Trump Just Revolutionized Health Care — And Nobody Noticed – Issues & Insights

Trump Just Revolutionized Health Care — And Nobody Noticed – Issues & Insights
"Few have ever heard of “Health Reimbursement Accounts,” but they could fundamentally change the nation’s health care system — for the better — and destroy the Democrats’ case for socialized health care.
Late last week, the Trump administration finalized rules that will let companies put money into tax-exempt HRAs that their employees could then used to buy an individual insurance plan on their own.
Seems like no big deal, right?
Except it will start to unravel a 77-year-old policy mistake that is largely responsible for many of the problems the health care system suffers today.
Back in 1942, the Roosevelt administration imposed wage and price controls on the economy.
But it exempted employer-provided benefits like health insurance, and the IRS later decreed that these benefits wouldn’t be taxed as income.
...not only did this Roosevelt-era mistake create an employer-dominated health insurance market, it made consumers largely indifferent to the cost of care, since the vast bulk of it was picked up by a third party.
...Even with all the restrictions Congress put on HSAs, the market for high-deductible HSA plans exploded — climbing from nothing in 2005 to nearly 30% of the employer market today. 
By the end of last years, consumers had saved up $10 billion in these accounts.
The rise in these “consumer directed” plans was at least partially responsible for the slow-down in health spending in recent years, according to official government reports, as consumers increasingly started shopping around.
Trump’s HRA rules will have a far more profound impact.
Under the plan, employers will be able to fund tax-free Health Reimbursement Accounts for their workers, who can then use the money to buy an individual insurance plan — thereby taking another step toward fixing the 77-year-old tax distortion. 
The rule also lets employers fund a different account to buy cheaper “short-term” plans.
“This subtle, technical tweak has the potential to revolutionize the private health insurance market,” wrote Avik Roy, one of the smartest health care experts around, in the Washington Post.
The administration figures that 800,000 employers will eventually move to HRA plans, and 11 million workers will get their benefits this way.
At the same time, Trump also loosened the federal rules that had needlessly impeded “association health plans.”..."
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