ObamaCare repeal forces Congress to choose between cost saver or opposing abortion
© Getty Images

Collapse of the ObamaCare replacement backed by House Republican leadership, the American Health Care Act (AHCA), seems likelier by the hour, and no provision illustrates conservatives’ ambivalence toward the bill like a new amendment blocking patients from depositing in health savings accounts (HSAs) tax-credit funds left over after buying health insurance.

A recent change to the bill completely undercuts the AHCA’s (until recently) chief mechanism for potentially revolutionizing the health care and health insurance industries. A “manager’s amendment”—used for making multiple changes to a bill—unveiled on March 20 would remove the option for individuals getting a health insurance tax credit to bank the difference saved by making smart purchases. Patients would no longer have an incentive to shop for inexpensive insurance.

ADVERTISEMENT

Republicans across the ideological spectrum favor expanding the use of HSAs, which let people use pre-tax dollars on health care expenses. The HSA tax break is an incentive for people to deposit more money in HSAs. Every dollar banked in an HSA is an opportunity for patient choice to spur competition and innovation in health care and insurance. Conservatives love HSAs.

 

Unfortunately, even among conservatives, a vote to expand HSA use does not occur in a vacuum, but amid a typhoon of central planning of health insurance reform by federal government regulators. Expanding HSA use is politically easy by itself. Helping fund HSAs with tax dollars is not quite as easy, but it’s still politically achievable, considering the Affordable Care Act (ACA) conditioned Americans to feel entitled to health care subsidies.

Replacing ACA, however, is a migraine. It obscures the path forward even for an obviously patient-choice-centered reform such as depositing leftover health insurance tax-credit funds in an HSA. Why? Because of an even hairier government boondoggle: abortion.

Health care policy analyst Chris Jacobs wrote at The Federalist on March 21, “[Republican Study Committee] Chairman Mark Walker (R-N.C.) and other pro-life members asked for further restrictions on abortion funding. As a result, the agreement eliminates language allowing unspent tax credit dollars to get transferred into health savings accounts, for fear those taxpayer dollars moved into HSAs could be used to cover abortions.” 

Walker’s point is valid. Is the eve of a vote on the Republican replacement plan for ObamaCare a legitimate time and place for it? Yes, actually—and unfortunately, for free-market health care reformers (including the authors). Good luck persuading any God-fearing pro-lifer (including the authors) not to dig in their heels against what faith, reason, and science conclude is a form of infanticide.

At the same time, eliminating patients’ option to put leftover health insurance tax-credit funds in an HSA drains AHCA of its chief tool to make health insurers compete with each other and with innovative direct-pay models. Scrapping the HSA deposit removes the only incentive patients would have not to try to use the entire subsidy (tax credit). In other words, with no incentive to spend the tax credit wisely, patients will naturally buy the most expensive insurance product possible with federal taxpayer money.

With the “threat” of patient choice neutralized, insurance companies will soon offer age-specific $2,000, $3,000, and $4,000 policies matching AHCA’s age brackets, to squeeze every last cent from those credits. These credit amounts will become the price floor. Patients won’t be inclined to push for anything less, as they would derive no benefit from doing so. Instead, patients would be incentivized to squeeze every last cent out, too.

How is it possible such unapologetically conservative ideas—expanding HSA use and preventing taxpayer funding of abortions—arrive at cross-purposes? As with most health care policy problems confronting the nation today, the blame legitimately belongs to ObamaCare.

AHCA is not just a Republican health care bill. It is a response to seven years of unprecedented meddling in patient-doctor, insured-insurer, employee-employer, and citizen-state relationships by ObamaCare. AHCA may prove a disaster, but it takes one to know one.

Michael T. Hamilton (@MikeFreeMarket) is a Heartland Institute research fellow and managing editor of Health Care News. Chad Savage is the founder of YourChoice Direct Care in Brighton, Michigan and a Heartland policy advisor.


The views expressed by contributors are their own and are not the views of The Hill.