“Congress must also expand health savings accounts.”

DMI SAYS: “Health Savings Accounts (HSAs) do nothing to address the fundamental problems of our enormously expensive and inefficient private health care system; HSAs just push risk and costs from businesses and the government on to America's squeezed middle class and exacerbate existing strains in the health care system.”

?     Health Savings Accounts are predicated on the notion that people are spending too much on unneeded health care expenses and will spend less if they have to pay for it out of their own pockets.

?     Presenting HSAs as a solution to the health crisis in America is disingenuous. The reason health care is so expensive isn’t because middle-class Americans are reveling in their gold-plated plans and spending unnecessarily.  The cost of health insurance is high because of many causes, including skyrocketing HMO profits and industry expenditures that have nothing to do with medical care.

?     One such non-medical cost is the tens of billions of dollars that the pharmaceutical industry shells out every year to pay for advertising and marketing. According to one new study, these promotional costs are almost twice what the industry spends on researching and developing new medications.

?     Other health care spending that did not go into providing care was the $8.8 billion in profits health insurance companies raked in during the first six months of 2007 alone.

?     The idea that individuals should control their own health care defies the central principle of insurance to spread risk so that no insured individual is left with overwhelming costs or without access to needed care.

?     President Bush expects busy middle-class Americans with no medical training to evaluate which tests and treatments are worthwhile. Doctors and other health care professionals—not patients trying desperately to save a buck—should decide what care is really warranted.

?     By individualizing risk rather than spreading it among many people, HSAs will be attractive to healthier, wealthier people, who have less risk and more money to begin with, draining them from the insurance risk pool and leaving traditional insurance plans to cover the much steeper costs of providing coverage to higher-risk people.

?     For the most part, HSAs do not make health care less expensive: instead they just move costs from employers, who may previously have paid for comprehensive health care benefits, to employees, who must now pay high health care deductibles out-of-pocket.

?    Any health care savings that do arise from HSAs are the result of providing less health care — including skimping on needed care.

?    HSAs are more effective as tax shelters for the very wealthy than opportunities for middle-class Americans to access quality health care.

?    Contributions to the accounts are tax-deductible, and withdrawals from the accounts to pay for out-of-pocket medical costs are tax-free, providing an unprecedented opportunity for the very wealthy to shield money from taxation.

?    Meanwhile, these tax breaks will not help the aspiring middle class (who comprise the bulk of the uninsured), because the majority pay little or no income tax. President Bush's plan makes the situation worse by requiring additional costs that have nothing to do with providing medical care — billions of dollars in fees the middle class would have to pay banks and money managers to manage their health savings accounts.

Relevant Statistics:

?    Predicted net increase in the number of uninsured people if the Administration’s health care proposals were put into place: 600,000.

?     Projected new spending to subsidize HSAs: $10 billion.

?    Average deductible for an HSA-qualified family plan offered by employers in 2007: $3,596.

?    Approximate proportion of patients with deductibles over $1,000 who decide to forgo needed medical care because of the cost, according to one study: 2 in 5.

?    Approximate proportion with deductibles over $1,000 who reported difficulty paying medical bills or paying off medical debt: 1 in 2.

?    Average deductible for family coverage under a preferred provider organization (PPO) plan: $1,040.

?    Percentage more that a person in the 50-percent tax bracket saves in taxes per dollar that they deposit into an HSA than a person in the lower-income 15-percent tax bracket: 30.

?    Cost, according to the Bush Administration, of the HSA proposals over the next ten years: $156 billion.

PRESIDENT BUSH SAYS: Association Health Plans will help small businesses to provide health coverage to their employees.

“Congress must also… create Association Health Plans for small businesses.”

DMI SAYS: “Association Health Plans (AHPs) will harm the middle class — raising the cost of health care for small businesses and increasing the number of uninsured Americans — if they are exempt from state insurance laws that prohibit insurance companies from only insuring the healthiest consumers.”

