What Real Health Policy Compromise Would Look Like: HSAs Combined with Automatic Enrollment in Public Catastrophic Insurance
The White House Blog has posted a new letter that President Obama sent to the congressional leaders in both parties about the recent health care summit. To show that Democrats have incorporated Republican ideas, Obama pointed to four examples. I’m going to highlight the last:
4.Senator Barrasso raised a suggestion that we expand Health Savings Accounts (HSAs). I know many Republicans believe that HSAs, when used in conjunction with high-deductible health plans, are a good vehicle to encourage more cost-consciousness in consumers’ use of health care services. I believe that high-deductible health plans could be offered in the exchange under my proposal, and I’m open to including language to ensure that is clear. This could help to encourage more people to take advantage of HSAs.
Effectively, Obama is saying, as far as he is concerned, Barrasso’s idea is already in the bill. If Republicans with ideas like Barrasso’s were actually looking for a bipartisan compromise on health care, which they are not, HSAs could serve as the basis for a compromise.
What a Possible Compromise Would Be
Republicans claim to support HSAs as a way to encourage smart health care consumption, with minimum insurance coverage mandates, and automatic enrollment as a way to increase coverage. Progressives support public insurance programs, believe everyone should get basic coverage to protect them from medical bankruptcy, and support a public alternative to private insurance companies. Republicans, progressives, and a majority of Americans overwhelmingly oppose an individual mandate forcing Americans to buy a product from private insurance companies, or face getting fined by the IRS.
A bipartisan policy compromise would be to scrap the current individual mandate and replace it with automatic enrollment in a HSA combined with only a very minimal public extreme catastrophic insurance policy. If individuals qualified for tax credits on the exchange, but did not buy a private insurance policy, they would have their tax credit automatically go to pay the premiums for the public catastrophic policy, with any leftover deposited into their HSA. Anyone who is too wealthy for tax credits would be automatically enrolled in the HSA with a catastrophic coverage program when they did their taxes, unless they took the affirmative step to opt-out. If a person chose to opt-out, they would sign a waiver stating that if they tried to buy individual insurance, an insurer would have the right to charge them up to a one year’s worth of back premiums.
This would greatly increase the use of HSA’s like Republicans want. It would ensure near-universal basic protection from medical bankruptcy like progressives desire, and it would do it all without using the IRS to force people to buy a product from private companies.
This is what an actual policy compromise would look like–if we were dealing with two parties trying to find a middle ground between two ideological positions. But that is not what we are dealing with on health care. Instead, we have a Republican party making the politically calculated decision to say no to any health care bill, and a Democratic party hijacked by some members that have placed protecting the profits of drug makers, providers, and health insurance companies above achieving the best possible policy outcome. So, we get Republicans throwing out buzzwords, and Democrats claiming that the buzzwords are already in their plan.