joined the ranks of the underinsured, where they stand at risk should a major illness or traumatic event occur.

Low income workers likely don't have $2,000 to $4,000 to meet the individual or family deductible, much less the annual out of pocket limit, at least $1,000 dollars higher. So what do they do when faced with a health problem? Many likely go without.

That brings up back to the bigger Bush record on health insurance coverage. While he waved HSAs as his signature solution for the ills of the health care marketplace, the number of uninsured rose from 43.5 million in 2004 to 47 million in 2006. From the time he implemented high deductible health plans, more people lost insurance than rode his magic bullet.

The jury is out for the latest year, as 1.3 million more enrolled in "HSA type insurance plans." That brings the total to 4.5 million living under high deductible health plans. If only 26% still have funded HSAs, then the free market purchasing power of 1.2 million consumers with ready tax free cash to spend can be unleashed to drive down high health care prices.

If American businesses covering 176 million lives can't stem the hemorrhaging of high medical costs, I don't think a mere 1.2 million thrifty shoppers will do much. The other 3.3 million with high deductibles and zero balances in their HSAs likely are praying they don't get sick. Just remember the President's other signature solution for health care problems, "go to an ER." Be sure to send the bill to 1600 Pennsylvania Avenue.