Paul-Sanford ACA replacement bill introduced today

[TheGipper]

OK, spare me the usual caveat of "I'll wait till it passes". This exercise is just for fun. Not meant to be political. There are some MAJOR goodies in here for supersavers, HSA lovers, and early retirees.

Unlimited allowable HSA contributions for everyone! No income restrictions. No HDHP retirement. Possibly allowed to pass on to heirs. $5000 tax credit to all who contribute! Think about the possibilities here.

Individually purchased health plans would now be tax deductible, similar to employer health plans! Individuals, small businesses, churches, etc...would be allowed to band together to purchase insurance. Let that sink in for a moment early retirees.

And much more......Maybe a pipe dream to think any this will pass, but one can dream.......

[DMFA]

Unlimited HSA contributions would be amazingly awesome for me, assuming they remain the super-tax-advantaged plans they are.

So instead of paying a medical bill, I'd contribute to the HSA to get the tax deduction, then draw from the HSA to pay it.  No limit, just lather-rinse-repeat, 33% discount off healthcare.

Basically that can make all healthcare spending tax-free, which benefits the rich more than the poor.  Classic government.

[TheGipper]

Shame on you DMFA, that last line is spiraling into politics.

But in response. Why should corporations get tax-free health plans, but not individuals? This is just an accidental result of avoidance of WWII era wage and price controls and it restricts portability. Thinking of it as just rich vs poor misses the boat.

[DMFA]

TheGipper wrote:

Shame on you DMFA, that last line is spiraling into politics.

But in response. Why should corporations get tax-free health plans, but not individuals? This is just an accidental result of avoidance of WWII era wage and price controls and it restricts portability. Thinking of it as just rich vs poor misses the boat.

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Rich and poor isn't politics, it's social economics.  Rather, it's less so rich and poor but low-income vs high-income.

It should be similarly taxable, corps vs individuals (never mind S-corps).  But that's the danger of giving tax deductions, since they benefit one tax bracket more than the other, when it's likely that the lower bracket needs the break more than another.  A high-income person can *probably* already afford healthcare better than a low-income person can, so I think it's a reasonable deduction (pun intended) that something which effectively gives a higher discount to the rich than the poor defies the original purpose.

But I would LOVE unlimited HSA, because I do save/invest a lot (relative to the average American) and am in a higher tax bracket.  Don't get me wrong, the bill seems like it still helps lower-income people, and the middle-class should still enjoy a 25% discount off of their premiums and effectively off their health expenses (using the HSA), but given that a lot of the population hardly saves anyway, it might not be particularly impactful...however, maybe this will change the way they think about saving and about health expenses and grant incentive to people to make some positive financial changes (yeah, right).

[TheGipper]

The real holy grail is marketplace competition. Allowing purchasing across state lines is key. Nothing drives price down and quality up faster than competition. Ideally, all Americans should have dozens of insurers to choose from, not just a couple. Competition may also help docs. More pressure to cover procedures, labs, imaging, etc.....or lose patients to those who do.

[triad]

TheGipper wrote:

but given that a lot of the population hardly saves anyway, it might not be particularly impactful…however, maybe this will change the way they think about saving and about health expenses and grant incentive to people to make some positive financial changes (yeah, right).

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insurance companies don't want to compete over county lines, what difference would state lines make?

[triad]

TheGipper wrote:

Unlimited allowable HSA contributions for everyone! No income restrictions. No HDHP retirement. Possibly allowed to pass on to heirs. $5000 tax credit to all who contribute! Think about the possibilities here.

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would the HSA eliminate the IRA?

[TheGipper]

Unlimited or very large allowed HSA contributions would certainly turn our savings vehicle rankings on their heads. Could make DB plans, 457b, etc... of little value. Would be interesting to see the calculus of early front loading of HSA vs maxing PSP. The ability to transfer funds from IRA into HSA, in some of the proposals, also is very intriguing.

[Craigy]

Decoupling health insurance from the employer would be an incredible step forward for the free market.

Most people have virtually zero control of what health plan they can choose since it is selected by their employer.  And once they have an employer plan, it's all about how much they can milk from the plan for free with zero concern for cost.

