President’s Health Initiative --

Proposal Will Increase Costs for People Needing Care

“The President is right to focus attention on the growing health care affordability crisis. Unfortunately, his proposed solution will make that crisis worse.

"The President's main answer to the health care cost crisis is to promote high-deductible insurance policies that will make health care costs even more unaffordable. For people needing health care, these high-deductible policies will significantly increase their out-of-pocket costs.

"Health Savings Accounts (HSAs) create tax shelters that disproportionately help the wealthy. Since wealthy people can afford insurance policies with high deductibles, and since HSA tax breaks are most beneficial for people in high tax brackets, the President's proposal will provide the most help for those who need it the least."

"Meanwhile, more moderate-income families that need health care will be saddled with higher and higher out-of-pocket costs—and the health care affordability crisis will get even worse.

The Worsening Health Affordability Crisis under President Bush’s Watch

“Under President Bush’s watch, the health care affordability crisis has gotten worse and worse:

• The number of the uninsured has grown dramatically, from 38.7 million in 2000 to 45.8 million in 2004.
• From 2000 to 2004, per capita health care spending soared from $4,729 to $6,280.
• Employer-based health coverage has dropped. In 2000, 69 percent of businesses offered health coverage for their workers, but by 2005, this share had dropped to 60 percent.
• From 2000 to 2005, the average monthly premium paid by workers increased from $135 to $226.

“Until now, the President’s legacy on health care has caused more harm than good to health care consumers. His Medicaid proposals will increase out-of-pocket costs and reduce coverage for low-income seniors, children, and people with disabilities, causing millions of people to lose access to health care.

“His Medicare prescription drug program has given us dramatic images of chaos in pharmacies across the country, as vulnerable seniors are denied the prescription drugs they need. At the same time, the drug industry will reap enormous profits at the expense of consumers and taxpayers.

HSAs Are Not the Answer to the Health Affordability Crisis

"The President's claim that HSAs will reduce health care costs does not square with reality. In fact, HSAs are more likely to raise costs than to reduce them. His underlying rationale for this policy is that, if consumers have 'skin in the game,' they will be more prudent purchasers. But there are numerous reasons why HSAs will cause much more harm than good:

• The overwhelming majority of America’s health care costs are spent for people with major illnesses and disabilities and during the last stage of life. High-deductible insurance policies will have no impact on those costs.
• High-deductible insurance policies, however, deter people from spending the first-dollar costs needed for primary and preventive care. It is this care that is most important for protecting the American public’s health and avoiding the spread of detectable illnesses.
• As the wealthy who are healthy leave traditional insurance and purchase high-deductible coverage with HSAs, those left with traditional insurance coverage—less wealthy Americans and those who expect to need health care, including those with chronic health problems—will be forced to pay skyrocketing premiums because traditional insurance pools will have higher and higher per capita costs.
• HSAs will drain critical federal resources needed to strengthen the health care safety net, such as Medicaid and the State Children’s Health Insurance Program (SCHIP).

“In short, the President has recognized the problem but is offering the American people the wrong solution. On behalf of America’s health care consumers, we urge the President to abandon this misguided approach and, instead, to seek bipartisan solutions that will make coverage more affordable.”

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org