Health Savings Accounts Are A Scam

Health savings accounts, touted as the latest "free market" solution to our spiraling health care costs, is nothing but a scam to give more money to insurance companies and the rich.

Health savings accounts by definition favor the wealthy and/or the healthy. For those that never go to the doctor, or who can afford the high out-of-pocket costs incurred when using health savings accounts (you need to pay $1,050 as an individual or $2,100 for a family before your insurance will cover the rest), health savings accounts are great. Wealthy and/or healthy individuals can put a bit of money away, tax free, into their health savings account and then draw from it to pay their astronomical out-of-pocket costs when they decide to go see a doctor. If you're healthy, the doctor's visit doesn't happen very often. If you're wealthy, who cares if it happens very often, you can afford it.

For the rest of us, however, health savings accounts don't work. If we get sick and see the doctor often, we have to pay those huge costs often; that means we have to save a lot of money in that health savings account. For those on fixed incomes, or even those just barely scraping by (and that's a lot of us in today's economic climate), putting away even $4,000 in a health savings account is out of the question. Health savings accounts don't work for the same reason tax credits don't work: Those who don't have a lot of cash to save are forced to put away money they don't have a bit at a time to pay for their care. With tax credits, they get repaid at the end of the year. With health savings accounts, they don't pay taxes on that money. But either way, they need to save over the course of a year to get that payoff. For a lot of folks, this just isn't a realistic option - there's simply nothing to spare.

Is it any wonder, then, that health savings accounts haven't been embraced by most Americans? Jason Roberson at The Dallas Morning News reports:

Today, with only 5 percent of the 114 million Americans covered at work opting for such health plans, their future is in question. In Texas, regarded as the birthplace of the HSA, only 387,000 people have signed up out of the 12 million with employer-provided insurance.

Proponents point to small companies - including some in Texas - that have used the lower-cost plans to offer coverage for the first time.

Meanwhile, critics argue that the plans benefit only the healthy and wealthy, with sick patients who can't afford deductibles of more than $2,000 doing without care.

...

Despite the tax benefits, patients have not been enamored of the trade-off. Few have signed on at companies now offering HSA plans as a new option, according to the Commonwealth Fund, a private New York City foundation focusing on the nation's health care system.

...

On the other side, Stacy Pogue, a policy analyst at the Center for Public Policy Priorities, an Austin-based advocacy group, argued that HSAs favor healthy people, who don't worry about a deductible, and the rich, who have the money for a big deductible and like the tax incentives.

In fact, a May report from the Government Accountability Office found that taxpayers with health savings accounts averaged an adjusted gross income of $139,000 in 2005 vs. $57,000 for other filers.


Health savings accounts, by favoring the wealthy/healthy, redistribute wealth in the wrong direction. Insurance companies pay out less money, as our out-of-pocket costs are higher. The rich who can afford to pay the costs stay fat. The rest of us are forced to pay more of our hard earned money for health care and the gap between the rich and poor rises. This is redistributing wealth towards the rich, a venerable American tradition.

People who work hard, who pay their taxes, and who get sick out of no fault of their own deserve better.

And health savings accounts do nothing to address underlying problems. Insurance companies can still deny care at will, even after people are forced to pay thousands out of pocket. Health care access is still determined by your wealth - the more money you have the more health care you can buy. And health savings accounts do nothing to lower the actual cost of health care, they only serve as a small deterrent for people to see a doctor in the first place.

John Goodman, president of the National Center for Policy Analysis in Dallas and "father" of the health savings account admits as much:

"If a mother wakes up in the middle of the night with a sick child, we want her to think about the cost of the emergency room visit," said Mr. Goodman, dubbed by many the "Father of Medical Savings Accounts."

That's an amazing admission. Proponents of health savings accounts like Goodman want mothers with sick kids thinking about how much money is in their bank account instead of the health of their child. And here is where the differences of opinion become intractable: I believe that when a child is sick, the only thing that should be on a parent's mind is healing and comforting. Parents should be consulting their doctor, not their check book.

Paul Krugman agrees with this basic assessment of the failings of health savings accounts, and he points to a further problem:

But for people whose income puts them in high tax brackets, these accounts are a very good deal; making the premiums deductible turns them into a great deal. In other words, health savings accounts will offer the already affluent, who don't have problems getting health insurance, yet another tax shelter. Meanwhile, health savings accounts, in the view of many experts, will actually increase the number of uninsured.

...

In the case of health savings accounts, the key side consequence is a reduced incentive for companies to insure their workers. When companies provide group health insurance, healthier employees implicitly subsidize their sicker colleagues. They're willing to do this largely because the employer's contributions to health insurance are a tax-free form of compensation, but only if the same plan is offered to all employees.

Tax-free health savings accounts and premiums would provide healthier and wealthier employees an incentive to opt out, accepting higher paychecks instead, and would lead to higher insurance premiums for those who remain in traditional plans. This would cause some companies to stop providing health insurance, or raise employee contributions to a level some workers can't afford.


Not only to health savings accounts redistribute wealth upwards, they undermine the basic notion of risk-sharing that our current health system is based on.

So, to recap:

  • Health savings accounts allow insurance companies to keep more money.
  • They offer tax shelters to the wealthy,
  • while hard working Americans pay more out of pocket,
  • and parents are forced to worry about their bank accounts instead of the health of their children.

In short, health savings accounts are a scam.

Tags: Health care, health savings accounts (all tags)

Comments

63 Comments

Re: Health Savings Accounts Are A Scam

I agree that HSAs are really only good if you are young and healthy.  In that case, if you never go to the doctor, and require no prescriptions, you can save up a lot of money.  My company tries to encourage people to use them by giving them $500 a year in the HSA if they decide to take that over the PPO.

For me, right now, it doesn'g make much sense because I would come out slightly behind because of my prescriptions.  

I really don't think they even help out weathly employees that much, if they are not healthy, because there is still a limit as too how much money you can put into the HSA, they really only help out corporations.

Anyway, while I do not like HSAs, I still think that too many people run to the doctor too quickly in today's society.  There is no reason to take little Johnny to the doctor every time he gets a cough.  This bothers me because I know this is part of the reason that my premiums go up so much each year.

If we want to go to some sort of Universal health care, we have to realize that type of mentality just wont work.  

We have to find some way to make sure that the health care is available, but that people do not abuse it.

by gavoter 2008-08-02 02:06PM | 0 recs
Re: Health Savings Accounts Are A Scam

Nonsense. People in Canada, whose health care is free, Free, do not abuse the healthcare system. If you do not fear that healthcare will be denied, you do not obsess over getting some. Anymore than you would abuse the right to hang out in a drivers license office, anymore than you would hang out in a grocery store. Doctors in Canada don't give you more medical care merely because you show up. Doctors in France don't give you two knee replacements because you go back again.

Its no fun hanging out in a Doctors office, or an emergency ward. The British get what they need and go home. So would you. "Oh no while I'm here how about an appendectomy?" And if you did, then you have a syndrome, its called Münchhausen's BTW, and you might be offered assistance for that.

And Canada's system is cheaper than ours, Frances is more cost effective, England is not bankrupted by giving away their prescriptions.

Don't be fooled, Healthcare is a right and should be funded like all rights are funded, or were funded before the Republicans ruined America, out of general revenue. It makes running a company a lot cheaper, and covers everyone.

by Exiled 2008-08-02 02:30PM | 0 recs
Don't fall for the "abuse" FUD!

"We have to find some way to make sure that the health care is available, but that people do not abuse it."

Abuse? By the customers? This theme is propagated by the rethuglicans again and again, but has never really been proven. Just use your comment sense: Which human being, apart from maybe a small bunch of perverts, really enjoys medical exminatins and procedures. OK, when feeling sick, real or imagined, humans tend to overreact, and lack the restraint that insurance companies would like to see. But a human being is necessarily a poor judge when making decisions that go to the core of its own existence. We all have to rely on medical experts for making those decisions for us. And that's where abuse happens, because all those pros have no interest whatever in reducing their workload, on which their income depends.

But HSA's and other private plans are not superior in coping with this abuse. They only offer an incentive to reduce ALL health care spendings, regardless if they are reasonable or not. And this fools people into NOT spending bucks on necessary treatments and prescriptions, often resulting in later emergency room expenditures that vastly exceed all "savings" made before. Almost needless to say, but this is not a rational way to base a health care system on!

So, abuse by the customers is almost a nonexisting problem. There are unnecessary costs, sure, but they come form abuse by the professionals who make a living on health care services. And nothing in private plans efficiently deals with thisn problem, quite to the contrary. A centralized system, like universal coverage, is much better suited for identifying doctors and clinics that routinely bill unnecessary procedures or use other methods to boost their income by betraying the trust of their patients.

by Gray 2008-08-02 11:05PM | 0 recs
Don't fall for the "Don't fall for" game

Part of the reason health care costs continue to rise is that health care spending continues to rise. Abuse is a fair issue to raise in a quasi-free market: just as people are free to go uninsured when they can afford insurance and thereby shifting future costs onto the rest of the public, so too are insured people free to consume more health care via their employer plan than is effective. I don't think anyone's suggesting that people go out of their way to make as many doctor's visits as possible and take as many tests as can be had; but I also don't think a lot of people who aren't directly in control of the majority of their health care costs try to find the least costly and most effective treatment. The theory behind HSAs tries to address that. As is, they're not very useful for the average family. (I do disagree with J Ro's suggestion that it's a tax shelter for the rich. If employer payments on health care for employees are tax free, why shouldn't money set aside and used for health care be free from tax penalties as well?)

I think it's fair to have an honest discussion about all of the issues with respect to finding a politically innovative way to bring back social services and try to narrow the widening wealth gap in America. But ignoring one side of the problem while advocating a fix to address the other side is just as foolish a thing to fall for as any other gimmick.

by bowiegeek 2008-08-02 11:26PM | 0 recs
Another great theory that doesn't work in reality

"The theory behind HSAs tries to address that."
Sure. But it doesn't work. Simply because the customers don't have the knowledge to decide what's necessary and what's not. The doctors should decide this, not the patients.

"If employer payments on health care for employees are tax free, why shouldn't money set aside and used for health care be free from tax penalties as well?"
The point is, this only helps people who pay so much taxes that they can deduct the payments. This doesn't help the working class people, who have the most dire problems with health care costs, at all.

"But ignoring one side of the problem while advocating a fix to address the other side is just as foolish a thing to fall for as any other gimmick."
Sure. But, as I showed, HSAs don't really address the problem, because the customers are not in a good position to make reasonable decisions. Come on, all those decades of reliance on employer based health care and private plans haven't brought any relief from rising costs. Where do you get the idea that finetuning the existent system will finally manage the trick? That's totally counterproductive.

by Gray 2008-08-03 12:11AM | 0 recs
Ideology shouldn't get in the way...

But it doesn't work. Simply because the customers don't have the knowledge to decide what's necessary and what's not. The doctors should decide this, not the patients.

And why do you think that is? The theory doesn't work in practice because HSAs as drafted by Congress act as a kind of supplement to high deductible insurance, not exactly a substitute. If one of our shared goals is to lower costs, consumers prioritizing expenditures is important. Excuses for why consumers don't have good information now doesn't cut it. Based on present circumstances, few have the incentive to find out.

The point is, this only helps people who pay so much taxes that they can deduct the payments.

Incentivizing people to save for future medical costs is a good thing. 1) There's a yearly cap on how much an individual can contribute. It's about $3,000. I hardly think Wall Street fat cats are stuffing their millions in HSAs because they want a tax shelter. 2) HSAs aren't just some Swiss bank account that you can liquidate in a snap. Liquidating an HSA (for non-health purposes) incurs a similar tax penalty as prematurely pulling out of an IRA. Saving is good. Saving for future health costs isn't wrong.

This doesn't help the working class people, who have the most dire problems with health care costs, at all.

I think all of the people who have defended the impetus behind HSAs have pointed out that they aren't for everyone. Why should we go the route of bureaucratic arrogance that says just because x does not fit in with my ideological preference for all people, we should call it a scam?

But, as I showed, HSAs don't really address the problem, because the customers are not in a good position to make reasonable decisions. Come on, all those decades of reliance on employer based health care and private plans haven't brought any relief from rising costs.

Consumers can be put in the position to make good decisions if they have information. As is, there is no incentive for them to obtain information. Participants in HSAs have much more incentive to be better consumers. Reduced demand for non-necessary treatments lowers costs by shifting resources back toward other less costly treatments. Doctors, god bless them, are still salesmen too. Pharmaceuticals lobby them to prescribe new patented drugs and tests with new machinery. I know that medical oversight authorities are looking into this, but in the meantime it's reasonable to try and prod America into being more savvy about health care costs.

Where do you get the idea that finetuning the existent system will finally manage the trick? That's totally counterproductive.

The existent system will continue to exist after 1/20/09. It's counterproductive to argue from a position of expecting a new system to magically develop in complete ignorance of some of the fundamental problems with the way we obtain health care. Universal Health Care is important. It's so important, that we shouldn't be hostile to bipartisan, hybrid, cost-saving strategies in order to get it.

by bowiegeek 2008-08-03 01:08AM | 0 recs
Re: Ideology shouldn't get in the way...

"Excuses for why consumers don't have good information now doesn't cut it."
The average customer will never be in a position to apply good judgment on medical proposal. Damn, he can't even get his TiVo to run like he wants it, where on earth do you get the idea that he may be able to second guess the doctors? Now, come on...

"Incentivizing people to save for future medical costs is a good thing."
Only when you try to conserve a system that puts the risk of high copayments in the future on the customer. The much better idea is to get rid of that system asap. For details on the deductment, pls check the great comment on this in this thread.

"Why should we go the route of bureaucratic arrogance that says just because x does not fit in with my ideological preference for all people, we should call it a scam?"
Huh? You stomp for HSAs, admitting that they are helping only the more afluent people, and you don't think it's a scam to present this as beneficial for all? This is a blatant special interest pork issue. Now what do you want, a system that is working for everybody, or a plan that will only help you and your peers? Because universal coverage and HSAs don't fit well together. Universal coverage would get rid of the single reason behind HSAs, high copayments.

"Consumers can be put in the position to make good decisions if they have information."
Some customers, but not all. And look at the telecom market, or at the airlines. What did the "position do make good decisions" bring the customer? Even the most intelligent and knowledgeable customers are still left with the same bad choices.

"It's so important, that we shouldn't be hostile to bipartisan, hybrid, cost-saving strategies in order to get it."
Huh??? Excuse me pls, but the rethuglicans are AGAINST universal health care. Where do you see any potential for compromise with these uncompromising ideologists? Not to speak of that HSAs don't make no sense in a universal coverage system. All Dem plans (Edwards, Clinton, Obama) show a reasonable migration path by de facto making medicare the standard, with the insurance co.s having to adapt to this. But there won't be copayments on a level that makes saving for them reasonable any more. HSAs are automatically dead when universal coverage comes. And why should there be an artificial "compromise" on this, if this will only result in people still burdened with the costs of therir treatments? This doesn't make any sense.

by Gray 2008-08-03 01:34AM | 0 recs
Re: Ideology shouldn't get in the way...

The average customer will never be in a position to apply good judgment on medical proposal.

That's complete nonsense. As with any other scarce resource, as the price increases we will have to find better ways to manage it. Why on earth do you think medicine is so special that no one wants to spend an hour on google researching a condition if they had the incentive to?

Only when you try to conserve a system that puts the risk of high copayments in the future on the customer.

Hardly, in the short term consumers begin to conserve health care, not insurance. They're just as insured as they ever were with the current form of HSAs. In the long term, consumers' prolonged status as insured with access to medical treatments makes them less risky to any insurance pool, thereby lowering precautionary costs.

Huh? You stomp for HSAs, admitting that they are helping only the more afluent people, and you don't think it's a scam to present this as beneficial for all? This is a blatant special interest pork issue. Now what do you want, a system that is working for everybody, or a plan that will only help you and your peers?