Being able to choose the plan that works for you and having a tax-credit supported health savings account to pay for the rest will create a much more transparent and navigable healthcare marketplace that actually moves and responds to the needs of the consumer patient instead of the bloated needs of the government and health insurance bureaucracy.

Many of the features of this plan are downright utopian for me compared to the terrible, terrible system we have now.  If anything close passes that would be huge.

[Craigy]

I doubt that an HSA could be truly "unlimited," at least not in its current form.  If it became unlimited or of any size similar to a 401k, there would be some loss of the current generous benefits of the HSA, particularly forcing you to realize income at some point or points on unspent money.  Or there would be some drawback whereby your insurance only covers you to the extent you exhaust your HSA funds, etc.

I would love to see some unlimited HSA but I don't believe congress will allow that big a loophole to open.

[Craigy]

TheGipper wrote:

The real holy grail is marketplace competition. Allowing purchasing across state lines is key. Nothing drives price down and quality up faster than competition. Ideally, all Americans should have dozens of insurers to choose from, not just a couple. Competition may also help docs. More pressure to cover procedures, labs, imaging, etc…..or lose patients to those who do.

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Purchases across state lines is one thing.

But the bigger thing IMO will be allowing the market to write the policies that consumers actually want.  Emergency only, catastrophic coverage to full cadillac zero copay plans, and everything in between.  Maternity coverage for women who want it.  Drug plans for people who want it.  The current system that forces men and menopausal women to buy maternity coverage, among other ridiculous things, is completely asinine.

If I could pickup a catastrophic plan for myself that only kicks in after $10,000 or $20,000, that would be fantastic.  If I can get a tax credit for the first $5k and a deduction for the rest of my HSA contributions, after a year or so I'll easily have that money in an HSA to spend.  I'll spend my own money when I need care, go to the doctor I want and buy the drugs that appear cost effective.  And that's what I do anyway since I never come anywhere close to a deductible.

As it stands, our employers spend something like $15,000 year on health insurance for two young, perfectly healthy people who consume no healthcare.  The consumer and his or her doctor know how to spend money in the right place better than any insurance company or government agency.

[TheGipper]

Bingo.

In addition to being able to choose between a dozen insurers, we should all be able to choose anything from a basic, catastrophic only plan to more complete expensive plan. The current ACA forces you to buy the expensive plan, and even worse it manipulates deductibles to be just too HIGH as to disqualify HSAs. Crazy.

I envision a day in which the patient/consumer will "shop" for the best value, because it is coming from their own pocket and HSA, rather than just trying to maximize their employer plan.

The real sticking point is pre-existing conditions. I like Paul's compromise of saying insurance must cover, but you then must maintain continuous coverage. If people can just sign up when they get sick, it really isn't insurance at all, and would bankrupt any system. This is the fatal flaw of the ACA.

[hightower]

I think political talks like this are very important.  Just as long as they stay civil  Hope I don't offend WCI for getting political, but I didn't start the thread

I think the final verdict will come when the price of these new insurance policies come out.  Not only that, but we'll also have to wait and see how many of the 20 million or so people currently covered under the ACA (who didn't have insurance before) remain covered.  I do not trust our current administration at all.  So, my opinions are certainly biased.  The ACA had some major problems, but overall I think it was a step in the right direction.  It needs major reform, yes, but still overall a positive step forward.  So, efforts to repeal it without attempting to fix it first seem ludicrous to me.

As you all have quickly pointed out, legislation such as this would have enormous financial benefits to people like us who are able to save a lot and can easily afford to pay for insurance.  But, we're all "rich" compared to most of the US population.  I'm not an economist and I'm not a health insurance industry expert, so please forgive me if I'm overlooking something here, but how is this bill going to help people with low or average incomes?  I'm talking about a family with 3 or 4 kids who makes barely 50k a year?  They can barely afford to pay their basic bills every month, there's no way they can afford to contribute to an HSA.    There's no tax benefits there for them.  Of course they want their employer sponsored health plan to be free, that's about all they can afford.  The ability to chose a cheaper plan is a benefit?  They're going to have to pick the absolute cheapest plan which will also be the most horrible plan offered.  Then they'll have to pray they never get sick.

