2019s more moderate members complain that it goes too far. Bringing Senate Essay health care reform and Moderates Together on Health-Care Reform, by Michael F. Conservatives complain that it does not fulfill the GOP’s seven-year pledge to repeal Obamacare, while the caucus’s more moderate members complain that it goes too far. If he is going to pull the bill out of the fire, he will need ideas that make it more appealing to both factions of the Senate GOP.
With a bit of give-and-take, Senate Republicans can forge a passable health-care compromise. Current law allows taxpayers enrolled in high-deductible health plans to save money for their deductibles and other uncovered medical expenses in a tax-free HSA each year. Account holders can generally contribute enough to cover their annual deductibles, but not enough to cover the maximum cost-sharing exposure of many plans. 35 billion in deposits by 2016.
These changes would lead taxpayers to direct more of their income to the tax-free HSAs, and would therefore reduce the amount of tax revenue the federal government collects. But Senate leaders could cover that revenue loss simply by eliminating other tax cuts already in the Senate bill. What’s in it for conservatives? Large HSAs would cut taxes and reduce the size of government more than the tax cuts currently in the Senate bill. A large part of the burden of government is how much the tax system reduces economic productivity by distorting the economic decisions of producers and consumers. For decades, the federal tax code has heavily favored third-party payment for medical services and health insurance over direct payment, which has left Americans less wealthy.
Large HSAs would completely level the playing field, reducing tax-based distortions of Americans’ economic decisions and thereby reducing the burden of government. Large HSAs would cause health-care prices to fall, which is the most important form of assistance we can provide vulnerable patients. Large HSAs would deliver an effective tax cut nine times as large as the one that would result from repealing Obamacare’s taxes, because they would let families control more of their earnings. The federal tax code’s current treatment of health insurance denies workers control of a huge chunk of their compensation. Yet the tax code gives control over that money to employers rather than the workers who earned it.
If workers demand that money as cash wages, the tax code penalizes them by taxing it. Large HSAs would eliminate that penalty, allowing workers to receive the extra money as cash compensation, deposit all of it and more in a Large HSA, and use the resulting nest egg to purchase insurance tax-free, as employers do today. HSAs encourage patients to comparison shop and avoid unnecessary spending, because they allow the taxpayer to keep whatever she doesn’t spend, which then continues to grow tax-free. 20 percent across a range of health-care services.