The Bush administration has released its plan for healthcare reform. And liberals will take it as an open declaration of policy war — just as they did when President Bush said he wanted to reform Social Security by creating a system of personal accounts, and for the same reasons.
Bush’s Social Security reform plan would have put more money in the hands of individuals, giving them more control over, and responsibility for, their financial futures. Most liberals want no part of that, and they did everything they could to defeat the effort — and stood and applauded that defeat when President Bush mentioned Social Security in his State of the Union Address.
At the heart of the president’s health care reform agenda is expansion of Health Savings Accounts (HSAs). He only mentioned them in the State of the Union, but the White House released a five-page document that outlines its efforts to expand HSAs.
Like the president’s Social Security reform proposal, HSAs put money in the hands of individuals. People still have health insurance; it just has a high deductible. So if a person has a major accident or illness or a year of high health care expenses, health insurance is there to cover them. For smaller and routine health care expenses, people use their Health Savings Account.
HSAs became available in January 2004, though a much more limited and regulated version known as Medical Savings Accounts was created by Congress in 1996. HSA plans combine a high-deductible (e.g., $2,500 for a family) health insurance policy with money deposited in a personally owned, tax-free account. (To find out more about how Health Savings Accounts work, click here.)
More than a million people have shifted to some form HSA plan. The success has been nothing short of phenomenal. The New York Times reports that a huge array of financial institutions, which never had much interest one way or the other in HSAs, are jumping on board at record speed. Why? Because analysts expect that by 2010, there may be as much as $75 billion in HSA accounts.
That’s money that people can use to pay for health care if they need it, without someone — like an HMO or the government — telling them what they can and can’t have. But that is also money that belongs to them, and grows with interest tax-free.
By expanding HSA options, President Bush has openly declared that patient empowerment is the centerpiece of his vision for the health care system — and liberals don’t like it one little bit.
Some of the central features of the president’s plan:
- Changing current law so that the annual HSA contribution can cover total out-of-pocket expenses.
- Providing individuals who purchase HSAs on their own with the same tax advantages as those with employer-sponsored health insurance.
- Allowing premiums for the purchase of non-group HSA plans be tax-free if paid from an HSA account.
- Eliminating all taxes on out-of-pocket medical spending done through HSAs.
- Allowing military retirees and families to have an HSA option.
- Allowing employers to make additional contributions to HSAs for chronically ill employees and/or their dependents.
- Extending HSAs benefits to low-income families and individuals through refundable tax credits.
Make no mistake about it, these are ambitious reforms.
In addition, the administration is considering ways to expand HSAs to seniors on Medicare. And several governors, led by Florida Governor Jeb Bush and South Carolina Governor Mark Sanford, are pushing HSAs for the Medicaid population — with strong support from the White House. And the Bush administration has already made HSAs available to millions of federal employees.
It is a plan to ensure that everyone, regardless of age, income or work status, has an HSA option.
And if that wasn’t enough to tick off the liberals, the president also wants to push medical liability reform and allow people to buy health insurance across state lines (that is, if you live in one state, you would have the option of buying a policy that is state-approved and currently being sold to residents of another state).
For decades liberals have been trying to push the U.S. into a government-run health care system. In essence, Medicaid for everyone. And they are pursuing their dream both at the federal and state levels. "Dirigo Health" in Maine, "Healthy Illinois" and "All Kids" in Illinois, and many, many more.
They all have one thing in common: to move everyone into a government-run health care system step by step.
With his expansion of HSAs, President Bush has said there is a better way: That individuals, in consultation with their physicians, ought to control their health care decisions — not government, politicians or bureaucrats.
It’s a conflict of visions, to use economist Thomas Sowell’s term. One relies increasingly on government funding and control. The other puts that control and responsibility in the hands of patients.
It’s also the first skirmish in what is sure to be a key campaign issue in the next presidential election — given the near certainty that an older and savvier Clinton will be running for president.
We are calling it "The Great Debate for 08." And with his ambitious expansion of HSAs, President Bush may have just kicked off that debate. It’s a debate conservatives have to win. Our health depends on it.
To view the White House’s plan click here.
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