COVID-19 has devastated the U.S. economy and 36 million Americans have filed for unemployment since the pandemic began. To prevent permanent economic damage, the country must devise a plan to jump-start the economy that doesn’t mortgage the future to pay for the present.
Democratic politicians, however, pretend that debt doesn’t matter. They have proposed throwing trillions of dollars at the problem in a Keynesian-style economic stimulus. Instead of robbing future generations to waste more money in an inefficient system, there is a better approach: fixing health care, the largest segment of the economy, by empowering patients, unleashing health savings account (HSAs), and ending surprise billing.
Health care makes up almost 20 percent of U.S. Gross Domestic Product (GDP). That means nearly 1 in 5 dollars earned or spent in America are earned or spent in health care. This percentage is far too high; despite decades of legislative and other “top-down” approaches to correct health care’s heavy and inefficient costs, it consumes a larger and larger portion of the economy. This life-giving industry has too much economic deadweight, slowing growth when we need it the most.
Instead of failed top-down approaches, the best solution is found closer to the problem. Since the problem of high prices is experienced at the patient level, empowering patients to spend their money more efficiently is a win for both them and the economy.
Businesses suffer from health care’s high costs and inefficiencies, as many companies provide employee health insurance. That is because a little-known law passed during World War II incentivized the purchase of pre-tax insurance through an employer instead of after taxes with your own dollars.
Thus, any additional COVID-19 relief legislation should include language that decouples insurance from employment. This small change would create tax parity between employer-based and privately purchased coverage, encouraging the use of HSAs—unshackling American enterprise and providing people with more control over their health care decisions. Health Savings Accounts allow patients to save and use money, tax-free, for medical expenses.
However, these wonderful savings tools are currently burdened with needless restrictions that inhibit their ultimate, transformative potential. Part of this potential could be realized if HSAs were allowed to pay for insurance, health sharing, or other coverage options. Then, patients would enjoy the freedom of purchasing the pre-tax, private insurance of their choosing instead of being forced to buy a pre-tax insurance plan that their employer offers.
These employers would also benefit. Liberated from having to purchase insurance, companies could invest this capital back into their primary businesses.
To further take advantage of health savings accounts’ potential, any COVID-19 legislation should clarify that HSAs can be used to pay for the affordable membership model medical clinics known as Direct Primary Care (DPC). These clinics contract directly with patients, providing primary medical care for a much more affordable price — and without co-pays. DPC does this by cutting out the expansive and costly network of middlemen, administrators, and insurers that have injected themselves into the doctor-patient relationship. DPC doctors also frequently contract with labs and pharmaceutical distributors to obtain tests and generic medications that save patients 90 to 95 percent. Enabling HSAs to purchase Direct Primary Care services would expand the availability of these innovative practices and save patients money, allowing them to spend it elsewhere and catalyze the economy.
Surprise billing is another issue that COVID-19 legislation could address. How? By prohibiting Health Maintenance Organizations (HMOs) from excluding referrals made by “out-of-network” physicians based solely on the fact that the referring doctor is not paid for, or influenced by, the insurer. A referral is either medically valid or it is not; it has nothing to do with how the referring physician is paid. HMOs’ sneaky exclusion protects the insurers’ confiscatory, middlemen status—obstructing access to higher quality and less expensive DPC care. This anticompetitive practice hits patients with unnecessarily high medical bills and helps insurance companies and their cronies. Fortunately, legislative language that could end this form of surprise billing already exists.
By empowering patients, realizing the potential of HSAs, and eliminating surprise billing, Congress could free up massive amounts of capital currently squandered on an ineffectual medical bureaucracy. This capital could function as a substantial stimulus—spurring dramatic and much-needed economic growth. Unlike government stimulus checks, though, this “efficiency stimulus” wouldn’t add a dime to our national debt and would supercharge the financial recovery from COVID-19. It’s time for Congress to offer this prescription for our economy, a prescription that provides immediate relief without punishing Americans with long-term financial side effects.
Chad Savage, M.D. (info@d4pcfoundation.org)