HEALTH CARE IMPROVEMENTS
June 28, 2002 - WAR REPORT NUMBER 26-2002
This is the second in a series of WAR Report adapted from articles in FACT AND COMMENT by Steve Forbes in the 5/27/02 edition of Forbes magazine. This article is titled, "We're Dim Bulbs on Health Care."

Mr. Forbes proposes reform by applying free enterprise in the medical marketplace to get better health care at more affordable prices. This is a follow-up to Medical Savings Accounts (MSAs) the author suggested last week.

Another reform: Correct the equally imbecilic shortcomings of Flexible Spending Accounts (FSAs). With FSAs, employees can have a certain amount of money deducted from their paychecks, tax-free, for medical expenses. Sounds great, but FSAs are hobbled by two flaws. If the deducted money isn't spent by year's end, you lose it; it can't be used for future medical expenses. The other shortcoming: If an employee leaves a company at the beginning of the year, he or she can get a windfall. Say you have agreed to have $400 deducted each month; leave a company January 31, and you can demand a "refund" of up to $4,800 for unreimbursed expenses incurred by January 31, even though you've only kicked in $400. Not surprisingly, employees put caps on FSAs. The solutions are self-evident. Washington should let employees roll over unused money into the next year, and Congress should remove the windfall provision so employers can remove their caps.

Doing away with inhibiting restrictions on MSAs and FSAs would go a long way toward solving our health care problems. The top-down, third party, semisocialistic approach we now have is costing companies, their shareholders and employers unnecessary grief and unnecessary high costs.

In "Power to the Patients," Forbes indicates there are other positive changes Washington could enact. One would be to permit unfettered MSAs for Medicare. Another would be to let people on Medicaid use vouchers or coupons to shop for health care; too many of these folks now get "back of the bus" care, in part because reimbursements are low. (And this causes cost shifting to the private market.) More next week.

Stay tuned! Why? Because I tell it like it is and it's your money.

God Bless America.