Healthcare Reform:Saving For a Rainy Day
Lifetime Health Savings Accounts
A bank account earning interest will contain more money than a bank account earning no interest. How much the interest will be, depends on circumstances, but earning interest beats no-interest every time. In the case under discussion, the account is a Health Savings Account, and the alternatives for spending are healthy alternatives. Because the volume of money passing through the system is estimated to be huge ($325,000 per lifetime), the interest to be earned on 316 million Americans is staggeringly huge. In the following discussion, it is assumed the comparatively easy decision has been made to accept the money, but the highly contentious decision remains: how to spend it. The following choices immediately come to mind:
Pay off the health entitlement debts of the past.The U.S. Treasury reports our foreign debt to be $4.5 trillion, of which one trillion is owed to China, and one trillion to Japan. The Treasury does not issue data any more detailed than the national total, for the interesting stated reason that all Treasury bonds are general obligations. Some of this debt originated as Medicare subsidy, but it is not easy to learn more than that. In addition, it would only seem fair to devote some of a windfall for health to paying off its past obligations. For these two reasons, it would be possible to run an appreciable surplus without seeming to affect current balances.
Universal Entitlement. Obamacare was enacted on the proposition of universal entitlement to health insurance. Implicit in that claim was the idea that many Americans did not have and could not afford health insurance, and that insurance coverage represented some minimum level of healthcare entitlement, even if it had to be subsidized. Persons who did not have health insurance were regarded as jeopardized, even if they were in perfect health, and even if they did not regard health insurance as worth its cost. This uninsured risk within the population was covered by providers absorbing the cost, along with traditional health charities, and other levels of government. Somehow the idea was included that it was superior to have the federal government cover these costs, or perhaps it was superior to cover these costs with a graduated income tax. Although in the early stages there was some talk of reducing healthcare costs by federalizing them, it was eventually acknowledged, extra insurance coverage implied higher costs for everyone, except those who received government subsidies, derived from graduated income taxes, and identified as entitled by government regulation. It is a great curiosity of this campaign that employers were never pointed to as having a burden lifted when the existing system was still described as employer-based. As proposing to devote a huge windfall to the purpose tends to bring out, the cost of healthcare was being shifted from employer tax-deductions to individual taxation of the upper-bracket sort.
After three years of Obamacare, the two clear beneficiaries are health insurance companies and employers who donate the insurance to their employees. It is not clear either of these two groups was particularly suffering, so it is not obvious why a windfall should benefit them.
Originally published: Tuesday, January 27, 2015; most-recently modified: Tuesday, May 21, 2019