Following on the entry below, where health-care costs are finally revealed to the consumers, we see an interesting item in the American Spectator:
Consumer-driven health care is beginning to show real signs of progress. A recent survey by America's Health Insurance Plans found that the number of people with a health savings account (HSA) tripled, from 1 million to 3 million, in barely a year's time. Companies are finding that high-deductible plans coupled with an HSA cost less. In his recent visit to Milwaukee, President Bush pointed to the hamburger giant Wendy's, which saw an increase of only 1 percent in its premiums after switching to an HSA plan.
Of course, in the State of Wisconsin, an HSA is a minefield--due largely to Wisconsin's reluctance to "conform" with Federal tax rules. Our health plan went HSA this year--a good thing--except that keeping the books on this will be horrific.
Perhaps our friends in the Union movement will pressure their Legislative pals to repair the Wisconsin tax code before their membership with HSA's has to fill out their tax forms next year, which will require counter-debit/counter-credit entries AND a hell of a good set of records.
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HSAs are well and good, but their effect will be temporary. Generally they will be fully funded the first couple years, but the goal of them is to eventually reduce typical funding to about 1/3 of the deductible or jack up the deductibles even higher. The reason for this is that after 5 years, no business is going to continue funding HSAs when half their employees have funding for 200-300% of their deductible. When a person does get really sick, like $100,000 sick, they will have about $10,000 in coinsurance and another $5,000+ in deductible having exhausted their HSA account in prior years of treatment for the sickness. This will become a writeoff for the hospital. This writeoff will increase costs over time. This is the rosy scenario too. A certain percentage will lose employment during their sickness even if just for FMLA purposes and be looking at COBRA premiums of $800-$1200 a month. That will exhaust an HSA real quick too.
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