With the prospect of a Republican president who could conceivably repeal and replace ObamaCare, it is time for ObamaCare opponents to take a hard look at their "replace" plans. As I have argued elsewhere, expanding health savings accounts -- a proposal I call Large HSAs -- beats other alternatives like health-insurance tax credits. In short, if opponents succeed in repealing ObamaCare, Large HSAs would take another step in the direction of a market system. Health-insurance tax credits would constitute a step backward, because they would simply resurrect some of ObamaCare's worst features--including an individual mandate and much of ObamaCare's government spending and redistribution.
I set off a kerfuffle last week when I wrote that Sen. Marco Rubio's (R-FL) ObamaCare replacement plan contains an individual mandate in the form of tax credits for health insurance. Rubio supporters and others were none too pleased.
- “Rubio’s Health Plan Has an Individual Mandate” (me, National Review Online)
- “Marco Rubio’s Healthcare Plan Absolutely Does Not Contain An Individual Mandate” (Ryan Ellis, Forbes)
- "Squabble over Rubio plan highlights GOP impasse on ACA replacement" (Harris Meyer, Modern Healthcare)
- “Yes, Marco Rubio's Obamacare Replacement Plan -- Tax Credits -- Is An Individual Mandate” (me, Forbes)
- “Rubio's Health Plan Offers Choice And Freedom, Not Mandates” (Grace-Marie Turner, Forbes)
- “When Is A Mandate Not A Mandate, And Why Does It Matter?” (Robert Book, Forbes)
- “No, Rubio’s Plan Does Not Include an Individual Mandate” (Jim Capretta, National Review Online)
For those who are interested, here's my short response to Capretta's well-taken argument that Large HSAs also involve a mandate:
- Unlike tax credits or a standard deduction for health insurance, Large HSAs would consolidate and reduce the burden of all existing health-related tax preferences (i.e., mandates). So while a mandate would remain, it would only be a mandate to contribute to an HSA, where the money could only be saved or spent on health insurance or medical care, or passed on to one’s heirs. Thus, at worst, it would be a mandate to save one’s own money.
- The tax preference/mandate that would exist under Large HSAs would therefore be far less restrictive than either the existing smorgasbord of health-care mandates in the tax code, or that smorgasbord with a health-insurance tax credit layered on top.
- My preference is to eliminate all health-related tax preferences/mandates in the tax code, because doing so would lead to better health care, particularly for the most vulnerable. Large HSAs would take a huge step in that direction. They would deliver an effective tax cut of nearly $1 trillion per year, and in so doing would greatly facilitate a transition to a tax code with no health-related tax preferences/mandates, because that tax cut would remove the greatest obstacle to that transition.
There's a lot more to say about tax credits vs. Large HSAs, and I will return to this question soon.