Tag: john goodman

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.

Fisking Pawlenty

Having fisked Newt Gingrich’s and John Goodman’s “best” health care reform ideas, I probably should do the same for Minnesota Gov. Tim Pawlenty’s similar oped in the Washington Post.  Pawlenty makes five recommendations:

  1. “Incentivize patients to be smart consumers.” Setting aside his use of the grating word incentivize (down with suffix creep!), Pawlenty is on the right track.  But he’s so vague as to leave (himself?) room for mischief.  “Make quality and costs more transparent”?  “Incentivize smarter health-care decisions”?  A pol could claim to be doing those things while falling far short of what he should be doing: letting Americans – rather than employers or government – control their health care dollars and choose their own health plan.  If that’s what Pawlenty means, heck, say it.
  2. “Congress should pass reforms that allow people to stop paying for procedures and start paying for results.” Pawlenty appears to think government should find the “right” payment system, rather than allow for competition between different ways of paying health care providers – between fee-for-service, capitation, and everything in between.  Such competition promotes all dimensions of quality.  Government isn’t equipped to define and pay for performance, and bad things happen when it tries.
  3. “Liability reform.” To recap: federal limits on med mal liability unconstitutional; Republicans unprincipled.
  4. “Interstate health-care insurance.” Pawlenty doesn’t seem to get that the point of letting individuals and employers purchase health insurance across state lines is to force regulators to compete.  His “interstate purchasing pool with strict standards” idea makes it sound like he doesn’t get it.
  5. “Modernize health insurance.” Again, with the vagueness.  If Pawlenty means he wants to let individuals control their health care dollars and choose their own health insurance – see here for how – then terrific.  But when he recommends that we should “make health insurance transferable so employees can keep their coverage if they switch jobs” and “prohibit insurance companies from discriminating against individuals whose preexisting conditions were covered under insurance they lost through no fault of their own,” it sounds like he thinks regulation is the solution.