How nasty and disingenuous are you willing to go? Because you just accused me of being a wealthy person only looking after his money, I'll have you know that I'm currently uninsured. But I do care enough about the politics and economics of the issue to persuade you that you are severely misinformed about HSAs. People get high deductible insurance coverage not because they're rich, but because they need to lower their monthly premiums. HSAs go to pay that deductible. So let's leave family economic decisions to families. If it is more beneficial to have some of their earnings placed in a tax free shelter that earns tax free interest to go toward small things, but have full coverage in the case big problems like a car crash or leukemia, let them decide for themselves what's best. Some are.

"Consumers can be put in the position to make good decisions if they have information."
Some customers, but not all.

Well then you just contradicted yourself from before when you said that consumers will never be in a position to make good decisions, notwithstanding information.

Excuse me pls, but the rethuglicans are AGAINST universal health care. Where do you see any potential for compromise with these uncompromising ideologists?

If the primaries were any clue, Obama's rhetoric on this issue is very close to the Republicans' in principle. He stresses access, not guaranteed coverage for every person. As it turns out, so do the Republicans. So here's the deal: if Obama thinks he can bring people together, he's going to have to come January on this issue. Republicans, on the other hand, will be weak enough after this election to compromise somewhat, but not perform a complete 180. Suppose that Democrats win a hugely optimistic 8 seats in the Senate this time. They still won't get past a filibuster.

HSAs are automatically dead when universal coverage comes.

I think if you looked into universal coverage systems elsewhere around the world, private options still exist and thrive on top of government mandated coverage. Saving HSAs would be a very low cost, beneficial compromise toward getting to Universal coverage (hopefully drafted by people more like Clinton than Obama) that does very little damage to anyone.

by bowiegeek 2008-08-03 10:18AM | 0 recs
Restless Leg Syndrome

Ok, this is my example for abuse.  I can not recall the name of the medicine they started advertising a while ago that cured RLS.   Once this went on the air, the number of claims of people having this skyrocketed.  All of a sudden, everyone had RLS and needed to get the expensive prescription to help.

Of course most of the people did not have this, but they saw an ad for a perscription and they wanted it and their doctors gave it to them.  It is this kind of crap that I consider to be abuse.  Yes, it is generated by the health care industry itself, I understand that.

The first step toward Health care reform that I want to see is a total ban on advertisements by prescription drugs.   There is no reason that the average American needs to know that there are 6 or 9 or 12 different drugs to combat High Cholesterol.  That is what Doctors are supposed to do.

You can not tell me that people in Canada go to their doctors and demand as many prescriptions as Americans are, and that they are getting them all prescribed under nationalized health care.

This is the type of attitude that has to change in America.  I don't care whether you are left or right, most Americans are greedy and will take advantage and abuse a system in ways that Europeans would not.

by gavoter 2008-08-03 11:59AM | 0 recs
Re: Ideology shouldn't get in the way...

"Why on earth do you think medicine is so special that no one wants to spend an hour on google researching a condition if they had the incentive to?"
Googling a condition? And this will make them qualified to second guess their doctor's proposal???Sry, I don't believe this for a minute. I guess we will never reach any common ground on what can be expected from the average Joe.

"They're just as insured as they ever were with the current form of HSAs."
I thought we were speaking about the changes that will come soon with universal coverage? If you have universal healthcare, for which part of healthcare do you need savings then? Maybe you think the donut hole will survive?

"Well then you just contradicted yourself from before"
Lets check this:

  1. The average customer will never be in a position to apply good judgment on medical proposal.
  2. Some customers, but not all.
See? Some customers, those with above average education, may be able to execute effective control. No contradiction at all.

"I think if you looked into universal coverage systems elsewhere around the world, private options still exist"
Well, I'm from Europe, you know, and so I'm well aware about private plans here. They are quite different from the US, and have their own problems. But I've never heard about HSAs here.

by Gray 2008-08-03 06:16PM | 0 recs
Re: Ideology shouldn't get in the way...

Googling a condition? And this will make them qualified to second guess their doctor's proposal???Sry, I don't believe this for a minute. I guess we will never reach any common ground on what can be expected from the average Joe.

The market for health care options information is growing. There are already scores of sites not to supplant a doctor's judgment but to put treatment suggestions into perspective. As I pointed out earlier, some doctors have incentive to inflate revenue earnings to hospitals, manufacturers, and drug companies who support them. A health economist at the University of Pennsylvania argues that part of the excessive testing that goes on is in part a precaution against malpractice suits alleging misdiagnosis or negligence. Given the incentive to look for information (such as managing their own pot of health funds), many more people will have to opportunity to scale back increases in the price of obtaining health care.

I thought we were speaking about the changes that will come soon with universal coverage? If you have universal healthcare, for which part of healthcare do you need savings then?

I don't know about you but I was talking about the reality of HSAs now. As I mentioned before, people who can't afford monthly premiums for so-called traditional health insurance plans opt to buy high deductible coverage which lowers their monthly premium. The savings goes toward paying for treatments under the baseline amount.

Well, I'm from Europe, you know, and so I'm well aware about private plans here. They are quite different from the US, and have their own problems. But I've never heard about HSAs here.

Now that I know you're from Europe, I can at least see why you're wholly unfamiliar with HSAs. It still doesn't excuse the fact that you went out of your way to imply falsehoods about a program you know nothing about. In the end, America will not adopt a European plan if we really do this time around. One need only look at Obama's unfortunate but successful attacks on Clinton's automatic enrollment and mandatory subsidized coverage suggestion to see where we are at the moment.

by bowiegeek 2008-08-03 09:29PM | 0 recs
Re: Ideology shouldn't get in the way...

"you're wholly unfamiliar with HSAs."
I am not "unfamiliar" with HSAs, how often do I have to say this? I am interested in health care plans all around the world, and I especially follow the discussion in the US quite cosely. I regularly read the NYT and WaPo coverage, and am a regular reader of Ezra Klein's blog at The American Prospect. And as you may know, Ezra is regularly blogging about news and trends in healthcare, and is cited regularly by Paul Krugman from the Times. So, I think I'm adequately informed to participate in such a discussion.

No, the problem seems to be more that we're talking on different frequencies. My point is, HSAs are only an addon for "conventional" healthcare insurance, designed for reducing the negative impact of high copayments. But this kludgy system led only to very high healthcare costs while at the same time producing only average performance, and HSAs didn't change anything with that. So, the whole thing has to go, and hopefully it will be replaced soon by universal coverage as proposed by all major Dem candidates.

And then large copayments, going into the thousands of dollars, will be a thing of the past, too. Small copayments may provide an incentive for the customer to be more aware of healthcare costs, and they are common in many systems all around the world, but even their benefits are questionable: "Some proponents of cost-sharing argue that copayments encourage people to be more cost-conscious so that they make "smarter" health care decisions and avoid unnecessary care.  The research indicates, however, that most consumers, whether low-income or not, do not selectively reduce their use of less effective care; consumers typically lack the clinical knowledge to make informed choices.  For example, patients might choose to go to the doctor because of coughs or discomfort that are symptoms of common colds that will pass in a day but avoid seeking care for chest pains that could signal heart disease."
http://www.cbpp.org/5-7-03health.htm

However, one way or the other, HSAs don't make any sense in an environment where copayments will only amount to a few hundred dollars a year. The administrative effort would be higher than any positive effects. Defending HSAs comes down to defending the bad old system, which has resulted in dozens of millions of Americans living without any healthcare insurance, numerous hardships, including bankruptcy, for those insured, high administrative costs for doctors and clinics, and all this without providing better results than nations who spend much less. That's the point I tried to make here in my comments. Sry if I didn't manage to get this through to you.

by Gray 2008-08-04 01:45AM | 0 recs
Re: Ideology shouldn't get in the way...

and am a regular reader of Ezra Klein's blog at The American Prospect. And as you may know, Ezra is regularly blogging about news and trends in healthcare, and is cited regularly by Paul Krugman from the Times.

Ezra is a blogger, yes...

My point is, HSAs are only an addon for "conventional" healthcare insurance, designed for reducing the negative impact of high copayments.

