Coupled
with high-deductible plans are various tax-advantaged savings plans – funds
(such as salary) can be placed in a savings plan, and then go to pay the
out-of-pocket expenses. This approach to addressing increasing premiums is
dubbed "consumer driven health care", and received a boost in 2003,
when President George W. Bush signed into law the Medicare Prescription Drug,
Improvement, and Modernization Act.
The law created tax-deductible Health
Savings Accounts (HSAs), untaxed private bank accounts for medical expenses,
which can be established by those who already have health insurance.
Withdrawals from HSAs are only penalized if the money is spent on non-medical
items or services. Funds can be used to pay for qualified expenses, including
doctor's fees, Medicare Parts A and B, and drugs, without being taxed.[98]
Consumers
wishing to deposit pre-tax funds in an HSA must be enrolled in a
high-deductible insurance plan (HDHP) with a number of restrictions on benefit
design; in 2007, qualifying plans must have a minimum deductible of US$1,050.
Currently, the minimum deductible has risen to $1.200 for individuals and
$2,400 for families. HSAs enable healthier individuals to pay less for
insurance and deposit money for their own future health care, dental and vision
expenses.[99]
HSAs
are one form of tax-preferenced health care spending accounts. Others include
Flexible Spending Accounts (FSAs), Archer Medical Savings Accounts (MSAs),
which have been superseded by the new HSAs (although existing MSAs are grandfathered),
and Health Reimbursement Accounts (HRAs). These accounts are most commonly used
as part of an employee health benefit package.[100] While there are currently
no government-imposed limits to FSAs, legislation currently being reconciled
between the House of Representatives and Senate would impose a cap of $2,500.
While both the House and Senate bills would adjust the cap to inflation,
approximately 7 million Americans who use their FSAs to cover out-of-pocket
health care expenses greater than $2,500 would be forced to pay higher taxes
and health care costs.
In
July 2009, Save Flexible Spending Plans, a national grassroots advocacy
organization, was formed to protect against the restricted use of FSAs in
health care reform efforts, Save Flexible Spending Accounts is sponsored by the
Employers Council on Flexible Compensation (ECFC), a non-profit organization
“dedicated to the maintenance and expansion of the private employee benefits on
a tax-advantaged basis”.[101] ECFC members include companies such as WageWorks
Inc., a benefits provider based in San Mateo, California.
Most
FSA participants are middle income Americans, earning approximately $55,000
annually.[102] Individuals and families with chronic illnesses typically
receive the most benefit from FSAs; even when insured, they incur annual
out-of-pocket expenses averaging $4,398 .[103] Approximately 44 percent of
Americans have one or more chronic conditions .[104]
LIMITED BENEFIT
PLAN
Opposite
to high-deductible plans are plans which provide limited benefits – up to a low
level – have also been introduced. These limited medical benefit plans pay for
routine care and do not pay for catastrophic care, they do not provide
equivalent financial security to a major medical plan. Annual benefit limits can
be as low as $2,000.[citation needed] Lifetime maximums can be very low as
well.[citation needed]
DISCOUNT MEDICAL
CARD
One
option that is becoming more popular is the discount medical card. These cards
are not insurance policies, but provide access to discounts from participating
health care providers. While some offer a degree of value, there are serious
potential drawbacks for the consumer.[105]
Health
care markets and pricing
The
US health insurance market is highly concentrated, as leading insurers have
carried out over 400 mergers from the mid-1990s to the mid-2000s (decade). In
2000, the two largest health insurers (Aetna and UnitedHealth Group) had total
membership of 32 million. By 2006 the top two insurers, WellPoint and
UnitedHealth, had total membership of 67 million. The two companies together
had more than 36% of the national market for commercial health insurance. The
AMA has said that it "has long been concerned about the impact of
consolidated markets on patient care." A 2007 AMA study found that in 299
of the 313 markets surveyed, one health plan accounted for at least 30% of the
combined health maintenance organization (HMO)/preferred provider organization
(PPO) market. In 90% of markets, the largest insurer controls at least 30% of the
market, and the largest insurer controls more than 50% of the market in 54% of
metropolitan areas.[106] The US Department of Justice has recognized this
percentage of market control as conferring substantial monopsony power in the
relations between insurer and physicians.[107]
Most
provider markets (especially hospitals) are also highly concentrated, - roughly
80%, according to criteria established by the FTC and Department of
Justice[108] - so insurers usually have little choice about which providers to
include in their networks, and consequently little leverage to control the
prices they pay. Large insurers frequently negotiate most-favored nation
clauses with providers, agreeing to raise rates significantly while
guaranteeing that providers will charge other insurers higher rates.[109]
According
to some experts, such as Uwe Reinhardt,[110] Sherry Glied, Megan
Laugensen,[111] Michael Porter, and Elizabeth Teisberg,[112] this pricing
system is highly inefficient and is a major cause of rising health care costs.
Health care costs in the United States vary enormously between plans and
geographical regions, even when input costs are fairly similar, and rise very
quickly. Health care costs have risen faster than economic growth at least
since the 1970s. Public health insurance programs typically have more
bargaining power as a result of their greater size and typically pay less for
medical services than private plans, leading to slower cost growth, but the
overall trend in health care prices have led public programs’ costs to grow at
an rapid pace as well.
Other
types of health insurance (non-medical)
While
the term "health insurance" is most commonly used by the public to
describe coverage for medical expenses, the insurance industry uses the term
more broadly to include other related forms of coverage, such as disability
income and long-term care insurance.