Will this Year's Version of the Ownership Society Slip through Congress?

Sebastian Mallaby says the creation of health savings accounts is a bad idea that is more about the administration's vision of an ownership society than a serious proposal to meet our health care challenges:

Ownership Society Redux, by Sebastian Mallaby, Commentary, Washington Post Online: The ... "ownership society." ... You think George Bush would let go of this ... just because Social Security reform failed? Fuhgedaboutit. The ownership society is back, though it's got a new label. Bush may not be pushing individual Social Security accounts these days. But he is pushing things called health savings accounts, which turn out to be similar.

Health savings accounts are ostensibly supposed to fix the health system. .... Health savings accounts ... will shift control of medical spending into the hands of consumers, who will discipline overpriced hospitals and clinics. Or so goes the theory. In practice, probably less than half of all health spending outside Medicaid and Medicare would be affected ... Many hospital stays cost more than any deductible, so consumers would have no incentive to bargain; emergency-room patients aren't in a fit state to negotiate prices ...

But consider an even more basic question: Is the ostensible reason for health savings accounts the real one? ... [H]ealth savings accounts are not just about ending the tax bias in favor of traditional company health plans. The administration is proposing a new kind of 401(k) ... as an inducement to quit low-deductible insurance. Rich people, who gain most from the tax breaks ..., will be first to sign on; healthy people, who subsidize sicker people in company health plans, will be right behind them. Their exit may force traditional health plans into a death spiral. ...

The State of the Union address ... contained barely a mention of health savings accounts, but don't let that fool you. Because these accounts are being pushed modestly, with no grand Social Security-style talk of remaking the social contract, there's a chance that they'll be seen as just one of various bewildering tax tweaks and slip quietly through Congress. But the proposal cries out for a debate very much like last year's -- a debate about personal saving vs. collective insurance.

A rerun of last year's debate would show that health savings accounts are ... shockingly regressive: ... a poor family might get a subsidy of $150 while a rich one might get more than $4,000. They have not just a transition cost but a real cost: The tax breaks could widen the deficit by at least $132 billion over 10 years and a lot more after that. And health savings accounts pose a more formidable threat to traditional corporate health plans ... Market forces are already dislodging company health plans; an extra shove could cause an avalanche.

The limited consumer discipline that would come from health savings accounts could not justify these disadvantages...