I suppose you can say that, but it contradicts the purpose of why it was suggested.

But this kludgy system led only to very high healthcare costs while at the same time producing only average performance, and HSAs didn't change anything with that.

I'd point out that no one left or right agrees that the "system" is useful, but no one intended for it to be as cumbersome as it is. That HSAs have not caught on like a wildfire since 2003 does not imply that they are not effective altogether or at reducing costs. They aren't the answer, but they could definitely be part of the answer.

So, the whole thing has to go, and hopefully it will be replaced soon by universal coverage as proposed by all major Dem candidates.

Obama's plan will be difficult to make work fiscally. Thankfully, it may just have been an empty gesture on his part to get to be the nominee and the Democratic Policy Caucus will take it from there. Even so, I'd be surprised if they nixed HSAs in the final version of the bill, supposing it even got to the floor.

"Some proponents of cost-sharing argue that copayments encourage people to be more cost-conscious so that they make "smarter" health care decisions and avoid unnecessary care....

I'll go over the document in more detail, but I'm already suspicious about its findings with respect to the Executive Summary:

Higher copayments for medical services or prescription drugs cause low-income people to use substantially fewer essential and effective medical services or medications.  The RAND health insurance experiment, one of the most rigorous and important health policy studies ever conducted, found that low-income adults and children reduced their use of effective medical care services by as much as 44 percent when they were forced to make copayments, a much deeper reduction than occurred among those with higher incomes.

They just explained how the RAND study was the most vigorous and important policy study by neglected to point its elementary finding: that regardless of the amount of services consumed, health outcomes tended to be the same. The whole point of the experiment (giving one group 100% subsidized access to medicine, and one group unsubsidized access) was to see if there were demonstrable differences between the quality of health outcomes versus the quantity consumed. Of course, the unsubsidized group cut back...

However, one way or the other, HSAs don't make any sense in an environment where copayments will only amount to a few hundred dollars a year.

Medicare is going broke. It pays out something on the order of 3 times the revenue it takes in. If the United States expands coverage, it will have to find a meaningful way to cut costs while at least holding quality the same. Removing HSAs as an option might make it that much harder.

Defending HSAs comes down to defending the bad old system, which has resulted in...

Defending HSAs is about defending choice. I happen to believe it's a rather consistent, liberal position to take. So I'm happy to do it, even if Paul Krugman disagrees.

by bowiegeek 2008-08-04 01:39PM | 0 recs
As someone who sees the fin'l svces....

...industry (sometimes) from the inside (I provide transaction software for various types of financial services products), I can tell you firsthand that this is little more than a scam put together by the insurance co's, the financial svces. industry (in general), the credit/debit card industry, the Republican Party, and a variety of business groups.

The insurance co's are enabled to tap an entire new market--folks that would not otherwise be able to afford coverage.

The financial services industry makes a fortune on these types of accounts, "coming and going," above and beyond piggybacking on the Graham-Leach-Bliley Act (repeal of Glass Steagel), wherein they many now own these insurance firms and support their products.

The credit/debit card industry targets the low-end of the labor market with these products (since it's the only thing close to an insurance plan that those poorly-paid workers can afford). There are a ton of hidden costs associated with the management of these accounts. It's a veritable bonanza for new transaction fee revenue!

The Republican Party looks at it as a win-win, since all their traditional business interests/groups profit from it. And, they have a new talking point, putting forth the TOTALLY FALSE notion that there's anything to compare this type of bogus coverage with the real thing.

And, the business community merely parrots the Rethugs on this, in addition to reaping massive revenues from "profit sharing' with the financial services firms with which respective businesses choose to partner to provide these bogus services. They also reap tax incentives, and put forth the notion that they're in compliance with local labor laws, since many (not all, but many) are required to offer some form of healthcare coverage for their poorly-paid works in certain situations (some states require this) where management is receiving far better coverage under parallel (non-HSA) healthcare plans.

All in all, in technical terms, I'd say this is a classic clusterfuck.

Whomever came up with the concept for these things, along with the leading of evangelists for these programs must certainly be considered among the most ruthless, unconscionable of our "ruling class" today.

by bobswern 2008-08-02 02:12PM | 0 recs
Re: As someone who sees the fin'l svces....

I'm glad someone with your expertise agrees with me on this. Clusterfuck is the right word.

by J Ro 2008-08-02 02:32PM | 0 recs
thanks for this post

I would add to your list at the end that Health Savings Accounts also allow Republicans to pretend they have a solution for the enormous problems in our health care system. For instance, Iowa's own Congressman Steve King touted these accounts in a recent conference call with constituents:

http://www.bleedingheartland.com/showDia ry.do?diaryId=1736

by desmoinesdem 2008-08-02 02:25PM | 0 recs
Re: thanks for this post

A scam and a smokescreen, no doubt.

by J Ro 2008-08-02 02:42PM | 0 recs
Freedom to get rich, choice in who to give service
You're almost covered for this fatal disease, should we put the money back in your healthcare savings account so that your children might be able to afford this surgery if they need it?

Dont be fooled by almost covered. Don't distracted by excuses. Healthcare for health reasons only. You need it, you get it. Period.
If Europe and Canada and so many more can do it so can America!
Repeat often, all the crap flows away if you repeat --- Healthcare for health reasons. No checks, no visa, no excuses, no BS ---> no healthcare savings accounts.
by Exiled 2008-08-02 02:39PM | 0 recs
Re: Freedom to get rich,

Yeah, this is mainly an excuse to give another tax break and dodge capital gains taxes.

It appears to have little to do with providing health care.

by Bush Bites 2008-08-02 03:11PM | 0 recs
Re: Freedom to get rich,

It is also another reason to keep insurance companies in the very lucrative (for them)healthcare business.

Many conservatives say employers should not have to provide healthcare.  That is correct.

Like K-12, fire and police, and other essential services, healthcare should be provided by the government.

by imhotep 2008-08-02 03:40PM | 0 recs
Re: Freedom to get rich,

I have no idea how you can say that. No one is going to get rich off of an HSA. If you deduct money from an HSA for any purpose other than for medical bills, you incur a 10% penalty. You can't even have an HSA without having a high deductible insurance plan; and there is a $3,000-$6,000 cap in the amount you can contribute each year. It is highly unlikely that someone has a million dollars in his or her HSA, period.

The only way someone can stick money into an HSA and not use it for health purposes and get the maximum benefit possible is to leave it alone, making zero withdrawals until he or she reaches a retirement age. So the worst case scenario here, which isn't even a bad one, is that an HSA can become another IRA.

by bowiegeek 2008-08-03 04:09PM | 0 recs
Re: Choice and the Whole Story

I've got no problem with choice. In fact, a central tenant of Health Care for America Now's purpose is to preserve choice.

People should be able to choose their plan, public or private, but be guaranteed a certain level of coverage at an affordable price.

I'd probably have less objection to HSA's if they came with a guarantee of care. As it is, they are a scam. I believe in choice, but painting blatant swindles as a "choice" is the height of deceit.

by J Ro 2008-08-02 02:42PM | 0 recs
What choice?
If healthcare is a right, and there are many practitioners, what choice are you looking for? If the local Hospital can't repair the 4 month olds heart, she is sent to a larger hospital who can do a transplant, and arrange for support while you wait for a donor. And arrange for a return flight back home. I choose a red Helicopter.! I am not arguing so much as trying to pint out what you want choice for, and when it makes sense.
by Exiled 2008-08-02 02:48PM | 0 recs
Re: What choice?

I think I'm with you on this. If folks want to choose a private plan, that's ok. If they want a public plan, they have the option. They can choose their doctor too.

Either way, it should be affordable and have guaranteed care.

by J Ro 2008-08-02 02:56PM | 0 recs
Re: Choice and the Whole Story

They are a no bigger scam than the health industry as a whole, and what in heaven's name do you mean by guarantee of care, and how do HSA's deprive one of that?

by fsugrad2005 2008-08-02 06:26PM | 0 recs
Re: Health Savings Accounts Are A Scam

So somebody is finally waking up. It is a scam, a Republican scam.

by shergald 2008-08-02 03:03PM | 0 recs
Re: Health Savings Accounts Are A Scam

I'm surprised Obama hasn't jumped on this.

