KENNEDY: BUSH’S HEALTH SAVINGS ACCOUNTS WILL MAKE A BAD SITUATION WORSE Like Privatizing Social Security, HSA’s Will Fail to Solve the Problem

Washington, DC: After five years of ignoring our nation's healthcare crisis, President Bush is expected to announce at the State of the Union proposals to encourage health savings accounts (HAS). Last year, the White House launched a failed privatization social security plan and now they want to do the same to healthcare. Senator Kennedy believes that HSAs benefit the wealthiest and healthiest Americans but leave ordinary working families with higher medical costs and more people uninsured. The expanded use of tax deductions for health care would also primarily benefit high-income houses. Senator Kennedy said, “With 2,000 more Americans becoming uninsured every day, the Medicare drug plan failing, and health costs sky rocketing, it’s absurd for the Bush Administration to make a bad situation even worse. Its health proposals will fatten the bank accounts of HMOs and the drug industry and lavish more tax giveaways on the wealthy, but will do nothing to make health care more available and affordable for millions of average families." For example, a single woman suffering from breast cancer who makes $37,000 a year could face $32,000 in medical bills for cancer treatment and surgery in a single year. Right now, she's likely to buy an individual health plan for $2500 that provides full coverage of her costs after she pays a $2000 deductible – so her total costs would be $4,500 and insurance picks up the remaining $27,500. However, under the Bush health care proposal, her health insurance will cost $2000, but it will carry a $8000 spending limit, so her total costs would be $10,000 -- $5,500 more than under her old plan. She may have some money saved in her HSA, but with a costly illness like cancer, she won't have time to save enough for her treatments, and would likely go into debt. As another example, today, the average single mother of three who makes $31,000 a year will pay $2200 for an employer-sponsored health plan, with an "out-of-pocket" spending limit of $2000. If one of her children has an unexpected illness or injury, she wouldn’t have to pay more than $2000 in extra medical expenses. Under the Bush health care proposal, she'll pay just $1800 for her HSA health plan, but that plan has a $10,000 deductible. So if her child gets sick under the Bush proposal, she could end up spending over $11,800 - more than 30% of her income on health care – forcing her to cut back on other essential needs. Below are the facts on HSA’s: