Silver Lining in the Medicare Clouds?

http://www.NewsAndOpinion.com | Last week in these pages, Dr. Glueck described how our children and grandchildren will have to do a "Medicare mop up" as a consequence of HR 1, the "Medicare Prescription Drug, Improvement, and Modernization Act of 2003" that President Bush signed Monday. They're the ones who will have to pay for the multitrillion-dollar bill ... or endure the collapse of the entire structure.

Yet a potentially revolutionary change, providing for a tax-exempt Health Savings Account (HSA), did get included in the spendthrift law. And this little proviso holds a wondrous potential for freedom.

Before explaining, let's review the general situation with consumer-oriented health plans, such as Medical Savings Accounts (MSAs) and HSAs.

Seven years ago, the Kennedy-Kassebaum Health Insurance Portability and Accountability Act (HIPAA) of 1996 (HR 3103) included a Medical Savings Account (MSA) "pilot program." This allows federal tax exclusions for money put aside in special savings accounts for buying routine medical services when these are coupled with a high-deductible ($1,700 to $5,050) health insurance policy.

In essence, you put before-tax dollars into your MSA and, so long as you keep them there (earning interest) or spend them on medical care, you pay no income tax on the money. The idea is to give consumers a financial interest in their health care by encouraging them to shop around, and by making them the owners of their MSAs.

At the time, many of us hoped that MSAs would be such a hit that they'd have to be expanded.

We were wrong, not least of all because the law limited the number of MSA accounts to less than 1 percent of the total market. Further, company-sponsored plans were limited to firms with 50 employees or fewer. Large employers, the bulk of the health insurance market, had no chance here; nor did their employees have any incentive to investigate. In short, the "experiment" was set up to fail.

Now, fast-forward to almost yesterday.

Last week, Dr. Glueck alluded to some of the dark leaden linings of the new law. Suffice it to note Rep. Scott Garrett's statement:

"Under the new plan, seniors will have to pay a $35 a month premium, a $250 annual deductible, and 25% of their next $2,250 in drug expenses - all for a plan they may have not needed in the first place. A senior with $999 in drug costs will still have to pay $771 out of their own pocket. A senior with $5000 in drug costs, will still pay $3976 out of their own pocket. The new plan proves to be more costly to seniors who are already on a very limited income."

And this is but a summary of one small part of a law that the legions of locusts - er, bureaucrats - will soon be busily "interpreting" and "implementing."

However, the HSA provisions may be a silver lining. Greg Scandlen, a health care policy expert at the Galen Institute, a Washington think tank, says, "They [HSAs] have the potential to become the dominant kind of health care financing in the next five to 10 years." Henry Aaron of the Brookings Institution thinks HSAs may change regular health insurance far more than the new law changes Medicare.

And lest anybody doubt the freedom-enhancing potential, Sen. Tom Daschle, D-S.D., has already introduced the Medicare Preservation and Drug Price Fairness Act (S 1974), which would repeal the HSA part of the brand new law and make other changes in the direction of, shall we say, greater "centralization."

So, what's got Mr. Daschle so scared?

In essence, HSAs share the same fundamental concepts as MSAs, but include many significant advances. For example:

An unlimited number of HSA accounts can be opened.
There's no limit on the size of companies that can include HSAs in their health plan offerings.
- An employer and employee can both contribute to the account.
- The tax-exempt cash contribution each year can be as high as $4,500 for a family plan.
- The high-deductible health insurance has a wider range of deductibles, starting at $1,000 for individual insurance, with a $5,000 maximum on out-of-pocket expenses; the range for families is double these amounts.
- The HSA provisions are permanent.
Other features are similar to MSAs, such as
- Taxpayers don't have to itemize deductions to take this particular deduction.
- Tax-exempt HSA money can pay for health care not covered by insurance.
- The individual or family owns the account, not the employer; the money belongs to them, permanently.
- People have both health and financial incentives to learn more about their own health care needs.
As President Bush said during the signing ceremony Monday: "Our laws encourage people to plan for retirement and to save for education. Now the law will make it easier for Americans to save for their future health care, as well."

