We have just a couple updates for you this morning. The first is related to Paragon’s new policy paper: “The HSA Option: Allowing Low-Income Americans to Use a Portion of Their ACA Subsidy as a Health Savings Account Contribution.” The second is the ongoing fight against the IRS’s proposed rule that illegally expands Obamacare subsidies.
An Obamacare reform to empower patients
On June 27, I coauthored an op-ed with Dean Clancy in National Review, entitled “Obamacare is Broken. Here’s How to Help.” The op-ed summarizes key arguments from Paragon’s paper. Here are some highlights:
There is a way to reform Obamacare’s subsidy structure to enhance efficiency and consumer control, without increasing deficits.
We call it “the HSA Option.” In a new Paragon Health Institute paper co-authored with Andrew Lautz and Roy Ramthun, we outline a simple idea: Give Obamacare enrollees the option of receiving a portion of their existing health-insurance subsidy in the form of a cash deposit to a health savings account (HSA) that they own and control. Having this option would significantly improve these Americans’ welfare at no additional cost to taxpayers. …
Under our proposal, the single woman earning $25,000 would qualify for an annual HSA deposit of $3,200 for a plan with a $7,050 deductible and out-of-pocket limit. While she would face higher cost-sharing obligations than under the CSR option, she would have substantial savings available for health-care expenses — and more personal control. …
HSAs enhance consumer welfare in three key ways. First, they can be used for many items and services not typically covered by insurance — such as vision, dental, and hearing services.
Second, they can be used for out-of-network expenses. This feature helps address the “surprise bill” problem by protecting enrollees from unexpected costs of receiving accidental or unintentional out-of-network services, since most exchange plans today employ restrictive provider networks.
Third, they encourage wiser shopping, leading to more competition and consumer savings. …
While our proposal does not represent a comprehensive reform to Obamacare’s onerous regulatory structure, it does offer significant benefits for patients and taxpayers alike. More importantly, its underlying principles — empowering consumers with more choice and control, helping people rather than insurance companies, and targeting benefits to those who need them — offer a model for the fundamental reform of other government health programs.
Testimony against the Illegal Proposed IRS Rule to Fix the So-Called Family Glitch
On June 27, I testified at an IRS and Treasury hearing on their proposed rule to “fix” the so-called family glitch. I recommended that the IRS withdraw the proposed rule, building on a comment letter that I submitted on the proposed rule. In my oral testimony, I told the IRS and Treasury that the law is clear and unambiguous and that the IRS cannot violate the law regardless of the White House’s political interests. While the proposed rule would have many adverse effects, one of them would be the effect on the IRS as an institution. I said:
If the IRS were to finalize this proposed rule, it would lack credibility to object to changes desired by future administrations. By finalizing an illegal change in the definition of affordability of coverage, the IRS would not be able to credibly oppose efforts by this and future administrations to change tax policy in direct contravention of the Internal Revenue Code. Based on the precedent set in this situation, future enforcement of the tax code would gyrate back and forth based on the administration in power without regard to enacted law. The only way for IRS to avoid this dangerous outcome is by withdrawing this rule.
Doug Badger, a Paragon advisor who is a senior fellow at the Galen Institute and the Heritage Foundation, and Peter Nelson, a senior policy fellow at the American Experiment, also testified against the rule. Last week, Health Affairs published critical pieces about the proposed rule from both Doug and Peter. I joined Doug and Peter, along with more than 30 other experts, on another comment letter to the IRS and Treasury which explained why the proposed rule is both illegal and harmful. Congress has already signaled strong interest in ensuring that the IRS does not violate the law to expand Obamacare with separate oversight letters from the Oversight Committee’s ranking members, the Ways and Means Committee and Senate Finance Committee ranking members, and the Senate HELP Committee ranking members.
All the best,
Paragon Health Institute