Pres. Bush’s statements on health care and health insurance in the State of the Union (free subscription required) address left me somewhat confused about the President’s real objectives. While he advocated controlling the cost of care, he also strongly endorsed extending tax breaks for insurance and any individual expenditure on anything medical.
These two programs are contradictory. Reducing the consumer’s real cost of health care makes them less likely to reduce expenditures, thereby feeding medical inflation.
The central premise of the Bush plan appears to be a belief in the power of information and tax policy to encourage better decision making by health care consumers. This approach, known as consumer-directed health care, will do nothing to reduce health care inflation.
Bush also:

An excellent ongoing debate on HSAs is raging at Ezra Klein’s blog.
Ezra is engaged in a discussion w libertarian/conservative Adrienne and others about the role of and impact upon society of HSAs.
Here’s an excerpt
” (Adrienne) If your ultimate goal as a health policy wonk is to push for government-financed health care, then criticizing HSAs and the consumer-driven health care approach is your bread and butter, the overwhelming evidence that many people like having the HSA option notwithstanding.
(Ezra) Well, yeah. If yesterday I was paying to help sick, old people not go bankrupt and today I’m not, I’ll probably be a happy camper. At least till I get sick and/or old. I’m sure the healthy young things populating HSA’s are ecstatic to have lower premiums, but I’m similarly sure that HSA’s are a bad idea. And since they will eventually destroy regular insurance if widely adopted…”
Leaving aside the ideological asides, the debate provides good perspective on the pros cons and disagreements about same. There’s also less twisting of facts and perceptions than one normally finds in left-right debates.
My perspective is once you strip aside the labels and ideology, it is blindingly apparent that HSAs and CDHPs cannot and will not reduce health care inflation – they just do not address the key drivers – aging, technology, over-utilization…
So, if you want to debate HSAs on their merits, go ahead – just don’t confuse them with medical cost containment.

Half of the 2 million people who have signed up for consumer directed plans with health savings accounts have yet to put anything into the accounts. Interesting, as one of, if not the major attraction of the plans was the tax-favored status of the dollars going into the savings accounts.
(Matthew Holt at The Healthcare Blog has a transcript of Pres. Bush’s interview with the Wall Street Journal in which Bush describes HSAs as one of the ways to make health care more affordable…)
What appears to be happening is what I (and others) have been predicting all along. Employers, staggering under the burden of rising health care costs, have all but given up and thrown in the towel. Those who have given up are dropping their health plans in favor of the new high-deductible plans, thereby shifting more of the burden onto employees. In those instances where the CDHP option is offered alongside regular heath plans, CDHP participation is in the low single digits.
The idea (at least the politicians’ idea) behind CDHPs is that they will make the consumers more directive, more involved, more aware of their health and thus better consumers. I’m not sure the employers care much about the theory; what they do care about is health care inflation is now less of a problem for them.
I write that with no malice towards employers; many have decided health care is simply unmanageable. It is digging into their profits, their ability to fund new businesses or products, increase wages, enhance training, pay bonuses and executive stock options, and hire new workers. Employers in the US are tasked with addressing the health care needs of their workers, a challenge their competitors in other OECD countries don’t worry about.
Here’s more detail from Milt Freudenheim’s article in today’s New York Times:
” people have evidently signed up not because they are eager to direct their own medical spending but because the plan looked cheap or they had no other insurance option. And at least half of those enrolled have not put money in their health savings accounts. So there will be no money building up for next year’s out-of-pocket expenses