After a week of peculiarly warm temperatures for February, I’m watching the snow fall again today. It’s been a relaxing weekend as I head into a week-long break from teaching. I still have lots of reading and grading to do, but the campus will be quiet with all the students gone. It will also be a week to schedule some appointments that are hard to fit into my regular routine. I’m taking my younger son to a pediatric dentist tomorrow afternoon to get some cavities filled and I finally have time to schedule a haircut.
This talk of appointments gets me to the subject of my letter to you this week. Ever since I attended your Town Hall meeting and heard you talk about your ideas for health care reform, I’ve been planning to tell you about my experience.
At the meeting, you said you want to replace the Affordable Care Act (ACA) with a plan under which people would have Health Savings Accounts (HSAs) and contribute to them with money they get through a tax credit. I have an HSA, so I’d like to tell you about how that’s worked (for good and for ill) from my perspective.
Through my employer, I am enrolled in a high-deductible insurance plan. My husband has the same employer so we have the simplicity of being on the same plan. The deductible for our family is $5200 per year.
That means that whenever we go to the doctor for anything beyond really basic preventative health care (vaccinations for our kids, yearly physicals), we pay whatever price our doctors have negotiated with the insurance company. So last summer when my daughter had a sore wrist and my son had a weird rash and I took them to see a doctor, we had to pay the full (negotiated) price for those visits. I had a torn meniscus in my knee this fall and needed surgery, and that also cost the full (negotiated) price for the surgeon, the anesthesiologist, etc. The MRI to diagnose the torn meniscus, the visits to the orthopedist, and the physical therapy afterwards were all our responsibility.
This is where our health savings plan comes in. My employer contributes $2600 per year to our HSA. We use that $2600 to pay for our doctor’s visits. This should sound pretty good to you. I think you’re intending that families get at least that much as a tax credit. They could use that money for those kinds of bills.
There are, however, a couple of things about this that are not ideal—at least for people with a lower income than my family. First, you will note that $2600 from my employer is only half of our deductible. So if my family of five has medical expenses beyond $2600 but less than the deductible then we must pay for those ourselves. Will you be able to provide a large enough tax credit to get people without a lot of extra cash in the bank closer to their deductibles?
But the $2600 that I get is a lot of money, right? That should be plenty except in a year when there is a major health crisis (or a minor but expensive one like my knee surgery). In which case, our family would hit its deductible and be grateful that we only had to pay $2600 out of pocket. And if we used funds that we had deposited in our HSA, they would be tax-free to boot.
$2600 would be an adequate amount of money for a relatively healthy family of five if we only had to use it to cover qualified medical expenses. But our insurance doesn’t cover dental or vision. So every year we burn through much of our HSA fund on dental exams, orthodontist’s visits, and eye care. Four-fifths of us wear corrective lenses (so far). So the $2600 disappears pretty quickly. And we’re on our own for the next $2600. We typically spend several thousand dollars more than our employer contributes. And because a lot of this goes toward dental and vision, it doesn’t count toward our deductible.
This isn’t dreadful for us. We make decent professional salaries and paying several thousands of dollars per year in health-care costs is not a crisis. I am not really asking you to fix health care for people like me (middle-class professionals with a stable source of employment).
I will point out, however, that we are not so well off that we can do anything we like with our budget regardless of how much we spend on health care. We are gradually fixing up our older home—increasing its value and the property values of homes on our street by making it a more beautiful and pleasing place to live. Every summer, when we can afford it, we like to do some kind of improvement project. This coming summer we were planning on expanding a side porch, creating a new entrance, and transforming our laundry room/pantry in to an entry/mudroom. We hire local contractors to do these renovations and try to buy most of our supplies from a locally-owned lumberyard (a shout-out here to the wonderful folks at Nunda Lumber).
This year, partly because of my knee surgery and those cavities that my son is getting filled, I’m not sure whether we’ll have enough left over in savings to take on this project. Instead of our money going into the kinds of things that would help our local economy, it has gone to health-insurance companies that exist somewhere out in the netherworld of corporate finance. It’s hard to see how the money we put into health care benefits our community.
And I am considerably better-off than many people in our district. Families with lower incomes than mine would have to cut back on more essential things than home improvement to meet those high deductibles.
So HSAs, in my experience, are not a bad thing. But they also don’t feel like a solution.
The other thing about your plan that worries me is the elimination of the individual mandate that requires people to carry health insurance. Without it, a lot of relatively healthy people will go without insurance. Why get insurance and then still have to pay out of pocket until you reach a high deductible? If you were in their shoes, mightn’t you be tempted to forego insurance altogether? And without everyone signing up for health care, insurance companies would lose profits. Then they’d have to raise their premiums and deductibles.
Despite how easy your press releases make this sound, I don’t think there are any “common-sense solutions” that everyone can agree on. This is going to be hard.
HSAs are one tool that might be part of a responsible health-care plan. The individual mandate is another tool that I think you may find indispensable.
I suspect that, as a conservative, you don’t like the language of “mandates”—it sounds like government overreach. Here’s where you can be creative, though, Tom. I’ve noticed that some of your colleagues are starting to use the language of “repair” instead of “repeal” for the ACA. That was a clever way to shift positions while sort-of-sounding like they’re talking about the same thing. Perhaps you could do the same thing with the individual mandate. Could you find a synonym for “mandate” that sounds more pleasant to conservative ears? What about “individual requisite”? That sounds vague and bureaucratic enough for government work. “Individual obligation” might have nice moral overtones. You have bright people on your staff and in your caucus. I bet they could come up with something.
Although you did send me those three form emails, I’d still love to get a personal note from someone in your office acknowledging these letters and my blog. I’m very curious what you think of them if you ever have time to read them.