RALEIGH – There are plenty of reasons for lovers of liberty to oppose the legislative abomination now lumbering to the floor of the U.S. Senate under the misleading name of “health care reform.”
The bill will jack up taxes, cost far more than advertised, delay the nation’s economic recovery, violate the U.S. Constitution, and make millions of additional Americans into the kind of governmental dependents that most Europeans now are – and that the Left desires as a means of increasing its political power.
But for me, there’s an additional reason, both personal and professional, why I hope the bill never reaches the president’s deck: it would almost certainly destroy my current health plan.
Years ago, the John Locke Foundation adopted a consumer-driven health plan for its employees. We can choose from among three options: 1) a high-deductible insurance policy coupled with a tax-free health savings account, 2) a high-deductible insurance policy coupled with flexible spending and health reimbursement accounts, or 3) cashing out and purchasing a plan in the individual market.
All the options are based on the inescapable fact that when your employer “gives” you health insurance, what’s really going on is that you are being paid for your labor with a non-cash benefit rather than with cash. Because the non-cash benefit escapes income and payroll tax, it’s greatly desired by most workers. But that doesn’t change the fact that it’s a transaction. Your employer “gives” you nothing. Your employer buys a group plan of some kind and then sells participation to workers in exchange for their labor.
Until politicians in Washington end their gross misunderstanding of health care issues and do something constructive – such as fully equalize the tax treatment of insurance and cash paid for medical services – setting up employer-sponsored health plans that include opportunities for personal savings is pretty much the best deal anyone can come up with. It gets employers and employees out of the silly business of financing routine expenses with insurance claims rather than cash, while giving workers greater flexibility and portability.
All three savings vehicles – HSAs, HRAs, and FSAs – store cash in banks for use in paying medical bills. But they have key differences. HSAs are the personal property of employees and can only be set up in conjunction with an approved insurance policy. Unspent funds stay in personal accounts and can be taken with workers as they change jobs. HRAs are actually owned by the employer, not the employees, while FSAs are personal account but cannot accumulate unspent balances. At the end of the year, they revert back to the employer.
These consumer-driven options are the most successful products in health insurance at the moment. By making families more cost-conscious and reducing the amount of insurance claims, they’ve resulted in substantial savings and low or no annual increases in premiums for the insurance component, unlike what’s going on in the rest of the market.
What Congress should do right now is change the law to give more Americans access to these options and convert all FSAs to HSAs, so that there will no longer be a “use-it-or-lose-it” problem with flex accounts.
Instead, of course, Congress is about to impose such severe limitations on all these options that they will likely disappear. If ObamaCare passes, in other words, I and my JLF colleagues will lose our current health care plans. There’ll be nothing “optional” about it.
So you’ll have to pardon me if I view liberals’ political promises about health care with scorn. Rather than truly addressing the problems with the current system, they are bound and determined to destroy any health care financing arrangement that puts power in the hands of individuals rather than government and the special interests who control its subsidies and dictates.
Naturally, I hope they fail. So do millions of other Americans who believe that the first step to crafting a sound public policy would be for the government to pledge to leave us the hell alone.
Hood is president of the John Locke Foundation