August 9, 2018 at 5:00 am ET
Health care spending is out of control. Need proof?
In 1970, Americans spent $74.6 billion, or about 6.9 percent of gross domestic product, on health care. In 2016, it had ballooned to $3.3 trillion, or nearly 18 percent of GDP.
According to a recent analysis, the total cost of health insurance for a typical family of four is averaging a staggering $28,166 a year.
For decades, policymakers in state capitals and in Washington have been trying to bring down costs, to no avail. Part of the problem is most of the “fixes” rely on stale policies that build on a top-down, bureaucratic, one-size-fits-all model. What’s needed is a fresh approach that puts patients in control over their health care choices.
The House of Representatives recently passed legislation that moves us toward this model by increasing access to health saving accounts and expanding their uses.
HSAs have grown in popularity because they are tax-free savings accounts that consumers can use for ordinary health care expenses. Last year, approximately 22 million Americans use HSAs. And in just the past year, HSA accounts have grown by 11 percent.
Unfortunately, rules and regulations prohibit how much consumers can contribute to their HSAs and how they are able to spend their own hard-earned money.
But under the bipartisan legislation passed by the House, consumers would have greater freedom to spend their health care dollars as they choose. For example, the legislation would eliminate a rule that says users must spend the balance on their flexible spending account, a close cousin to HSAs, within a calendar year.
Other reforms would expand how consumers can spend their HSA dollars, including being able to pay for over-the-counter medication, telemedicine (remote diagnosis and treatment using online technology) and diabetic test strips, just to name a few.
Other changes would allow consumers to help pay for gym memberships, exercise classes and other fitness expenses with their HSA accounts or a general tax deduction without an HSA. Most of the time, a tax preference is counterproductive, but in this case, it is helpful because it serves the overarching goal of shifting federal funding on health insurance toward actual health services. It is an important shift that will help transform our system of one dominated by third-party payments to one where consumers and patients are directing decisions.
Another major change allows the use of HSA funding for direct primary care relationships. With DPC memberships, the doctor-patient relationship is strengthened, and providers can focus on patient care rather than looking for ways to maximize billing.
These changes become especially important after this month’s new rule from the administration allowing the purchase of new types of insurance plans with customizable benefit packages. Some patients may choose to bypass the traditional insurance market to seek those more affordable and higher-quality options, and HSAs will make them even more attractive. More choice and competition, free from government restrictions and bottlenecks, will help bring down costs and drive up participation by patients, insurers and providers.
Collectively, these changes mean patients can spend their own money to customize their health care needs.
After years of complaining about rising health care costs, Congress is finally doing something about it. Now the Senate must pick up where the House left off and send a bill to the president’s desk.
The time has come to dramatically rethink the way we deliver health care. Expanding HSAs is a good first step toward empowering Americans to take control over their own care so they can live longer, happier and healthier lives.
David Barnes is policy manager at Americans for Prosperity.
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