On first thought, these three topics — President Bush, health care and taxes — don’t seem to go together. Bush and taxes are a natural. And taxes pay for many health care programs. But how are the three linked now?
The answer came in the president’s acceptance speech at the Republican National Convention. Bush proposed tax credits for so-called health savings accounts in his speech, and it received one of the more prolonged applause moments.
Here’s how these accounts work. Workers would put money aside in a tax-free account to buy a catastrophic insurance policy and to pay for routine medical costs. The worker would be able to keep any money that didn’t go to health care. He or she could roll it over into the next year, or take it out. More importantly, the worker — not an insurance company and not the government — would own that account. That means the worker would take that account to any new job, regardless of the kind of insurance, if any, the new employer provides.
A prudent user of health care — one who doesn’t go to the doctor for the sniffles or a headache — could possibly pocket thousands of dollars over the years, which might then be used for health care after retirement. But if a health problem is more serious and costly, the catastrophic insurance policy, as well as the account would cover that person.
With HSAs, people have a reason to be value-conscious shoppers in the health care marketplace. As a result, health care costs will decline.
Bush summed up the virtues of this approach best in these lines: “These accounts give workers the security of insurance against major illness, the opportunity to save tax-free for routine health expenses, and the freedom of knowing you can take your account with you whenever you change jobs.”
So Bush, health care and taxes do go together — and workers, patients and health care providers will be better for it.