Okay, here comes some heavy stuff...

I'm not going to lie, I'm excited for my own bank account.  But, I'm saddened for the patients that I see everyday who I know aren't going to be able to have health insurance unless its basically given to them.  I can't think of a more horrible way for a human being to end their life than to go bankrupt from getting sick or to be unable to even seek help when they're sick because they can't afford it.

I see this as class warfare.  The people who are in power now fundamentally don't believe in a society where the more affluent take care of the poor.  Their mantra is everyone for themselves.  They want to hoard money for themselves and they don't care what happens to the rest of society.  And they get support from the working class by spreading lies and playing on their emotions.  You can nail me to a cross if you want, but I believe health insurance should be provided to all free of charge through taxes.  Just like we're all provided a military to protect us and basic education when we're children, I don't think people should have to spend their lives worried about what they will do when they get sick.  And I think there's plenty of wealth concentrated at the top, so it wouldn't be hard to pay for it.  Can you guys tell I voted for Bernie?  And please don't take my contempt for the current administration as an endorsement of the prior administration.  I had serious issues with them as well.

[Craigy]

TheGipper wrote:

 

The real sticking point is pre-existing conditions. I like Paul’s compromise of saying insurance must cover, but you then must maintain continuous coverage. If people can just sign up when they get sick, it really isn’t insurance at all, and would bankrupt any system. This is the fatal flaw of the ACA.

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Absolutely.  If you can sign up when you get sick, it is no longer insurance.  IMO it hasn't been insurance for a long time now for other reasons but that's another story.

If people were covered before, they should not be denied coverage now.  That is only fair.  If you had insurance for this event, they shouldn't be able to drop you once the insured event occurs.  That makes sense.

Ostensibly/theoretically/presumably/definitely many people with preexisting conditions with no coverage found their way into the system at artificially low rates, but they are going to have to be absorbed by the industry.  That's quintessential "thanks Obama" but both bad and good, putting an enormous burden on the system dramatically tripling and quadrupling costs, but it also got many needy people healthcare.

A very cold-hearted ultra libertarian etc. might suggest we strip everyone of their newfound Obamacare coverage if they bought it with preexisting conditions, but that's just not going to happen.  Ending the taxpayer subsidies for these plans IMO might be acceptable but we can't simply take away what people have been allowed to buy into.

But going forward you simply can't allow people to buy "insurance" only when they have a need.  It makes no sense.  It didn't make sense under Obamacare either, but that's what congress gave us and we have to eat it.  IMO that is good and equitable compromise that works because it is objectively fair.

[hightower]

TheGipper wrote:

Bingo.

In addition to being able to choose between a dozen insurers, we should all be able to choose anything from a basic, catastrophic only plan to more complete expensive plan. The current ACA forces you to buy the expensive plan, and even worse it manipulates deductibles to be just too HIGH as to disqualify HSAs. Crazy.

I envision a day in which the patient/consumer will “shop” for the best value, because it is coming from their own pocket and HSA, rather than just trying to maximize their employer plan.

The real sticking point is pre-existing conditions. I like Paul’s compromise of saying insurance must cover, but you then must maintain continuous coverage. If people can just sign up when they get sick, it really isn’t insurance at all, and would bankrupt any system. This is the fatal flaw of the ACA.

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I think what you're pointing out as a "fatal flaw of the ACA" is that people were given too much time to sign up for coverage without being penalized.  So, effectively it looked like they were waiting to sign up until they were sick, and in fact, some were.  A fix could be to put a more stringent rule in place that would force people to sign up in a timely manner or they would be penalized.  That would force compliance and maintain the continuous coverage that the system needs.  And if you're "caught" without insurance, you should be penalized for that too.  Just like car insurance.  And if you truly can't afford the insurance (with a strict definition in place to help define who can and can not afford insurance), then the government will provide it for you through taxes. That last part is why the current administration wants to get rid of the ACA.  They don't want to pay for poor people to have insurance.

Again this was all the original intent of the ACA, but an example of why it needs to be reformed.  These are easy fixes when smart people come together,  intelligently debate the issues, and cooperate with one another.