January 24, 2007 at 18:30:06

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BUSH'S STATE OF THE UNION / SPIN AND FACTS

By Allen L Roland (about the author)     Page 2 of 4 page(s)

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In addition, Karen Pollitz, a Georgetown University researcher who co-authored a 2001 study on the individual health-insurance market for the Kaiser Family Foundation, found that people who aren't in perfect health are largely unable to buy individual health insurance.

In her study, Pollitz found that "roughly 90% of applicants in what's known as less-than-perfect health were unable to buy individual policies at standard rates, while 37% were rejected outright." Individual health insurers may deny coverage to people based on their medial history, or put them in "a high-risk category that it makes health coverage too expensive."

BUSH'S PLAN WILL DISCOURAGE EMPLOYERS FROM OFFERING QUALITY COVERAGE: Sixty-one percent of companies offer at least some of their employees health insurance, a drop of 8 percentage points since 2000.

Additionally, the Washington Post notes that there's "a danger that ending the tax privilege for employer-provided insurance will cause companies to discontinue coverage, driving more buyers into the individual market, where it's hard to buy insurance at a reasonable price." American Progress senior fellow Jeanne Lambrew added in a June 2006 piece in Tax Notes, that "the tax exclusion is a thread that, if pulled in isolation, could unravel health coverage in the United States" and even "minor changes to the exclusion could accelerate the recent trends" of employers dropping coverage for the 175 million Americans who receive employer-sponsored coverage.

Health Care -- Health Savings Accounts

What Bush said: "We created Health Savings Accounts, which empower patients and can reduce the cost of coverage." [1/20/07]

What You Need to Know: Health Savings Accounts (HSAs) increase the number of uninsured, do not offer savings on health care costs for average Americans, and primarily benefit the wealthy.

HSAS DO NOT OFFER MEANINGFUL SAVINGS FOR AMERICANS: "Low- and middle-income uninsured people will gain meager or no tax savings" from health savings accounts, according to a Commonwealth Fund study. Roughly 50 percent of uninsured adults pay no federal income taxes, meaning that "tax incentives for high-deductible health plans would have little impact on uninsured adults."

Moreover, "uninsured people in the middle income tax bracket would see potential savings of just 3 percent to 6 percent on a typical high-deductible health plan premium of $2,000."

HSAS PRIMARILY BENEFIT THE RICH: The Government Accountability Office (GAO) found "that the average income of HSA users was $133,000 in 2004, compared to $51,000 for all non-elderly tax filers." Additionally, these HSAs are being used as tax shelters for the wealthy.

In 2004, the "majority of people with HSAs withdrew no funds from the accounts...and HSA participants in the focus groups that the GAO convened spoke of using their HSAs for tax sheltering purposes." Most low-income individuals "do not face high enough tax liability to benefit in a significant way from tax deductions associated with HSAs" and people "with chronic conditions, disabilities, and others with high-cost medical needs may face even greater out-of-pocket costs under HSA-qualified health plans."

HSAS INCREASE THE NUMBER OF UNINSURED: HSAs are "not likely to be an important contributor to expanding coverage among uninsured people" because most of uninsured Americans "do not face high-enough marginal tax rates to benefit substantially from the tax deductibility of HSA contributions."

Another study by the Center on Budget and Policy Priorities found that Bush's proposal "would induce some currently uninsured individuals to purchase insurance, but also would encourage some employers to drop health insurance or to reduce the amounts they contribute toward their employees' health insurance costs, since employers would know their workers could get a tax deduction if they purchased coverage on their own.

The number of people who would lose coverage due to actions that their employers would take would likely exceed the number of uninsured people who would gain insurance."

AMERICANS ARE DISSATISFIED WITH HSAS: Just 33-42 percent of enrollees in consumer-driven health plans were satisfied with their health care, compared to 63 percent of those people with traditional coverage. Two-thirds of people prefer an employer-selected set of plans over an employer-funded account and choosing insurance on their own


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