HSAs Won’t Lower Costs or Cover Uninsured; Will Increase National Debt

WASHINGTON D.C. – Congressman John Conyers, Jr. issued the following statement today in anticipation of the health care proposals to be announced in the State of the Union address:

“The President’s health care plan is not about covering the uninsured, making health insurance affordable, or even driving down the cost of health care.  Its real purpose is to make it easier for businesses to dump their health insurance burden onto workers, give tax breaks to the wealthy, and boost the profits of banks and financial brokers.  As we have seen with the disastrous Medicare Prescription Drug Plan, health care policies concocted at the behest of special interests do nothing to help the average American.  In many cases, they can make health care even more inaccessible.

Mr. Conyers stated, “Mr. Bush’s plan is a fig leaf that is long on political cover but short on substance.  According to the plan, individuals could invest pre-tax income in a Health Savings Account (HSA) and then accrue interest earnings on funds in the account and withdraw funds from it for medical expenses without paying taxes.  Some people will benefit from having access to tax-free funds to pay for health care, but most of these people would have health care already.  That’s because those who get the biggest tax break would be those who are earning the most, while those who earn the least would get little or no benefit.  For example, Americans in the 10% tax bracket would see a reduction of only 10% in the cost of health insurance – not much of a savings.  Americans who don’t earn enough to pay taxes would see no reduction in cost at all. 

“Since about three-quarters of Americans – and around 90% of uninsured Americans – are either in the 10 or 15 percent bracket or earn too little to owe income taxes, this so-called benefit would have little or no impact on their ability to buy health insurance.  The proposal would create a lucrative tax shelter for the highest-income taxpayers, enabling them to build up a nest egg in their HSAs to cover health care costs after retirement, but would leave moderate and low-income Americans with little or no coverage, since they would likely exhaust whatever funds they could afford to deposit into the account each year.  Moreover, the tax giveaways in the plan are expected to cost $25 billion over ten years, further driving up our massive national debt.

“Adding insult to injury, Mr. Bush’s plan would transfer the burden of health costs onto workers, encouraging employers who already cover their workers to cut back benefits or eliminate them entirely.  Companies with a history of refusing health care to their employees, such as WalMart, are major supporters of Bush’s plan.  Mr. Bush argues that making Americans “responsible” for their health care will cause them to consume less of it, and that this decreased demand for health care will drive down prices.  The only proof Mr. Bush has for this assertion is a theory still being debated among economists.  The shakiness of Bush’s economics did not stop Wall Street bankers and financial investors from establishing a lobbying group to push for the president’s plan and spending millions of dollars to roll it out.  That’s because they realize that the fees they can charge for setting up and maintaining HSAs could translate into millions of dollars in increased profits.  While the cost-saving aspects of Bush’s plan are in doubt, it is certain that these additional finance charges would add to health care inflation, not decrease it.  

Mr. Conyers concluded, “If America wants to get serious about fixing our broken health care system, Congress should consider implementing universal health care, or “Medicare for All,” such as the plan outlined in my bill, H.R. 676.  Universal health care is not “government health care.”  Under my plan, Americans would be able to go to the doctor or hospital of their choice, and these providers would continue to operate privately.  The role of the government in my plan would be limited to coordinating the financing of care, thereby eliminating the insurance company “middle man” that skims profits off the money we spend for health care.  The funds we invest in health care would be spent solely to promote affordable, accessible care for all Americans, not to enrich the insurance or pharmaceutical industries.”

###1-31-2006###