Is Wal-Mart Gearing Up For The Effects Of HSAs?
HSA's Are the Right Medicine at the Right Time (Sally C. Pipes. Real Clear Politics)
Health Saving Accounts, first allowed in 2004, combine high deductible medical insurance with a side fund that provides a tax deduction for contributions, tax-deferred investment growth, and tax free ultimate dispersal, provided funds are spent on qualified medical expenses. In 2006, an individual is responsible for the first $1,050 to $2,700 of expenditures ($2,100 to $5,450 for families). Routine care is paid for out of pocket, albeit in a tax advantaged way.
Just as car and homeowners insurance doesn’t pay for maintenance and minor repairs, health insurance kicks in only when true catastrophe strikes. Once a deductible is met, however, a generous insurance package, often 100 percent of covered expenses, takes over the burden. Money that isn’t spent in one year rolls over into the next, earning compound interest.
In short, Health Savings Accounts put the insurance back into health insurance, provide Americans with a triple tax free means to save for future expenses, and deliver a strong incentive to economize on the use of health care.
Like any change to the status quo, HSAs have powerful and vocal enemies. Liberal activists groups, policy analysts, and members of the media are attacking HSAs, claiming that only young, healthy, and well heeled Americans will find the innovative arrangements attractive. “You’re giving them peanuts,” gripes Columbia University professor Sherry Glied who authored an anti-HSA study for the Commonwealth Fund. “Very few people will gain insurance coverage because of tax preferences for health savings accounts.”
The evidence so far contradicts the critics. Health Savings Accounts have proven popular with both individuals and employers. Although a significant change from traditional medical insurance, more than three million Americans are now covered by HSAs.
Wal-Mart looks forward and back at health care (Timothy Goddard)
Wal-Mart made two different announcements today, both with very different implications. The media, unsurprisingly, is treating them as if they were essentially two sides of the same coin, but they’re not. In fact, they are two very different approaches to the same problem–one looking back, one looking forward.
[snip]
The important announcement is being largely ignored in the media, though: Wal-Mart is opening 50 more health clinics in their stores, adding to the nine started in a pilot program mainly in the Southeast. This could be the start of something remarkable–if Wal-Mart can begin applying the same downward price pressures to medical prices that it has applied to goods in general, then it could be the beginning of a trend that finally halts the long upward march of medical prices.
State-based health care, about a century old, is proving a very expensive disaster everywhere it’s been tried. Employer-based health care, which has been with us for about 65 years, is likely on its way out, taking GM and other venerable US companies with it. But consumer-based health care, with doctors and clinics competing for our business and dollars, that may just have a future.
Health Savings Accounts were the most important reform contained in the (admittedly expensive) Medicare Reform Act of 2003. They're still new or even unavailable at many companies (leading one local blogger recently to confuse them for FSAs/MSAs -- oops!), but we are starting to see more companies (large companies) adopt them, as Pipes points out. My company first offered them for this fiscal year, and it made such great sense for me that I didn't hesitate to jump all over it. My notion from talking to a few HR folks is that it's only going to accelerate as companies start renegotiating their insurance coverage with carriers, a process that doesn't take place every year at all companies.
The Wal-Mart experiment is interesting for a couple of reasons. First, they are gambling that there's a (growing) market for cash-based, non-insurance, affordable basic healthcare. Second, they have to be gambling that HSAs and growing numbers of cost-conscious health consumers are going to be shopping around, so to speak, in the near future.
Wal-Mart is usually pretty good at sizing up markets and trends.
Posted by Kevin Whited @ 02/26/06 10:48 | Other | Technorati
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Not to mention the fact that it will drive more customers to it's inhouse pharmacy...
Posted by Rorschach @ 18:18 on 03/01/06
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