Thursday, January 30, 2020

CATO's Michael Cannon Echoes Calls for Reform—Employer Funded HSA's for Purchasing Direct, Portable Individual Health Insurance Plans

2 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff recently concluded a comprehensive four-part series on the regulatory origins/causes of America’s longstanding medical pre-existing conditions problem and multiple proposals to solve it, including Donald Trump’s 2017 “Executive Order on Health Care Choice and Competition.” The links to review that series appear in the comments section of this post.

However, CATO’s Michael Cannon has summarized both the history of and solution to pre-existing conditions in a much shorter New York Post piece. Following the cause-and-effect may be slightly tougher sledding without a longer, more detailed description, but his outline touches all the important points in a faster, more efficient analysis.

Click here to read...

From Cannon:

“For 70 years, that tax penalty [non tax-deductible status of health insurance purchased by workers outside of company plans] has fueled the problem of preexisting conditions. Unlike coverage you purchase directly, employer coverage drops you when you leave your job. Data show workers with expensive illnesses were therefore more likely to wind up uninsured if they had employer coverage versus coverage they purchased directly…”

“The Trump administration has taken a small step in the right direction. Starting in 2020, new rules for health reimbursement arrangements (HRAs) will let certain workers avoid that penalty when purchasing portable coverage directly from insurers — whether a costly ObamaCare plan or (in limited cases) affordable, renewable-term health insurance that is exempt from ObamaCare’s hidden taxes.”

“But HRAs don’t let workers save that money and take it with them from job to job.”

“Congress should go further and totally eliminate this tax penalty by expanding health savings accounts (HSAs) — tax-free accounts that consumers own and can take with them from job to job. Congress should apply the tax exclusion that exists for employer premium payments instead to HSA contributions…”

“With these changes, the tax code would no longer force workers into health plans they don’t want. Workers would be free to remain in their employer’s plan; to buy ObamaCare plans; to buy ObamaCare-exempt plans that make coverage more secure for the sick; or just to save their money tax-free for future medical expenses.”

“If employers want to stay in business, they would have to give that $828 billion back to the workers who earned it, either as tax-free HSA contributions or higher wages…”

“…Economists of all political stripes agree the tax preference for employer coverage is ailing America. Large HSAs are the cure.”

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