Every expert says McCain's plan will erode employer-sponsored health care plans.

That's going to hit the middle class. It's a dream issue for Obama.

by Bush Bites 2008-08-02 03:14PM | 0 recs
Re: Choice and the Whole Story

insurance underwriters believe that, if Americans see a relationship between medical cost and their bank accounts, they will consume less medical care, shop for bargains, and be more vigilant against excess and fraud in the health care industry. Introducing consumer-driven supply and demand and controlling inflation in health care and health insurance were among the government's goals in establishing these plans.

-----

Wait a minute.

The insurance industry itself does that every time it denies coverage or raises deductables and I don't see medical costs going down at all.

And do you really think somebody working 48 hours a week at some low wage job is better prepared to sniff out fraud and abuse than an insurance company?

by Bush Bites 2008-08-02 03:40PM | 0 recs
Re: Choice and the Whole Story

Patients win because they have a new option available to them, provided your employer offers a good one.

Insurance companies are able to get more business by providing this choice, which helps them manage their risk pool.

Doctors may benefit because more people will have access to health care.

The point is a patient will have a financial incentive to make sure the extra tests the doctor is recommending is absolutely necessary, and find out what it costs to make an informed decision.

by fsugrad2005 2008-08-02 06:24PM | 0 recs
Re: Choice and the Whole Story

Over a period of time, if medical expenses are low and contributions are made regularly to the HSA, the account can accumulate significant assets that can be used for health care tax free or used for retirement on a tax-deferred basis.

-----

That just proves it's less about health care and more a financial vehicle.

by Bush Bites 2008-08-02 03:41PM | 0 recs
Re: Choice and the Whole Story

Yes, that's the point indeed. Health SAVINGS ACCOUNTS are financial vehicles used in tandem with High-Deductible health plans. It's similar to 529's for education or 401K's for retirement. The point is to encourage people to save for health, education, and retirement.

by fsugrad2005 2008-08-02 06:18PM | 0 recs
Re: Choice and the Whole Story

HSAs also give the FLEXIBILITY not available in some traditional health plans to pay on a pretax basis for qualified medical expense not covered in standard or HSA insurance plans. This may include dental, orthodontics, vision, and non-prescription medications such as aspirin.

-----

Many of these are tax deductable when they are not covered anyway.

by Bush Bites 2008-08-02 03:45PM | 0 recs
Re: Choice and the Whole Story

OK, I've tried for years to deduct health expenses, but you have to clear a very high threshold (it's 7.5% of your adjusted gross income). And then you only get the deduction on the portion over 7.5%. The medical expense deduction is primarily meant for poor people who have a particularly bad year when it comes to medical expenses. For many destitute people, this is every single year. Most others don't qualify for this deduction, especially since you can't count the coverage provided by your employer. Even if you pay co-pays frequently you are unlikely to clear the threshold. Most destitute people that would benefit from this probably already don't pay any taxes to begin with after all adjustments, credits, and deductions are considered. The medical expense deduction is one of the more narrowly focused deductions available, and is meant as a safety net in years where your medical expenses are astronomical.

by fsugrad2005 2008-08-02 08:02PM | 0 recs
Re: Choice and the Whole Story

A recent industry survey found that in July 2007 over 80% of HSA plans provided first-dollar coverage for preventive care. This was true of virtually all HSA plans offered by large employers and over 95% of the plans offered by small employers. It was also true of over half (59%) of the plans were purchased by individuals. All of the plans offering first-dollar preventive care benefits included annual physicals, immunizations, well-baby and well-child care, mammograms and Pap tests; 90% included prostate cancer screenings and 80% included colon cancer screenings.

--------WHICH CAN BE WRITTEN LIKE THIS---------

A recent industry survey found that in July 2007 about 20% of HSA plans didn't provide first-dollar coverage for preventive care. This was true of virtually all HSA plans offered by large employers and over 4% of the plans offered by small employers. It was also true of 41 percent of the plans were purchased by individuals. All of the plans offering first-dollar preventive care benefits included annual physicals, immunizations, well-baby and well-child care, mammograms and Pap tests; 10% didn't include prostate cancer screenings and 20% didn't include colon cancer screenings.

by Bush Bites 2008-08-02 03:52PM | 0 recs
Re: Choice and the Whole Story

Yes, the glass is half empty indeed. The point is not all HSA's are scams. Some are quite good.

by fsugrad2005 2008-08-02 06:19PM | 0 recs
I have a High Deductible Plan in tandem with a HSA

I have an HSA right now. It is a savings account that can be used in conjunction with a high deductible plan. I have had it for almost 3 years and I love it. Some of the information in your post is not exactly complete.

The idea of an HSA I think is one that is in good faith. Health care costs in this country are astronomical. Until we have universal health care, I think we need to give the consumer as much power as possible. The health care industry is by far the most clandestine industry in operation IN THIS COUNTRY today. How many times do you go to the doctor and know exactly what they will charge, whether it's the patient without insurance or the insurance company? There's no menu of services with prices. Instead of letting doctors charge what they want and allowing the industry to keep abusing the system, HSA's are a very small step toward letting the consumer fight back.

First off, HSA's are no more or no less a free market solution than regular health plans are. HSA's are simply the savings vehicle that go along with a high-deductible health care plan. There are many people who have high-deductible health care plans and do not have HSA's. High-deductible plans are mostly used by individuals who want catastrophic coverage (major medical) as well as some very basic coverage for occasional minor infirmities. Insurance is about risk. People in high-deduc plans may be wealthy, may be middle class, or they may be poor. It depends on what risk you want to take given your financial status. Saying HSA's are for the "wealthy and the healthy" is not exactly true, but there is a weak correlation.

I don't think HSA's are inherently a scam. Maybe the one you researched is, but there are scams and suckers for all types of products. There are many reasons why the participation rates in these plans are not increasing faster, although the growth rate is much larger than for regular plans, as you would expect with a new product. The main reason is people have come to accept the crazy labyrinth of co-pays, deductibles and other crap of "traditional" health care plans. Many people signing up for HSA's are young (tending to be healthier), but this is in part because they probably are not ingrained in the traditional ways of health care plans.

HSA's do not necessarily mean more money for insurance plans. It depends on the profit margins of each service they provide. Yes, I am a far-left liberal even though I know what 'profit margins' are. The problem with regular insurance plans, especially dental plans, is that corrupt doctors ask you whether you're insured and then convince to get things done that aren't absolutely necessary. These are like corporations, man! Doctors are no better than mechanics - in fact there are many similarities if you think about it. Anyway, back to profit margins.... The High-deduc plans do not necessarily have services that are higher margin. In fact, I suspect they are lower margin plans. The HSA that I pay for is considerably cheaper than the traditional health plans I can get through my employer, and there's the "pass through" which I'll explain later.

The idea that HSA's redistribute wealth to the rich is interesting but exaggerated. The health care system is completely fucked up, but HSA's are not to blame. A rich person who chooses less coverage through a high-deduc plan takes the risk of getting sick, just like everyone takes infintie risks every second of our lives. Should he get really sick, he pays more out of pocket, just like if you choose a higher deductible on car insurance to save a few bucks. It is not liberal or conservative to select a car insurance plan with a $0 collision deductible versus $1000, and the same applies to health care. The key to making sure we are not limiting who can take advantage of the 401K/Roth IRA type benefits of the HSA - which is where distribution of wealth comes in - is to make sure the plans are affordable and that the coverage is adequate. I'll agree that this is not the case right now, but it could be in the future. There's nothing more inherently 'regressive' about HSA's than 401K's or any other incentives.