This is a big step toward equalizing tax treatments of individuals and families with corporate employees.

In sum, I urge you, dear readers, to check with your employer, union steward or health insurance agent as soon as possible to see if these new accounts might be available to help you meet your family's goals. Don't be surprised if they haven't heard of them. If they haven't, tell them to get up to speed.

You can use an HSA in your next tax year, Jan. 1, 2004, for most of us. The sooner you sign up, the better, if an HSA fits your situation.

If you want a sound bite, try "Don't Debate, Investigate."

Or, if you want a dreary old political slogan that, for once, might make sense: "Do it for the children."

The children who will someday have to pay the bills.
Editor's Note: Robert J. Cihak wrote this week's column

Michael Arnold Glueck, M.D., is a multiple award winning writer who comments on medical-legal issues. Robert J. Cihak, M.D., is a Discovery Institute Senior Fellow and a past president of the Association of American Physicians and Surgeons. Both JWR contributors are Harvard trained diagnostic radiologists. Comment by clicking here.

12/05/03: Medicare mop up
12/01/03: The Dirty Radioactive Bomb: Rational Response or Fear Itself?
11/24/03: The Caduceus Conspiracy: How the People Lost Medicine and How We Can Take It Back
11/14/03: Mosquitoes kill us; DDT doesn't
11/07/03: Avoiding the Schiavo Scenario: Readers Speak Out With Life-and-Death Comments
10/31/03: The Terri Schindler-Schiavo Case: Speaking out for those who can't
10/24/03: Want health service — go on a diet?
10/15/03: The War on Legal Painkillers: Sen. Kerry owes an apology to the more than 48 million Americans who suffer chronic pain
10/13/03: Medicare defrauds itself
09/19/03: Politics prevents women from learning about abortion/breast cancer risks
09/12/03: Medical mischief
09/05/03: Unholy medicine
08/29/03: The California Tea Party and West Coast Determinism; Voter anger coming your way soon
08/18/03: The outlaw prosecutors: A Justice and Civil Liberties Issue
08/08/03: "Toxic Teeth?"
07/25/03: Resuscitating the Constitution; CPR American Style
07/25/03: Drug reimportation: Bill translates to goodnight, patients
07/11/03: Costly Medicare Changes, Without Real Reform
07/04/03: The Painful DEA II: War on legal drugs ensnares too many doctors and not enough dealers
06/20/03: The Medicare Mess: Will President Bush call Congress' Bluff?
06/13/03: Diagnosis: School Insanity: A suit for sanity and school discipline
06/05/03: Soaring Medical Costs: Rational ignorance or rational enlightenment?
05/30/03: A Tale of Two Admirable Women: Jessica and Annika
05/23/03: Latest medical innovation: Cash
05/09/03: We feel your pain; Physicians have it too no thanks to the DEA
05/02/03: Medical Quarterbacking
04/25/03: CNN the "Conscience-Not Network"
04/21/03: Medical Miranda?
04/11/03: Are childhood vaccines shots in the dark?
04/09/03: The PETA Principle -- The lambshank Redemption
03/28/03: American conscience?
03/21/03: West Wimps or Wings: Treatment for Hollywood Hypocrisy
03/13/03: Worldwide schmaltz shortage looms --- all because of a featherless chicken
03/06/03: Legal metastases are killing us
02/28/03: Outside the Jury Box: Seeking Justice rather than a Lottery in Medical Liability
02/21/03: Workforce temperature rising; employer TLC in demand
02/14/03: Malpractice Insurance: They Reap What They Sue
02/12/03: Hawk, Dove or Groundhog: Diagnosis Critical List; Prognosis Uncertain
02/07/03: How about tax cuts for the "rich" and "poor"?
01/31/03: AIDS Bug Chasers
01/24/03: Libertarian moment or movement?
01/17/03: It's not just 'sue the docs' anymore
01/03/03: A pox on the critics; diagnosis sour grapes
01/03/03: If protesting is good for your health; then at least let's root for the home team
