If Republicans know what they're doing, healthcare reform is easy

By | November 29, 2018

People are angry about the high cost of healthcare and health insurance.

Many voters told pollsters healthcare was the top of their concerns when they voted in November’s congressional elections.

Voters worried about cost, availability, and access to healthcare for themselves and their families.

People are understandably upset. Barack Obama promised in 2008 to pass legislation that would reduce the cost of a family’s health insurance by $ 2,500 a year. Instead Obamacare, or the Affordable Care Act, reduced the options families have, took away the ability to keep your doctor, and increased the cost of health insurance by $ 2,500.

In the next month, Republicans have an opportunity to reduce some of the damage done by Obamacare. After the Democrats take control of the House, that opportunity disappears for two years.

Congressional Republicans can draw a sharp contrast with this top-down, command and control model of healthcare by using the lame-duck session to pass free-market reforms that lower the cost of healthcare for families, increase consumer choice and access, and get the federal government out of the healthcare business.

They can do this by passing legislation that repeals or delays Obamacare’s health insurance and medical device taxes and expands Health Savings Accounts.

In the past few months, healthcare premiums have begun to stabilize due in in part to the policies of the Trump administration that have returned some powers to the states and empowered patient-centered healthcare.

However, if lawmakers fail to act soon, Obamacare’s $ 16 billion a year tax on health insurance premiums (cleverly delayed until Obama left office) will soon take effect.

More than 141 million consumers will be damaged by this new tax: consumers in the individual market, large and small group plans, Medicare Advantage, and Medicare Part D plans. Furthermore, 1.7 million small businesses would be harmed.

Premiums could increase by as much as 2.2 percent per year, equating to almost $ 6,000 over the next decade for a typical family of four with small or large group insurance. This tax is also highly regressive. Those earning less than $ 50,000 a year pay about half of the tax.

Although the tax does not take effect until 2020, insurers plan their prices months in advance, so Congress must act soon. Congressional action is also overwhelmingly popular: 77 percent of registered voters support delay or full repeal of Obamacare’s health insurance tax.

Ideally, this tax should be outright repealed to spare taxpayers from an onslaught of higher premiums and financial hardship. However, if Congress can’t repeal this harmful tax in full, it is imperative that the health insurance tax is delayed so that families and small businesses are protected from tax increases.

The health insurance tax is not the only looming tax hike. The Obamacare medical device tax is also set to go into effect in 2020. This 2.3 percent excise tax is imposed directly on manufacturers and thousands of small businesses.

Ultimately, this tax suppresses investment and costs jobs. When it was last in effect, medical device investment dropped by $ 34 billion in 2013 and almost 22,000 jobs were lost between 2013 and 2015.

While all Obamacare taxes should be repealed over the long term, it is crucial that Congress uses this opportunity to ensure that the health insurance tax and medical device tax do not go into effect.

In addition to preventing tax increases on the healthcare system, lawmakers should also proactively implement new reforms for families.

Today, 25 million families and individuals (and counting) utilize tax-advantaged Health Savings Accounts to save and spend their own money tax-free on a variety of healthcare expenses.

The House passed legislation earlier this year expanding these accounts centered around nearly doubling the contribution limit from $ 3,450 to $ 6,650 for an individual and $ 6,900 to $ 13,300 for a family. This reform will expand the viability of HSAs for millions of families.

The reforms will also increase the utility of HSAs by expanding eligibility to individuals with a bronze or catastrophic health plan, allow working seniors enrolled in Medicare Part A to contribute to an HSA, and allowing HSAs to be used to purchase over-the-counter medications and fitness expenses.

HSAs have a proven record in promoting consumer driven healthcare that lowers healthcare costs, increases savings, and strengthens retirement security. These simple reforms will update HSAs for the benefit of millions of families.

While there are only a handful of weeks left in the legislative calendar, the GOP can use this time to pass legislation that offers real healthcare relief to families and businesses and draws a sharp contrast with the one-size-fits all policies of the Left.

Preventing the health insurance tax and medical device tax from going into effect and expanding HSAs will strengthen access to care, lower costs, and restrain the federal government.

Grover Norquist (@GroverNorquist) is president of Americans for Tax Reform. Alex Hendrie is the organization’s Director of Tax Policy.