HEALTH ACCESS ALERT
Tuesday, January 31st, 2006
STATE OF THE UNION HIGHLIGHTS HIGH DEDUCTIBLE PLANS
- President Bush Plans Push for High Deductible Plans and Health Savings Accounts
- AB977 (Nava) Passes CA Assembly, to Review High Deductibles and Other Out-of-Pocket Costs
- ALERT: Budget Reconciliation Vote This Week on $3 Billion Cut to California; Rep. Bono Targeted
Health care is taking the spotlight in the federal discussion this week. President George W. Bush highlighted a handful of health care proposals in tonight’s State of the Union speech, such as promoting high-deductible plans and health savings accounts. (See the full SOTU coverage and analysis below.)
MEDICAID CUTS PENDING
Also later this week, the U.S. House of Representatives is expected to have an exceedingly close vote on a “budget reconciliation” bill, that would make $16 billion in cuts to the federal Medicaid program, as well as major cuts to other services such as student loans and child support collection. The bill would impose additional costs on those with Medicaid coverage, and impose new administrative burdens to get such coverage.
CLOSE VOTE: In a previous House vote, this measure was approved by a very narrow margin, 212-206, largely on party lines, with Republicans supporting the measure, and Democrats opposing it. Because of pressure from advocacy organizations pointing out the economic and community impacts of these cuts, a few more Republicans have announced their opposition to the measure, suggesting an even closer vote in the next day or so.
ALERT: ALL CONGRESS MEMBERS SHOULD BE CALLED ASAP on this issue, to urge them TO OPPOSE BUDGET RECONCILIATION. Representatives from Health Access California and other health, senior, low-income, and community organizations have met in the past few days with both the DC and Palm Springs offices of Representative Mary Bono (R-45, Hemet), who is identified as a potential swing vote. THOSE IN REP. BONO’S DISTRICT SHOULD CALL HER OFFICE AT (202) 225-5330, OR FAX TO (202) 225-2961.
CALIFORNIA IMPACT: A recent Legislative Analyst’s Office indicated that “the fiscal impact of this legislation on California would be $3.1 billion–$1.7 billion in reduced federal funds and $1.4 billion in increased state costs-during federal fiscal years 2006 through 2010.” For the full LAO report, visit http://www.lao.ca.gov/PubDetails.aspx?id=1366
The Congressional Budget Office (http://www.cbo.gov/) has a national cost perspective. The California Budget Project also has an analysis of the California financial and policy impact, at:
Given this information, a coalition of groups, including the California Partnership, Health Access California, Western Center for Law and Poverty, and the California Association of Food Banks, have written to Governor Arnold Schwarzenegger to urge him to publicly oppose this measure, and urge the entire California Congressional delegation to do the same. Unfortunately, despite his pledges to be the “Collectinator” and protect federal money for California, and the fact that the votes of only a few California Congressmen could make the difference, Governor Schwarzenegger has not made this a priority.
STATE OF THE UNION, ON HEALTH CARE
In his State of the Union, President George W. Bush did highlight some health care policy proposals. While early signals were given that health care would be the centerpiece of the President’s domestic agenda, the issue did merit a few paragraphs, fully transcribed below:
“Keeping America competitive requires affordable health care. Our government has a responsibility to help provide health care for the poor and the elderly, and we are meeting that responsibility. For all Americans, we must confront the rising cost of care, strengthen the doctor-patient relationship and help people afford the insurance coverage they need.
“We will make wider use of electronic records and other health information technology, to help control costs and reduce dangerous medical errors. We will strengthen health savings accounts by making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get. We will do more to make this coverage portable, so workers can switch jobs without having to worry about losing their health insurance. And because lawsuits are driving many good doctors out of practice, leaving women in nearly 1,500 American counties without a single OB-GYN, I ask the Congress to pass medical liability reform this year.”
ANALYSIS ON HEALTH SAVINGS ACCOUNTS: The focus of the president’s proposals are the expansion of health savings accounts, which consumer advocates say simply encourage high-deductible plans from employers and insurers, shift costs from insurers to individual consumers, starve public health programs for resources, and further undermine traditional insurance pools, making health care less affordable overall. More details about President Bush’s health care proposals are at the White House website, at:
Consumer advocates are concerned that high-deductible insurance policies will make health care costs even more unaffordable, as even people with their insurance will have to pay significant out-of-pocket costs, or lead them to forgo needed care.
Health Savings Accounts would not serve most of the millions of uninsured and underinsured Californians. They actually are another new tax shelters for the wealthy, disguised with the word “health.” Since wealthy people can afford insurance policies with high deductibles, and since HSA tax breaks are most beneficial for people in high tax brackets (since most uninsured and underinsured people live paycheck to paycheck and won’t be able to set aside money in an HSA), the President’s proposal will provide the most help for those who need it the least.
In fact, HSAs are more likely to raise costs than to reduce them. The rationale for this policy is that consumers use too much health care and are over-insured, and they need financial penalties to discourage them from getting care. The group Families USA points out about HSAs that:
- 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).
NEW GARAMENDI REPORT: In anticipation of the President’s push, Insurance Commissioner John Garamendi released a study on the insurance impact of Health Savings Accounts, calling them “bad medicine” and that they “pose a clear danger” for an ailing health care system. The report is available at:
The report indicates that Health Savings Accounts:
- Force the patient to play doctor and will likely reduce utilization of needed health care;
- Require currently nonexistent tools to help consumers understand health care quality;
- Discourage the use of preventive and disease management techniques;
- Increase the financial risk to families;
- Jeopardize continuity of care;
- Fail to address the true cost drivers in health care;
- Will not offer the needed help to the uninsured;
- Put California’s hospitals at risk, especially safety net hospitals;
- Are designed as tax breaks for the wealthy;
- Create a new boom market for investment banks instead of helping with health care; and
- Support employer efforts to transfer health care costs to employees.
STATE LEGISLATION ON HIGH DEDUCTIBLE PLANS (AB977)
In a related but contrasting story, yesterday the California Assembly voted to pass AB977 (Nava), sponsored by Health Access California, to have the Department of Managed Health Care conduct a public review of high deductibles and out-of-pocket costs, and to disapprove plans with “unusually high” deductibles and co-pays that serve to limit access to needed care. In this way, the bill can prevent the problem of underinsurance, as even those with insurance face medical debt and even bankruptcy because of high out-of-pocket costs.
The bill was stalled last year on the Assembly floor due to heavy lobbying by the insurance industry, which is heavily marketing new high-deductible and high-cost plans, which allow the insurers to shift more of the cost of health care onto patients. Assemblyman Pedro Nava (D-Santa Barbara) was able to pass the bill this year on a 42-36 votes, with most Democrats voting for it. Voting against the measure were all Republican Assemblymembers, as well as Democratic Assemblymembers Matthews, Nation, Parra, and Wolk. Assemblymembers Canciamilla and Chavez did not vote.
ALERT: AB977(Nava) now goes to the Senate Banking, Finance, and Insurance Committee, which includes Democratic Senators Speier, Florez, Lowenthal, Machado, Murray, and Scott, as well as Republican Senators Cox, Denham, and Hollingworth. Organizational letters of support should be sent to any or all of these committee members, as well as referred to the bill’s author, Assemblyman Pedro Nava, as well as Health Access California.