12/20/02: Obesidemic (obesity epidemic) or not?
12/20/02: Time for voluntary informed smallpox vaccinations
12/13/02: The real reason the state opposes homeschooling?
12/06/02: Conscience of a former conservative: Portrait of a political metamorphosis
11/27/02: Thanksgiving dinner hazard?
11/22/02: Time to think outside the box and inside the nucleus
11/15/02: The military should be protected from abusive environmental laws in times of war
11/11/02: Does Kyoto Treaty pose more harm than global warming?
10/31/02: Deep thoughts on Baseball, the World Series and Life: How about them Anaheim Angels?
10/23/02: "Pediatric rule" guinea pigs
10/23/02: Once the World Series ends, we need to create a Donnie Moore Day of Remembrance: Sports and mental health
10/18/02: Congress to senior patients: Do as we say not as we do for ourselves
10/11/02: Using pollution "scare labeling" to political advantage
10/04/02: The Great Asbestos Heist: Did Litigation and Junk Medical Science Helped Bring Down the World Trade Center?
09/27/02: The imminent rise of civic feminism: A far healthier national alternative in war and peace
09/20/02: A Ray A Day" to replace the daily apple?
09/13/02: Beware of celebrities hawking drugs
09/06/02: Avoid 9/11 overdose: Give blood to begin "September of Service," SOS
08/28/02: From Doubleday to strikeday: Baseball's collective anxiety attack
08/23/02: Should she or shouldn't she?: An alternative view on treating menopause with HRT
08/16/02: Cooking up defenses against germ warfare
08/02/02: Medicine, crime and canines
07/26/02: Lies, pathologic lies and the Palestinians
07/19/02: Medicare Drug Follies � as in "now you see it, now you don't"
07/12/02: Anti-Profiling: A New Medically False Belief System
07/08/02: Don't procrastinate, vaccinate!
06/28/02: The scientific advances on the safe and effective deployment of DDT are being ignored, or denied. Why?
06/21/02: Sex and the system: In seeking healthcare men are different from women
06/14/02: The FDA, drug companies and life-saving drugs: Who's the fox and who's the hen now?
06/07/02: Medical Privacy Lost: A hippo on the healthcare back!
05/24/02: To clean up America's game: A (soggy) ground rule
05/10/02: Free speech is good medicine
05/03/02: Medicine's Vietnam
04/26/02: Attack on alternative medicine could lead to alternative lawsuits
04/12/02: Insure the 'crazies'?
04/09/02: No Time for Litmus Tests: In War We Need a Surgeon General and NIH, CDC, and FDA Directors
04/02/02: The scoop on soot: A dirty rotten shame?
03/22/02: Too many beautiful minds to waste: The first annual Caduceus Movie
03/15/02: Terror and transformation: Defense essential for health & state of mind
03/08/02: Diagnosis: Delusional
03/06/02: The great matzah famine
03/01/02: Is new Hippocratic Oath hypocritical?
02/15/02: Why the recent moaning about cloning?
02/08/02: Searching for Dr. Strangelove
01/15/02: Score one for the value of human life
01/04/02: Medical-legal-financial wake-up call
12/28/01: Who's afraid of a 'dirty bomb'?
12/21/01: End of medicine?
12/14/01: More heroes: Docs deserve a little credit after 9/11
11/16/01: Do we need 'Super Smallpox Saturdays'?
11/09/01: Why the post-9-11 health care debate will never be the same
11/01/01: Common sense good for our mental health
10/26/01: Your right to medical privacy --- even in terror time
10/12/01: Failed immigration policy ultimately bad for nation's mental health: Enemy within leads to epidemic of jumpy nerves
09/28/01: Can legal leopards change their spots: A treat instead of a trick
09/21/01: Civil defense again a civic duty
08/30/01: Shut down this government CAFE
08/23/01: School Bells or Jail Cells?
08/15/01: Time to take coaches to the woodshed
08/10/01: Blood, Guts & Glory: The Stem of the Stem Cell controversy

© 2002