Florida Governor Charlie Crist got the legislature to approve—unanimously—innovative reform that could dramatically affect Florida’s number of uninsured, now running at 21% of the population, the fourth highest rate in the nation.

The “Cover Florida” plan will allow insurers to offer plans exempted from the 50-some mandates that Florida imposes. The new plans will cost as little as $150/month, or less. Plans will enroll only those who have gone without coverage for six months. It also creates a clearinghouse through which small businesses that can’t afford coverage can offer their employees similar plans (Wall St J 5/29/08).

In New Jersey, Republican Assemblyman Jay Webber of Trenton will introduce legislation, modeled on the Shadegg plan, allowing any state resident to buy low-cost insurance from any registered policy in any of the 50 states. A family health plan that costs an average of $5,799/yr elsewhere costs $10,398 in New Jersey.

Democrats, however, are rallying behind a plan to require every uninsured person in New Jersey to buy a plan from a new state-administered program. “So a state that is already so broke that its politicians are contemplating mortgaging its highways might now add a $1.7 million health subsidy (Wall St J/ 5/29/08).

Massachusetts should have tried a similar idea, suggests Greg Scandlen. The average cost in Commonwealth Care is $4,994 per person. Next door in Hartford, Conn., the most expensive policy for a 35-year-old male, for a zero-deductible, zero-coinsurance HMO, is $2,744. Other plans cost half that, or less. “Massachusetts would have been better served if it simply allowed its residents to buy coverage next door and paid all of their premium” (Consumer Power Report #130, 6/6/08).

Manitowoc County, Wisconsin, saved the taxpayers nearly $2,600 per family plan by providing its employees a high-deductible health plan (HDHP) with a health savings account (HSA). The county fully funded the $3,000 deductible, and eliminated more than $4,000 in employee costs for premiums and copayments (ibid.).

State governments, including Georgia and Indiana, are beginning to turn to HDHPs and HSAs, to the consternation of opponents such as Niko Karvounis. He writes: “HDHPs and HSAs are actually thriving—and in fact penetrating our health care system at a relatively brisk rate.” This is a problem because “their proliferation weakens the political viability of the health reform we really need” (Consumer Power Report #128, 5/21/08).

Additional information:

• “Sabotaging Health Savings Accounts,” AAPS News of the Day
• “HSA Enrollments to Reach 30 Million by 2009, Mintel Predicts,” AAPS News of the Day 6/29/07.

Nothing probably shows the potential of health savings accounts (HSAs) better than their enemies’ attempts to wreck them. An attempt to load on costly administrative requirements passed the House of Representatives but not the Senate. President Bush had threatened to veto it. Expect it to come back.

H.R. 5719 would have required every HSA transaction to be reviewed and verified as a legitimate medical expense. Currently, such expenditures are subject to an IRS tax audit, and many are made with a debit card that is only useful at a facility providing medical supplies or services.

A Wall Street Journal editorial called it “Health Savings Sabotage,” with a key player being Rep. Pete Stark (D-CA), who views HSAs as a “weapon of mass destruction.” While Democrats, including Barack Obama and Hillary Clinton, decry the high cost of medical care, including insurance overhead, “Mr. Stark and his friends want to impose the same bureaucratic overhead even on spending that consumers do with their own money” (Wall St J 4/19/08).

Cheating is a nonproblem, the editorial stated: “In any case if people cheat on their HSAs, they are only cheating themselves.”

Lobbying for the provision was EvolutionBenefits, which makes software used for “substantiation” of expenses in employer-owned Flexible Spending Accounts. H.R. 5719 would have enabled EvolutionBenefits to charge twice as much for administering HSAs.

“This is a near perfect example of the corruption of Washington,” writes Greg Scandlen. “A powerful member of Congress using his authority to benefit a single company at the expense of millions of consumers and taxpayers” (Consumer Power Report #123, 4/23/08),

“The message is clear,” writes Dan Perrin of the HSA Coalition, “we (the Democrats) think you cannot make your own decisions, so we are going to force you to pay a company to review your decisions and then we will give you access to your own money but only after we decide whether you made the right choice in the first place.”

Since HSAs were created in December 2003, 3.2 million accounts have been opened, covering 4.5 million Americans, one-third of whom were previously uninsured and bought coverage on their own. Thirty-three percent of new users are small businesses that previously had not offered coverage to their employees.

Consulting firm Watson Wyatt found that average health-insurance costs in the last two years rose 3.6% for employers who offered high-deductible accounts, versus 7% for employers who did not (Wall St J 5/1/08).

According to the U.S. Government Accountability Office (GAO), the number of tax filers reporting an HSA tripled between 2004 and 2007 (GAO-08-474R).

“The take-up rate is the fastest of any benefits innovation of our lifetimes, states Greg Scandlen. “Faster than IRAs, 401(k)s, and far faster than HMOs. The only thing that rivals it may be the conversion of HMOs into PPOs in the mid to late 1990s.”

“Which is probably one of the main factors in pushing H.R. 5719,” writes Frank Timmins. “HSAs are a threat to the SP [single payer] crowd. They need to slowly poison this baby before it grows to maturity.”

Additional information:

• “HSAs Have Dramatic Growth Spurt,” AAPS News of the Day 3/23/06.
• “Frequently Asked Questions (FAQs) on Consumer-Driven Medical Care.”
• “Tax-Advantaged Medical Coverage,” by Madeline Pelner Cosman, J.D., Ph.D.