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August 30, 2005
Health Savings Account plans helping insure more people
One of the criticisms of Health Savings Accounts (HSAs) by people who want a one-payer health care system is that only the rich and healthy can benefit from Health Savings Accounts.
Assurant Health, one of the largest marketers of HSA-qualified plans in the country, reports that 75% of its HSA enrollees have an income of $50,000 or less. 27% report a net worth of less than $25,000.
They also report that 40% of their HSA enrollees previously had no coverage. Low rates and favorable tax features make these plans more affordable. So now people that were previously going without coverage are purchasing health insurance. Greater affordability = more people covered, a very good thing.
For what its worth, Assurant also reported that 73% of its HSA clients were families.
Posted by Wiley Long at 09:24 AM | Comments (0)
August 28, 2005
Health Savings Accounts Now Available in Pennsylvania
Pennsylvania has been one of only a handful of states in which Health Savings Accounts (HSAs) have not been available. Pennsylvania's problem is that state law mandated certain first-dollar benefits be covered by all health insurance sold in the state. HSA plans are designed to protect against major expenses, while letting the consumer cover smaller expenses like doctor visits and prescription drug expenses incurred before meeting the deductible.
Governor Rendell recently signed a bill exempting high-deductible health plans with HSAs from this mandate. Unfortunately for Pennsylvanians, the state still does not allow deductions on state income taxes for deposits into a Health Savings Account.
One of the major benefits of Health Savings Accounts is that the deposits are 100% tax deductible from federal income taxes, and from state income taxes in all but nine states. The Pennsylvania legislature will reportedly be revisiting this issue in 2006.
Posted by Wiley Long at 01:10 PM | Comments (0)
August 26, 2005
United States fatter than ever
If you own a Health Savings Account (HSA), you owe it to yourself to stay healthy. The CDC just released its obesity data, and once again we, as a nation, are fatter than ever. 22.7 % of adults are officially obese. Obesity is defined as a body mass index of over 30. This means that a man 5'10 could weigh 201 and not be considered obese. A 5'5 woman could weigh up to 179.
The fatest states are Mississippi, Alabama, West Virginia, Louisiana, and Tennessee. These are also the states that are most likely to experience rapidly rising health care costs due to increased rates of diabetes, cancer, Alzheimer's, cardiovascular disease, arthritis, and just about every other chronic disease that is caused or influenced by excess body fat.
If you own a Health Savings Account, you owe it to yourself to stay healthy. You'll have loads more money when you retire, and who wants to be sick anyway? One of the most important steps is avoiding the fate of the rest of the nation, and staying lean.
Eating a diet based on vegetables, fruit, and lean protein, and which eliminates or sharply limits grains and dairy will make it fairly difficult to stay overweight. Combined it with weight training and a little aerobic exercise, and it will be virtually impossible to maintain a fat body.
Remember, you're in charge - the decisions you make today will guide both your financial future, and your health future.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 10:03 AM | Comments (0)
August 23, 2005
Health Insurance for everyone in California using Health Savings Accounts (HSAs)
Jack Lewin, CEO of the California Medical Association and Ronald A. Williams, president of the Aetna insurance company, suggest a different solution for California’s health insurance challenges – requiring all citizens to carry health insurance.
Currently, people without health coverage often don’t get any preventive care, and only seek emergency care after medical conditions become acute. Health care facilities then have the absorb the uncompensated cost of services to these individuals, and then shift the cost to those who have insurance. The result is higher insurance premiums, and possibly even more people without coverage.
Before someone is allowed to drive a car in this country, the car must be insured. This is to prevent that individual from imposing expenses that are theirs (such as damage they do by causing a vehicle accident) onto others. Requiring individuals to carry health insurance would have similar benefits.
- By requiring individual coverage by those who can afford it, people would become personally responsible for their own health and healthcare expenses.
- Subsidies for those who cannot afford the most basic coverage acknowledges the social responsibility society has.
- A properly structured plan that encourages consumerism (such as Health Savings Accounts do) would not only provide access to health care but would also do much to ease the financial crisis facing health care.
These suggestions would be fair to all, would allow more Americans to benefit from the private-sector health care that most Americans receive through their employers, and would be much more cost-effective than any government-run socialized system.
Source: Jack Lewin and Ronald A. Williams, "Cover Yourself!" Wall Street Journal, August 19, 2005.
Find more Health Savings Account inforamation at HSA for America
Posted by Wiley Long at 11:08 AM | Comments (0)
August 21, 2005
California's Misguided Insurance Commissioner on Health Savings Accounts
California Insurance Commissioner Garamendi opens his report criticizing Health Savings Accounts (HSAs) and other forms of consumer-driven healthcare with this statement: “This report is not a neutral presentation of facts... This report and the recommendations contained in it are my views and the opinions of those of my staff.”
Californians should be outraged that their insurance commissioner is spending millions of their tax dollars in a PR campaign to promote his biased political view, with no attempt to present a balanced report. But apparently, Mr. Garamendi sees no problem with spending your tax money. In fact, he’d love to spend much more of it.
In his report, he complains that consumers will save about $7 billion in taxes by placing tax-deferred money into Health Savings Accounts. This is money that individuals can choose to spend on their own healthcare expenses, in any way they choose. They may go to a chiropractor, or a naturopath, they can shop the market, and find the best value for the service they’re looking for. If they stay healthy, they’ll then still have that money, to spend on whatever they want.
Garamendi believes the government can spend this money “more effectively” than you can. Isn’t there a punch line to a joke that goes something like “We’re from the government, and we’re here to help”?
His report claims that HSAs will benefit only the wealthy. An individual can shelter up to $2,600 per year in a Health Savings Account. This can be a nice tax break – perhaps up to $800 or so. That may be enough to cut the cost of one’s healthcare by a third or more, but its certainly not enough to get Donald Trump and Martha Stewart rushing to put their money into HSAs.
Interestingly, in a different section he then claims that many people with HSAs “are likely to forego necessary treatment”, because of the high deductibles that these plans carry. Are these the same wealthy people he was talking about who will be the only beneficiaries of these plans?
I’ve probably got more to say about this ridiculous report. Stay tuned... and let me know if you agree.
Posted by Wiley Long at 11:25 AM | Comments (1)
August 19, 2005
Health Savings Accounts or Socialized Medicine?
California Insurance Commissioner John Garamendi recently issued a report criticizing Health Savings Accounts (HSAs), and the entire idea of consumer-directed healthcare.
The concept of consumer-directed healthcare is that by placing the consumer at the center of the purchasing decision, and by injecting competition into the system, prices will drop, and quality and access to healthcare will improve.
Commissioner Garamendi is of the mistaken belief that a government-run, single-payer system is the answer to California’s healthcare problems. To see the folly in his thinking, all one has to do is look north to Canada, where a government monopoly on the healthcare system has been in place for many years. Canadians for years have been complaining about their system, and Quebec recently won a court battle to allow private insurance.
Here’s what Canadians have to deal with when they need medical care:
- Long waits. There are long waits for virtually any kind of medical care, including seeing a primary-care doctor. Nearly 4.2 million Canadians are unable to find a primary-care doctor willing to take them as a patient.
- Really long waits. Hundreds of Canadians cross the border into the U.S. every year for medical procedures, particularly life-threatening situations like bypass surgery or organ transplants, where waiting another few months is not an option.
- Difficulty in getting life enhancing procedures such and hip and knee replacements done.
Watch out California. If Garamendi gets his wishes, this is what may be in store for you.
The failure of Canada’s single-payer system is no surprise. Though not a panacea for our nation’s healthcare problems, consumer-directed healthcare encourages people to use health care services carefully, and to take care of their own health. Something Mr. Garamendi apparently doesn’t get.
Find more Health Savings Account information at HSA for America
Posted by Wiley Long at 12:17 PM | Comments (0)
August 17, 2005
Rhode Island to Finally Get Health Savings Accounts
Health Savings Accounts have, until recently, been illegal in the state of Rhode Island. Federal law defines what an HSA-qualified plan can cover before the deductible is met, and Rhode Island has many requirements on what must be covered by health insurance companies that do business in the state. One requirement – that coverage for early intervention expenses for special needs children be exempt from deductibles – conflicted with HSA legislation, and thus made HSAs unavailable to the citizens of Rhode Island.
This law has recently been changed, not only addressing this immediate problem but also exempting tax-advantaged health plans from any future mandates as well. This is great news for individuals and families who purchase their own health insurance.
Two companies have announced that they will be offering HSA plans in the state. UnitedHealthcare of New England will be offering its iPlan HSA products in Rhode Island, effective Sept. 1. Blue Cross Blue Shield of Rhode Island is planning to launch their HSA plan, tentatively named HealthMate for HSAs, by October 1. Both Blue Cross and United expect premiums for their HSA plans to be 30 to 40 percent lower than for their other plans.
This obviously has the potential to save Rhode Islanders thousands of dollars in premiums, and income taxes.
Posted by Wiley Long at 03:17 PM | Comments (5)
August 15, 2005
Health Savings Accounts bring consumerism to Medical Care
An estimated 7 million people will own Health Savings Accounts (HSAs) by year end. These consumers will be asking healthcare providers all kind of questions about the quality and cost of treatments - questions that they haven't asked in the past. As this trend grows, an efficient and competitive marketplace will be created for healthcare, just as it exists for computers, food, or any other product or service.
This will shake up the medical world which has become used to consumers not caring about the cost of a drug or procedure, because their out-of-pocket was only $20. But in fact, docors visits are much more expensive than that, and are being paid for in the form of high premiums or companies deciding not to offer health insurance to their employees.
The results of this massive shift towards Health Savings Accounts will be what you might expect when people have to be responsible for their behaviors. We will see a marked increase in people's awareness about their family's health and their health care consumption. Individuals who are motivated to make more intelligent decisions about their lifestyle habits, and their purchasing of healthcare will be rewarded with more money, and of course better health.
Humana CEO Michael McCallister recently said that he is more convinced than ever that consumer-driven plans and the philosophy of individual responsibility will carry the day on reforming large segments of the health care industry. I agree - HSAs will change the country.
Posted by Wiley Long at 08:54 PM | Comments (0)
August 11, 2005
Tax Deductible Health Savings Account Insurance
To encourage broader use of Health Savings Accounts (HSAs), the President has proposed allowing individuals who set up HSAs to deduct from their income taxes the premiums they pay for their health insurance, thus reducing the net cost of those policies.
Currently, businesses are allowed to deduct the cost of health insurance from their income taxes. Individuals who buy their own health insurance, however, cannot deduct this expense, and must pay taxes on the entire premium. Only if an individual is self-employed are they allowed to deduct the cost of their health insurance from their taxes.
President Bush has also proposed providing a contribution of $1,000 to the HSAs of low-income families (those making at most $25,000 per year), along with a $2,000 refundable tax credit toward purchase of a high-deductible insurance policy to cover major medical expenses. This could be a great way to help low-income families protect themselves from major medical expenses, and can also be a way to reward them for staying healthy.
As with all HSAs, any money not withdrawn from the account to pay for medical expenses grows tax deferred, and can be used to pay for medical expenses tax-free at any time. If the money is not needed for medical expenses, it can be withdrawn for any reason, penalty free, after age 65. If it is withdrawn before age 65 for non-medical reasons, income taxes and a 10% penalty must be paid on the withdrawal at that time.
Posted by Wiley Long at 10:11 AM | Comments (0)
August 09, 2005
Pennsylvania decides to tax Health Savings Account contributions
The Health Savings Account (HSA) bill recently signed into law by Pennsylvania Governor Ed Rendell eliminates state tax exclusions from HSA contributions.
A majority of states give a tax deduction for contributions to Health Savings Accounts. This is in line with the federal government, which also provides federal income tax deductions for any contributions made to an HSA.
Under the original legislation, contributions to HSAs by employers and employees would not have been taxable for state income tax purposes. Unfortunately, under pressure and threat of veto from the Rendell administration, the tax exclusion language for contributions was stripped from the bill immediately prior to its passage.
The Pennsylvania Chamber of Business and Industry expressed disappointment that important state tax exclusions were eliminated from the health savings account bill signed into law by Gov. Ed Rendell. "While we note that the concerns of insurance companies have been addressed by ensuring compliance with the federal health savings account law, we are extremely disappointed that the small business community's needs were ignored," said Jim Welty, PA Chamber vice president of legislative and corporate affairs.
"The new law provides insurers assurance that Pennsylvania's law adheres to federal requirements for health savings accounts, but unlike a majority of other states, it provides virtually no tax incentive at the state level," said Welty, adding that the savings from tax-free interest that can be earned is negligible compared to tax savings that could have been realized had the contribution exemption remained in the measure.
Welty said the PA Chamber is committed to ensuring that contributions to HSAs are excluded from state income tax, as they are treated for federal tax purposes, and will make the issue a priority this fall.
By offering a tax incentive, the federal government and most states are encouraging people to take more responsibility for their health, and their healthcare decisions. As more and more people open Health Savings Accounts, the medical community will feel the impact of consumers who are now more concerned with how their healthcare dollars are spent, and who are shopping before they buy.
