By Chris Jacobs
Trump Administration’s Solution
You wouldn’t know it, given all the carping and hostility from the Left, but the Trump Administration has put forward a very positive solution that answers the policy problems associated with employer-provided health coverage. It should increase portability in ways that help solve the pre-existing condition problem, while also providing additional choice and competition.
The Administration’s policy, implemented through regulations finalized last year, allows employers to contribute funds to workers on a pre-tax basis through Health Reimbursement Arrangements. These HRAs allow individuals to purchase coverage that they own, not their employers—making the coverage portable from job to job.
The HRA concept provides wins for employers, employees, and the economy as a whole:
• Employers get predictability when it comes to their health insurance offerings. By providing employees a fixed sum (say, $300 or $500 a month) into the HRA, they will not have to worry about changing plans from year to year, a sudden spike in costs because of a sick employee, or many of the other paperwork hassles associated with offering coverage.
• Employees get both choice and portability. They can select the insurance plan that best meets their needs—the doctors, deductibles, and plan features that they want. Not only can they keep the plan when they switch jobs, the fact that they and not their employer chose the coverage in the first place will make them more likely to do so.
• The economy will benefit from individuals selecting the plans they want, rather than the plans employers select for them. Insurers will have to provide better, more customized plans that fit individuals’ needs, and employees will have incentives to make better choices to stretch the HRA dollars their employers provide them.
Ideally, Congress would amend the law regarding Health Savings Accounts, to allow individuals to use HSA dollars to fund health insurance premiums. Because HSA funds cannot pay insurance premiums in most cases under current law, the Trump Administration had to use Health Reimbursement Arrangements (which are owned by employers) rather than Health Savings Accounts (which are always owned by individuals) to fund individual coverage. (RELATED: Employers, Insurers Are Behind The Trump Administration’s Latest Health Care Policy)
Providing contributions via an HSA, as opposed to an HRA, would allow employees to control any unused employer contributions upon leaving a job. That way, individuals would not only have a source of coverage in the event of a layoff, they could develop a source of savings to pay for that coverage while unemployed. But until Congress acts, the Trump Administration’s Health Reimbursement Arrangement regulations represent a tremendous step forward toward a more logical, patient-centered insurance system.
Empower Patients, Not Government
Coronavirus has made the problems with government control of health care apparent. As Joe Biden (of all people) noted in the March CNN debate, Italy has a single-payer system—and that nation had to ration access to ventilators, whereas the United States did not.
The pandemic has exposed the flaws in our current health insurance system. But it comes just as the Trump Administration has shown a better path forward. By empowering patients rather than government bureaucrats, Health Reimbursement Arrangements can help transform the current coverage system into something that lowers costs and provides the care American patients prefer.
Chris Jacobs is Founder and CEO of Juniper Research Group, and author of the book “The Case Against Single Payer.” He is on Twitter: @chrisjacobsHC.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation or Conservative Daily News.
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