Intended for healthcare professionals

News Roundup [abridged Versions Appear In The Paper Journal]

Bush administration promotes health savings accounts

BMJ 2006; 332 doi: https://doi.org/10.1136/bmj.332.7548.992-a (Published 27 April 2006) Cite this as: BMJ 2006;332:992
  1. Janice Hopkins Tanne
  1. New York

    Americans should take more responsibility for their health costs and become bargain shoppers for health care, said Allan Hubbard, President George Bush's assistant for economic policy and director of the National Economic Council.

    He spoke last week in New York at the annual meeting of the Greater New York Hospital Association, which represents 250 hospitals and nursing homes in New York, New Jersey, Connecticut, and Rhode Island.

    Health savings accounts and smart shopping would help control rising national healthcare costs, Mr Hubbard said. He leads the Bush Administration's policies promoting health savings accounts and transparency in healthcare pricing.

    President Bush had promoted the health savings accounts in January's State of the Union message and repeated his call to the national small business week conference in Washington earlier this month.

    At the New York meeting Mr Hubbard said that US healthcare costs were on an “unsustainable path” and that something would have to change because health coverage for a family now costs $11 000 (£6200; 荤8900) a year and is rising at a rate of 7-9% a year.

    He said that most Americans overuse health care because they are insured through their employers and pay only part of the cost. Health savings accounts would change that, he said.

    The accounts became available two years ago. Each year the employee sets aside money, tax free, from his or her salary and must also buy a high deductible health insurance policy. Premiums for such policies are lower than for conventional health insurance. Employers may also contribute. The employee uses the money saved in the account to pay for routine health care. The high deductible health insurance policy takes over if the employee needs major health care.

    If money remains in the savings account at the end of the year, it can be rolled over into future years. If there is money in the account when the employee reaches 65, he or she will pay ordinary income tax on it.

    The savings accounts give people an incentive to consider prices and quality, Mr Hubbard said. He mentioned Lasik eye surgery, which is not covered by insurance. The cost has dropped from $2500 per eye to less than $1000 per eye, and quality has improved, he said.

    Transparency in healthcare pricing would let consumers know exactly what each non-emergency procedure costs, he said

    Dr Spencer Foreman, president of Montefiore Medical Center in New York, said that currently only plastic surgeons “bundled” costs to give consumers a package price. He praised Mr Hubbard's statement that bundled payments by Medicare, the health plan for elderly people, would be made available.

    He disagreed, however, on the number of patients who would choose health savings accounts and said the biggest challenge was chronically ill people, who have predictably high costs year after year.

    Health economist Dr Karen Davis, who was not at the meeting, has written that Americans already pay more of their own bills for health care than people in other industrialised countries. She is head of the Commonwealth Foundation, which works to improve healthcare coverage and quality. Many uninsured Americans earn too little to be able to contribute to savings plans or to enjoy their tax advantages. Furthermore, she says, patients “will never have as much information about the care they need as the physicians who care for them.”

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