February 7, 2006


Health accounts would eat up savings (Julie Appleby, 2/06/06, USA TODAY

President Bush's proposal to expand tax-free health savings accounts would cost the U.S. Treasury $59 billion over five years, more than offsetting the savings he seeks from limiting the growth of Medicare. [...]

Highlights of the budget include:

• Offering more tax deductions and credits for health savings accounts would cost the Treasury $59 billion over five years and $156 billion over 10 years. Health savings accounts were created in 2003. Under the law, the accounts must be coupled with health insurance policies that carry at least a $1,050 annual deductible for individuals or $2,100 for families. They allow people to set aside money, tax free, to cover medical costs. To encourage use of the accounts, Bush wants to increase the amount policyholders can contribute annually to the savings account.

Supporters, who include the National Center for Policy Analysis, say the accounts and insurance will slow health care inflation by getting people to spend more of their own money on care. They say the accounts will also encourage people to set aside funds for medical costs.

Critics, including the Consumers Union, say the accounts benefit mainly the healthy and wealthy and could drive up costs for others.

The point, of course, is that nearly everyone is reasonably healthy for at least the first seven decades of life and could be saving the money they currently waste on comprehensive health insurance. Draining the federal coffers is just one beneficial side effect.

Posted by Orrin Judd at February 7, 2006 7:51 AM

Have we not just been told that we already have a negative savings rate, that our profligate personal spending and credit use has us, as a country, on the edge of the abyss? HSAs seem unlikely to significantly worsen our already dire situation. If only we saved like the Japanese..............

Posted by: ed at February 7, 2006 9:38 AM

... or were as parsimonious as the Germans?

Posted by: erp at February 7, 2006 10:01 AM

But OJ, wouldn't that be treating people as adults?

Posted by: Genecis at February 7, 2006 10:04 AM


And forcing them to grow into it gradually.

Posted by: oj at February 7, 2006 10:51 AM

I can't remember the exact figure, but I've read several times that around 80-90% of one's lifetime's medical expenses are in the last year of your life. It's vain attempt to keep alive when your time has come. It's a view one is sympathetic towards, but not a good way to prioritize a nation's healthcare expenses.

Allow HSA's so people can save money for their own elderly expenses. Otherwise, the only issues are 1) taking care of childhood needs and 2) handling the occassional catastrophic medical expense for working adults.

Posted by: Chris Durnell at February 7, 2006 1:04 PM

Wouldn't it be easier and cheaper to set people off on the proverbial ice floe the year before they die?

Posted by: erp at February 7, 2006 1:23 PM

Just set 'em loose in traffic. When they get too hard of hearing to pick up the tire noise from the onrushing Priuses it's time for them to go anyway.

Posted by: joe shropshire at February 7, 2006 3:07 PM

Half the point of HSAs, IRAs, Roth IRAs, 401K's, etc., is to give tax preferences to all savings and move us to a de facto consumption tax.

Posted by: David Cohen at February 7, 2006 3:20 PM

I thought that half the point was to keep my own money in my own name, where both me and the government understand that its MY money.

Posted by: fred at February 7, 2006 4:04 PM

erp, Are you just saying that because you live in Florida?

Posted by: jdkelly at February 7, 2006 4:37 PM

Hey, I may be senile, but I'm not stupid.

Posted by: erp at February 7, 2006 6:13 PM