California Individual And Group Health Insurance Plans

WHITE HOUSE ADVISER SAYS BUSH CONTINUES TO PUSH HSAs
BestWire Services - Apr. 3: The White House will continue to press for expansion of health savings accounts this year, despite resistance in some quarters of Congress, a top adviser to President Bush told the National Association of Health Underwriters. Addressing NAHU's annual Capitol Conference, National Economic Council Director Al Hubbard said the President intends to hold to his 2007 fiscal year budget proposal to extend tax benefits to those who purchase high-deductible health plans in the individual market. The proposal would allow individuals to claim deductions from their income taxes equal to the cost of the coverage, as well as earn exclusions equal to the payroll taxes that would have been foregone had the coverage been purchased on a pretax basis. "Why is it that if you happen to work for an employer that can provide its employees with insurance, that expenditure is on a pretax basis, but if you go out and buy it yourself from one of you folks, you have to use after-tax dollars, which means it costs 30% to 50% more?," Hubbard said. "We're discriminating against the employees who work for employers that do not provide health insurance." Bush has made expansion of tax incentives for health insurance a major part of his 2006 domestic agenda. In addition to extending favorable tax treatment to policies sold in the individual market, he also proposes raising the caps on annual tax-free contributions to health savings accounts from the current limits of $1,050 for individuals and $2,100 for families to $5,250 for individual policies and $10,500 for family policies. The President's 2007 budget also called for tax credits of $1,000 for low-income consumers who purchase an individual HSA/HDHP policy, or $3,000 for those who purchase a family policy. But those plans have hit a major snag in the U.S. Senate, which earlier this month passed a budget resolution that didn't include proposals to expand HSAs. At the time, Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, noted that in 2005, tax preferences for health care represented $177.6 billion in foregone income to the federal government. Over the next 10 years, deductions and tax credits for health care are projected to reach nearly $2 trillion in tax expenditures. The proposal to increase contribution limits for HSAs also is part of H.R. 4511, the Flex Health Savings Accounts Act. Sponsored by House Deputy Majority Whip Eric Cantor, R-Va., the bill also would allow individuals covered under flexible spending arrangements or health reimbursement arrangements to roll over contributions into health savings accounts. Created by the Medicare Modernization Act of 2003, HSAs first were offered to the public in mid-2004. According to research by America's Health Insurance Plans, lower-premium, high-deductible health insurance plans offered in conjunction with HSAs covered nearly 3.2 million people in January 2006, more than triple the 1 million reported in March 2005. Hubbard noted that the U.S. Treasury Department projects enactment of the HSA proposals to increase the number of HSAs from the current forecast of 14 million in 2010 to as many as 21 million. He added that, in 2005 dollars, the median cost of health insurance has tripled since 1988. "We're getting close to a tipping point in health care, and we're either going to go one way or another," Hubbard said. "The wrong way, but half of Americans think it's probably the best way, is to become a single-payer system with everything run by the government. The other alternative is to become a more consumer-driven system that's similar to the rest of our economy." But Los Angeles-based underwriter Jeffrey R. Miles asked Hubbard to implore Bush not to "give up" on the employer-based system. He warned that, in the California market, many who are turned out to the individual market find they can't get any coverage if they have even the most minor pre-existing conditions. "The employer based system is far and away the best system anywhere in the world. With all of its problems, it works better than anything," Miles said.