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Commentary

Building on the Successes of Health Savings Accounts
Robert E. Moffit, Ph.D., Greg D'Angelo, Heritage Foundation, 10-20-06

D'Angelo and Moffit think that efforts towards the next significant health care reform should focus on the tax code, which currently favors employer–based insurance to the disadvantage of individuals who work at firms that don't offer health insurance. They also believe that tax credits should allow individuals to purchase any kind of health insurance, not just HSAs.

The Health Opportunity Patient Empowerment Act of 2006, recently passed by the House Committee on Ways and Means, includes needed management and administrative changes to HSAs. As good as these changes are, however, they are insufficient. Alone, HSAs will not fix the health care system. They work within a distorted health insurance market where tax policy favors the purchase of some health plans over others and where government officials and employers still choose health plans for most individuals. While health accounts are portable, the high–deductible plans are often still tied to the place of work.[13]

The next target for reform, then, should be the arbitrary and inequitable federal tax code, which unduly favors employer-based health insurance. Congress should fix this inequity and level the playing field. Health insurance offered by employers or government, and constrained by their incentives, cannot meet the needs, preferences, or values of all health care consumers. Nor can any single health insurance product. Individuals and families need the freedom to make personal health care decisions without government officials picking winners and losers for them.

Meanwhile, Congress should refrain from adding another layer of distortion by giving individuals a tax break or credit to purchase only HSA-qualified plans. This preference would run counter to tax neutrality, equitability, and simplification. Government involvement in the health insurance marketplace, though perhaps well intentioned, will ultimately stifle rather than enhance freedom of choice for heath care consumers. A better policy would be a tax credit applicable to any kind of health coverage.



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