Wednesday, February 15, 2006

More tax breaks for for poor...

From American Progress:

The Doctor is Not In
February 15, 2006

President Bush will start to sell his flawed health care fix today by going to the headquarters of Wendy’s – the nation’s third-largest burger chain. Irony aside, Bush and the White House chose the venue because Wendy’s strongly supports Health Savings Accounts – Bush’s main remedy to fix America’s crumbling health care system. Bush wants to dramatically increase the amount of money that individuals can contribute to such accounts to encourage more high-deductible plans. An increased reliance on HSAs, however, would actually increase the number of uninsured Americans – who won't be able to afford plans with high deductibles. What America needs is comprehensive health care reform, not a plan that will only benefit the wealthy.
HSAs will make a bad situation even worse. The administration’s "consumer-driven health care" model will do nothing to fix the problem of America’s uninsured. If anything, they will push healthy people out of traditional plans, forcing higher premiums and, according to economist Jonathan Gruber of MIT, lead to 600,000 more Americans without health insurance (PDF). Uwe Reinhardt of Princeton University writes, "A wholesale switch to HSAs would redistribute the nation's overall financial burden of health care from the budgets of chronically healthy families to those of chronically ill families."

Buying health care isn’t like comparison shopping at the mall. A major problem with health savings accounts is that people who are forced to pay for medical care out of pocket often don’t have ability to make good decisions about what care they need – they typically rely on doctors to help them make those tough decisions. As Sebastian Mallaby said, it is "irrational to assume that the parents of a critically ill child will call for price quotes on an urgently-needed procedure, or that accident victims will consult hospital quality report cards to direct the ambulance to the emergency department of their choice."

HSAs will not help the neediest people. The supposed benefit of HSA’s is that it can provide tax breaks to help pay for health care costs. The reality is that those with higher incomes would receive the most benefit, while those at the lower end of the spectrum will not only see very little tax benefit, but will also struggle with the higher premiums of HSAs, making this plan "shockingly regressive." Not surprisingly, the financial industry is strongly behind this plan – they stand to make a large profit from the transaction costs and financial fees associated with HSAs.

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