Health Care in California: Sick from Economic Illiteracy

August 10, 2005

Health Care in California: Sick from Economic Illiteracy

The symptoms: Rapidly rising medical costs and lots of wasteful treatment.

The treatment: Crack down health savings accounts!

That's the quality of reasoning you get from California's Insurance Commissioner Garamendi. This critique from Richard Ralston of Americans for Free Choice in Medicine has to be read to be believed:

Because of their tax advantages, HSAs are attacked as being a benefit only for the wealthy. Take a moment and try to picture Donald Trump greedily rushing to shelter $2600 in one of these accounts so he can save a couple of hundred bucks in taxes. These accounts aren’t worth the paperwork for the wealthy...

The report also attacks HSAs and the high-deductible insurance policies to which they are linked because they “are likely to cause many to forgo necessary treatment.” In other words, all of these wealthy consumers with HSAs will not spend their own money for their own health care. They will seek treatment only when someone else is required to pay for it. Wow! This is in a report whose supposed purpose is addressing the high cost of health care now. Imagine what it will cost when we shove “necessary treatment” down the throats of well-off people who don’t want it.

It is clearly the very popularity of HSAs with consumers that the Commissioner sees as a threat. The chief complaint is that the federal government could make better use of the $7 billion a year in tax savings which these consumers realize: “These resources would be spent more effectively if they were used to help fund a universal health care system.” Of course, $7 billion would not even be a drop in the bucket for such a system. But the principle upon which these government functionaries base this fatuity is that government spends money on health care for everyone “more effectively” than individuals can for themselves.