Health Savings Accounts

Discussion in 'Health and Lifestyle' started by Mariner, Feb 8, 2006.

  1. Mariner
    Offline

    Mariner Active Member

    Joined:
    Nov 7, 2004
    Messages:
    772
    Thanks Received:
    52
    Trophy Points:
    28
    Location:
    Boston, Mass.
    Ratings:
    +52
    Anyone here have one? I'm glad Bush is trying to do something to fill the gap for the uninsured, but where are poorer people to get the money to put into their HSA? It seems wealthy people are going to benefit the most, as in all Bush policies. From Business Week last week:

    Bush's Health-Care Scheme Needs a Doctor: As ill as the current system is, the President's latest proposal, which expands health savings accounts, is no cure, BusinessWeek,

    By Howard Gleckman

    2/2/2006 -- President George W. Bush is right when he says the U.S. should add a dose of market competition to its health-care system. But giving the wealthy a big new tax break for tummy tucks may not be the best way to do it.

    That is, no kidding, a major piece of how the President wants to tackle the nation's health-care problems. He outlined some of his ideas last night in his State of the Union address (see BW Online, 2/1/06, "A Probusiness State of the Union" <http://businessweek.com/bwdaily/dnflash/feb2006/nf2006021_1615_db038.htm> ). But the key change, which he only mentioned in passing, is described in a White House fact sheet <http://www.whitehouse.gov/news/releases/2006/01/20060131-7.html> . Bush would dramatically expand health savings accounts, which are tax-free savings vehicles that are linked to high-deductible insurance policies.

    He would make HSAs far more attractive by layering new tax breaks on to them (see BW, 6/13/05, "HSAs Could Keep You in the Pink" <http://businessweek.com/magazine/content/05_24/b3937110_mz070.htm> ). People who enroll in HSAs outside of their job would get a generous new deduction for all their health costs, including both premiums and out-of-pocket expenses. Not only would those costs be deductible from income taxes but they would also be free from payroll taxes. Today, you can deduct only medical expenses that exceed 7.5% of your income -- a tax break that just the very sick can use.

    TO THE FISCAL BOTTOM. The current system gives a huge advantage to employer-sponsored health plans. If you buy insurance at work, your company can take a tax deduction for its share of the cost. But you get the benefits of those contributions tax-free. If you buy insurance on your own, you get no such break.

    Think of it like this: A typical company pays about $8,000 for its share of a family policy. If your employer paid you the $8,000 in cash, you would pay income tax on the money, and perhaps payroll taxes as well. But as things are now, you get $8,000 worth of health insurance tax-free. For someone in the 30% tax bracket, that's worth $2,400. Overall, the tax break is expected to increase the deficit this year by $126 billion.

    Most economists say the best way to level the playing field is to trim the tax break for employer-based insurance. In fact, last year, Bush's own tax-reform panel proposed putting a cap on the amount of tax-free insurance workers could get. But the President isn't willing to tackle that tax break, because much of the business community would oppose it. Instead, in a race to the fiscal bottom, he would create more goodies for those who get health care on their own.

    WILL THEY BUILD IT? The new deductions would be a first step toward decoupling health insurance from the workplace. The good news about such an idea is that you would keep your health network when you change jobs, and you wouldn't have to worry about finding new doctors and hospitals. The bad news is that there's no real individual insurance market today. Premiums are stunningly high, especially if you suffer from a chronic illness such as heart disease.

    Backers see the individual market as a reverse Field of Dreams: If consumers come, insurance companies will build it. But Len Nichols, director of the Health Policy Program of the New America Foundation, a centrist think tank, says Bush's plan will succeed in driving the healthy and wealthy to the individual market, leaving group policies stuck with a population of only the sick. That, in turn, will drive up rates and create more uninsured. "They are creating each-man-for-himself health insurance, and celebrating it with tax breaks," Nichols says.

    Since both insurance and out-of-pocket costs would be deductible, the President's proposal would encourage people to buy low-premium coverage even if it meant paying a bigger chunk of actual medical expenses. Backers hope that spending more of their own money will make people more careful consumers.

    JACUZZI BREAKS. That's also something of a roll of the dice. Studies by Rand and others suggest that people who pay more out-of-pocket for their health care buy less of it. And while that can discourage them from getting unneeded care, it may also discourage them from going to the doctor when they should.

    And then there's the tummy-tuck problem. A Beverly Hills starlet who wants to make a few, umm, adjustments to various body parts would get a tax break. So would a CEO who buys a Jacuzzi to ease his back pain. With a budget deficit likely to top $350 billion in 2006, this may not be the best use of taxpayer dollars.

    Because it's structured as a deduction, the wealthy will get the biggest chunk of the benefit. For most Americans, a deduction is worth only about 10 cents on the dollar. So, $5,000 in cosmetic surgery would still cost $4,500 -- enough to discourage most folks. But if you're in the 35% bracket, Uncle Sam would knock your after-tax cost down to $3,250. And it's hard to see how that would discourage wasteful medical spending.

    At first glance, the Bush plan doesn't sound like much. And it's awfully complicated. But the closer you look, the riskier is seems.
     
  2. rtwngAvngr
    Offline

    rtwngAvngr Guest

    Joined:
    Jan 5, 2004
    Messages:
    15,755
    Thanks Received:
    511
    Trophy Points:
    48
    Ratings:
    +511


    You communists are just afraid of losing control of all that money.
     
  3. The ClayTaurus
    Offline

    The ClayTaurus Senior Member

    Joined:
    Sep 19, 2005
    Messages:
    7,062
    Thanks Received:
    332
    Trophy Points:
    48
    Ratings:
    +333
    I have an HSA. Just started in January.
     
  4. Mr. P
    Offline

    Mr. P Senior Member

    Joined:
    Aug 5, 2004
    Messages:
    11,329
    Thanks Received:
    618
    Trophy Points:
    48
    Location:
    South of the Mason Dixon
    Ratings:
    +620
    I've had an HSA for a year and a half.
     
  5. ScreamingEagle
    Offline

    ScreamingEagle Gold Member

    Joined:
    Jul 5, 2004
    Messages:
    12,887
    Thanks Received:
    1,610
    Trophy Points:
    245
    Ratings:
    +2,159
    Employer-related health care is not really the protection you think it is.

    Did you know that if you get sick - let's say a long term illness - while on the job - and you can't work anymore, your employer can fire you? Then he'll put you on COBRA which will last only 18 mos. and for which you have to pay the premiums which could be quite high. After that you are out of insurance and you got to go out and buy your own. Just try to get cheap insurance after you've gotten sick.

    Also, if you decide to quit a job you don't have to worry about getting a new job right away to provide coverage since the private plan stays with you. It's great for the self-employed. This gives people a new sort of freedom in the job market. I've seen people just keeping a job they absolutely hate in order to have health insurance. That's not good for the employee or the employer.

    Private insurance (like the HSAs) goes with you. As long as you keep paying your premiums you keep the insurance coverage. It's not subjective to your job.

    I'd rather we develop a good health system that let's the consumer pick and choose the health plan they want, kind of like shopping for auto insurance.
     
  6. Mariner
    Offline

    Mariner Active Member

    Joined:
    Nov 7, 2004
    Messages:
    772
    Thanks Received:
    52
    Trophy Points:
    28
    Location:
    Boston, Mass.
    Ratings:
    +52
    I have no clue what the right answer to the health-care crisis is. I work on the same floor as two of the nation's leading advocates for national health insurance--but I don't agree with them. Something about it feels un-American. I like the idea of some kind of choice, at least in deductibles and premiums.

    I agree that employer-based plans have problems. As a physician, I'm constantly dealing with people who can no longer see me because they changed jobs and therefore changed insurance. As an employee, it's clear to me that I'm offered a very poor range of choices.

    What distresses me most about the current system is the vast waste and inefficiency. I spend hours filling out insurance forms, justifying treatments to insurers, whose vested interest is often in making in a profit, not in maximiming their customers' health. There seems to be a built-in problem there--until health plans can be compared in terms of how well they work from a consumer's point of view.

    The other problem with various forms of private plans is that there has to be regulation to prevent the insurer from denying coverage to sicker people. Otherwise, health plans simply skim the healthy customers, who make money for them, while dumping the unhealthy ones. Many a person--including a businessman who wrote movingly about this issue in the Wall Street Journal a few weeks ago--has found himself in health care limbo, unable to find any coverage at all.

    I'm not closed-minded about HSA's. Do those here who have them feel they're working? They don't seem to solve the problem that poorer people simply can't afford the health care that our medical establishment is capable of providing. Ethically, it seems wrong to deny people care because they can't pay. So how do we deal with that?

    Mariner.
     
  7. Mr. P
    Offline

    Mr. P Senior Member

    Joined:
    Aug 5, 2004
    Messages:
    11,329
    Thanks Received:
    618
    Trophy Points:
    48
    Location:
    South of the Mason Dixon
    Ratings:
    +620
    Mine is working as well as any company paid insurance I ever had.

    However there are many problems with private insurance coverage vs company
    coverage. The biggest is premium. The insurance industry rape the private customers on premiums, IMO. The HSA vs a non-HSA gives a bit of relief, but you must accept a high deductable for that benifit, and still pay high premiums. And if you get ill and can't pay that premium, yer thoast, unlike a company paid program were they'll continue coverage for x time.

    The biggest contributor to this problem IMO, is the insurance co. Their cost are spread around with an employer pool. So they seem to keep the premiums lower. I don't see any reason they shouldn't do that in the private market as well. If HSA(A) or HMO(A) has one million customers why not spread the risk around and reduce the premiums?

    What's the answer? I don't know. I don't want to see Government regulation, although it may be getting to that. I would much rather see the industry become "Fair" and balanced, provide for their customers, and still make money.
     
  8. rtwngAvngr
    Offline

    rtwngAvngr Guest

    Joined:
    Jan 5, 2004
    Messages:
    15,755
    Thanks Received:
    511
    Trophy Points:
    48
    Ratings:
    +511
    We've told you a million times. The key is to introduce free market aspects to the current system to drive prices down. And tort reform, did we tell you about that one? That's a biggie, you should be on board with that.
     
  9. archangel
    Online

    archangel Guest

    Ratings:
    +0
    exhorborant medical costs...Hospitals charge some ten dollars for two aspirin...rooms are charged at a rate far exceeding a five star hotel...and ya must share with several people...surgeons charge ridiculous hourly wages...a one hour surgery will average some $7200.00 thats a hellava hourly wage...considering that surgeons are just exaggerated mechanics...and what is the going rate for a auto mechanic...about$80.00 per hour! The problem is the exaggerated costs the providers,hospitals and MD's charge...I know some will argue that Universities cost alot of money and the Doctors must recoup...so you would be correct...Universities charge exaggerated rates also...part of the problem...IMO
     
  10. manu1959
    Offline

    manu1959 Left Coast Isolationist

    Joined:
    Oct 28, 2004
    Messages:
    13,761
    Thanks Received:
    1,625
    Trophy Points:
    48
    Location:
    california
    Ratings:
    +1,626
    why are costs high?
     

Share This Page