?    Exempting AHPs from state regulations increases average health care costs for small businesses and reduces the number of workers with health insurance. State laws prevent insurance plans from cherry-picking only the healthiest people for insurance coverage, allowing businesses with relatively healthy employees to join for less money, while charging higher rates to those with older and sicker workers. Such cherry-picking would destabilize the health care marketplace: state regulated health care plans would see their healthy workers siphoned off to the AHPs, leaving them with a disproportionate number of older and sicker employees who are more expensive to cover. As a result, an estimated 4 out of 5 small businesses would see their premiums increase under unregulated AHPs.

?    Small businesses should be able to band together to get a better deal on health insurance without this harmful disaggregating of risk that will ultimately rebound to make health care less accessible and more expensive for many middle-class Americans and small businesses.

Relevant Statistics:

?    Number of Americans who do not have health insurance: 47 million.

?    Percentage that individual coverage health care premiums have increased since President Bush took office: 169.

?    Percentage of U.S. companies that offered their workers health insurance in 2007: 60.

?    Percentage that did so in 2000: 69.

?    Among the 95 percent of U.S. businesses considered “small,” percent that offered health benefits in 2007: less than 60.

?    Number of middle-income families that will spend more than a quarter of their income on health care in 2008: 5,813,000.

?    Ratio of growth in premiums for employer-sponsored health insurance to the growth of an average worker’s salary since 2001: 4 to 1.

?    Increase in employee contributions to company-provided family health insurance since 2000: 202 percent.

?    Proportion of small business employees that would see their premiums increase if AHPs became common: 4 out of 5.

?    Average estimated increase in health care premiums for small employers with state-regulated coverage under AHP legislation: 23 percent.

PRESIDENT BUSH SAYS: We should reduce medical malpractice lawsuits.

“Congress must… promote health information technology and confront the epidemic of junk medical lawsuits.”

DMI SAYS: Health information technology has the potential to both increase patient safety and reduce medical costs, both important goals for middle-class Americans. But appealing to the myth of rampant 'junk lawsuits' will lead to measures that put patient safety in grave danger.. By blocking Americans’ ability to sue medical providers such 'reform' would eliminate a critical incentive for maintaining high quality patient care.

?    Medical lawsuits of any kind are hardly an epidemic: the number has remained stable and at points even decreased over the past ten years. However, capping medical malpractice liability would make middle-class Americans more likely to be injured or killed by medical negligence or a preventable error and eligible for less compensation if their lives are devastated by such malpractice.

?    Capping malpractice liability limits the amount of money patients can receive when injured by medical negligence and can effectively grant hospitals immunity from the consequences of their malpractice. As a result, capping liability for lawsuits is actually likely to increase the amount of medical errors that contribute to the cost of healthcare.

?    The focus on malpractice lawsuits is misguided and will not make a significant impact on health care costs - the vast majority of medical errors that occur are the result of failed patient safety systems and not negligent doctors, and the costs associated with malpractice lawsuits account for less than 1 percent of the costs associated with health care.

?    The best way to reduce the lawsuits President Bush complained about this evening is to modernize the practice of medicine and eliminate the avoidable medical errors that are the only reason these lawsuits exist.

?    Insurance companies are profiting from lawsuit sensationalism and misleading the public about the cause of malpractice premium increases. These companies make up for profit losses that naturally occur due to cyclical changes in the investment market by overcharging doctors for medical malpractice insurance.

Relevant Statistics: 

?    Maximum percentage that limiting medical malpractice liability would reduce U.S. health care costs, according to the non-partisan Congressional Budget Office: 0.5.

?    Number of hospital deaths each year that are attributable to preventable medical errors: 44,000 - 98,000.

?    Number of hospital injuries each year that are attributable to preventable medical errors: 300,000.

?    Total amount of annual medication errors that are preventable: 1.5 million.

?    Amount that these medication errors cost each year: $3.5 billion.

?    Amount that each preventable medication error adds to the cost of the inflicted individual’s hospital stay: $8,750.

?    Percentage of doctors responsible for a majority of all medical malpractice awards: 5.9.

?    Percentage of doctors with 10 or more malpractice liability payouts that received no disciplinary action from their state medical board: 67.

?    Cents per each dollar in doctors’ malpractice premium payments that the 15 leading insurance carriers said they expected to spend in 2006 on actual claims payments: 31.4.

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DMI on 2008 State of the Union