Report on the Rep. Stark HSA Hearing in the U.S. House Ways and Means Committee
To: Coalition Members and Opinion Leaders
From: Dan Perrin
Re: Stark’s Health Subcommittee Hearing on HSAs
1) After sitting through the two hour and 15 minute hearing on HSAs in Congressman Stark’s (D-CA) Health subcommittee, I offer the following observations:
i) never did a single Democrat say anything good about HSAs;
ii) Congressman Becerra (D-CA) called HSAs a “Ponzi scheme” and “trickle down health care,” and that HSAs are “unproven” and “aren’t proven to work well,” and that they have to work well in all circumstances since HSA owners are “spending government money” and that HSA owners “get to cheat the government” and “need more auditing” (we can thank Evolution Benefits for this);
iii) Stark believes that HSAs are about to destroy health care in
· “permit unprecedented tax-free savings for health care if one enrolls in a qualified plan;”
· “HSAs are disproportionately used by and benefit high income people, and that these plans attract healthier people too;”
· This will “lead to a devastating cost increase for all who decided to remain in conventional insurance;”
· HSAs are “a waste of resources to forego revenue to advance that goal;”
· HSAs “shift costs and responsibilities to consumers;”
· HSAs do not “encourage people to get needed preventive care” and will “discourage lower and middle income people from seeking care when they need it.”
· HSAs are a “destructive policy” and we should not be distracted by the red herring that HSAs help consumers find good health information.
2) In short, the Stark hearing was like traveling to a parallel universe, where white is black and the witness panel was stacked four to one against the one pro-HSA witness, who has 75% of their employees in an HRA, 8% in a PPO, and 17% in an HSA. (I think it is fair to say that HRAs are on Stark’s target list.) He said “if these plans were widely adopted they might increase costs to our health care system, not to mention increase the uninsured while eroding the level of coverage among those fortunate enough to have insurance today.”
3) In another example of the parallel universe problem, one of the witnesses, Linda Blumberg, a principal research associate at the Urban Institute was asked by Congressman Sam Johnson (R-TX) if, given that 28% of HSAs chosen individuals who were previously uninsured, whether she believed that HSAs helped the uninsured. She said no, HSAs do not help the uninsured because there is no statistically significant difference of the uninsured becoming insured with HSAs because every year 25% to 30% of those becoming insured are previously uninsured in the insurance market.
4) The witness from Harvard University, Michael Chernew, the editor the American Journal of Managed Care, sounded like the managed care proponent he is, and was not meaning to sound elitist, I am sure, when he said that “HSAs may force individuals to make poor decisions about health care, causing much more damage to themselves than decisions made in other marketplaces, and that health care information is often too complex for consumers.”
5) In fact, the entire “hearing” needs to be rebutted with a real debate, one where the opponents are given equal time with the proponents, so that it is not a one sided affair.
6) What does all this mean? If you listen carefully, Representative Stark has the HSA Account tax break in his cross hairs, which is his real target, and substantiation was the first probing attack. (Of course, Evolution Benefits played their role as the useful idiots who gave Stark substantiation rope with which he is attempting to hang HSAs.)
7) HSAs, and now HRAs, will be the focus of a particular wing of the Democratic Party that believes these plans will destroy health care in