Washington Wednesday: Expanding healthcare choice

MARY REICHARD, HOST: It’s Wednesday the 10th of July, 2019. Glad to have you along for today’s edition of The World and Everything in It. Good morning, I’m Mary Reichard.

MEGAN BASHAM, HOST: And I’m Megan Basham.  Up next, Washington Wednesday. Last month the Trump administration finalized regulations that could have big implications for consumers. 

HRAs, Healthcare Reimbursement Arrangements. are employer-sponsored accounts that give employees the chance to buy healthcare plans on the individual market. And the funds in these accounts are tax-free. 

The George W. Bush administration created HRAs in 2002 to give Americans more healthcare choice. The Obama administration restricted them as part of its Obamacare vision.

REICHARD: But now HRAs are coming back, possibly affecting more than 10 million Americans, starting January 1st of next year.

Here to talk about it is David Balat. He’s a former healthcare executive. Now he leads the health policy team at the Texas Public Policy Foundation.

REICHARD: David, good morning! 

DAVID BALAT, GUEST: Good morning to you.

REICHARD: This rule is aimed at giving more coverage options to businesses, but I’d like to start with what this means for consumers. How does this help them? 

BALAT: Well, It’ll make these types of, uh, savings plans tax exempt for both the employer and the employee. And what it does is it allows them to choose from options outside of their employer’s, uh, coverage that they may have, uh, for their employees. What it stands to do is to really expand and grow the individual market that essentially went away when the ACA or Obamacare, as many people like to call it, uh, came into being.

REICHARD: OK, and what about their employers? How will it help small businesses lower healthcare costs?

BALAT: Well, you know, employers are not in the business of providing benefits. That’s not what they got into business to do. They got into business to do what it is that they’re very good at. Uh, in order to attract and retain employees, they offer benefits. And it sometimes becomes such a strain that they have to make a decision as to whether to carry it at all. And so what this will do is it’ll allow employers to say, you know what, I’m going to dedicate a certain amount of money to go into this HRA plan. Instead of going out and getting my own insurance, I’m gonna just allocate some money for you so that you can be a shopper and you can be a consumer and you can go get the choice that best suits you and your family.

REICHARD: Once this takes effect, do you think we’ll see some ripple effects in other areas of healthcare policy? 

BALAT: Oh, absolutely. What this is gonna do as far as the ripple is that you’re seeing more and more people see this landscape and, and seeing this environment of option and they’re creating products that, uh, don’t have exclusions for preexisting conditions. They’re looking at being very innovative in addressing the high costs of healthcare. These are things that are important to the American people. So, our market-based economy is, is starting to respond now that they feel that they have a foothold to, to get to the next level.

REICHARD: As we’ve already noted, this is the third of a trio of policy changes the Trump administration has adopted. Are there other policy changes that you would like to see happen?

BALAT: Uh, yes. Significant ones. Yes. I, I’d love to see more options for patients to have control of their own money. We’re trying to expand the health savings accounts and being able to use them for direct primary care memberships and for prescription medication. It’s your account. It’s your money. It’s tax advantaged. It’s pre-tax, and you get to use it for anything health related without the restrictions that we have today. 

REICHARD: Well as we all know getting legislation through in our divided government is tough. Do you see any movement at all in Congress to either make changes to the Affordable Care Act or adopt something entirely new?

BALAT: Well, just as you said in a divided Congress, we don’t expect a lot of movement. Um, for the next, the next year, 18 months, uh, but we do, we do expect, uh, a lot of other good things to occur. But as it relates to the ACA, no, there’s just not going to be anything that’s done. Uh, and that may or may not be a bad thing. From my perspective, Mary, uh, the ACA, our current system, even prior to the ACA, it’s irreparable. It’s, it’s, it’s just a very bad system. And what we need to do is we need to foster and encourage another system that alongside of it that is, um, more compassionate, more caring, and less expensive.

REICHARD: You’re saying the system is bad. It’s very expensive, families can go bankrupt if they have a very expensive event,  a car crash or cancer or something like that. I mean, how do you balance trying to fix a system when we just are faced with the reality that life is relentless and hard?

BALAT: We know that we live in a fallen world. That’s our baseline. Uh, and, and things do happen. … Insurance is not a bad thing. We just use it wrong. We use insurance to cover doctor visits. We use insurance to cover lab tests. And because we use insurance incorrectly, it has driven up the cost of healthcare overall. If we were to use insurance as it was intended, for when those bad things do occur, when we have chronic illnesses, the rest of of medicine would fall in place or the rest of healthcare, rather, would fall in place and the prices would not be as stratospheric as they are. … We’re told that the solutions are binary. Either the government comes in and, and provides a one size fits all answer or people go bankrupt and we die. Well, those aren’t our only two options. We have the option of developing relationships with doctors, getting types of coverage that are best suited for our family, which there are a number of them. And I mentioned a few being the association health plans, which have demonstrated a great deal of success in bringing down the cost of, of premiums and offering good coverage with good access and for those with preexisting conditions. So I categorically deny that the government is the only salvation for healthcare today.

REICHARD: David Balat works on healthcare policy for the Texas Public Policy Foundation. David, thank you for your insights today.

BALAT: Thank you.

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