NOW MAKE THEM A MANDATORY MINIMUM:

HSA's Changing The Face of Health Care (Michael Barone, 6/13/05, Real Clear Politics)

[E]mployers are offering and employees are choosing health savings accounts and high-deductible health insurance in greater numbers. HSAs were given a big boost in the Medicare prescription drug bill passed in November 2003; indeed that was the reason that most Republicans voted for a bill that also included the biggest new entitlement program since Medicare was passed in 1965.

HSAs seem to be gaining in popularity. A survey by Watson Wyatt and the National Business Group on Health found that 8 percent of employers are offering health savings accounts in 2005, and 18 percent plan to offer them in 2006. Large majorities of employers believe that HSAs will help lower overall health care costs and that they will expand options for employees.

The number of people covered by HSAs and high-deductible insurance policies increased from 438,000 in September 2004 to 1,031,000 in March 2005. Nearly half of these are people over 40 -- though some predicted that such policies would not be attractive to them.

One thing that HSAs and high-deductible health insurance help do is to make employees more cost-conscious when it comes to health care decisions. HSAs allow employees to keep money they don't spend on health care this year and to roll it over to next year, and on and on -- therefore, there is an incentive not to fritter it away. High-deductible health insurance operates the same way high-deductible auto insurance does: It does not pay for the equivalent of your oil change but does pay you when your car is totaled.

For many years, the World War II decision to make health insurance coverage tax-deductible for employers and non-taxable to employees has driven health insurance to a different model, one that pays for virtually every procedure but in a surprising number of cases does not cover catastrophic costs.

But increasingly that makes no sense.

As Wall Street Journal columnist Holman Jenkins points out, the tax subsidy to employees, while worth a lot to high-income earners, is worth very little to those whose income tax liability is low or, as in the case of Earned Income Tax Credit recipients, nonexistent. To them, it is hardly worthwhile to pay an insurance company to process their claims for predictable items like annual checkups and routine pediatric care, yet to be left with a policy that, to hold down employers' costs, doesn't provide catastrophic coverage.

The real savings will come when they're near universal.

Posted by Orrin Judd at June 13, 2005 8:29 AM