Bush Tries To Rehabilitate His Ailing Health Care Scheme
This week, President Bush is again touting his plan to shift health care costs to workers, while doing nothing to reduce the numbers of uninsured Americans or address the spiraling costs of care. Today, during a meeting at the White House, and tomorrow during a speech in Bridgeport, Connecticut, President Bush is peddling his failed scheme, health savings accounts, hardly a cure for America's health care woes. According to the Center on Budget and Policy Priorities, the President's proposal would weaken the existing health insurance system, do nothing to improve access to health care, and increase the budget deficit by $156 billion over the next ten years. [CBPP, 2/4/06]
President Bush and the Republican Congress have offered no proposals to help the nearly 46 million Americans who lack health insurance -- an increase of more than 6 million since 2000 - or to reduce the cost of health insurance, which has increased nationwide by $1,070 - 72 percent - on his watch. [CPS, 10/05; KFF 2005]
"The President's failed, special interest-driven medical savings account scheme does nothing to reduce the number of the uninsured or make health care affordable," said Democratic National Committee Communications Director Karen Finney. “America’s working families are struggling and the health security of our country is being undermined, because President Bush and Republicans in Washington have failed to address America’s health care crisis.
"More Americans have been forced to go without health insurance and those with coverage are paying skyrocketing premiums. But, President Bush and the Republican Congress have only offered more of the Republican culture of corruption where special interests write the policies. Together, America can do better. President Bush and Republicans in Washington should join Democrats in fighting for access to affordable health care for all Americans, not just those who can afford it."
Bush's HSA's Scheme: A Bad Idea For America's Working Families
Bush Pushing for Health Coverage That Will Double Cost of Traditional Health Plans. Bush is pushing a shift to a "consumer-based healthcare," where costs are cut because patients pay more medical bills out of their own pocket. But this would segment the insurance market by encouraging young, healthy workers to drop out of group coverage. According to the Center on Budget and Policy Priorities, "Premiums for comprehensive, employer-based coverage could more than double if such accounts became widespread, according to major studies conducted in the past by RAND, the Urban Institute, and the American Academy of Actuaries." Ultimately, traditional plans would be driven out of the market as premiums spiral upward. [National Journal, 1/24/04; CBPP Fact Sheet, www.cbpp.org, 12/8/03; Gail Shearer, Testimony Before Joint Economic Committee, 2/25/04, www.consumersunion.org]
The Wealthy Will Be Chief Beneficiaries From Bush's Health Savings Accounts. Under the Bush Medicare bill, both deposits and withdrawals are tax exempt, making them an ideal mechanism to reduce taxable income for the affluent. If individuals simply wait until retirement age, they can withdraw these funds for non-medical purposes with no penalty. In fact, the GAO has found that insurers have historically marketed such accounts primarily for tax advantages, not health benefits. [Democratic Policy Committee, democrats.senate.gov; CBPP, 3/2/00, 12/1/03]
Health Savings Accounts Will Cut Coverage, While Not Addressing The Uninsured Problem. Tax deductions will do nothing to help most uninsured people. According to the GAO, 90 percent of the uninsured pay at or below the 15 percent tax bracket, meaning they would receive little benefit from the Bush policies. Alan Weir of the Urban Institute: "[A]t best, the budget proposal helps the wealthiest Americans while doing nothing for the uninsured. But at worst, the proposal increases the incentive for healthy people to leave the broader risk pool, thereby increasing premiums for everyone else, and making it harder for employers to continue providing coverage to their employees." [GAO, 6/10/98; Ronald Pollack, Testimony Dem. Policy Committee, 1/6/04; Gail Shearer, Testimony Joint Economic Committee, 2/25/04; CBPP, 2/18/04; Alan Weil, Testimony House Budget Committee, 2/26/04]
Over 1.4 Million More Would Join The Ranks Of The Uninsured. Some employers may decide to no longer offer health insurance to their employees, since their workers can now take advantage of both the tax benefits of existing HSAs and the new premium deduction to purchase coverage on their own in the individual market. As a result of these factors, more than 1.4 million workers with health insurance now would lose their employer-based coverage and become uninsured. Those 1.4 million would join the 45 million uninsured Americans, a number that soared by over 5 million during Bush's first term. [CBPP, 4/10/04; Kaiser Family Foundation, 9/27/04]
Small Businesses Pay More Under Bush’s Health Proposal. The Congressional Budget Office estimated that Bush’s Association Health Plans could raise premiums for 4 out of 5 small businesses that keep traditional insurance. A study of Bush's proposal found that overall insurance costs would actually increase by an average of 6 percent in the small-business market while also growing the number of the uninsured. [CBO, January 2000; Mercer Risk, Finance, and Insurance, 6/10/03; National Small Business Association, 6/10/03]
Medical Savings Accounts: Allowing Businesses To Cut Back On Benefits Offered, Transferring Costs To Workers. "Critics say the accounts could undermine efforts to secure coverage for some 43 million uninsured Americans and ultimately destabilize an already teetering health-insurance system. The reason: Employers now offering full medical benefits may scale back to cheaper, high-deductible plans, cutting their expenses while transferring more costs to workers. Many younger and healthier people would take the cheaper coverage, saddling the existing plans with people needing more treatment and fueling an upward spiral in premium costs. 'The risk is the fracturing of these employer pools that (now) include young and old, healthy and sick people,' said Paul Ginsburg, president of the Center for Studying Health System Change. 'The people in the pool with the unhealthy people are not only going to pay more, a lot of them won't be able to afford coverage.'" [CBS MarketWatch, 1/20/04]
