Ya gotta give ’em credit. Ten days after the Health Savings Account/Health Savings Security Account (HSA/HSSA) provisions were passed in Ways and Means, the left-leaning Center on Budget and Policy Priorities (CBPP) was out with three separate papers and press releases explaining how these ideas would be the ruination of civilization, destroy the employer-based system of health insurance (of which CBPP is so fond), and create massive deficits in state government (not that the states need any help in creating deficits).
In a news release dated June 26, 2003, CBPP predicts enactment of the HSA/HSSA provisions would “encourage employers to replace traditional health insurance plans with plans that offer fewer benefits and impose higher deductibles and co-payments.”
It’s difficult to argue with that. But, the news release goes on to repeat the old threadbare and discredited assertions that “Younger, healthy individuals would tend to come out ahead,” leaving older, sicker, and lower-income workers worse off.
Opposed to MSA Expansion
The first paper focuses on the medical savings account (MSA) expansion provisions of the Ways and Means amendment. It was able to be written so quickly because it simply repeats all the old falsehoods CBPP has been spreading for years now. It relies on sloganeering instead of analysis of actual events.
It says, “Proponents of large-scale [MSA] expansion argue it would increase health insurance coverage and thereby reduce the ranks of the uninsured. But most health analysts disagree.” The assertion that “most” disagree is, of course, unsubstantiated, and disregards the reality that some 75 percent of new MSA accounts go to people who were previously uninsured.
The paper goes on to say widespread use of MSAs could double the premium for “traditional health insurance,” by attracting the healthy and wealthy away from traditional coverage. Of course, it doesn’t define what is meant by “traditional health insurance.” Are health maintenance organizations (HMOs) considered “traditional” health insurance these days? Preferred provider organizations (PPOs)? Point of service (POS) plans?
If the CBPP authors mean “traditional” major medical policies, their criticism is a bit out of date, as such policies have already nearly disappeared from the market. The paper cites the RAND Corporation, American Academy of Actuaries (AAA), and Urban Institute as sources for the notion.
In fact, RAND concluded wealthy people would prefer HMO coverage over MSAs, and the Urban Institute said, “on average, lower-wage workers would benefit from switching to a catastrophic/MSA plan.” The AAA report hedged its bets because it couldn’t tell if workers would see the MSA funds as their own money, or their employer’s money.
It is pretty clear now that MSA account holders correctly view the MSA funds as their own money, and they are careful with those funds.
The reports CBPP relies on were mostly written before the MSA law went into effect, so are entirely speculative and have been disproved over the years of MSA and health reimbursement account (HRA) experience. There is no evidence whatsoever that adverse selection occurs. There is plenty of evidence that MSAs allow people to afford coverage for the first time, and lower the numbers of uninsured. The CBPP worries about employers shifting to less-comprehensive coverage, but employers are doing that anyway, with or without MSAs.
At least MSAs (and HSSAs and HRAs) enable workers to pay their out-of-pocket expenses with tax-favored dollars. The notion that employers will go back to first-dollar coverage in light of double-digit premium hikes is nothing but fantasy. In fact, it is first-dollar coverage that is creating double-digit premium hikes in the first place. Employers are unlikely to repeat that mistake. The other papers are unsurprising and predictable.
In a nutshell, any decrease in tax revenue is seen by CBPP as a bad thing, as is any expectation that consumers should pay some portion of their own medical expenses.
Greg Scandlen is director of the Galen Institute’s Center for Consumer Driven Health Care and assistant editor of Health Care News. His email address is [email protected].
For more information …
The news release and reports issued by the Center on Budget and Policy Priorities are available on the group’s Web site at http://www.cbpp.org.
“MSAs Can Be a Windfall for All,” written by Greg Scandlen for the National Center for Policy Analysis in November 2001, rebuts the anti-MSA charges that appear in CBPP’s work. The paper is available on NCPA’s Web site at http://www.ncpa.org/pub/bg/bg157/.