Tag: health savings accounts

Monday Links

ObamaCare’s Price Controls Threaten HSAs

John Goodman is correct that ObamaCare’s individual mandate – and Kathleen Sebelius’s power to make the mandate more burdensome at whim – threaten the continued existence of health savings accounts (HSAs).  But ObamaCare’s price controls are no less a threat.

The new law requires insurers to charge enrollees of the same age the same average premium, regardless of health status.  That’s a price control, and it will cause premiums for healthy people to rise dramatically and thus lead to massive adverse selection.  Healthy people will gravitate to less-comprehensive insurance – in particular, HSA-compatible high-deductible plans – where the implicit tax is smaller.

As premiums for comprehensive plans spiral upward (ultimately causing comprehensive plans to disappear) and as ObamaCare proves more costly than projected, supporters will be desperate for new revenue.  They will call for the elimination of both HSAs and high-deductible health plans on the grounds that those products – not the price controls, mind you – are causing the market to unravel.

HSAs allow young and healthy consumers to avoid the raw deal that ObamaCare offers them. And that’s precisely why ObamaCare’s supporters will try to kill HSAs. We will end up repealing one or the other.

Obama’s HSA Gambit a Net Minus?

President Obama evidently thinks that if he promises not to kill health savings accounts (HSAs), opponents will swoon for his government takeover of health care.  If that doesn’t do the trick, he should make clear that his health plan would not eliminate other things too, like the Defense Department and puppies.

Of course, that hollow gesture didn’t win the president any Republican support.  But it may have cost him some Democratic support – or at least frayed the nerves of a few House Democrats.  According to CongressDaily:

Liberals, meanwhile, are fuming over an addition Obama made to his proposal to make the effort appear bipartisan and possibly switch the votes of moderate Democrats who opposed the House bill last year.

The Congressional Progressive Caucus co-chairman, Rep. Raul Grijalva, D-Ariz., said Wednesday he is disturbed and bitter about an addition he said goes against Democratic principles.

“I’ve been leaning ‘no’ for a long time. That hasn’t changed,” Grijalva said about voting for the healthcare overhaul the Senate passed in December and a package of changes that would move through a separate bill through reconciliation.

Obama indicated he might be open to a provision that would encourage the use of health savings accounts, a tax-exempt savings account that typically is used in conjunction with a high-deductible plan. The provision would allow the exchanges to offer high-deductible plans.

“For some of us, the bitterness about HSAs in and the public option completely out, I don’t know how long that’s going to linger,” Grijalva said.

Which tends to confirm what HSA supporters have long feared: killing HSAs is the Left’s game plan.

A Government Man

This afternoon Politico Arena asks:

Will the president’s health care remarks today sway enough votes to pass ObamaCare through “reconciliation”?

My response:

Who knows? What they show beyond all doubt, however, is the mind-set of the president and the bill’s proponents. Consider just a few of his opening words: “Everything there is to say about health care has been said and just about everyone has said it. So now is the time to make a decision about how to finally reform health care so that it works, not just for the insurance companies, but for America’s families and businesses.”

Notice first the insinuation that health care works today for the insurance companies, but not for the rest of us. Obama has to have his foil, this man with no experience in the private sector and little understanding of how that sector works. But notice, more importantly, that we need “to finally reform health care so that it works” – the implication being that this is a collective undertaking, the only question being how to do it. “We’re all in this together.” In the private sector, if we can’t reach an agreement about some proposed undertaking, we walk away. That seems inconceivable to Obama. He’s a government man: conceiving public solutions to private problems is what his life is all about.

I suppose you could say that government is so enmeshed in health care today that there are only public solutions to the problems government is largely responsible for having created – starting with the favorable tax treatment employer-provided health care affords. But the direction of reform needn’t be toward even greater government. It might be toward less government, as with health savings accounts. But that approach has been rejected from the start by Obama and his Democratic supporters. They move in only one direction.

Before Administering the Lethal Injection, Dr. Obama Offers to Sterilize the Needle

In a letter to congressional leaders, President Obama wrote of his openness to including Republican proposals in his health care legislation.

Dropping a few Republican ideas into a government takeover of health care is like sterilizing the needle before a lethal injection: a nice thought, but the ultimate outcome is the same.

This is not bipartisanship.  President Obama is creating the illusion of bipartisanship while taking the most partisan route possible: forcing his legislation through Congress via reconciliation.

(Cross-posted at National Journal’s Health Care Arena.)

Yes, Mr. President, a Free Market Can Fix Health Care

At his White House forum on health reform back in March, President Barack Obama offered:

If there is a way of getting this done where we’re driving down costs and people are getting health insurance at an affordable rate, and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way.

In a new Cato study titled, “Yes, Mr. President, a Free Market Can Fix Health Care,” I take up the president’s challenge and explain that markets are indeed the only way to achieve those goals.  I also explain how Congress can remove the impediments that currently prevent markets from doing so:

  1. Give Medicare enrollees a voucher (adjusted for their means and health risk) and let them purchase any health plan on the market,
  2. Reform the tax treatment of health care with “large” health savings accounts, which would give workers a $9.7 trillion tax cut (without increasing the deficit) and free them to purchase secure coverage that meets their needs,
  3. Free consumers and employers to purchase health insurance across state lines (i.e., licensed by other states), which could cover up to one third of the uninsured,
  4. Make state-issued clinician licenses portable, which would increase access to care and competition among health plans, and
  5. Block-grant Medicaid and the State Children’s Health Insurance Program, just as Congress did with welfare.

Unlike the president’s health care proposals (which, as Victor Fuchs explains, would merely shift costs), these reforms would reduce costs, expand coverage, and improve health care quality – without new taxes, government subsidies, or deficit spending.

Would a free market be nirvana?  Of course not.  But fewer Americans would fall through the cracks than under the status quo or the government takeover advancing through Congress.

There is a better way.

(Cross-posted at Politico’s Health Care Arena.)

Cutting Health Care Costs

Ezra Klein, the young Washington Post blogger who writes a lot about health care, contributed an article to the paper’s Sunday Business section in which he made this compelling point along the way:

The surest way to cut health-care spending would be to make people shoulder more of the burden directly, as opposed to hiding it in taxes and lost wages.

Bingo! Exactly! So why does Klein want government to get more involved, to wrap our health care in a web of mandates and subsidies and regulations and gatekeepers and monitors? When, as he says, making the cost of health care clear and direct would be “the surest way to cut health-care spending”?

Michael Cannon’s proposal for “Large HSAs” would move us in the right direction. It would allow workers to receive the full amount that they and their employer spend on their health benefits as a tax-free cash contribution to the worker’s health savings account. That would give consumers control over their health care dollars, giving them an incentive to shop around, ask questions, and generally hold down costs as consumers do in normal competitive businesses.

You can’t say it enough:

The surest way to cut health-care spending would be to make people shoulder more of the burden directly, as opposed to hiding it in taxes and lost wages.

Congress should stop moving in the other direction.