Governor Rendell apparently thinks citizens of Pennsylvania who open Health Savings Accounts should pay higher taxes on their contributions than the citizens of at least 42 other states do.
Posted by Wiley Long at 09:07 PM | Comments (2)
August 07, 2005
Growth seen in Health Savings Accounts
New research from TowerGroup projects that the total number of health savings accounts (HSAs) and flexible spending accounts (FSAs) will rise to nearly 29.1 million by 2010, up from just 17.3 million in 2005. They also predict that HSA assets under management will grow to between $10 billion and $26 billion by 2010.
My prediction is that these numbers are way too low. Health Savings Accounts have only been available a year and a half, and many people are not even aware of them. Yet the growth in number of HSAs being opened is accelerating every month. Many insurance companies are reporting that up to 50% of their sales this year have been HSA-qualified policies. This has also been our experience.
If HSA plans also result in lower rate increases (which is a good possibility, since HSA holders have a financial incentive to stay health), we’ll see even more people flocking to these plans.
Posted by Wiley Long at 12:52 PM | Comments (0)
August 05, 2005
UnitedHealth expects Health Savings Accounts to fuel company growth
UnitedHealth, one of the leading health insurance companies in the nation, recently unveiled its latest acquisition plan, an $8 billion bid for rival PacifiCare Health Systems. The deal marries two leaders in the emerging field of consumer-driven health plans and Health Savings Accounts (HSAs).
Investors and policymakers alike have embraced these plans as a way to bring down skyrocketing health care costs, and consumers are flocking to the plans.
TheStreet.com, an investment advisory website, has reported that UnitedHealth is banking on explosive growth in health savings accounts and health reimbursement arrangements to drive earning gains for years to come. The company has been regularly posting double-digit quarterly profit growth for quite some time now.
I, too, expect tremendous growth in the number of health savings accounts opened, as people become more aware of the premium and tax savings that are available to owners of HSAs.
Posted by Wiley Long at 09:54 AM | Comments (0)
August 03, 2005
Health Savings Account Bills to be voted on by Congress
House Republican leaders this month plan to bring several health care bills to a vote. Floor action may be expected during the week of July 25 on bill HR 525, which would allow small businesses to buy health insurance through business and trade associations.
Action is also is expected on a measure sponsored by Rep. John Shadegg (R-Ariz.) that would make it easier for insurers to expand sales of health care policies into additional states. Basically, this proposal would remove the ability of states to regulate their own health insurance laws. (Once again, the Republicans show that they tend to be for states rights more when they are not the ruling party. Once they’re in power (either party, that is), they want to take control away from the states, and put it in the hands of Congress.)
The House may also consider a proposal (HR 1872) to expand health savings accounts for small businesses. This bill would make high deductible health insurance plans tax deductible for individuals. Currently businesses can deduct health insurance as a business expense, but individuals get no tax break when they purchase their own health insurance. This bill would also provide a refundable credit to businesses that help fund their employee’s health savings accounts.
Posted by Wiley Long at 09:47 AM | Comments (0)
August 01, 2005
Price Transparency helps those with Health Savings Accounts
The big promise of Health Savings Accounts (HSAs) is that they will help usher in a new era in which medical providers will finally have to compete the way every other business in America competes. This will benefit not only HSA holders, but all Americans.
The state of Pennsylvania has made hospital fees publicly available. Patients can now see that a heart bypass may cost from $10,000 to $80,000 depending on the hospital.
Getting prices on medical care is typically very difficult. Hospitals and doctors rarely advertise their prices. The result is that people don’t have any basis on deciding which provider to choose.
Individuals with health savings accounts are most in need of pricing information. These plans, which combine catastrophic coverage with a tax-exempt savings account, can carry deductibles over $5,000 for an individual.
It is expected that insurance companies, non-profit organizations, and other states will become more involved in making the cost of healthcare and hospitalization expenses more readily available. There’s actually a word for what every other business has always had to do in order to stay in business – compete on the basis of both quality and price.
When price competition enters the game, we can expect one major result – a reduction in prices. Healthcare prices have been rising rapidly for several years now. There are many reasons, but one of the biggest is that there has been no competitive pressure for hospitals, doctors, or pharmaceutical companies to charge reasonable prices.
Posted by Wiley Long at 07:43 AM | Comments (0)