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Monday, February 13, 2006

Health Care & Health Savings Plans

Published by cck at 9:09 AM

Y'know, I had a health savings plan. It was a "cafeteria plan" and part of my paycheck - my pre-tax gross income - went into this savings account. I had a credit card with a MasterCard logo and I could use it on everything from band-aids to doctor's visits As long as it was a pharmaceutical item (and the list was long), I could use this magic card to buy it.
As a single gal, it was a life saver. Worried about that high deductible? Don't. Use your Health Savings card. Worried about affording that medicine that's on the preferred list? Don't. Use your Health Savings card. You get the picture. It was great for those weeks when you got the flu but had already been, um, shoe shopping.

However, after reading Sebastian Mallaby in today's Washington Post ("Ownership Society Redux"), I'm not so sure that the Health Savings Plans should be the next great hope. I didn't even realize it was being pegged as the next great hope.

Health care - affordable, decent health care - is one of my issues. I think everyone should have it. And not in that way that all hacks talk about "improving education" (I mean, who is against improving education?);I really believe that every American should have affordable access to being cared for by a health care professional. I wrote about it a little here.
"If the administration's goal were merely to remove the tax bias against out-of-pocket health payments, it could simply make these tax-deductible. No need for health savings accounts to accomplish that -- just tell people to count out-of-pocket payments against taxable income," writes Mallaby. That makes a ton of sense, and isn't regressive.
Furthermore, Mallaby points out from a Jason Furman paper for the Center on Budget and Policy Priorities, "No other savings vehicle enjoys so many privileges. And then there's the size of these accounts. If the aim is to discipline health spending below the deductible, why subsidize savings up to $5,250 a year -- five times more than the deductible?"
Plus, an interesting point I didn't think of (surprise), is that healthy people will flock to this new plan - leaving insurance companies with a sucking vacuum. Healthy people subsidize sick people in insurance plans. If they leave, what will we do to help the folks that regularly use health insurance?
I'm not sure about Health Savings Plans - I thought they were great - but I think, if anything, they should be an additional component of health care.