Yesterday, in his speech, Obama acknowledged that the Affordable Care Act is flawed, by saying, “I will work with anybody to implement and improve this law effectively. If you’ve got good ideas, bring them to me. Let’s go.” The progressives are agitating for single payer health care and they will likely achieve their goal if the Republicans do not put forth a real improvement to ObamaCare.
Here is an improvement for the Republicans to bring to the table: end job-based health care.
The private sector has about 54 percent of the health care coverage. It is dominated by job-based health care. Ending it would move much of it to individual health care coverage. With this, workers would no longer have the portability problem and would not need to change insurance coverage when their job ended.
Job-based health care is a form of crony capitalism or corporate welfare because insurance premiums and therefore insurance companies are subsidized by the income tax system. Workers who enjoy job-based health insurance do not pay income or FICA taxes on this part of their compensation. It is paid with pre tax dollars.
The fix would be to create a law that bans job-based health care. This is nothing new. Our national government already bans things like large flush toilets and incandescent light bulbs.
The law would also allow employers to put the money that they would have paid on the insurance premiums into an individual Health Savings Account for each worker. The money put into the HSA should be tax neutral so it would use pre income tax and FICA tax dollars. People would use their HSAs to pay the insurance premiums for their individual policies as well as their out-of-pocket medical expenses.
As savings accumulate, people would save money by choosing higher deductible policies. Then when medical expenses occurred, they would pay for much of it out-of-pocket. This would put them in charge of much of their health care choices. It would also connect them to the cost so they would spend their money prudently.
With individual HSAs, employers would no longer be responsible for administering their workers’ health care. One could argue that an employer disadvantage is that this decreases workers loyalty to the company.
Insurance companies lose because both insurance premiums and out-of-pocket medical expenses would be subsidized by taxes. The more people paid out-of-pocket, the less profit there would be for insurance companies.
Progressive government would also be a loser because people with savings and their own health care coverage would have less need for big government. However, the national government would still be in charge of defining what is health care. Would it be both over the counter and prescription medications? Would it allow for exercise equipment or swimming pools to improve the health of people?
For fairness, the law might allow all employers to give income and FICA tax-free accounts to their workers. It should also allow the same tax advantage to the self-employed.
This is a crony capitalist plan because it continues the practice of subsidizing health insurance companies with the tax codes. It also subsidizes out-of-pocket health care payments. This will increase the overall amount and cost of health care because when you subsidize something, you get more of it and it costs more.
The suggested improvement would be another big government plan and not nearly as good as the FairTax as health care reform that would result in free market medical care. However ending job-based health care would be a popular and doable improvement.