Up Next: Drive-Thru Health Insurance

Remember this bit from yesterday's press conference, where Scottie McC tried in vain to change the subject of the day:

MR. MCCLELLAN: Yeah, again, Suzanne, if you all want to continue to focus on this, you all can spend your time on it. We're going to keep focusing on the pressing priorities of the American people, like talking about how to make health care more affordable and accessible. We've got important work to do for the American people, and that's where we're going to keep our focus. You're welcome to continue to focus on these issues. I'm moving on.

Well, I just got my morning Progress Report (the new daily email from ThinkProgress) and health care is the topic of the day for the White House:

“Bush To Discuss Health Care During Visit To Wendy’s,” Cincinnati’s WCPO-TV reported. Their headline wasn’t a joke - Bush really picked the headquarters of the nation’s third-largest burger chain as the place to sell his health care schemes to the American people.
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The White House chose the venue because Wendy's strongly supports Health Savings Accounts. In 2005, the National Journal reported Wendy's International joined a working group, along with other companies such as Fidelity Investments and Pfizer, "aimed at ensuring the success" of HSAs. Today, Wendy's spokesman Denny Lynch said the company wants to "tell [Bush] about an innovative program that we believe serves the best interests of employees and shareholders." The "innovative program" is HSAs, paired with high-deductible health insurance. Bush wants to dramatically increase the amount of money that individuals can contribute to such accounts to encourage more high-deductible plans. An increased reliance on HSAs, however, could actually increase the number of uninsured Americans because they won't be able to afford plans with high deductibles. HSAs provide benefits almost exclusively to high-income individuals and big businesses.

Here's some more on HSAs from the WaPo's Sebastian Mallaby:

Health savings accounts are ostensibly supposed to fix the health system. Right now, tax rules subsidize company-provided health insurance, but they're less generous toward out-of-pocket medical payments; as a result, company health plans pay most bills and patients have no incentive to shop around for the best bargain. Health savings accounts end this tax bias. Anyone who buys an insurance policy with a deductible of $1,050 or more can open an account and save $5,250 a year toward out-of-pocket health costs, tax-free. This will shift control of medical spending into the hands of consumers, who will discipline overpriced hospitals and clinics.

Or so goes the theory. In practice, probably less than half of all health spending outside Medicaid and Medicare would be affected by the new consumer-driven discipline. Many hospital stays cost more than any deductible, so consumers would have no incentive to bargain; emergency-room patients aren't in a fit state to negotiate prices with their doctors. But consider an even more basic question: Is the ostensible reason for health savings accounts the real one?

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Even if the administration were determined to shelter out-of-pocket payments using health savings accounts, why make them so generous? It proposes both a tax deduction and a tax credit when money goes into the accounts; savings would accumulate tax-free and could be withdrawn tax-free also. As Jason Furman points out in a paper for the Center on Budget and Policy Priorities, no other savings vehicle enjoys so many privileges. And then there's the size of these accounts. If the aim is to discipline health spending below the deductible, why subsidize savings up to $5,250 a year -- five times more than the deductible?

In sum, health savings accounts are not just about ending the tax bias in favor of traditional company health plans. The administration is proposing a new kind of 401(k), and using it as an inducement to quit low-deductible insurance. Rich people, who gain most from the tax breaks on saving, will be first to sign on; healthy people, who subsidize sicker people in company health plans, will be right behind them. Their exit may force traditional health plans into a death spiral. The loss of the subsidy from healthy workers will drive premiums up, which will drive more healthy people into health savings accounts, which will drive premiums up further.

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The limited consumer discipline that would come from health savings accounts could not justify these disadvantages. But when you talk to administration officials, they express remarkably few doubts. They believed in the ownership society last year; they still believe in it this year. They believe in individual choice; they distrust collective programs. They don't worry too much about the risks to the budget. Or to distributional justice. Or to existing safety nets.