AHCA, HSA and incoherent policymaking

I am not a fan of HSA’s.  They are a good tax shelter to healthy people with high incomes.  They can be used to cushion a one-off shock of catastrophic medical events but they are useless in reducing the cost burden of either repeated catastrophic events or chronic conditions.  At best, in those cases, it is a back door subsidy through the tax code to slightly reduce out of pocket costs where the people who get the most help need it the least.

But there is a coherent theory of change with the use of HSA in both a single year and over a lifetime.  The single year theory of change is that high first dollar expenses will lead to lower utilization with minimal real health consequences.  The lifetime theory of change is that an HSA can be built up while an individual is young and healthy and spent when an individual is old and sick.  It prefunds some of the expected health cost obligations on an individual level.

In the original version of the AHCA, the subsidies were set up so that they could be split.  If a person found a policy that cost less than the subsidy, the remaining portion of the subsidy would be deposited into an HSA.  This makes a decent amount of mechanical sense.  The young and healthy people would buy dirt cheap policies and deposit a significant amount of the subsidy into an HSA.  Over time, the HSA would grow until the cohort of people who were once young, healthy and cheap to cover are no longer young, no longer healthy and no longer cheap to cover.  At that point, the savings they had accumulated in their HSA would be available to pay for either care or premiums.

There is a major issue of founder’s debt in this scheme but if we handwave away the problem that killed Social Security privatization in 2005,it is mechanically coherent.

The Monday Manager’s amendment took away the ability of a subsidy to be split between a premium and the HSA.  This was done to get more anti-abortion votes on board.  It will have two effects.  It will limit choice as insurers have no reason to price their products underneath the subsidy point. The second is that it completely destroys the mechanical theory of change for an HSA system.  People can’t use tax advantaged dollars to pay part of their first dollar expenses in the current year.  And more importantly, the young can not partially prefund their health care expenses when they become old as they can’t rollover a partial subsidy into their HSA.

There is no coherent policy thought here.  It is an absurdity

 






19 replies
  1. 1
    NobodySpecial says:

    There is no coherent policy thought here. It is an absurdity It is GOP governance distilled

    Fixed that for you.

  2. 2

    The details are incoherent, as you’ve demonstrated, and the overall strategy makes no sense at all either, except as an expression of spite. I guess that’s enough these days.

  3. 3
    BlueDWarrior says:

    @Betty Cracker: As we’ve said or intoned before, the goal is simply to erase everything that happened before the Great Depression, and pretend that it’s September 1929 again, and all that entails.

  4. 4
    rikyrah says:

    Thanks for the truth, Mayhew.
    Knew that this was a scam😕😕😕

  5. 5
    ArchTeryx says:

    And the insanity train keeps right on rolling down the track. The doomsaying this morning has been something else. Me? I don’t know what to believe any more, but I’m not putting my disaster plan into effect until this monstrosity is signed by pResident Trump – and not shelving it until it is declared dead, dead, dead.

  6. 6
    Sherparick says:

    @BlueDWarrior: No, I think the goal is 1859, and all that entails.

  7. 7
    Kay says:

    I went to a 5 county Democratic dinner last night. Good turnout. Steve Dettelbach, the former (Obama) U.S. attorney for the Northern District of Ohio, is the D candidate for AG and he was there.

    In really unusual news, we have a contested primary (!) for the state senate seat. Two young ‘uns. The woman in the race was a Clinton organizer. She’s only 21. The man is local from my area (he’s 25) so we’re backing him. I asked them why one of them doesn’t just run for the lower chamber seat in their respective districts since those are often uncontested here rather than a contested primary for the state senate seat but they seemed a little insulted by this suggestion.

  8. 8
    WereBear says:

    I always thought health savings accounts were an insult. We are just too stupid and childish to forgo that ice cream cone or peppermint latte and save up for our spine stabilization surgery instead.

    Classic thinking from people who have so much money that sheltering it from taxation is their only consideration.

  9. 9
    Kay says:

    I think we’ll see a lot of former Obama people running for office, which I had forgotten about, that there are a lot of them.

