Last week, Bush held a town-hall-like forum in Louisville and received a pretty good question: “As a small business owner, like a lot of people in this room, we look at the dramatic cost increases that have been passed along, and that we all really struggle with how do we provide our employees with health insurance that’s comprehensive?” The president said he has a plan.
“First, health savings accounts, which is a new product passed as part of the new Medicare bill, which is an evolving product, that enables a business and/or worker to be able to buy a catastrophic plan and put the incidental cost of medicine into the plan on a tax-free basis. That’s a lot of words. Look into it, is what I’m telling you. And I think Congress needs to expand HSAs, and their use, and their tax advantages, relative to corporate taxation when it comes to health care. (Applause.) Look at them. I’m not kidding you. Take a look at health savings accounts. Any small business owner in Kentucky ought to be looking — and Indiana, ought to be looking.”
As a rule, I don’t link to columns published behind the New York Times’ subscriber wall, but Paul Krugman has a hunch, which I agree with, that HSAs will be a major part of the White House domestic agenda in the coming months. Krugman explained why this is a proposal that does little to help address the problems with the current system.
The 2003 Medicare bill, although mainly concerned with prescription drugs, also allowed people who buy high-deductible health insurance policies — policies that cover only extreme expenses — to deposit money, tax-free, into health savings accounts that can be used to pay medical bills. Since then the administration has floated proposals to make the tax breaks bigger and wider, and these proposals may resurface in the State of the Union.
Critics of health savings accounts have mostly focused on two features of the accounts Mr. Bush won’t mention. First, such accounts mainly benefit people with high incomes. Second, they encourage wealthy corporate employees to opt out of company health plans, further undermining the already fraying system of employment-based health insurance.
But the case of diabetes and other evidence suggest that a third problem with health savings accounts may be even more important: in practice, people who are forced to pay for medical care out of pocket don’t have the ability to make good decisions about what care to purchase. “Consumer driven” is a nice slogan, but it turns out that buying health care isn’t at all like buying clothing.
The bottom line is that what the Bush administration calls reform is actually the opposite. Driven by an ideology at odds with reality, the administration wants to accentuate, not fix, what’s wrong with America’s health care system.
Sebastian Mallaby has a column today that predicts that health care will be the “new theme” for the White House in 2006. As far as I can tell, it’d be a gift to Democrats, who are anxious to have a real debate with the GOP over the issue going into midterms.