Health Saving Accounts: An Idea Too Soon Forgotten

Elections come and go. And as those cycles occur, various big ideas also have a tendency to move from their fifteen minutes of fame into the dust bin of old ideas, left there to rot without ever delivering their promised benefits. Health Savings Accounts is one such idea that, unfortunately, has mostly been relegated to that political purgatory.

This idea was brought to the fore by George W. Bush, although it did not originate with him. In the 1980s, the idea of the IRA changed the way everyone thought about retirement – at least how to fund it. Now nearly everyone, from corporate bigwigs to latte-drinking, NPR-loving liberals, either has one or is contemplating having one.

The IRA is a simple concept, really: a tax-deferred or tax-free account that “incentivizes” (a fancy word for “rewards”) prudence in the form of saving. Of course, I do not need to be an economist or math teacher to know that a lack of savings is a huge problem in our country. In fact, the fundamental problem, from the least to the greatest, is that we are living on credit that does not reflect our true wealth or our true immediate prospects for acquiring it.

In my last piece on health care, I let David Goldhill tell us all the reasons why the new legislation in this area will fail, because it does not address the system’s lack of responsiveness to the market for health services. Christine O’Donnell, in a seemingly rare moment of lucidity, said it best in her debate with Chris Coons: the new law “confuses coverage with care.”

This ignoring of the differences between covering people and caring for them was Goldhill’s whole point. To borrow a word and give it a euphemistic spin, the incentives are perversely misaligned.

The cold reality is that the new Congress – even should there be a Republican majority in both houses – will not repeal the health care reform law, no matter what they say. If the two parties can throw brickbats at each other and win elections without fundamentally altering anything, that is what they will do.

But between throws, the least they could do is give the people a way to help themselves. If they did not just ruin the market for health insurance entirely, we know for sure that it will at least cost more.

Rising prices make the need for incentivizing – there is that word again – health-related savings all the more important. Health savings accounts (HSAs) are just a good idea at a time when our government is less able to help us, even if it were so inclined, than ever before.

I know the Democrats cannot give an actual tax break without their eyes bleeding, but we need one here to get us started. And, no, a tax credit will not do as a substitute. (Note: A tax credit is nothing more than a device to give someone’s tax money to another person who paid none at all.)

HSAs relate to a fundamental matter of individual liberty: helping people save their own money to buy their own coverage so that they can receive medical care when they need it most.

As Congress debates whether to help citizens acquire this coverage, let me ask each member a simple question: whose side are you on?

Jason Kettinger is a contributing editor and senior political analyst to Open for Business.