Health Care Reform: Health Savings Accounts

Some conservative members of Congress are demanding that
market-oriented health care reforms be included in the Medicare
bill being negotiated in Congress. If they succeed, it could
improve health care for all Americans, says analyst Stephen
Moore.

The problem with health care today is that markets are hardly
permitted to operate at all. The government's dominating role has
caused hyper-inflation in costs.


0 In the last three years, according to the Labor Department,
employer-covered health costs have risen by 14 percent, 12.5
percent and 13.9 percent.


0 In just five years, health costs have doubled for families to
an average annual cost of $9,068 for a family of four.

0 Meanwhile, overall inflation has not grown at all, and costs
and prices have been declining in most consumer-driven industries.

Health care is unaffordable to a growing number of families. Soaring
health-care costs are also a major reason why so many states are broke
today (Medicaid expenses) and why the federal government is running
huge deficits (Medicare).

The most important reform conservatives want is universally available
Health Savings Accounts (HSAs). HSAs are like tax-free IRAs where the
money is stored in the account to pay for health expenses. If the
family incurs a medical cost, it pays out of the account. If the
family does not incur expenses of $3,000 or more a year, it can roll
over unspent money into a regular individual retirement account (IRA).

HSAs already exist on a limited basis and are cutting health-care costs
dramatically.

For example, one study by the Reason Foundation recently
found that Medical Savings Accounts (a type of HSA) combined with a
catastrophic coverage plan could save the typical family about $2,000
a year -- more than 20 percent -- on health costs compared to
conventional insurance, while providing more comprehensive coverage.

Source: Stephen Moore (Club for Growth), "Hidden Snares in Health Care,"
Washington Times, November 13, 2003.

For text
http://www.washingtontimes.com/commentary/20031112-093419-5573r.htm

For more on Consumer Driven Health Care
http://www.ncpa.org/iss/hea/