The paltry number of HSA/High-Deduc plans vary widely. Some are scams, some are perfectly legitimate. I can tell you about mine. I work for the federal government, which has enormous negotiating power given how many federal employees there are (you wonder why Republicans don't want the federal government negotiating drug prices). I pay $100 every two weeks for "family coverage." That's about $2600 per year. My employer - thanks to everyone's hard-earned tax dollars - pays the other 75%. Each month, they "pass through" a portion of what I pay, $180, and place it in the HSA. That's $2160 per year. Yes, I'm not kidding! I pay $2600, but $2160 is sitting there for me to use after 1 year. For the $440 that I'm effectively paying each year, I get catastrophic coverage above $6000 (which I could use the 2160 toward!), and unlimited PREVENTIVE (i.e., not sick visits) services such as cancer screenings, routine check-ups, etc. covered at 100%. What's more, if I do get sick and need to pay let's say $300 for something, I pay the NEGOTIATED amount between the doctor and my insurance carrier, not the $450 the fucker would charge for someone without insurance. All around, it's an exceptional deal for me, much better than the traditional plans I can choose from. I've looked at other HSA/High-Deduc plans out there and they admittedly aren't as generous as my plan, but they are similar and good enough to consider.

I think the example of John Goodman's statement is over the top. I certainly don't agree with his example, but the underlying logic he was getting at is that people are either tricked, or get hysterical, into getting too much stuff done. Taking care of a sick child is one thing. That's a no-brainer - you see a doctor. The question is do you take a kid who's had a 100-temp for only 2 hours to the emergency room - we all know people who do this. Or, do we monitor the situation closely and go to the family doctor the next day if the 'fever' doesn't relent? Some insurance companies actually cover stupid things like limited cosmetic surgery. I'm perfectly OK with having someone think about whether they want to spend their own HSA money on vain things like that than have to face higher premiums because other people want to get things they don't absolutely need for good health.

By the way, there's no reason to think that people who pay HSA premiums aren't subsidizing those of you with traditional health plans. Where's the proof? I doubt it with my federal plan, but what would prevent an insurance company from offering a lower premium high-deduc (with lower risk exposure) and add in an invisible offset to partially cover "you traditional health plan people?" It would still be considerably cheaper than the other plans, so how would we notice???

In summary, let's take your four main points one by one.

1. Health savings accounts allow insurance companies to keep more money.

This is not necessarily true. Especially with plans that cover unlimited preventive care, as well as complete wellness for children, this may not be true. It depends on many factors: utilization, what's covered, profit margins, etc.

2. They offer tax shelters to the wealthy

Not necessarily true, but somewhat true in practice just like 401K's are. With my plan, working class folks like me can save a whole bunch for future health crises. The "tax shelters" (actually, incentives to save for health care costs only, until retirement) are offered to all who can afford any health care coverage, but obviously people who make more will have more money available for this purpose.

3. while hard working Americans pay more out of pocket

Let's not get into the politics of "hard working Americans." Besides, if we get sick, HSA/High-Deduc people pay more out of pocket. I had to pay $600 recently when I got sick, between doctor visits and meds. With a regular plan I could choose from, it probably would have been $100 or less out of pocket between co-pays. The point is, if you have a "pass through", you use the savings account to pay for it. It's just like saving my own money for sicknesses, or like having a traditional plan. If you get sick, you get the best of both worlds.

4. parents are forced to worry about their bank accounts instead of the health of their children.

With my plan, child wellness is covered 100% so this does not apply to all plans. Besides, you can argue the same thing for plans that have higher co-pays or the uninsured paying thousands of dollars just for going to the emergency room. You're not FORCED to worry about the bank account. This is an unnecessarily vitriolic oversimplification of the problem.

HSA's/High-Deduc plans are not for everybody, but they are prefectly legitimate ways to manage health risks. However, it is critical that other choices be available. Repugs are OK with having people have HSA/High-Deduc plans and no other choices. That's not cool. Some people need and want different coverage, and they should have that option as well. But let's not go overboard and say HSA's are a scam. I have a choice in the matter, and this flaming liberal chooses to have an HSA for himself and his family!

by fsugrad2005 2008-08-02 06:13PM | 0 recs
Re: I have a High Deductible Plan in tandem with a

totally right.  see my later post basically agreeing with you.

by edparrot 2008-08-02 07:03PM | 0 recs
Falling for rethuglican propaganda?

Sry, but afaics your lengthy plea pro HSAs is based on one premise: 'A free market system can work for health care insurance'.

Well, I'm a backer of free market approaches and a fellow liberal, too, but I have to tell you, yozu're wrong.
Firstly, "free market" means transparent choices. But health care is such a complex issue that not even experts have that level of oversight into its mechanisms. And, of course, the insurers themselves have no interest in making their underlying calculations more transparent. So, the customers have no chance to oversee all the factors that are necessary for a rational decision.

Secondly, "free market" depends on the players on making rational choices. But when it comes down to making decisions about "to be or not to be", almost no human being will or even can make a rational decision. Not to speak of that recent studies in economics show that humans are not the rational players in the market that the classic theory depends on.

Thirdly, chosing an insurance means making a risk assesment, and evaluating the risk to get an estimate of a reasonable premium for insurance. But, sadly, scientific studies show that humans are prone to underestimate (and even ignore) long term risks, and this is hazardous when coping with health care insurance.

So, sry, but the good ole "free market" approach doesn't work when it comes to health care. Nervertheless, frethughlicans still pray that mantra. But we "flaming liberals" shouldn't let them fool us into believing their ideological nonsense that has been shown not to work in reality, time and again.

Let's have health care coverage for all instead, and let's implement the "savings" part in retirement plans. An option for early retirement, without a tax penalty, in case of health care issues sounds like a good idea.

by Gray 2008-08-02 10:41PM | 0 recs
Re: Falling for rethuglican propaganda?

No, your premise about my premise is absolutely wrong. Do you follow? I do not agree that a free market system can "work" for health care. I believe in universal health care as I think it should be an inalienable right. I think health is more important than property. The US has this ass backwards. How can Metallica tell me they own a song I download on my computer, but I don't own a universal right to health care? Explain to me how energy companies own MY COUNTRY'S resources, but I don't have an inalienable right for health care?

I can tell you that most of the people who say anything positive/neutral about HSA's at MyDD are probably for universal health care. I think there would still be a market for them even if we went to the patchwork UHC Clinton talked about. I personally feel that allowing individuals to deduct tens of thousands of dollars between 401K's, mortgage interest, and even HSA's is despicable, but I guarantee you that as long as it's the law I will take full advantage of it.

My point is that HSA's can work for some people. It works for me. Reverse mortgages work for some people. Crap, even whole life insurance or time shares can work for some people even though they are really bad ideas for most people. I think HSA's could work for more people than people are currently utilizing them, but some people probably have HSA's/HDHP that probably should not. I think what some liberals think is that if the game sucks, don't play. I think the exact opposite. We need to beat Republicans at their own games instead of self-imposing financial disadvantages for philosophical reasons.

The problem with Republicans is they actually think, like you say, health care can function under a market system. They will look you straight in the eye and say they acknowledge that the rich should get better care if they're willing to pay for it, and that it's just a terrible shame that there are uninsured in this country, but it's a shame they're willing to live with. In fact, they'll probably blame the uninsured for their circumstances under the mantra of personal responsibility. These people would take away assistance to the disabled if given enough breathing room. I agree that Republicans pretend HSA's are a panacea for the health care crisis. That is pure unadulterated bull shit. However, that doesn't mean that HSA's can't be a useful choice for some, at least in the meantime until we get truly universal health care.

by fsugrad2005 2008-08-03 12:26AM | 0 recs
Re: Falling for rethuglican propaganda?
"No, your premise about my premise is absolutely wrong."
Huh? Excuse me, pls:
"My point is that HSA's can work for some people. It works for me."
This sure sounds like a market based approach to me, focussing on the interest of a certain market player, or a small group of players. And this is the total opposite of the solidarity approach, which tries to spread the burden on the largest pool of shoulders. Ok, regardless of this, I see we're not that far apart:
"However, that doesn't mean that HSA's can't be a useful choice for some, at least in the meantime until we get truly universal health care."
So, you see HSAs as the lesser evil, regarding other private plans? Hmm, maybe, for the really afluent. Even though I still think that customers can't make a realistical risk assesment when it comes to health care, and so many tend to underestimate the costs they have to bear when push comes to shove. It's a gamble, imho. And what's necessary nowadays is to implement another system that keeps people from gambling with their health. And that system is universal coverage.
by Gray 2008-08-03 12:44AM | 0 recs
Re: Falling for rethuglican propaganda?

