IN THIS ISSUE:
? SOTU to be Featured in Galen’s Health Policy Matters
? HSAs Most Important Legislation of 2003 – Feldstein
? NCPA’s Analysis of HSAs
? UnitedHealth Group CEO — Only Academics Should Define Essential Coverage
? HSAs – “Thinking Outside the Box”
? HSAs — A Further Shift Toward Consumer Driven Care
? HSAs — “A Real Boon for People” – CBS
? The “I Love Being Vindicated” Department
SOTU to be Featured in Galen’s Health Policy Matters
I am writing this the afternoon before the President’s State of the Union Speech. If you would like to get a review of the health care provisions he announces tonight, you should subscribe to Galen’s “Health Policy Matters” newsletter that comes out every Friday. Galen President Grace-Marie Turner will have a thorough analysis of what is expected to be a major initiative on health care from the White House.
HSAs Most Important Legislation of 2003 — Feldstein
Martin Feldstein weighs-in on HSAs in “The Wall Street Journal” this week. He calls it “the most important piece of legislation of 2003.” He says, “The new HSA law (a part of the recent Medicare reform bill) eliminates the preferential subsidy for comprehensive insurance by giving the same tax treatment to individuals who set aside income to pay cash for a larger share of their own health care.” He provides an illustration of how they work by citing premiums for a California Blue Cross family policy. He says a plan with a $1,000 deductible ($500 each for two family members) costs $8,460 in annual premium, while a plan with a $5,000 deductible ($2,500 each for two family members) costs $3,936, for a premium saving of $4,524, which can be deposited into the HSA. [Actually the savings are even better than that. Since a family that buys its own coverage gets no tax deduction for the premium, they are better off minimizing their premium payment and maximizing the HSA deposit. Assuming, as Feldstein does, that this family pays 45% in taxes, they would have to earn $15,382 to have enough left over to pay the $8,460 premium. They would only have to earn $7,156 in gross income to pay the $3,936 premium. Add in the $4,524 tax-free HSA deposit, and the family has saved another $3,702 over the cost of the low-deductible health plan. -GS]
SOURCE (subscription required): http://online.wsj.com/article/0,,SB107447362821704871,00.html
NCPA’s Analysis of HSAs
NCPA President John Goodman also celebrates the HSA law in a Brief Analysis. He makes the interesting point that Americans could easily double our health care spending on beneficial services. He says “There are more than 900 diagnostic tests that can be done on blood alone, and one doesn’t need too much imagination to justify, say, $5,000 worth of tests each year.” He says health care must be rationed, but there are only three ways to do it – impose it from the government, use managed care techniques, or “allow individuals to make their own choices between health care and other uses of money, through a vehicle such as HSAs.” He concludes that HSAs “should appeal to liberals who want an alternative to HMO rationing. (They) should appeal to conservatives who want an alternative to government rationing.”
UnitedHealth Group CEO — Only Academics Should Define Essential Coverage
Jim Frogue of the American Legislative Exchange Council agrees. He tells Milt Freudenheim in “The New York Times,” “There will always be somebody rationing our care. The question is who is going to do it.” The rest of the article looks at a variety of efforts by the states to expand coverage and define “basic benefits,” including an effort in Maryland to eliminate some mandated benefits and punish people who fail to purchase coverage. John Sheils of the Lewin Group seems to think it is hopeless — “There is very little in health care you can trim off,” he says. But Dr. William McGuire, CEO of UnitedHealth Group, puts his faith in academia – “The definition of essential or basic coverage has to be made in the academic community.” So much for the notion that UnitedHealth Group might have a role to play in consumer driven health.
HSAs – “Thinking Outside the Box”
On the other hand, Eve Mitchell of the “Alameda (CA) Times-Star” quotes incoming president of the California Association of Health Underwriters Don Goldmann as saying HSAs are a “thinking outside of the box” approach to health coverage that will “have a big future in California.” [Assuming, of course, that Dr. McGuire’s academic community approves of it]. But academia notwithstanding, Joe Walshe of PricewaterhouseCoopers says, “[For] small employers and employers that couldn’t afford to offer health-care benefits, this provides more of an affordable opportunity?” In a companion article Ms. Mitchell cites several local business owners who believe HSAs will “help rein in rising health insurance premiums?” The article goes on to quote Len Burman of the Tax Policy Center as arguing HSAs are for the healthy and wealthy, and counters with NCPA’s Devon Herrick who says, “HSAs will empower consumers to be wiser medical consumers.” [Gosh, the academic community seems to be divided. What will Dr. McGuire do now?]
HSAs — A Further Shift Toward Consumer Driven Care
“The Daily Record” of Baltimore includes an article by benefits attorney Becky Kukuk [Are attorneys included in the “academic community”?] in which she says, “The enactment of HSAs represents a further shift in U.S. health care policy toward consumer-driven health care.” She adds, “HSAs offer a flexible, tax-free savings vehicle to a growing segment of health care consumers.” She cites the recent Kaiser Family Foundation study of employer benefits that “found that 17% of large employers (5,000+ employees) offered high deductible health plans (and) 16% indicate they are likely to add a plan of this type in 2004.”
HSAs — “A Real Boon for People” — CBS
Eva Rosenberg writes for CBS’s “MarketWatch,” “Finally, a tax-advantaged health-care program that cuts across all income levels and lifestyles – the new Health Savings Accounts. They are a real boon for people who pay for their insurance coverage.” She cites Tim Bireley of Fortis Health as saying up to 40 million people will take advantage of them. She reports on a CPA in South Carolina who knows of one company that has already implemented an HSA and expects to save $65,000 in premiums in 2004. Also cited is Elise Koll of Working Today who says HSAs are “more than just portability in health care? They remove the employer-ownership of the plan and put control into the employees’ hands.”
The “I Love Being Vindicated” Department
I’ve been arguing for some years now that the role of “agency” is important in health care, but that employers make very poor agents. The whole point of agency is that the agent works for the consumer – not the other way around. Plus, few employees want their boss to even know about their health care needs, let alone confide in them. I’ve been suggesting that there will be a whole new profession to evolve of health care agents – people who can advocate on behalf of the consumer in navigating a complex health care system. Now Sally Roberts reports in “Business Insurance” on just such a development. She writes, “As employers continue to shift some of the rising health care cost burden onto employees, more are beginning to ease the pain by offering health advocacy services as an employee benefit.” She quotes Jane Cooper, president of Patient Care, a two-year old advocacy firm, as saying, “One of the things that’s driving the advocacy industry is the move toward more consumer responsibility.” Briggs & Stratton is one firm offering the service to its 6,500 employees. The article says the company “offers a consumer driven health plan for which Patient Care provides additional negotiating services to employees enrolled in that plan.” Company spokesman Craig Reynolds says Patient Care has extended hours in the evening and on weekends, “Our staff here can’t match that. And even if we could, we’ve still got issues with HIPAA.” Other vendors mentioned in the article are Hewitt Associates and Health Advocates.
SOURCE (subscription required): http://www.businessinsurance.com/cgi-bin/article.pl?articleId=13986&a=a&bt=Advocacy
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