PRIORITY
ISSUE : Freedom
Health Plans
Status:
S. 1405 (Seward) / A. 2688 (Morelle)
06-01-05 Reported and referred to Senate Rules.
06/21/05 - Passed the Senate
The Assembly bill is in the Insurance
Committee.
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The Medicare Modernization Act of 2003 included a provision to allow individuals
to create a new tax-favored account - commonly referred to as a Health Savings
Account (HSA) - to pay for medical expenses. The account can only be created
when the individual or the individual's employer purchases a health plan
with a higher deductible - a minimum $1,000 for individuals and $2,000 for
family coverage.
Traditional managed care companies are restricted from selling these higher
deductible policies and therefore thousands of New Yorkers can not start
a HSA.
Some employees have access to high deductible health insurance plans. Large
employers who are subject to ERISA and not New York State Insurance Law,
can purchase them. Employers who purchase indemnity coverage or preferred
provider organization coverage can buy them. But the vast majority of employers
who purchase traditional managed care coverage are restricted from purchasing
them because Insurance Law considers the deductible to be too high.
Business Council Priorities
The ability for individuals to create their own health savings account can
quietly transform the health care system. Until recently, consumers
have had little direct knowledge of the totality of the costs of health-care
and have not been prudent in how they use the health care system. Many people
spend far more time researching the costs and quality of a big screen television
than they do learning where to go for surgery and finding out how many times
a particular surgeon has performed the procedure.
When employees are spending their own funds there will be a greater incentive
to use services more prudently. The HSA's also allow the employee to
carry-over their accounts from year to year, thus building up more substantial
funds to use at a time when they are more likely to need more services. The
HSA is also portable for the employee, allowing them to take the money with
them if they change employment.
New York needs to authorize higher deductible health insurance plans to
complement health savings accounts. Senator Seward and Assemblyman
Morelle have spearheaded a major initiative to allow more employers to buy
what we are calling Freedom Health Plans. S.1405/A.2688
has nearly 50 legislative sponsors, a number that is surely to grow.
It should also be noted that an additional benefit of HSA's is that a workers'
employer is also authorized to put money into an employees HSA. For instance,
if an employer wanted to purchase a $2000 deductible family policy they could
also put, say $750, into the employees HAS. The employee could use this money
to pay for medical expenses.
Health care costs are continuing to rise multiples of the inflation rate
and there is no end in sight. Some estimates project the savings from Freedom
Health Plans as high as 30%. Any savings would be welcome relief for small
businesses.
A recent Business Council survey of New York State business leaders shows
that employers want Albany to enact sweeping reforms to improve New York's
business climate. The cost of health insurance was the top issue for the
second year in a row. Nearly 90% of the respondents identified health insurance
as either "a top priority" or "very important".
