Benny's World

Tuesday, January 31, 2006

Health Care Savings Accounts Proposed

From WaPo, 1/27/2006:

President Bush laid out a plan yesterday for reducing the nation's spiraling health care costs, proposing tax credits to encourage expansion of health savings accounts and calling for allowing small businesses to pool together for health coverage across state lines.

The main element of Bush's plan would be health savings accounts, which allow people to save money tax-free. The accounts are used for medical expenses up to a preset deductible amount, and once that threshold is met, insurance takes over. Any money not used can roll over from one year to the next, and the cost of the policies is usually lower than that of traditional health insurance plans.


Under Bush's proposal, a family of four earning less than $25,000 a year would receive $1,000 a year toward their accounts. The families also would be eligible for $2,000 in refundable tax credits, which would go toward purchasing their health insurance policies -- which the White House said average $3,300 a year. Families choosing traditional insurance would be eligible for
$3,000 in refundable tax credits to put toward their plans.

I have used these type of accounts from time to time when I knew I was going to have extraneous expenses. 3K towards traditional plans that cost anywhere from 100 to 350 per month, is a drop in the bucket, and doesn't take care of the dental expenses such as braces, especially for adults. The account is not really an account as W makes it sound like; it is yearly fund you create out of your money that cannot roll over, as the article states, and the paperwork is a friggin' headache because you have save every receipt, report on a form what it was for, and the reinbursements take 3 weeks or longer.

For a family who makes 25K or less, they live from paycheck to paycheck and don't have 3 weeks to wait to get their refunds. Sure, they get a bit of a tax break, but not enough to make it worth their while.

What would be better is make all insurance expenses experienced by the consumer into tax credits, including prescription drugs, to start with, instead of the 7% of the income threshold.

Then one could move into a American single payer health care system. Here's what Dem David Gill, a physician running for Congress in my district has proposed and he calls it a "Prescription for America":

The plan that I am proposing would cost businesses no more than a 7% payroll tax; this figure could be even lower if we eliminate the Bush tax cuts for those earning a quarter million dollars per year or more. Currently, business owners pay an average of 8.5% of payroll salaries for employee health care plans and small businesses can pay up to 25% of payroll expenses. A single-payer system lets business owners know exactly what they will be paying for employee insurance.

My plan is much less expensive for individuals. A 2% tax paid by individuals would replace all costs currently incurred by insurance premiums, co-pays and deductibles. The cost for the average family would be $760/year. This would result in substantial savings for most families who typically pay between $1,200-$15,000 per year in combined costs under our current system.

Then, if the families wanted a health care savings account on top of that, great! But it takes a little bit of investment on our part to do it. Some businessmen think the government is intruding by advocating a single payer system, but it's not.

I predict that at some point there may be a trade for Social Security in the future, and it may be having to have a single payer system. I'm not advocating SS as one of the entitlements to be cut because goodness knows it was the safety net for my mother and other elderly (and those who cannot work), but if we have to make tough choices, in the long run, I would opt for a better health care system that is paid for out of my taxes.

In general, we don't, Medicaid will bankrupt our states' budgets.

The world is watching, and they are waiting for us. And they are waiting to see what we're made of. --Senator John R. Edwards


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