HSA News

One of the leading individual and small-group health insurers, Assurant Health, has updated it’s Health Savings Account data. Since 2004, the first year the accounts were available, Assurant says that 37% of its new individual medical sales have been HSAs. As of the end of February, it had received 175,000 applications for individual HSAs.

Assurant Health’s latest data also reinforce what other companies have found, that HSAs have widespread appeal:

  • 73% of HSA purchasers are families with children.
  • 35% of HSA purchasers are from households of four or more people.
  • 57% of HSA purchasers are over age 40.

And, perhaps most important, 40% did not indicate on their application having any prior health insurance coverage.


More HSA news: Treasury has issued new guidance on HSAs addressing whether or not a spouse can purchase an HSA if the husband or wife has traditional health insurance. The answer is yes, as long as the HSA spouse isn’t covered under the traditional policy. Here’s a link to the guidance.

And better yet, Treasury has on its website a terrific three-fold brochure with a great description of HSAs. With interest in HSAs exploding, this should be a handout at every conference, Rotary Club meeting, and business seminar in the country. You can get your copy here.


Interest in free-market ideas seems to be accelerating if our speaking schedule is any gauge. Some highlights of my speeches, with accompanying PowerPoint presentations, over the last couple of weeks:

  • Chicago for a talk to about 75 newly-elected state legislators from around the country attending a three-day conference organized by the National Conference of State Legislatures and the Agency for Healthcare Research and Quality. My topic: “The Uninsured and the Health Care Safety Net.” I warned that using the club of state regulation will backfire, and they should instead encourage Congress to create new incentives through refundable tax credits.

  • Orlando to speak at the Association of Private Enterprise Education conference with mostly free-market and libertarian academic economists. Texas A&M Professor Tom Saving led our panel on “Issues in Health Care Market Reform.”

    Tom previewed a terrific new idea he’s developing about individuals buying insurance to protect against changes in their health status. If the policyholder gets sick, an annuity would be paid to make up the difference in health insurance costs between the old and new status.

  • New York for a meeting where state-based think tanks wrestled with ideas and opportunities to inject competition and free-market reforms into Medicaid.

  • Phoenix to speak at the Catholic Medical Association Spring meeting about “Patient-Centered, Value-Driven Health Care.” The CMA is leading an effort to create a faith-based coalition around policy changes to recreate a health system centered on doctors and patients.

  • New Brunswick, N.J., for a Health Policy Conference on “Evidence Based Decision Making.” My concern: Basing payment decisions on the results of controlled clinical trials and determined by centralized boards could cast a dark cloud over medical innovation.


And speaking of conferences: This is the time to sign up for the very first Consumer Choice Community Conference (CCC) to be held in Washington, D.C., May 19-20.

Sponsored by the Galen Institute’s Center for Consumer Driven Health Care (CDHC), we will bring together physicians, insurers, hospital executives, and other industry leaders from around the country. They will join in discussions with key legislators — Ways and Means Chairman Bill Thomas and HSA leader Rep. Paul Ryan have both been invited to speak. The conference is free for CCC members, so if you are a member, please plan to join us. If you aren’t, please consider becoming a member of this dynamic and cutting-edge group of leaders. Click here for more information: www.galen.org/cccintro.asp.

Grace-Marie Turner


  • H.R. 525, Small Business Health Fairness Act of 2005
  • The drug approval pendulum
  • Examination and assessment of prescription drug importation from foreign sources to the United States
  • Pharmocoevolution: The benefits of incremental innovation
  • A cautionary note on the number of health-related bankruptcies
  • A new call to arms: Military health care

Source: Congressional Budget Office, 04/08/05

The Small Business Health Fairness Act of 2004 (H.R. 525), which would create a certification process and regulatory framework for association health plans (AHPs), would reduce federal revenues by a mere $261 million over the 2006-2015 period, according to a Congressional Budget Office cost estimate on the bill. Using an analytical model which simulates how small firms and their employees would react to the introduction of AHPs, the CBO found “that, by 2010, when the legislation is assumed to have its full impact, about 620,000 more people (including employees and their dependents) would be insured through small employers than would be insured under current law.” The CBO also estimates that nearly 8.5 million people would receive health insurance through AHPs and “about 10,000 people would lose coverage in response to rising premiums in the small-group market.”
Full text (pdf): www.cbo.gov

Author: Anne Applebaum
Source: The Washington Post, 04/13/05

“Even the arcane world of pharmaceutical regulation is afflicted by highly emotional mood swings,” writes Anne Applebaum, a columnist for the Washington Post. Applebaum looks back to the early 1990s when the public clamored for new breakthrough medicines and, in response, Congress passed the Prescription Drug User Fee Act designed to pressure the FDA to speed up its drug review process. “For a short time, harmony reigned,” writes Applebaum. “But then the pendulum began to swing, the winds of fashion began to blow in a different direction, and the FDA, once a bureaucratic monolith bearing down on the brave new world of pharmaceutical research, somehow managed to become the FDA, a bureaucratic castrato cozying up to the greedy pharmaceutical companies.” The withdrawal of several drugs, most recently Vioxx, from the market, has lead to calls for changes at the FDA. “Clearly, caution is now ‘in.’ Patients’ rights are ‘out.’ Risk-averseness is ‘in.’ Hot new research is ‘out,'” concludes Applebaum.
Full text: www.washingtonpost.com

