America’s working families are facing a crisis in health care: Between 2000 and 2006, health care costs rose nearly five times the rate of inflation. As a result, employers continue to shift more health care costs onto workers—or simply drop health coverage all together. Already, nearly 45 million Americans have no health insurance.
President George W. Bush’s answer to the health care crisis—individual Health Savings Accounts (HSAs) and high-deductible health plans—will end up costing consumers more money and providing less health care.
- HSAs require high out-of-pocket expenses—a minimum deductible of $2,200 deductible for a family—before workers’ coverage actually kicks in. The maximum out-of-pocket limit for a family is $11,000 in 2007 and increases to $11,200 in 2008. As a result, many workers and their families are likely to go without critical health care or delay seeking needed care because they cannot afford it.
- HSAs encourage employers to shift more health care costs and risks to workers. There is no evidence that HSAs will lower overall health care costs. While HSAs and their high-deductible plans may reduce employer costs, they do so by imposing additional costs on workers and their families.
- HSA plans will discourage preventive care, ultimately increasing the cost of health care in the United States.
- Workers who remain in more comprehensive coverage plans will see their premiums increase as younger and healthier workers opt for the high-deductible HSAs. As result, older and less healthy employees would be pooled together in a higher-risk group and insurers would raise premiums. As employers face higher premiums for traditional employer group health plans, they would be more likely to shift even more costs to workers or drop traditional health coverage all together in favor of high-deductible HSAs.
- HSAs and high-deductible plans don’t prompt individuals to become “smarter shoppers” for health care. An August 2006 U.S. Government Accountability Office (GAO) report (Early Enrollee Experiences with Health Savings Accounts and Eligible Health Plans, GAO-06-798) noted that few participants actually researched the cost of medical or hospital services. In addition, there is no evidence that individuals will be better than their employer or health plan at negotiating hospital and doctor rates.
- Most uninsured Americans could not save large amounts of money to put into HSAs. Because most low-income people have little disposable income after paying for housing, food and other necessities, it is unlikely they could manage to spare $2,850 in 2007, increasing to $2,900 in 2008 (or much more, in the case of a family) to put into an HSA. And many uninsured don’t even have enough income to see any benefits from the tax breaks.
- Racial and ethnic minorities suffer disproportionately from chronic conditions and so are less likely to benefit from HSAs. For example, African Americans and Latinos are twice as likely to suffer from diabetes as whites. Because racial and ethnic minorities are more likely to have acute or chronic conditions and are more likely to be low income, they are far less likely to benefit from HSAs and far more likely to be harmed by high deductibles.
- HSAs would undermine employer-sponsored group insurance—the backbone of health care financing in the United States.
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