Congress has a Prescription for Health Care's Sickly Status Quo
Despite the problems that plague American health care, innovative ideas exist to cure what ails it. But many transformative approaches are languishing in obscurity compared to insurance-based, big-government alternatives. One idea, reforming Health Savings Accounts (HSAs), is a powerful antidote to the sickly status quo. And Senator Ted Cruz’s Personalized Care Act (S. 3112) would implement this much-needed solution. S. 3112 — which has a companion bill in the House, Congressman Chip Roy’s HR 5596 — would lift unnecessary HSA restrictions, let Americans spend HSA dollars how they see fit, liberate employers, and unleash Direct Primary Care.
Created in 2003, HSAs are already powerful tools that empower patients. Individually owned, these plans allow patients to place pre-tax dollars into an account and use the funds for certain medical expenses. Frequently confused with the much less advantageous Flexible Spending Accounts (FSAs), HSAs are the ultimate tax-advantaged savings modality. That’s because they are not taxed on contribution, growth or use for an “Eligible Medical Expense.”
Currently, however, needless restrictions prevent HSAs from achieving their potential — and widespread adoption. Insurance companies, fearful of losing any power, were able to include language that prohibits Americans from owning an HSA unless it is linked to an insurance company’s High Deductible Health Plan (HDHP). This unnecessary requirement forces patients who buy HSAs to also buy overpriced traditional insurance policies, limiting the appeal of HSAs.
S. 3112 would correct this mistake by freeing Americans to own their HSAs outright — without the obligatory HDHP. This brilliant bill would let Americans use HSA pre-tax dollars to purchase a variety of coverage products, from the traditional HDHP to alternative coverage products such as Health Sharing Ministries or Short-Term Limited-Duration policies. By doing so, S. 3112 would allow individual Americans to purchase the coverage they choose.
The Personalized Care Act is also good news for employers. That’s because it affords HSAs the same tax advantage currently reserved for employer-based health coverage. This tax parity frees employers to focus on their core business instead of functioning as de facto health insurance providers. If Americans possess their own coverage, it would minimize health insurance-based job lock. And if coverage is purchased and continuously owned, over time it would reduce the need to cover pre-existing illnesses — which are largely a byproduct of the constantly shifting coverage that occurs in an employer-based system.
Furthermore, this legislation would help HSA owners take full advantage of an incredibly low-cost and high-service care model: Direct Primary Care (DPC). These clinics offer substantially reduced medications, imaging, labs and other services. Though President Trump’s June 2019 Executive Order partially addressed and expanded HSA use for DPC providers, S. 3112 would solidify these corrections in law. This step would make HSA dollars go farther and provide more quality services.
The ideas that can revitalize our health care system are already out there. S. 3112 unleashes one of them: innovative HSA reform. Insurance companies and big-government bureaucrats have been in charge for too long. The Personalized Care Act would reward both patients and employers with the freedom to make better choices.
We have the cure — we just need Congress to prescribe it.
Chad Savage, M.D. (firstname.lastname@example.org) is a D4PCF policy fellow and the founder of the DPC practice YourChoice Direct Care in Brighton, Michigan.