Don’t Hate the Mandate (or: My HSA Stroke of Genius)

March 8th, 2011

Inspired by GOP needs to decide what its goal is on health-care reform (Ezra Klein, Washington Post 3/08/11). 

Republicans hate
The individual mandate?
They want it to end
When it could be…
their best friend.

Republicans have been complaining about the individual mandate, even though (1) they themselves previously proposed it (Bob Dole) and (2) if Dems hadn’t put it in the healthcare reform bill, the GOP’s corporate masters would have made them do it (viz. the health insurance industry justification for cutting child health benefits for proof of that).

Here’s my idea: for anyone who doesn’t like the idea of being “forced” to buy health insurance (i.e., who prefer to self-insure), they can do that, comply with the individual mandate requirement, AND reduce their taxes. How: by creating and contributing to an Health Savings Account (HSA). What, Republicans, is not to like about that? It’s both good policy, and good politics.

The HSA is a Republican brain child. It’s like an IRA, in that you contribute a set (tax-deductible) amount to the account each ear, out of which you then pay your healthcare expenses (you can have a debit card linked to the account, and then you just use that to pay for your doctor’s visits and other costs). The account is coupled with a high-deductible insurance policy to cover expensive catastrophic illnesses. If you end up not spending the money in the account, it stays in your account, which gives you an incentive to save money that doesn’t exist when you’re spending insurance company funds. HSAs also theoretically allow for reduced paperwork and increased efficiency, through use of the healthcare debit card linked to the account.

HSAs are the perennial GOP counter to other healthcare reform options, and they do have a lot going for them (plus some problems, which you can read Healthcare Chicken to find out more about). But in spite of 8 years of full-out promotion under George W. Bush, they never really took off. HSAs have stagnated since introduced by the GOP, falling embarrasingly short of subscription targets. This could actually be the thing to get them going. In addition, expanding their scope (as Republicans have constantly called for) would be a nice bargaining chip to offer to the GOP in return (hopefully) for support (or at least reduced opposition) for other aspects of healthcare reform.

How would this work: HSAs would be expanded, and creation of an HSA (with the high-deductible insurance policy that comes with it) would be a fulfillment of the individual mandate requirement. Don’t want to be buy a government-sanctioned health insurance policy? Then just put your healthcare money is your own individual account. Your money: Spend it on what you want (as long as it’s healthcare-related). If you don’t use it, you keep it. Even the high-deductible insurance policy could be phased down (and ultimately out) as your HSA balance grew enough to gradually increase (and potentially eliminate) the deductible. At some point, the “insuree” would be fully (or almost fully) self-insured. And the money you contribute to the HSA? You get a tax deduction for it.

In conjunction with expanded use of HSAs, all the individual mandate does is stop the freeloading that occurrs when an uninsured person gets uncompensated care that the rest of us end up paying for. Since Republicans are in favor of individual responsibility and none of them have so far proposed that people going to the ER be denied care if they can’t pay, how can they oppose that?

HSAs also have the benefit (for Republicans) of being private sector programs offered by their good friend, the health insurance industry.

So, my Republican friends, what do you think?


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