The Treasury recently waived some of the requirements of the Health Savings Account rules until 2006, allowing HSAs to be set up in states with rules mandating low-deductible or no-deductible coverage, at least for some health conditions. These state provisions conflict with the requirement that HSAs be used with high-deductible health insurance plans.
The waiver seemed to us to open the door to mischief:
Various state rules require coverage with lower deductibles for certain conditions. For example, Kansas until recently required that mental and nervous conditions be covered for 100 percent of the first $100 of expenses, 80 percent of the next $100, and 50 percent of the next $1,640. Such provisions were enacted because they had a political constituency. To avoid confronting interest groups, legislators are likely to instead pressure Treasury to extend the Notice 2004-43 waiver. The slogans are easy to imagine: "The IRS wants to take our high-risk mentally ill off their medications!"
We didn't have to wait long. The BenefitsBlog reports that that the political pressure option appears already to be preferred in New Jersey, based on this report in the New Jersey Star Ledger:
But changing New Jersey's lead poisoning law may not be the answer, according to State Sen. Joseph Vitale (D-Woodbridge), chairman of the Senate Health and Human Services Committee.
Vitale said he is in favor of HSAs, which he said "could be an important tool for providing coverage to the uninsured."
But rather than changing the New Jersey law, Vitale said the state might consider "whether New Jersey can appeal to the Treasury. New Jersey is being progressive, and we are trying to provide financial help to people who have been exposed to lead paint. I don't see why the federal government would want us to revise our rules in order to take advantage of the HSA."
Giving in to this pressure would inexorably turn HSAs into just another tax break, rather than a policy tool to transform health insurance into something more like, well, insurance. Most health insurance now looks more like a purchasing pool than health insurance. If auto insurance were like health insurance, we'd be filing claims with State Farm or Geico every time we had our oil changed, and the newspapers would be talking about the "crisis" in auto insurance.
Giving the responsibility for health care purchase decisions to consumers seems more likely to lead to good use of health dollars than anything a state legislature would come up with. Unfortunately, the door has been opened at least a crack for legislatures to do their thing.
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