Health Savings Account Blog

Democrats have been relentless in their criticisms of health savings accounts (HSAs) and Bush’s whole agenda for healthcare. In particular, some lawmakers and their allies have compared the expansion of private accounts for healthcare to the White House’s plan to create private accounts under Social Security.

AARP is not officially opposed to Health Savings Accounts, but they are not in favor of expanding their tax incentives. However, the group does not plan to campaign against the White House HSA proposals.

AARP’s decision not to oppose Bush strongly on Health Savings Accounts will put Democrats in a difficult spot.

Health Savings Account legislation is expected to pass the House, attracting some Democratic support. It’s unclear how many Democrats will back it, but it is clear that Health Savings Accounts do not unite Democrats the way Social Security reform did.

Senate action on such legislation will be more difficult, particularly given the opposition of Finance Committee ranking member Max Baucus (D-Mont.). Baucus was instrumental in helping put together the Medicare drug bill, which was meant to be the crowning achievement of Bush’s domestic-policy legacy.

Baucus’s resistance will make it difficult for Chairman Chuck Grassley (R-Iowa) to move a bill out of the committee.

Special interests are aligning for the Health Savings Account debate along predictable lines. For example, large employers and health-insurance companies are behind the president’s agenda, while labor unions and some consumer groups stand opposed.

The White House wants to create new tax breaks for people who open the tax-free accounts and buy the high-deductible health insurance plans that go along with them. The president has made HSAs a regular fixture in his speeches this year.

AARP spent $27.8 million on lobbying during the first half of 2005, when Social Security was its No. 1 issue. The group also mobilized its massive grassroots operation against Social Security private accounts.

“We don’t have any such campaign in mind right now for Health Savings Accounts,” Certner said. “This is clearly not at the level” of Social Security.

AARP does not view HSAs as a direct threat to Medicare. Proponents of the HSA expansion have not proposed using Medicare funding for the accounts or making them part of the program itself, as the Social Security plan would have done.

Unlike the immediate negative reactions of many older Americans to the president’s Social Security reform ideas, seniors so far are not worried about HSAs. In fact, HSAs stand to benefit seniors who open the accounts before they turn 65.

HSAs are inextricably linked to Medicare, legislatively and philosophically, because they were created as part of the 2003 Medicare reform bill that also established the prescription-drug benefit.

The accounts are viewed as part of a movement away from open-ended entitlement spending and toward the president’s “ownership society.”

The enthusiasm of lawmakers for the White House agenda and the strong denunciations of Democratic opponents in part stems from the importance of rising healthcare costs as a vital issue for middle-class voters.

HSAs are poised to be the sole legislative vehicle for healthcare this year, making them the only handy focal point for a broader debate. The White House and its GOP allies need to appear active on healthcare, which traditionally has been an issue that favors Democrats.

The winner of the rhetorical battle may prove the winner of the legislative battle, as the public remains largely unaware of HSAs.

After Bush touted HSAs during his State of the Union address, a Kaiser Family Foundation poll found that 45 percent of people had never heard of them. Thirty-nine percent of respondents could not identify what HSAs were when presented with three descriptions; 38 percent chose the correct definition.

These numbers will begin to increase as more and more american's become aware of the many benefits of Health Savings Accounts.