October 8, 2007

THE GRAND COMPROMISE:

HSAs offer a good way to pay for care (Jeanie Wyatt, 10/07/2007, San Antonio Express-News)

The growth in the use of HSAs has been dramatic. These accounts first came into use in January 2004 as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 signed into law by President Bush.

According to the fact sheet from the U.S. Department of the Treasury, America's Health Insurance Providers (AHIP) reported that there were 438,000 individuals covered in November 2004 by HSA-type insurance. Additionally, IRS data for the 2004 tax year indicated that 113,000 tax returns reported income tax deductions for HSAs.

By December 2005, the number of individuals covered under these plans had mushroomed to 3.2 million. The breakdown was fascinating:

Thirty-one percent were previously uninsured individuals buying health insurance on their own; 33 percent were employed by small businesses that previously had not offered any health-care coverage to their employees. Nearly 50 percent of these HSA accounts were for people age 40 or older. Finally, 42 percent of these accounts were for individuals and families with incomes below $50,000 who are buying HSA-type insurance policies — those with high deductibles — on their own.

There is more than $1 billion invested in HSAs, accumulated in just three short years!

These are funds that forever escape income taxes so long as they are used to pay for qualified health-care expenses. You get to choose how and when the money is spent and you don't lose it at the end of the year, like in the more common Flexible Spending Accounts offered by many employers.

By 2010, the Treasury Department is predicting that there will be 14 million HSA policies covering 25 million to 30 million people, with greater growth even more likely as time goes on. With all the talk of health-care reform in the news, this is an existing option that you need to know more about.


Take all the kids the Democrats want to cover with SCHIP and put them in taxpayer-funded HSAs.


MORE:
S-chip of Fools: Republicans can't play defense on health care. (Fred Barnes, 10/15/2007, Weekly Standard)

Rahm Emanuel, the chief intimidator for House Democrats, didn't go for subtlety. Republicans who oppose expansion of the S-chip program will be denying "10 million American children their health care," he told Major Garrett of Fox News. Chuck Schumer, his counterpart in the Senate, took the sorrowful approach. "We're all hurt as a country when a child is not covered by health care and goes to school sick," he said. In vetoing the S-chip bill, President Bush "sided with [the] tobacco industry instead of America's children." That blast came from the nice folks at the American Cancer Society, who favor the 61-cent hike in the cigarette tax that would pay for the S-chip increase.

It isn't going to be pleasant for Republicans who believe the new S-chip legislation is bad policy. But there's a way to resist the measure and neutralize the Democratic demagoguery without suffering too much political heartburn. It consists of three steps. First, you go negative and criticize the bill as "welfare for the middle class," which it is. Second, you go positive and offer an alternative. Third, you go big picture and show how an expanded S-chip program is inconsistent with the kind of health care system most Americans want.

Posted by Orrin Judd at October 8, 2007 1:38 PM
Comments

Guess that means me too, says the 22 year old earning $60k a year.

We should probably address that upper age limit first.

Posted by: Jay at October 8, 2007 2:16 PM
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