With the closing of the first enrollment period of the Affordable Care Act’s new heathcare exchanges, speculators are predicting that the healthcare law will once again be a major factor in this year’s mid-term elections. However, realizing the growing support for healthcare reform, Republicans are moving more towards a repeal-and-replace attitude rather than the repeal-only message touted the past four years. While there is still no consensus for a possible alternative, one option was drafted by the Republican Study Committee about three months ago. Entitled the American Health Care Reform Act, the proposed plan is supposed to offer a framework for crafting a Republican alternative to the Affordable Care Act. While the plan has not had a lot of publicity, it supposedly already has a majority of Republican congressmen prepared to stand behind it.
A major component of this drafted Republican alternative is expanded access to health savings accounts. Health savings accounts, or HSAs, are tax-free funds that people can use to save money to pay for healthcare expenses. The accounts are paired with high-deductible, low-premium insurance plans, all based on the selling point of “only paying for what you need.” In theory, this system would give customers the option of paying a low monthly premium for emergency coverage while allowing them to also put money away at their own pace to pay for lesser medical expenses, thus saving them money and ensuring that they are only paying for the healthcare services they need.
While HSAs might appear like a cheaper, more attractive approach to healthcare, the truth is that these can hardly be called a legitimate solution to America’s healthcare crisis. The HSAs and the insurance plans they are connected with are essentially nothing but catastrophic coverage. With deductibles going up to $6,350 for individual plans, many people would end up paying thousands of dollars out-of-pocket before even hitting their limit. Add that to the fact that individual plans cap off the amount you can deposit in the HSAs at $3,300 a year, and one trip to the emergency room or one year of less-than-perfect health could wipe out years worth of savings. That means that for all practical purposes, those who sign up for these plans aren’t much better off than people who don’t have insurance at all. Emergency catastrophic coverage for younger people or those who are relatively healthy is really the only possible practical use for the plans.
And while the HSAs are a poor healthcare option even for young and healthy Americans, they remain completely unfeasible for everyone else. Anyone with medical conditions that require regular doctor visits, continual medication, or any sort of regular medical care would find themselves paying thousands more out-of-pocket before finally reaching their deductible. This makes HSAs financial impractical to a majority of Americans over the age of 45 as well as many others who are younger but have special health needs. With the growing average age of Americans due to longer life spans, this severely limits the number of people who would actually benefit from these healthcare programs.
All in all, the promotion of HSAs represents another attempt by the Republican Party to convince people to abandon their greater long-term financial security for short-term gain. Just like recent attempts to discourage participation in Medicare and Social Security, it’s all designed to encourage Americans to take a gamble with their financial security. With support for the Affordable Care Act growing since the first enrollment period, it’s becoming more unlikely that the law will be repealed and even more unlikely that it’ll be replaced by something like this. But in the event that this does happen, hopefully people will be aware of the risks of signing on to plans such as this.
