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HSA Plan for Federal Workers Unveiled

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The Bush administration last week began implementing one of the main programs of its health care agenda with the unveiling of an insurance plan for over 3 million federal government workers that includes a tax-free health savings account.

Under the program, which will begin Jan. 1, federal employees will be able to choose to have a tax-free account from which they could pay future medical costs. The program will be administered by a total of 18 insurance companies, with Aetna controlling the largest area, 32 states and the District of Columbia. The program would be operated under the Federal Employees Health Benefits Plan, the largest purchaser of health insurance in the country, and also would be available to members of Congress and judges.

Health savings accounts initially were implemented under Medicare legislation that was passed last December. Opponents of the plans have argued that HSAs appeal mainly to younger, healthier individuals who would benefit from low health costs, and have balances and credits remaining at the end of the year. Those individuals expecting higher health care costs, typically those who are older or more likely to get ill, would then be more likely to face higher premiums in traditional health insurance plans.

Among those making such an argument was Rep. Jim Moran, D-Va., on the House floor last week during debate on an amendment he offered to an appropriations bill that would have effectively barred the government from offering HSAs.

“The phenomenon is called adverse selection,” Moran said. “And it forces insurance carriers to raise premiums, to cut benefits, in fact, to squeeze the people who need health insurance coverage out of the market.”

Morans amendment, which specifically would have barred the government from using any of the appropriated funds for the Treasury, Transportation and other agencies to offer HSAs, was defeated 223-183 in a largely partisan vote.

Reproduced from National Underwriter Edition, September 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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