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Life Health > Health Insurance > Life Insurance Strategies

Value Of HSAs Debated During House Hearing

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The president of America’s Health Insurance Plans outlined a series of “common sense policy recommendations” to expand access to health savings accounts during a House hearing held on June 28 to assess the current status of the program, which found supporters and critics divided along the usual fault lines.

Specifically, in contrast to the call by Karen Ignagni, president of AHIP, Washington, for expansion of the program, one critic of HSAs used the hearing to say that the product is “a misguided solution for reining in U.S. health care costs.”

The hearing before the House Ways and Means Committee was convened by panel Chairman Bill Thomas, R-Calif., not only as a means of assessing the current status of the program but also to determine the committee’s future consideration of HSA adjustments.

However, in general, Democratic members of the committee voiced continued skepticism of HSAs as even a factor in resolving health insurance problems of cost and the number of uninsured, while Republican members of the committee touted HSAs as the market providing a real-world solution to the problem.

Ignagni said that HSA-eligible, high-deductible health plans “have quickly become valued health coverage options for consumers and employers,” and she urged Congress to take the lead in facilitating the next generation of HSAs.

“HSAs are helping a substantial number of previously uninsured consumers purchase coverage, accumulate savings for their future medical needs and access preventive care services. HSAs also are enabling many small employers to offer health coverage to their employees for the first time,” Ignagni said.

But Sara Collins, Ph.D., assistant vice president of the Commonwealth Fund’s Future of Health Insurance unit, argued that “increasing patient cost-sharing is a misguided solution for reining in U.S. health care costs.”

Collins said there is no evidence backing the claim that Americans spend too much on health care because they are protected from its real cost–one of the principal justifications put forth by those promoting HSAs coupled with high-deductible health plans.

“Americans already pay far more out of pocket for their health care than citizens do in any other industrialized country,” she noted. Moreover, studies show that high out-of-pocket costs lead patients to decide against getting the health care they need.

“The major beneficiaries of the tax savings available through HSAs are likely to be healthier and more affluent taxpayers who already have health coverage–and can afford the financial risk posed by higher-deductible plans,” she said.

Rep. Pete Stark, D-Calif., was critical of the entire hearing, saying, “I think it’s time we had a reality check.” He compared HSAs to the Iraqi WMDs, saying that as in that case, “it’s not that people are lying about it, but there is a lot of misunderstanding on the issue.”

Of the over three million people who have signed up for HSAs, only 100,000 actually have set up the savings account and contributed to it, Stark said.

“This is a case where the administration is trying to solve a problem by throwing extra dollars at the rich while ignoring the middle class, as they have done before,” he said.

Stark also criticized the Senate, saying that perhaps the committee should focus on gay marriage and that a gay marriage ban, or flag burning amendment, would do more for health care than HSAs. He concluded by saying, “I look forward to the nonsense from the witnesses who have a financial interest in the product.”

Thomas by contrast contended, “It’s not that we’re not spending enough money for health care, it’s the maldistribution of benefits.”

He asked the panel members if they would be supportive of a “reasonable cap” on employer deductions to help fund coverage for low-income people. Jeff Cava, executive vice president for human resources at Wendy’s in Dublin, Ohio, responded by saying, “I believe so.”

Ignagni said AHIP would be “concerned” about a cap on employer deductions, while Collins said that she’d be concerned about breaking up the group market.

In later comments, Rep. Earl Pomeroy, D-N.D., and a former state insurance commissioner, expressed concerns about the group concept in health insurance, as well, saying he thinks HSAs are the first step on a road to individually obtained health coverage. He said his concern regarding HSAs “is where we are going from here.

“What I think we’re seeing here is trying to move from employer-provided group coverage to a sort of defined contribution system,” he said.

Pomeroy said the change “would short-sell, significantly, the individual and will lead to the end of the private market.”


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