Editorial: HSAs are no substitute for ACA coverage

Last modified: 4/8/2015 12:37:08 AM
Dr. Ben Carson, a brilliant surgeon, free thinker and presumptive Republican candidate for president is unfortunately given to making hyperbolic statements, including some that have been followed by apologies and backpedaling. Nothing in Carson’s speech earlier this week in Manchester was as controversial, say, as equating the Affordable Care Act with slavery, but his words at times deserved raised eyebrows.

“If you can control the most important thing a person has, their health and their health care, then you’re well on your way to controlling every aspect of their life,” said Carson, a fervent opponent of what Republicans call Obamacare. That statement reflects an earlier one by Carson, who wrongly quoted Vladimir Lenin as having said that “socialized medicine is the keystone to the establishment of a socialist state.” The Affordable Care Act scarcely controls anyone’s health care, let alone other elements of their lives, but it has allowed more than 16 million Americans to enjoy basic health care coverage, many for the first time.

Carson, like every announced and rumored Republican presidential contender, has vowed to seek repeal of he Affordable Care Act. Most also claim, usually without providing much by way of specifics, that they would keep popular parts of the act and replace the rest with something. In Carson’s case, it’s health savings accounts. Money pumped into such accounts is exempt from taxation in three ways much appreciated by those who put serious money into them. The money goes into the account free of income taxes, grows tax free and is tax free when spent as long as the money pays for approved medical expenses. But HSAs are neither fair nor the answer to enrolling the uninsured and holding down health care costs.

Nearly 12 million Americans have an HSA, but the average account has only $2,000 in it. Wages for low- and medium-income workers have been flat for 30 years. For many households, including the 38 million living paycheck to paycheck, according to U.S. Census Bureau figures, there is no disposable income to direct toward a health savings account. About half of all workers make too little, after deductions and exemptions, to owe income taxes, so they get no benefit from an HSA. Meanwhile, people in the top income bracket get a huge benefit.

High out-of-pocket costs mean that low- and middle-income patients are more likely to skip preventive medical care and go untreated until their medical condition worsens. That increases, not decreases, health care spending. Nor do HSAs do much to address the real health care cost driver – the heavy use of health care by 20 percent of the population, most with a chronic illness, that accounts for 80 percent of health care spending. Virtually all of them routinely exceed the maximum deductible requirement in their policies.

Health savings accounts are a good way to put money away tax free to cover health care costs in retirement, but they’re no replacement for coverage under the Affordable Care Act. To make matters worse, many of the candidates promoting HSAs also want to tax, in full or part, the health care benefits workers get from their employers. Do that and they’ll have even less money to squirrel away against future health care bills.

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