Three Letters that Make a Difference: HSA

Barack Obama and the leftists in the Democratic party are in a desperate struggle to ram their massive increase in government control over health care down through Congress. Never mind the staggering election defeats the Democrats have suffered related to the issue, never mind the plans deep unpopularity - Obama and the left are so anxious to force their radical expansion of government into health care that they are trying again.

They very well may succeed by bribing enough scared Democratic Congressmen with jobs and/or pork spending.

Meanwhile, Mitch Daniels, the Republican governor of Indiana, writes about his state's success with Health Savings Accounts (HSAs). HSAs help eliminate the distortions that government tax policy have long created in health care: by subsidizing employer-provided health insurance, the tax code has created health insurance policies that shield consumers from the real cost of healthcare. And in the process, driving up the demand for healthcare.

HSAs entail an employer depositing a certain amount of money in a tax-free account (the State of Indiana deposits $2,750). Employees use this $2,750 to pay for health care expenses. Amounts above that are covered by insurance with co-pays and out-of-pocket maximums. The employee keeps any portion of the $2,750 not spent on health care.

Under this system, employees have an incentive to be thoughtful in making health care decisions, since they bear the cost from more health care spending and reaps the benefit of spending less.

The result has been much lower health care spending, the accumulation of wealth by employees from unspent balances, without adverse health effects.

Sounds like a great outcome. And it is.

But the Democrats have been fighting a battle against HSAs for years precisely because they were and are afraid they will work - because HSAs help provide a market-oriented solution to the healthcare problem without further government control of health care. Instead, the Democrats have been positioning for years for the opportunity to expand government control of health care and have opposed ideas that would improve healthcare based on less government control.

The Indiana success story with genuine healthcare reform shows we have not really pursued policies to improve healthcare in America where freedom and the market are central to the solution. Let's use our founding principles on individual freedom, as reflected in the Declaration of Independence, be the source for solutions to our problems - and not the ideas imported from European-style collectivism.