Another thing, in response to the transparency of the inner workings of insurance companies. Having an HSA/HDHP gives you huge incentives to inquire about costs and procedures, not only with the insurer but also with the doctors. These incentives are missing under traditional health plans. I readily admit that this is a small step and that we need MUCH MORE transparency in the health industry, but this incentive is nonetheless a step in the right direction.

by fsugrad2005 2008-08-03 12:33AM | 0 recs
Uh huh.
"Having an HSA/HDHP gives you huge incentives to inquire about costs and procedures, not only with the insurer but also with the doctors."
And so the patient will come into an expert position, where he can apply professional judgment on whether a treatment is necessary or not? Come on, why not simply force everybody to study medicine? Sry, but this isn't a reasonable approach towards cost control. The solution can only be implementing more oversight over doctors and clinics, NOT forcing every custoemer to become a doctor himself.
by Gray 2008-08-03 12:48AM | 0 recs
No misunderstanding, pls...

I don't want to ridicule your reasonable stance that the cooperation of the customers will help in reducing cost increases. Certaily it will, at a small level. But at the same time it comes with a risk of "false negatives" - customers denying crucial treatments because they think they are unnecessary. And, pls be honest, maybe you and I can manage to identify proposals from our doctor that are only meant to drive his income up, every now and then. But we're probably better educated than the average guy, and what is necessary is a system that keeps costs under control for all customers, not simply for those who are able and willing to cope with the doctor's latin. And for the majority of customers, no incentive will be able to put them into this position. Besides, living has already become difficult enough in the 21st century, it's not a good idea to put even higher burdens on the people. Let the professionals at the insurance keep an eye on the costs, don't force the customers to do this difficult job in their time off.    

by Gray 2008-08-03 01:06AM | 0 recs
Re: I have a High Deductible Plan in tandem with..

Your entire rebuttal is based around the argument that some of my arguments are "not necessarily true." While I guess I can agree in theory that in some HSA plans, my arguments don't hold, you have to look in aggregate. As a whole, HSAs do the things I argue they do. So, as a whole, they are a scam.

Every expert not in the pocket of the right-wing says the same.

by J Ro 2008-08-03 06:17AM | 0 recs
Re: I have a High Deductible Plan in tandem with..

We're painting with a broad brush I see. I'm not saying all of your arguments don't hold. Some I completely disagree with, some are correlative as opposed to absolute, and others I perfectly agree with. I don't agree with your "bad apple in the bunch" fallacy, though. Your "aggregate" thinking is the foundation for stereotyping. There's a big difference between "some" plans doing what you say (even if it's the majority), and what they are "as a whole."

The true scam would be the Republican talking points, that HSA's/HDHP are a panacea and we should get everybody to use them without a choice. There's a big distinction here: whether a program is inherently a scam, versus the ulterior motives of the people pushing it. Inherently, HSA/HDHP's make sense for some people, so I don't see how "as a whole" they can be scams if they're not that way for all people. Besides, are you saying that HDHP's are scams also, because they have been around much longer than HSA's. In essence, you can look at it this way: all health care plans are a scam. I can agree with this paradigm, but I don't think HSA/HDHP's are any more a scam than other products. You just have to "play the game" and figure out which product is the "least evil" for your particular circumstances.

Let's be clear here. HSA's/HDHP's are not a scam more than any other health insurance plan. The scam is Republicans want us to settle for them and not offer any other choice.

by fsugrad2005 2008-08-03 07:25AM | 0 recs
Re: I have a High Deductible Plan in tandem with..

I don't know. I personally believe HSAs, at least as they were sold to the public, are worse than regular health insurance. I know you like to separate the plan from the hype surrounding the plan, but we have to think politically here, too. If the right-wing puts forward HSAs as a solution for health care, not just a solution for the rich/healthy. That's how it was sold, that's how a lot of folks see it, and by all statistics that I've read, HSAs are a scam for just about anyone but those in the two above categories.

Now, if folks were marketing these things as only suitable for the rich/healthy, I'd have much less of an issue. But we live in a political world and these things matter.

by J Ro 2008-08-03 08:17AM | 0 recs
Re: Health Savings Accounts Are A Scam

Some sad misinformation floating around here.  First I need to say that I believe we need universal health care.  Private insurance as a primary system is inherently a bad idea.  But HSA/high deductible plans are no worse than others private plans.  They are one option.

I had one for two years while I was self-employed.  I had a choice - pay just over $300 per month for my family of three to have a plan with a family deductible of $5000 or pay $550 per month to have a deductible of $1000.  And in the former case, I could deduct $5000 per year without a floor for medical deductions (which we never hit so I could not do so with a regular plan), which is like an additional $1250 or so per year.  In either case I could deduct premiums as a self-employed individual.  Aside from that the plans were roughly similar - except that due to some of the restrictions on these HSA/HDHP plans, above $10,000, there is no consurance even for prescriptions.  Do the math - there was no scenario where I would come out worse.  I will say that over a period of 5-10 years, I would have built up so much money in the HSA that I would have been concerned, but it was after all earning income tax free just like an IRA.  And sooner or later, I'd have a big medical expense and use the money.

So don't single out HSA's.  They are good options for some people.  They are no better or worse than any other private health insurance.  Which is to say they suck.  But they're not a scam.

If you want to single anything out as being particularly bad, go after the fact that "group" insurance (as opposed to individual plans) has all kinds of rules benefitting insureds, including rules on prior coverage and pre-existing conditions and deductions.  If you are a W-2 employee for a company that does not offer group insurance, you are utterly shafted by current law.

Again, we need universal coverage.  Crying about HSAs is like paying attention to Bush's verbal gaffes while he's pissing on the Constitution, the justice department and the world as a whole.  Let's focus on the bigger picture, not a detail within the problem.

by edparrot 2008-08-02 07:02PM | 0 recs
Re: Health Savings Accounts Are A Scam

"Again, we need universal coverage. Crying about HSAs is like paying attention to Bush's verbal gaffes while he's pissing on the Constitution, the justice department and the world as a whole.  Let's focus on the bigger picture, not a detail within the problem."

I couldn't have said it better myself.

by fsugrad2005 2008-08-02 07:24PM | 0 recs
Re: Health Savings Accounts Are A Scam

"They are no better or worse than any other private health insurance.  Which is to say they suck.  But they're not a scam."

All private health insurance plans are scam. They only work up for a part of the insured, to various degrees. The common problem is that the more money some people who are lucky with their health safe, the more miserable the insured with serious issues will be. See, "insurance" basically means spreading the risk over a large pool of people. The broader the pool, the better. Private plans are a perversion of this concept. They all depend on scaling down the pool, leaving the less afluent and the "bad" medical risks outside of the system. And at the sanme time, they don't even offer real medical security for their own members. As soon as somebody's illness leaves him unable to pay the premiums, he/she is on his own. That's not insurance, that's a scam. And HSA's are only the latest trick to fool suckers, especially the greedy ones who think they would be better off without caring for the community.

by Gray 2008-08-02 09:54PM | 0 recs
Re: Health Savings Accounts Are A Scam
Uh, correction:
"the more miserable the insured with serious issues will be."
Strike " the insured", read "others", pls.
by Gray 2008-08-02 09:58PM | 0 recs
Re: Health Savings Accounts Are A Scam

More misinformation here. Now you're talking about spreading risk which has nothing to do with HSA's or the HDHP's that go along with them. The HSA is merely a savings vehicle to use for future health care costs. I agree with your "pooling" arguments, but that is a problem with the system as a whole. HSA's/HDHP's do not have any feature that try to exclude risky patients any more than any other plan. How does using an HSA make someone greedy for crying out loud? Following this faulty logic to its conclusion, why not blame the uninsured for not sharing in the community burden? You're actually blaming the uninsured guy who never gets sick for not paying into the system. That is such a far right wing vew.

by fsugrad2005 2008-08-03 07:35AM | 0 recs
Re: Health Savings Accounts Are A Scam

"More misinformation here. Now you're talking about spreading risk which has nothing to do with HSA's"
Misinformation? You obviously don't understand the idea behind insurance - it's about spreading the risk on a pool of people. The more, the merrier. And HSAs only make sense in combination with insurance with copayments, and that's not what universal coverage is about.
Universal coverage = no copayments = no HSAs.
What's so hard to understand about his?

