Portable insurance, health savings accounts debated

From USA Today

By Julie Appleby, USA TODAY

In President Bush's vision of America's health care future, people would have high-deductible insurance they take with them from job to job and tax-free health savings accounts to help pay for medical care. People would shop for the best quality and price because they would be responsible for a greater share of their medical expenses.
The plan, outlined by the president in his State of the Union speech Tuesday and a white paper released afterward, is aimed at controlling costs and helping more people afford health care.

But it isn't clear how some of the proposals would work. How would health insurance be made portable so it can be taken from job to job? Will health savings accounts make people better consumers of health care?

"We're a solid decade away from being anywhere close to consumers having the price and quality information they need to really shop for health care," says Drew Altman of the non-profit Kaiser Family Foundation research group.

Health savings accounts, the cornerstone of the president's proposals, allow people to save money tax-free for medical expenses. A person must also have a high-deductible health insurance policy, one with at least a $1,050 annual deducible for individuals or a $2,100 for families.

Details on the president's health care proposals are expected next week when Bush submits his budget to Congress. But one of his advisers provided some details Wednesday.

National Economic Council director Allan Hubbard said the president in the coming weeks will work with medical providers to encourage them to make information about quality and price available.

"Most people feel their health care is free; we know that, because they never ask about price," Hubbard said.

Another element of Bush's proposal is to make the insurance that comes with health savings accounts portable, so people could change jobs or retire and keep their insurance. No such policies currently exist.

"If the American worker wants a portable (insurance plan) ... the marketplace will eventually offer that," Hubbard said.

Despite the concern about rising costs, many economists, such as Uwe Reinhardt at Princeton, say the president's health savings account proposals won't do much to slow overall growth in spending on health care, which is around $1.9 trillion, or 16% of the gross domestic product.

That's because most policyholders would spend, at most, a few thousand of their own dollars before catastrophic insurance kicked in. Once they reached the policy's annual deductible or cap, there would be little incentive to save.

Hubbard said that once patients begin shopping with their own money, evaluating price and quality, it will translate into greater judiciousness even when they aren't spending their own money.

He also said other elements of the president's proposals, such as changing laws so small businesses could band together to lower costs when buying insurance, will help lower overall health costs.