Health Savings Accounts Passes House
For Immediate Release.
June 30, 2003 On June
26, 2003, the House of Representatives passed by a 237-191 vote the
Health Savings Account Availability Act (H.R. 2351).
The measure would help-low income, middle-income, and uninsured
families gain greater access to quality health care by creating savings
accounts for medical expenses.
Two new types of health
saving accounts are created by the measure.
One would be roughly similar to individual retirement accounts
(IRAs) and the other is a modified version of the older Medical Savings
Accounts (MSAs). Both could
be used to meet certain health care cost and could also grow tax-free. Uninsured people could setup, in some cases,
these accounts to purchase insurance.
The reason why more
than 40 million Americans are uninsured is that the problems of the
health care system are interrelated.
The more general problem is that most health insurance in America
is employment-based which has caused uninsurance, limited choice, and
the loss of patient control and privacy.
Employer-based health care plans offered to workers is owned
and selected by employers. In comparison to life insurance, homeowners
insurance, or automobile insurance, employees are unable to select the
policies that best suit the needs of their families.
The best coverage for individual workers or their families may
not be selected by employers who are concerned with controlling coverage
cost. Also, for example, in the service sector, employers
have little incentive to invest in coverage for employees because it
is an industry with relatively high rates of personnel turnover because
employees change jobs frequently.
The reason why health
insurance is obtained through the workplace is that there is unlimited
federal tax relief for the purchase of health insurance if and only
if it is done through the employer.
Compared to any other type of employee compensation or any other
type of insurance, there is no such federal tax policy.
To purchase health
insurance outside of the workplace, workers and their families must
do so with after-tax dollars which makes such policies for most cost
As a result the market
is distorted and inefficiencies are created since federal tax policy
limits workers and their families to employer-based health insurance. Such plans insulate employees from the true
costs of medical services, discourage to pay even for routine medical
services with out-of-pocket expenditures, and contribute to medical
cost inflation since federal tax policy almost exclusively favors medical
services purchased through insurance.
Furthermore, current employer-based health insurance tax treatment
favors upper-income families with little or no benefit to lower-income
because it is dramatically regressive.
Inequitable and unfair as well as distorting the market is the
current tax treatment of health insurance.
“To correct this unfairness
the House of Representatives should be praised for their positive efforts
to pass the Health Savings Account Availability Act of 2003,” said Dr.
Joel P. Rutkowski, president of the American Voice Institute of Public
Policy. He continued saying, “The Federal government
should not continue to compound the current health care insurance problems
that they have created by micromanaging the health insurance industry
as well as creating large bureaucratic entitlement programs. Instead as this measure does it empowers Americans to purchase health
care policies away from their employer that best suits their needs as
well as their families at costs that fit into their budgets. It is time for the federal government to release
its control over the American health insurance industry and allow consumer
choice and the market place to determine the type of health insurance
policies which best provides health care coverage for individual workers
and their families at a cost that they can afford.”
Joel P. Rutkowski, P.h.D.
President, The American Voice Institute Of Public Policy
to the American Voice Institute of Public Policy Home Page