"How does using an HSA make someone greedy for crying out loud?"
It's the other way around: Greedy people love HSAs. The money they put in the HSAs isa like a gamble on their health: If they don't get ill, they have a nice nest egg. But the money is earmarked only for them, there's no burden sharing in this plan. Imho that's quite a perversion of the whole insurance idea.

"You're actually blaming the uninsured guy who never gets sick for not paying into the system."
If he is able to get insurance, and refuses to do so in order to have more money for himself, yes, certainly. Because he can't know that he'll never get sick. Instead of paying into the system as long as he is healthy, he is freeriding, and if he becomes seriously ill, he shows up in the emergency room and lets others pay his bill. Sry, but such selfish behaviour doesn't look very liberal to me.

by Gray 2008-08-03 08:42AM | 0 recs
Re: Health Savings Accounts Are A Scam

I do understand insurance. It is about spreading risk. But HSA's are Health SAVINGS ACCOUNTS; they are not insurance plans. They are savings accounts that can only be used for qualified medical expenses. They have nothing to do with managing risks by having a large pool of people. The "risk" part comes in with the High Deductible Health Plans that must accompany an HSA. An HDHP is insurance. An HSA is a financial vehicle. If you don't have an HDHP, you can't contribute to an HSA. This is the only link between HSA's and insurance: you must have a particular type of health coverage to contribute to an HSA.

You can't be uninsured and contribute to an HSA.

You can't have a "low" or "medium" deductible plan and contribute to an HSA.

It is important if you want to have a knowledgeable discussion on this topic that you know the difference between HDHP and HSA, and not just spew off aimlessly against HSA's because you're only for universal coverage.

Something you don't seem to understand is that HSA's could still be around even if we do get universal coverage. Universal coverage under any proposal being considered will not cover unlimited amounts of all possible qualified medical expenses. HSA's can only be used for QME's until you reach retirement age. These are financial vehicles, not health insurance!!!!!

by fsugrad2005 2008-08-03 12:49PM | 0 recs
Re: Health Savings Accounts Are A Scam
"But HSA's are Health SAVINGS ACCOUNTS; they are not insurance plans."
I know. They only make sense in combination with health care insurance with copayments, so it's really a package. Pls check my other comments where I repeatedly pointed this out. The point is, when there's universal coverage without, or only with minimal copayments, HSAs don't make no sense anymore.
"Universal coverage under any proposal being considered will not cover unlimited amounts of all possible qualified medical expenses."
Uh, now which expenses are excluded, really? Say, hair transplants? Silicone implants? Yup, such stuff is very seldomly paid for under universal coverage anywhere around the world, I guess. But why should savings for such medical luxuries be tax free???
by Gray 2008-08-03 06:31PM | 0 recs
Re: Health Savings Accounts Are A Scam

I said qualified medical expenses. The items you listed are not QME's according to the IRS, which sets the rules. Universal health care coverage will not cover all QME's such as OTC medicines, which can be bought with an HSA or flexible savings account with tax benefits. For some families, OTC health products (vitamins, cold medicine, pepto bismol, bandages, etc.) can cost over $1000 per year.

You really seem to not be able to think about a world without universal coverage. Please, free your mind of this obsession and let's deal with reality for now. We both want universal coverage, but don't let it blind your thought process.

by fsugrad2005 2008-08-04 04:23AM | 0 recs
Re: Health Savings Accounts Are A Scam

There is good reason to go after HSAs. As other commenters have mentioned, HSAs allow right wingers to say "they're doing something" about health care costs. And they undermine our current employer-based system.

So, HSAs act as a smokescreen, and if they are not exposed for what they are, it makes it harder to get real reform passed.

by J Ro 2008-08-03 06:20AM | 0 recs
Totally out of touch with basic human emotions

"If a mother wakes up in the middle of the night with a sick child, we want her to think about the cost of the emergency room visit," said Mr. Goodman, dubbed by many the "Father of Medical Savings Accounts."

WHAT???
Another striking example how far away from common human feelings like compassion and solidarity many right wingers are. I guess all of us can imagine the panic of parents waking up in the middle of the night when their sick child is coughing or crying loudly. Even if we don't have kids we know that the very last thing considered in such a situation are the costs of an emergency room visit. Faced with a potential life threatening situtation for a sibling, normal people don't want to take any risk. What are a few bucks saved for health care insurnace, compared to gthe life of their kid?

But many right wingers don't think this way. For them, everything has a price tag to it, even the lifes of other people's kids. Those people have absolutely no sense of decency left. They are human scum. Don't let them succeed in enforcing their merciless idealogy onto the US! No pasaran!

by Gray 2008-08-02 09:36PM | 0 recs
When you're seriously ill, you don't have a choice

Cancer just doesn't care about freedom. Period.
So, when you're seriously ill, you do what your doctor tells you, or you most probably die.
And when you decide to try to live a little bit longer, you want to have full coveragre for your treatments. In your misery, you don't want to be additionally burdened with financial problems. In short, you don't want no stinkin' private plan scam.

So much for "choice" and "freedom".

by Gray 2008-08-02 11:27PM | 0 recs
Being seriously ill, you don't have a choice

"In your misery, you don't want to be additionally burdened with financial problems. In short, you don't want no stinkin' private plan scam."

Thinking more about it, this is what it all comes down to:
Do you want the cheapest health care plan for the times that you're healthy, or do you want the best coverage when you're sick? Imho this isn't really a choice, but the rethuglicans beg to differ. Irresponsible optimists that almost all of them are, they don't care baout what happens if they or their families might become seriously ill. Not to speak of that they can't be bothered with the medical problems of other people. Everyone on his own, and let god care for us all!

Of course, this isn't exactly what Jesus meant with his sermont on the mount, but only us liberals care about his communist rants...

by Gray 2008-08-02 11:41PM | 0 recs
Re: Being seriously ill, you don't have a choice

More importantly, there is a public health aspect to this. Those that gamble with their health and get a plan that doesn't cover them when their sick end up incurring costs for the state when they end up in the emergency room and can't pay. Preventative care and adequate care in the beginning of an illness save everyone money.

by J Ro 2008-08-03 06:13AM | 0 recs
There is only one answer to this problem

UNIVERSAL HEALTH CARE!

HR 676!

by ScienceTeacher118 2008-08-03 06:23AM | 0 recs
Re: Health Savings Accounts Are A Scam

And why do you think that is? The theory doesn't work in practice because HSAs as drafted by Congress act as a kind of supplement to high deductible insurance, not exactly a substitute

Nah it's just a give away to medium sized businesses and the insurance industry at the expense of the tax payer.  One interesting thing about health insurance accounts is that unless you get insurance through your employer, you are not eligible.  Which means that the uninsured and self  insured are cut out of the tax break.

If one of our shared goals is to lower costs, consumers prioritizing expenditures is important. Excuses for why consumers don't have good information now doesn't cut it. Based on present circumstances, few have the incentive to find out.

Nah, if you want to reduce costs, then the obvious place to look is the 50% of health care expenditures that go towards insurance company driven overhead and profit.  That is where the fat is.  The problem for the consumer is that if they have insurance, then that 50% overhead comes with it.  If you don't have insurance, then you pay for it anyways.

by gibbon1 2008-08-03 11:08AM | 0 recs
Re: Health Savings Accounts Are A Scam

There's only one piece of that worth responding to because it appears to be just 100% wrong.

One interesting thing about health insurance accounts [sic] is that unless you get insurance through your employer, you are not eligible.

Says who?

by bowiegeek 2008-08-03 04:24PM | 0 recs

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