Source: Giuliani Partners, 04/05

Importing prescription drugs from outside the United States “would compromise patient safety and expose the nation’s medicine supply to exploitation by organized criminals and terrorists,” according to a report from Giuliani Partners that examined the risks of drug importation. “Random inspections [at major mail facilities] found that 86% to 88% of the suspected drug parcels examined contained non-FDA approved medicines from such countries as Pakistan, Mexico, Brazil, the Netherlands and Canada.” Key findings of the report show that unapproved drugs are already coming into the U.S., the number of counterfeit drug cases is rising, and the current drug distribution system contains a number of loopholes and problems which need to be addressed. Furthermore, the report finds that legalized importation would not offer long-term economic benefits to consumers in the U.S. and that it would instead have a negative impact on pharmaceutical research and development.
Full text (pdf): www.phrma.org

Authors: Albert I. Wertheimer and Thomas M. Santella
Source: International Policy Network, 04/14/05

“The advantages of incremental improvements on already existing drugs are paramount to overall increases in the quality of health care,” write Albert Wertheimer and Thomas Santella of Temple University in a study for the International Policy Network. Critics claim that so-called “me-too” drugs are a “wasteful use of resources,” but new versions of existing drugs “often represent advances in safety and efficacy, along with providing new formulations and dosing options that significantly increase patient compliance.” Expanding existing drug classes also results in increased competition between manufacturers, leading to lower drug prices. “Policies aimed at curbing incremental innovation will ultimately lead to a reduction in the overall quality of existing drug classes and may ultimately curb the creation of novel drugs,” conclude the authors.
Full text: www.policynetwork.net

Author: Jeff Lemieux
Source: AHIP Center for Policy Research, 04/13/05

An earlier Health Affairs web exclusive “Illness and Injury as Contributors to Bankruptcy” (Feb. 2005) by David Himmelstein, et al, “does not come close to supporting the implication that half of all bankruptcies are caused by medical debts,” writes Jeff Lemieux, a senior vice president at America’s Health Insurance Plans. Lemieux argues that the authors used overly broad definitions of medical bankruptcy, and their research could not support the claims of causation. For example, “the authors’ definition of a health issue was very broad, ranging from uncovered medical bills over $1,000 within the last two years, to a two-week loss of work-related income due to illness or injury, to simply citing illness or injury as a ‘specific’ reason for bankruptcy,” writes Lemieux. “In fact, the authors stretched this already broad definition to include birth of a child, death of a family member, addiction, or uncontrolled gambling in order to boost the percentage of ‘medical’ bankruptcies over the media-critical threshold of 50 percent.”
Full text (pdf): www.ahipresearch.org

Author: Tim Weiner
Source: The New York Times, 04/14/05

“The cost of military health care is now bigger than the Army’s budget for buying new weapons, the Navy’s budget for new ships and submarines, or the Air Force’s budget for new planes,” according to a report in The New York Times. “Pentagon officials are warning Congress that something has to give.” Tricare, the military’s primary health care plan covering nearly nine million beneficiaries, costs almost $50 billion a year, with 75% of the benefits going to veterans and retirees, the Times reports. Tricare For Life, created in 2000 to provide Medicare wrap around coverage for retirees and family members who are Medicare-eligible, will cost $150 billion now through 2015. Air Force Chief of Staff Gen. John Jumper says the rising cost of military health care is “the single most daunting thing that we deal with out there today.”

[Retired Admiral and surgeon and active health reform advocate Steve Barchet wrote in a comment to us: “If ever there is an example of a ‘politically managed health benefit’ gone awry, this story makes it clear.”]
Full text: www.nytimes.com


Targeted Solutions for the Uninsured
Sponsored by the Galen Institute and the Council for Affordable Health Insurance
Tuesday, May 3, 2005
See our next newsletter for Capitol Hill location and time.

One Nation under Therapy: How the Helping Culture Is Eroding Self-Reliance
American Enterprise Institute Event
Monday, April 18, 2005, 2:00 – 3:15 p.m.
Washington, DC
For additional details and registration information, go to: www.aei.org.

America’s War on Carcinogens
Pacific Research Institute Breakfast Discussion
Tuesday, April 19, 2005, 7:45 – 9:00 a.m.
San Francisco, CA

For additional details and registration information, go to: www.pacificresearch.org

Ask the Experts: Medicaid
Kaiser Family Foundation Webcast
Wednesday, April 20 at 2:00 p.m. ET

For additional details, go to: www.kaisernetwork.org.

Should Government Fix Drug Prices?
Co-hosted by the Manhattan Institute & The Heritage Foundation
Thursday, April 21, 2005, 12:00 noon
Hart Senate Office Building, Room 902
Washington, DC

RSVP online to Tim Chapman, Deputy Director for Senate Relations at tim.chapman@heritage.org.

Can Health Savings Accounts Cover the Uninsured?
Cato Institute Policy Forum
Tuesday, May 3, 2005, 12:00 PM (Luncheon to follow)
Washington, DC

For additional details and registration information, go to: www.cato.org.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at http://www.galen.org/.

If you wish to subscribe to this free weekly newsletter, update your address, or be removed from our list, please send an e-mail message to galen@galen.org.

The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

Elizabeth Lamirand, editor