  10. 10
    PaulW says:

    @Betty Cracker:

    The details are incoherent, as you’ve demonstrated, and the overall strategy makes no sense at all either, except as an expression of spite

    The Republicans are not about policy, unless it involves granting tax cuts to the rich and deregulating government into non-existence.

    Betty is right. The entire healthcare debacle is over the fact that the Republicans campaigned for seven years against an Obama-backed healthcare reform package, and never really meant to replace it because that went against their anti-government beliefs. The GOP ran on pure spite and absolute fear, and now that they’ve “won” they can’t do that anymore.

    They used to organize around the “threat” of Obama but with him gone their factions are unraveling, and the saner ones are realizing that they actually have to govern now. But they’re tied to the hip with factions that DON’T want to govern, they just want to destroy and preen about it to their base. And past their agenda of tax cuts tax cuts and tax cuts ONLY for the rich, they’re empty shells fighting for lobbyist gigs in the near future.

  11. 11
    rikyrah says:

    @Kay:
    Glad to hear that you have people running, Kay. Nothing worse than uncontested seats.

  12. 12
    MomSense says:

    Ok juicers you know what to do. Call. Fax. Storm the barricades. Release the vitriolic jackal!

    ETA Also too be super polite.

  13. 13
    pseudonymous in nc says:

    The more horse-trading happens, the clearer the GOP’s attitude towards actual healthcare becomes. It’s like a boat where instead of throwing out things to keep it afloat, they’re making more holes so it sinks faster.

    EHBs tossed down to the states. HSAs jiggered around because people might spend their own damn money on abortions without it being taxed as well, given that it’s one of the few procedures that isn’t priced in the five-figure amount. The obvious incentive for junk insurers to create junk plans that match the tax credit, so that there’s a direct transfer from the federal government to private corporations in exchange for fuck-all. It’s breathtaking in its badness.

  14. 14
    From Both Sides of the Pond says:

    The idea that the young won’t have major expected medical bills is also ludicrous. I had a post a few years ago that had an HSA as part of the medical cover – they paid into it, so it wasn’t a hardship. Where did that HSA go? The maternity care for my wife for two kids. No more HSA.

  15. 15
    Percysowner says:

    Honestly, I’m starting to think that if the Republicans absolutely HAD to make a choice between lowering taxes and banning abortion (and female controlled contraception) we’d have higher taxes, because the ONLY thing they seem to swear allegiance to is keeping the uppity (women, non-Christian and POC’s) from having any rights whatsoever.

  16. 16
    PST says:

    It has been hard work to fine tune the AHCA to be worse than a simple, bare repeal of the ACA would be, but I think the republicans may now have succeeded. When you take into consideration the potential for a massive, useless transfer to insurers, today’s bill is worse than nothing.

  17. 17
    D58826 says:

    The lifetime theory of change is that an HSA can be built up while an individual is young and healthy and spent when an individual is old and sick. It prefunds some of the expected health cost obligations on an individual level.

    This may be an oversimplification but isn’t the idea of young and healthy paying more into the Obamacare risk pool to either pre-fund their own old age or pay for the current old/sick and then 30 years on the youngins will do the same for them. It just seems like a the Obamacare risk pools are a simple more straight forward way to go.

    IN a different context we already do this. I have been paying property tax for years to educate other people’s children. Just like the adults of my young days paid for mine. What I get back is an educated work force with good paying jobs to pay my Soc. Sec./medicare. Just like I paid for my parents generation soc.sec/medicare.

    The GOOPers have convinced the public at large that unless each individual gets more back than they put in each year then it’s a rip off.

  18. 18
    Ruckus says:

    @MomSense:

    Also too be super polite.

    That. That right there. That’s why I have a hard time calling. I had a job for 11 yrs that mostly could be boiled down to saying NO, but in a polite way, such that people who wanted something they knew they couldn’t have but still wanted really badly were supposed to walk away satisfied. 11 yrs of being polite to people who earned the privilege to be treated like asses, has taken it’s toll.
    I have a very difficult time being minimally polite, I don’t even know where to look for super polite.

  19. 19
    Ruckus says:

    @D58826:

    The GOOPers have convinced the public at large that unless each individual gets more back than they put in each year then it’s a rip off.

    Republicans really aren’t good at this math thing are they?

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