Stop HR 5719!

Check out this website. If you have any interest in keeping Health Savings Accounts (HSAs) around, you should call your congressperson and urge him or her to vote against HR 5719, which passed the House Ways and Means Committee last week and is going to a full House vote tomorrow. Basically, a company called Evolution Benefits lobbied to have a provision sneaked into the bill that would require substantiation of claims (proof that HSA dollars are spent on authorized products and services) at the risk of being fined by the tax man. It will cost HSA administrators tons of money and ruin HSAs.

The reason that Evolution Benefits did so is that they have a patented system that rejects unauthorized purchases for Flexible Spending Accounts (far inferior cousins of HSAs) and they have argued that HSA owners are making lots of unauthorized purchases with their cards which don't require substantiation. Account holders already must hold onto receipts in case they are audited and already must file with the IRS to show where their HSA dollars are being spent.

So, it comes as no surprise that some greedy businessmen are trying to get the government to shove more regulation down our throats so they can make a buck. Please call your congressperson and ask him or her to vote no on 5719! If you don't know who your congressperson is, shame on you, first of all, but you may find out at http://whoismyrepresentative.com/. Isn't the internet great? Also, feel free to call Evolution Benefits at 860-678-3400/5560 and tell them to go to hell.

I've also just learned that the White House might actually veto something if this passes the House. You may call the White House Comment Line at 202-456-1111 and ask that President Bush support the health of HSAs and does indeed veto it, should it pass.

What a great country.

I Think This Is Campaign Issue #2 (After Iraq)

From Fortune Magazine -

Why McCain Has the Best Health-care Plan

"Here's where [McCain's plan] gets interesting. Employers would no longer be able to buy more health care with $9,000 of their employees' money than the workers could buy on their own. The raison d'être for corporate health benefits would vanish. Employers have another compelling reason to pass the ball to the employee: While wages are rising around 3% ayear, their health-care costs are growing at three times that rate. 'I predict that most companies would stop paying for health care in three to four years,' says Robert Laszewski, a consultant who works with corporate benefits managers. Hence, an employer that pays $9,000 for your benefits would simply pack an extra $9,000 a year into your paycheck. (Why? Because in a competitive labor market, companies would have to hand over that cash to employees or risk losing them.) So you'd have $6,000 after tax, plus the $5,000 family credit, to buy insurance. That's $11,000 in new cash that employees can set aside for health care."

"The [Democrat] standard benefits package isn't just a bad idea because it will substantially raise the cost to taxpayers. It will also make it virtually impossible for Americans to buy insurance tailored to their needs. Suppose you're one of those 25-year-olds. You probably don't want to spring for a full-blown plan that covers old-age diseases like Alzheimer's and would rather save some money and go with a low-premium, high-deductible plan. But the Democrat approach requires that any competing plans be "actuarily equivalent" (Clinton's term) to the federal employee plan - which translates as a generous minimum standard for health insurance. 'With that mandate, you rule out high-deductible plans,' says Gruber. 'It would make it very difficult to design one that would qualify.'"

"The Democrat proposals have some additional drawbacks. First, the Dems want to heavily regulate the insurance industry by limiting everything from profits to marketing expenses. If the earning power of insurers is determined by federal regulators, their pricing will be too, and thus they will evolve into the equivalent of public utilities. Would you rather have medical prices set by fiat or by nationwide market competition?"

"Second, the Democrat plan exacerbates the fundamental problem in the American health-care system, which is that no one has any incentive to care about price. (How much is that MRI center charging for your ankle scan? Who cares? Just hand over the $50 co-pay and never you mind.) Creating a huge new medical superstructure would shift far more spending to third-party providers, chiefly the federal government, giving consumers even less incentive to concern themselves with the price of an MRI - or any other service, from an elective wart-removal procedure to a life-saving heart bypass. 'The Clinton and Obama plans would enormously increase total health-care spending, but disguise the extra costs by shifting them to taxpayers,' says John Sheils of the Lewin Group, a research firm that does statistical modeling for health-care plans."

HSAs

Sharon Alt, whose radio show I listen to from time to time, has written a good article on the evolution of consumer directed health plans and health/medical savings accounts. They've been around for about 4 years, and legislation has been enacted to better them several times. They seem to be just about there.

The main issues are to get the premiums down even more to justify the high deductibles, while considering the likelihood of consumers to get better deals when shopping for care, and allowing coverage for medication to treat chronic diseases (classifying it as "preventive"). The main objection I hear about these plans is from people who have expensive medication that would eat up the deductible (and therefore, the HSA money) and likely make the plan more expensive for the insured.

Shop Around

Newt.org has a clip of a little anecdote delivered by Newt Gingrich, in case you were thinking of some other Newt. He discusses the kind of market efficiency that is potentially attained by employing HSAs with the example of an expensive sleep apnea machine.

HSA Calculator

The 2007 annual contribution limits for Health Savings Accounts are $2,850 for individuals and $5,650 for families. The good news is that, now that President Bush has signed the Tax Relief and Health Care Act of 2006, you can contribute the max even if your deductible is lower. Try out this HSA Calculator from HSA Bank, to give yourself an idea of how much you'll have to start squirreling away to pay for medical expenses in retirement.

More On HSAs

President Bush today signed the Tax Relief and Health Care Act of 2006.

"The bill’s provisions include the following:

1. It allows HSAs to be funded with one-time transfers from Individual Retirement Accounts (IRAs), enabling individuals to benefit from the tax advantages provided by HSAs when paying for medical expenses.

2. It allows individuals to make the maximum annual contribution to HSAs at any point in a given year; previously, they were only allowed to make prorated contributions based on their enrollment dates.

3. It allows individuals to contribute amounts that equal the annual contribution limit, regardless of their plans’ deductible limits; previously, they were only allowed to contribute amounts equaling their deductibles.

4. It allows funding for HSAs to come from a health reimbursement arrangement (HRA) or a flexible spending account (FSA) in the form of a one-time rollover.

5. It allows employees with lesser earnings to receive higher contributions from their employers into HSAs."

Read the article here on insurancenewsnet.com.