WOUDENBERG: Hands off my health savings account

September 10, 2011

Anita Y. WoudenbergIndiana doesn’t have to participate in Obamacare. I’m thrilled with the August ruling from a federal appellate court saying it’s unconstitutional to make states participate in the federal health care plan. Participation would cost Hoosiers millions even though we’ve already got a great plan in place to accomplish a lot of the same things.

But what still troubles me is a rarely discussed but equally important health care change that hurts young Hoosiers like me: Obamacare is phasing out health savings accounts.

The beauty of HSAs is that they give incentives to buy health insurance. HSA plans allow individuals to purchase a health insurance plan that has a higher deductible, a lower monthly premium, and the opportunity to save up their deductible in a tax-free account to be used for any medical bills.

There is no co-pay, no rigmarole: I simply show up for my appointment or procedure, get the insurance company’s discount for services, and pay the rest from my account, tax-free. Once I’ve spent the annual deductible, I’m covered 100 percent. My saved money accrues year on year, and once I hit retirement age, the account becomes another retirement account, to be used for anything without penalty.

This type of plan is, or at least should be, enticing to young people. To someone like me, young and in good health, there are so many pros. My monthly premium is lower. I can use the difference to save in a tax-free, interest-bearing account. I can transparently see how my health care dollars are being used and can use them anywhere I like. And since I’m not holding my breath for any Social Security benefits, having what is effectively another IRA account helps out with retirement plans.

And yet, as Obama observed when Obamacare’s passage was under way, young adults are a significant portion of those uninsured in this country. Why? Because they are healthy, and when they weigh the risks of catastrophe striking against the costs of insurance, they, for better or worse, decide they’ll assume the risks.

So why aren’t they taking advantage of HSAs? Because they aren’t marketed. I found out about them only because, when I do my taxes, I check and double-check all the exemption and deduction options to see if there’s anything I might qualify for to lower my tax burden. Since most of us young adults aren’t typically using tax professionals, the opportunity to find out about these things really depends on us.

Unfortunately, Obama’s solution for uninsured young people, rather than to educate and promote this great option, is to use that fact to justify imposing federal health insurance on everyone and to penalize those who don’t buy into the federal program.

Now I can assure you that using a penalty “stick” on this segment of the population probably won’t work. They’re likely to just crack out their cost/benefit calculators—as would I—and may very well conclude they’d rather pay the penalty because it’s still cheaper to not be insured.

But more crucially, a stick isn’t necessary when a perfectly good carrot is out there. With employers offering fewer and fewer benefits, including health insurance, HSA plans are a great option that promotes autonomy and personal involvement in overseeing our own health.

HSA opponents argue that, if more young people start taking advantage of HSA accounts, there will be fewer healthier people in group plans, which could drive the cost of insurance up for those who remain in such plans.

But remember: Many of these individuals aren’t already insured. And in any event, Indiana has already demonstrated leadership by insuring uninsured Hoosiers. Its Healthy Indiana Plan is for those who are uninsurable or whose income precludes them from affording insurance.

I’m confident Hoosiers can tackle any remaining gaps in insurance coverage in a fiscally responsible, innovative way.•


Woudenberg practices constitutional law at Bopp Coleson & Bostrom in Terre Haute. Send comments on this column to ibjedit@ibj.com.


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