Monday, January 30, 2006

HSAs to the rescue

In an article from the Chicago Sun Times; Terry Savage makes a GOOD point about Health Care Costs:

America spent more than $1.9 trillion on health care in 2004 -- about 16 percent of our nation's gross domestic product and nearly double what most industrialized countries spend. Health care spending has been growing at more than twice the rate of inflation. And many households -- more than 40 million Americans -- have absolutely no health insurance.

No financial crisis in America has the potential to so completely undermine our economy. Our future depends on finding a solution.

For the past 60 years, health insurance has been primarily offered through employers. That started in World War II when wages were fixed, so employers offered health insurance to compete for workers. By the 1950s, employers could deduct the cost of health insurance, although individuals could not. Then health care packages were sweetened with promises of retiree health care -- a cost to be deferred into the future.

The future is now

Only now we're in that future, and the costs are staggering, making our products uncompetitive in the global economy. Last year, General Motors spent $5.2 billion on health care for its employees and retirees. That adds $1,525 to the price of every car!

That sets off a vicious round of job losses, pushing those without private health insurance into expensive emergency rooms. The unemployed and the very poorest patients are covered by state Medicaid programs. But low-wage workers who are not covered by their employers are faced with staggering medical bills, and even bankruptcy.

The health care system contains some bad incentives. Because employers or their health insurance suppliers are picking up the tab, individuals have absolutely no incentive to contain their health care costs. There's no tax-deduction incentive for individuals to buy health insurance policies because individuals can't deduct the premiums.

Most important, there's no reward anywhere in the system for staying healthy! That is, there was no reward until Health Savings Accounts came along two years ago. HSAs encourage people to stay healthy and spend wisely, because the money they don't spend belongs to them, and grows tax-deferred.

HSAs combine a high deductible health insurance policy and a tax-favored savings account. Instead of buying a health insurance policy with a $250 deductible, you'd buy a policy with a $5,000 deductible. It sounds scary, but that policy costs much less. The money you or the company saves on insurance premiums -- as much as 40 percent of traditional costs -- can go into a special, tax-deductible savings account and be used to pay for medical expenses tax-free. Unspent money grows for future years' expenses.

Many employers contribute some or all of their insurance premium savings into accounts for their employees. In 2006, an individual can put as much as $2,700 a year into an HSA, or $5,450 for families. But you can start an HSA account with a much lower amount. For those who can't afford a contribution, the high-deductible, low-cost medical insurance plan will at least protect them against bankruptcy caused by medical expenses.

If your company doesn't offer health insurance coverage, you can search for individual HSA plans at, run by Bob Hurley, who says his site is seeing a higher percentage of people choosing this type of health insurance.

Hurley advises younger workers to turn down employee-sponsored plans in favor of these inexpensive HSA policies. He notes that with company plans, if you lose your job you'll be stuck with expensive COBRA interim insurance. And if you have a pre-existing condition, you might not find health insurance when COBRA runs out. An individually owned HSA plan is tax-advantaged, secure and portable.

It's your money

The real benefit to society is that HSA incentives encourage people to spend wisely because it's their own money.

That's why companies such as Fontis Healthcare Services are creating online wellness tutorials. Workers who participate can earn extra HSA contributions from their employer.

Government is not the solution. That's been tried in Canada, where the Supreme Court recently ruled that the long lines generated by a state-sponsored health system violate their guarantees of human rights.

Maybe it's time to try individual incentives to stay healthy. We'll all be better off. And that's The Savage Truth.

Friday, January 20, 2006

For Better or For Spitzer

The Columbia Federalist Society will host a debate on Monday, January 23.
Topic: The merits of . . . Eliot Spitzer.

It's a star-studded event you won't want to miss!

Is Eliot Spitzer good for America?
The Role of State Attorneys General

Monday 1/23/2005 12:20 - 1:20 p.m.
Room 103 in Jerome Greene Hall, Columbia Law School

From a FedSoc email announcement:
New York's Attorney General may be better known than its Governor. Love him or hate him, Eliot Spitzer has changed the way people view the State AG. Is his "activist" style too disruptive of business? Has he abused his power in pursuit of political ambition? Or is it just what we need to make America safe for capitalism?

Come hear --- and --- debate these questions and more.

Prof. Richard Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago, where he has taught since 1972. He has also been the Peter and Kirstin Bedford Senior Fellow at the Hoover Institution since 2000....

James Tierney is the Head of Columbia Attorney General Project, a former Attorney General of Maine, and former President of the National Association of Attorneys General, who has represented numerous state attorneys general privately and has served as a mediator and special advisor in numerous cases involving state
attorneys general.

Thursday, January 19, 2006

Minority Rights, Baby

I'm taking a political science course on the rise and (sometimes) fall of various communist regimes. The audience is full of familiar faces: College Republicans spoiling for a fight, goateed idealists and *ahem* a libertarian.

Today, the professor gave a fascinating lecture about Marxism. According to Marx, he told us, the transition to socialism (and ultimately to communism, the end of history) would take place once the capitalist system had reached a critical stage at which a few wealthy capitalists exploited the extremely poor laboring masses. Under socialism, the common people — now sufficiently class-conscious to despise their capitalists overlords — would gain dictatorial control and use the forces of production in their best collective interest.

At this point, a hand shot up. A student in the back of the room, clutching her pen and notebook, looking slightly upset, asked: “Didn’t Marx have any notion of protecting minority rights within the proletariat-majority state?”

And that was the funniest thing I heard all day. Cross-posted at Liberty Belles.