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TUESDAY'S EDITORIAL

THE ISSUE: Health savings accounts

OUR VIEW: S.C. senator out front in efforts to change health care

U.S. Sen. Jim DeMint continues his push to make health savings accounts more accessible and more functional for Americans.

In this time of crisis in a system that is costing American employees and employers astronomically more and shutting more and more people out of care, DeMint is at the forefront pushing for privatization as a better alternative than government-sponsored health care.

Most recently, the South Carolina Republican was instrumental in winning Senate passage of improvements to HSAs.

The biggest change would increase, by hundreds of dollars a year, the tax-free contributions many people are allowed to make each year to their HSAs.ˇ Specifically, the bill lifts the current requirement that annual contributions to HSAs be no higher than the deductible of the health insurance held by the account owner.ˇ Many people with HSAs have health insurance deductibles at or near the minimum required to set up the accounts – about $1,000 or $2,000 a year.ˇ But the new law would raise the cap on contributions to $2,850 for an individual in 2007, or $5,650 for families.ˇ With higher annual limits, more people will be able to let at least some money accumulate in the accounts.

Another important change allows Americans to roll over IRA funds to their HSA. Under present law, a taxpayer cannot withdraw funds from an IRA prior to age 59-1/2 without paying a 10 percent penalty in addition to income tax on IRA funds. The bill allows taxpayers to make a one-time distribution from an IRA to an HSA so HSA funds are immediately available to meet family health needs.

“These HSA improvements are an important step in the right direction,” DeMint said. “They will make health savings accounts a more attractive way for Americans to save for their health care expenses. By expanding HSAs, these changes will make health coverage more affordable, accessible, and portable.”

DeMint makes no secret of his vision for improving national health care.

He seeks to end a system in which employers insure people as long as they work for the employer. Under the current system, when an employee departs, his or her insurance ends until another job is found with new insurance. Older Americans have Medicare. Low-income Americans have Medicaid. Many people slip through the cracks, existing without any kind of health care.

The result is a medical bureaucracy that has health-care providers filing form after form in search of payment for services. Couple that with the reality of non-payment for many services and the cost of care keeps going up.

DeMint sees a system in which major medical expenses continue to be handled by insurance, but routine care is paid for by the individual via a health-care savings account. Employers would put health-care dollars into a person’s health-care savings account, from which the individual would use funds to pay for doctor visits and routine care.

Employers would require the employee to have insurance, but it would be insurance for the individual and not necessarily provided by the company. That means the insurance policy could be retained by the person from job to job – and, importantly, be kept in place for retirement and beyond without a person having to quality for new insurance with accompanying higher premiums. People would not be able to withdraw dollars from their accounts for other uses.

DeMint contends the present system is expensive at the front end. A person by routine goes to the doctor and requests medicine. He or she has little or no reason to negotiate over costs. Insurance pays – or the person doesn’t pay at all.

If an individual has control of health-care dollars, he or she will be more likely to consider whether a trip to the emergency room is necessary, or question the cost of medicine, etc. Ideally, insurance costs will go down because insurance will be in place only for major care – as was the initial concept in our health-care system.

Whether the DeMint concept ultimately becomes the backbone of health care or the push for government-sponsored care wins the day, give the senator credit for seeing that the system is broken and taking action to improve, if not fix, the situation.