HSA Week

President Bush has made this Health Savings Account week, speaking at a forum featuring a panel of local business leaders in Bridgeport, Connecticut, on Wednesday and holding a HSA meeting and media briefing at the White House on Tuesday.

He clearly is passionate about HSAs, as I had a chance to see first hand.

The President held a private meeting on Tuesday in the historic and elegant Roosevelt Room in the West Wing with about a dozen people from the HSA world, including Don Hamm of Assurant Health, Bob Hurley of eHealthInsurance, Nathaniel Brinn of HSA Bank, and Leslie Hirschfield, a California broker who sold HSAs to a local labor union. I was seated next to the President and saw how much he wants consumers to have the power and freedom that HSAs offer.

The President made everyone in the room feel comfortable to talk and was genuinely interested in hearing how HSAs are working in the marketplace.

After the meeting, with all of us still there, they brought in about 20 TV cameras and as many reporters, and the President summarized the discussion: “We talked about the importance of cost savings through these important products, but we also talked about how we can work with the United States Congress to strengthen them; to make them more appealing; to give people more choices in the marketplace, to say to the American people, we trust your judgment, we trust you to make the right decision for you and your families.”

What an honor it was to be invited to this White House meeting!

The next day, the President traveled to the forum in Connecticut, where he heard a business owner talk about facing the prospect of dropping health insurance until he found HSAs. Instead of steep premium increases with his traditional insurance, his costs rose only 1.8% with the new HSA plan.

Another woman spoke of feeling empowered to search for the best price for health services and boasted that she had $800 left in her account at the end of the year: “You can call up different people and get the best price for your money, without compromising quality.”

The news coverage was remarkably positive, even giving relatively clear descriptions of what HSAs are and how they work. The President is committed to fighting for his health policy agenda and sees HSAs as part of the larger mosaic of freedom and trust in individuals’ ability to make the best decisions for themselves.

What a privilege it is to be part of this conversation.


Massachusetts also made big news this week when the legislature passed by big margins a new health plan that is designed to make the state the first in the nation to achieve universal coverage.

Gov. Mitt Romney, a likely 2008 GOP presidential candidate, has worked for two years to craft the plan, based upon his vision of offering portable private insurance through new pooling arrangements and with new subsidies to help lower- and middle-income people buy coverage.

The vision is on target, but the legislation includes several provisions that will be hard for free-market advocates to swallow, especially the mandate that individuals must buy coverage or face steep penalties. It also penalizes employers who must pay fines if workers aren’t covered.

The plan does little to bring the fresh ideas of consumer engagement to managing costs: In my first reading of the bill, policies offered through the Massachusetts “Health Insurance Connector” pool must have first-dollar coverage (the kind of coverage that union plans with bankrupt companies mostly have now). And all of the state’s existing 40 coverage mandates stay on the books. Health Savings Accounts can be offered through the new pool, but only through HMOs. However, other plan options outside the pool are expected to be more flexible.

The biggest danger is that costs will rise much faster than anticipated, and more fines, penalties, mandates, and taxes will be imposed to try to do what market forces could have done in the beginning. If the Massachusetts insurance market had been less regulated, the marketplace could have offered more affordable, more attractive health insurance policies that people wanted to buy, rather than forcing them to purchase plans approved by the state.

States are laboratories of democracy so Massachusetts gets an E for effort. Gov. Romney has line-item veto power, and he may be able to make some last minute changes, but we – and lots of other states – will certainly be watching to see how his plan unfolds.


A new Gallup Poll says that two-thirds of Americans say they personally worry “a great deal” about the availability and affordability of healthcare, making the issue the most worrisome among a dozen measured. It is the top issue for Democrats, independents, and Republicans.

And, in a series of townhall meetings around the country, people are getting a chance to have their say on the issue. Julie Appleby writes in USA Today that a series of 36 (count them!) town hall meetings are being held through early May to give citizens a chance to express their views on the future of the U.S. health care system.

Organizer par excellence Jonathan Ortmans and the Public Forum Institute are producing the meetings, which were authorized by Congress when it created the 15-member Citizens’ Health Care Working Group. Later this year, the group will make recommendations to the President and Congress for reform of our health care system.

Jonathan uses high-tech keypads to let the audience vote on a range of policy options. On March 4, about 500 people showed up at the forum in Los Angeles; 51% of those attending, for example, said that people with higher incomes should pay more for health care, while 20% said everyone should pay the same.

But the meetings are dominated by union members and social activists. We need free-market people to attend them as well. Here’s a link to the schedule. Why not attend and have your voice heard?

