INDIVIDUAL HEALTH SAVINGS ACCOUNTS ARE BETTER
February 18, 2010
Compelling individuals to purchase health insurance, as President Obama currently wishes, is one approach to reforming health care. But it's the wrong one, say Arnold Kling, a member of the Mercatus Center's Financial Markets Working Group at George Mason University and Nick Schulz, the DeWitt Wallace fellow at the American Enterprise Institute.
By and large, Americans reject today's health insurance when they have to pay for it themselves. Of the people who are not on government or employer-provided health plans, the majority choose to be uninsured. Forcing consumers to buy this product may benefit insurance companies, health care providers and other special interests, but it is not good public policy. Instead, a better idea would be to move toward a health care safety net, which would include health savings accounts, say Kling and Schulz:
- Consider that today, federal taxpayers subsidize state Medicaid programs that serve low-income Americans.
- Taxpayers also subsidize employer-provided health plans because that form of compensation is exempt from tax.
Both of these subsidies should be eliminated in favor of individual health savings accounts, say Kling and Schulz:
- We should give vouchers to people currently eligible for Medicaid so they can fund health savings accounts instead.
- The tax break for health savings accounts should be in the form of a tax credit.
- The voucher or tax credit might be $2000 for individuals and $5000 for families.
- In the years when consumers are healthy, they can build up savings for the years when they require expensive medical services.
Source: Arnold Kling and Nick Schulz, "Individual Health Savings Accounts are Better," Insurance News Net, February 18, 2010.
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