HSA’s Are A Losing Gamble For America

In this year’s State of the Union address, the President offered Health Savings Account (HSA) and tax breaks for premiums on high deductible insurance policies as the solution to America’s healthcare crisis.  Using the same kind of language he used to claim that Social Security was broken, the President said that unless we changed how Americans pay for health care, a financial crisis was awaiting future generations.  And, not surprisingly, the President offered a solution like his plan to privatize Social Security.

In 2003, when the President and Republicans passed the Medicare Prescription Drug Plan, they included a provision that created HSA’s. Essentially, the plan allows for individual accounts under which individuals can choose a high-deductible health care policy to pay for medical expenses out of pocket.  Under the President’s latest budget, these people would receive tax breaks for putting money into HSA’s and would not pay taxes when they removed their money so long as it was for valid medical expenses.  The President has argued that HSA’s would allow Americans more freedom and flexibility in obtaining health care, that the competition of the marketplace would drive down costs for everyone, and that more Americans would have coverage.  Initial analysis of the President’s plan casts those conclusions in doubt.

Supposedly, if Americans have to pay for their own healthcare, they’ll become more prudent about which medical services they seek, and as a result unneeded tests and procedures will be eliminated which will drive down costs for everyone. For example, under the thinking of the Bush plan, if someone found a lump on his thigh, he might not visit a doctor to have it examined.  Of course, not having something like that checked out could lead to disastrous results. 

Recently, I felt a severe pain in my side, and if I had had an HSA plan, I might have decided the pain would go away and I should save money instead of going to the doctor.  Had I made that choice, my appendix would have ruptured with potentially disastrous health consequences. Instead I sought medical treatment at the very earliest opportunity which resulted in minimal surgery and a speedy recovery. HSA’s would encourage this type of thinking and would cause people to delay crucial medical care or increase the price tag for care when it is sought.

Health care is not like other markets because dollar and cents do not drive medical decisions.  When it comes to a person’s health, nothing is more valuable, and a person will pay whatever is necessary to make herself well.  Moreover, having a healthy population is crucial for our nation and we should be encouraging preventative health care, not discouraging it. 

HSA’s would change the health care system for everyone.  Health insurance plans work because companies can spread risk over a large group in which the healthier people balance out the costs of those who are ill.  HSA’s would encourage young and healthy Americans to pull out of employer based insurance programs because they might save money.  Consequently, health insurers would restrict coverage and older or sick Americans would be forced to buy their own health insurance, which is something only the wealthy could afford.  I fail to see how this would increase coverage for all Americans.

HSA’s would make our health care crisis worse and not better.  We need to have a real bipartisan dialogue on proposals to extend coverage for all Americans.  Simply put, the President’s plan would not accomplish this goal.