Grace-Marie Turner


  • Massachusetts sets health plan for nearly all
  • Individual mandates for health insurance: Slippery slope to national health care
  • One solution for the small group market
  • The health of a nation
  • Healing America’s ailing health care system
  • A statement of madness

Author: Pam Belluck
Source: The New York Times, 04/05/06

The Massachusetts legislature this week overwhelmingly passed a bill that would require all state residents to obtain health insurance coverage by July 1, 2007, reports The New York Times. People with incomes at or below 300% of the poverty level will be offered subsidies for private plans, and eligible children in those families will receive free coverage through Medicaid. Those who fail to get insurance by July 2007 will lose their personal exemption on their state taxes and, in subsequent years, would pay a penalty that “could be as high as half of what an affordable health care premium would cost.” Businesses with 10 or more employees that do not provide insurance will face a penalty of up to $295 per employee per year. The program is expected to cost $1.2 billion over three years to cover 515,000 uninsured, about 95% of Massachusetts’ uninsured population.
Full text: www.nytimes.com

Author: Michael Tanner
Source: Cato Institute, 04/05/06

As the nation looks to Massachusetts as a model for health reform, the Cato Institute’s Michael Tanner warns that individual mandates for health insurance will be difficult to enforce and will ultimately lead to a government-run national health care system. “Individual mandates cross an important practical and philosophical line: once we accept the principle that it is the government’s responsibility to ensure that every American has health insurance, we guarantee even more government involvement with and control over large portions of our health care system,” writes Tanner. If enacted, a federal mandate “would be an unprecedented expansion of government power,” yet would likely be unenforceable, especially among the states, “because it would involve a costly and complex bureaucratic system of tracking, penalties, and subsidies.” Instead of focusing on expanding coverage through individual insurance mandates, we should focus on reducing costs and improving quality, concludes Tanner. “That will require the introduction of market mechanisms to give consumers more control over and responsibility for their health care decisions.”
Full text: www.cato.org

Author: JP Wieske
Source: Council for Affordable Health Insurance, 04/06

Small businesses who currently cannot afford to offer health insurance to their employees through the small group market could be helped by “list billing,” writes JP Wieske of the Council for Affordable Health Insurance. “List billing is the process that allows a health insurance company to send employers a single bill for several employees’ individual health insurance policies, if the employer and employee agree to payroll-deduct employee premiums,” writes Wieske. He details several ways that employees and employers can both benefit from list billing. “List billing alone will not solve the uninsured problem, nor is it a substitute for small group coverage,” concludes Wieske. “However, it does provide an option for an employer to help uninsured employees find affordable coverage, while reducing the costs and challenges of finding insurance.”
Full text: www.cahi.org

Author: Allan B. Hubbard
Source: The New York Times, 04/03/06

Increasing health costs, driven by a third-party system which shields consumers from the true cost of insurance, can be controlled through high-deductible insurance policies, like Health Savings Accounts, writes Allan B. Hubbard, assistant to the president for economic policy and director of the National Economic Council. “Health care is expensive because the vast majority of Americans consume it as if it were free,” writes Hubbard. “Informed consumers could bring down costs throughout the health care industry by choosing only high-value care, making providers raise quality and lower prices to compete for their business, and spurring the development of the kind of cost-effective innovation we see in other parts of the economy,” concludes Hubbard.
Full text: www.nytimes.com

Allan Hubbard’s market-driven approach to health care and push for price transparency among doctors and hospitals is further discussed in this Wall Street Journal article.
Full text (subscription required): online.wsj.com

Authors: Denis A. Cortese, MD and Robert K. Smoldt, MBA
Source: Mayo Clinic Proceedings, 04/06

Dr. Denis Cortese, president and chief executive officer of the Mayo Clinic, and Robert Smoldt, Mayo’s chief administrative officer, offer their vision for health care in the United States to function as a “learning organization.” The authors suggest that “[c]urrently, a myriad of professionals and organizations provide health care, but no vision has ever been articulated for these disparate parts to function together and learn from each other.” They describe how the Mayo Clinic has been using a systems-engineering approach to improving care since the early 1900’s, first with a single, central file for each patient and now with a new electronic medical record system. The authors propose that a consumer-driven, market-based approach will be the best way to achieve their vision. “Competition around value will improve health care quality and lower costs,” they write. “Increased transparency, publishing outcomes and quality indicators, makes it possible for consumers and payers to make informed choices about which health care provider they select.”
Full text:www.mayoclinicproceedings.com

Author: Sally Satel
Source: National Review Online, 04/05/06

Sally Satel, a psychiatrist and resident scholar at the American Enterprise Institute, takes issue with the “Consensus Statement of Mental Health Recovery” recently released by the federal Substance Abuse and Mental Health Services Administration (SAMHSA). Satel argues that the vision of recovery is “dangerously partial” by not accounting for many seriously ill patients. “By neglecting the needs of the most severely ill – that is, the individuals whose very awareness of being sick is blunted – the Consensus recovery guidelines are applicable to only half of those with mental illness,” she writes. Satel concludes, “The new Consensus Statement only fuels the well-deserved image of an agency [SAMHSA] that is often sorely misguided and na?ve in its approach to the most vulnerable (and costly) of its constituents: the severely mentally ill.”
Full text: www.nationalreview.com


Combating the Diseases of Poverty: Aid versus Innovation
American Enterprise Institute Event
Wednesday, April 19, 2006, 3:30 – 5:00 p.m.
Washington, DC

For additional details and registration information, go to:www.aei.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/.

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