Michael Sharer on “Medicare’s Hidden Bonanza“:
For conservative leaders, the best part of the Medicare bill President Bush signed in December had absolutely nothing to do with Medicare. Rather, the provision that House Speaker Dennis Hastert calls “the most important piece in the bill” and former Speaker Newt Gingrich considers “the single most important change in health care policy in 60 years” is a little-noticed tax rebate set to cost the Treasury $6.4 billion over the next decade. The measure allows Americans to open tax-free “health savings accounts,” which can be used to pay medical bills—in effect removing their owners from the shared risk that has been the core of the health-insurance system since World War II.
Conservatives claim health savings accounts will encourage people to more closely monitor their health care spending and bring down medical costs. Critics call the accounts a tax shelter that will benefit the wealthy and draw young, healthy workers out of health care plans, potentially doubling the cost of insurance for everyone else. But no matter who is right about the long-term impact, there is little doubt about the biggest short-term winner. He is J. Patrick Rooney, a major Republican campaign donor from Indiana who has done more than anyone else to make health savings accounts a reality. Rooney is the chairman emeritus of the Indianapolis-based Golden Rule Insurance Co., which has been selling health savings accounts through a now-expired pilot program that Rooney helped convince Congress to approve in 1996. Just days before the new Medicare bill passed, UnitedHealth Group, the largest insurer in America, paid $500 million in cash for Rooney’s family-owned company—a move that analysts said was directly tied to the Medicare bill’s provisions broadening the market for health savings accounts.