A Sign of Hope for Affordable Health Care

From The Daily Signal.com (July 29):

A final rule on health reimbursement arrangements set to take effect in August could expand opportunities for American workers and their families to attain affordable health care, increase access to health care for employees of small businesses, and create new competitive market forces that will increase coverage charges for all.

The rule, which would loosen many of the restrictions that have limited the scope and utility of health reimbursement arrangements, represents a large step in shifting the rigid defined-benefits insurance structure toward a defined-contributions structure that allows patients to direct their health care spending.

“We want more decision-making and power in the hands of the consumer and worker over how to finance their health care,” said Brian Blase of the National Economic Council in summarizing the goal of the rule change.

A health reimbursement arrangement is an employer-based, tax-advantaged account that allows employees to pay for their health care needs using funds deposited by their employer. Employees can then use the funds to pay for health care expenses as agreed upon with the employer in the terms of the arrangement.

Funds deposited by the employer will not be taxed, and funds used by employees will not be taxed as income. Furthermore, funds in the account may roll over year to year depending on the terms set by the employer.

This rule change will create two new health reimbursement arrangements—the individual coverage HRA and the excepted benefits HRA—and allow funds in a health reimbursement arrangement to be applied to purchasing health insurance plans.

Small employers who cannot afford a traditional group plan, or employees dissatisfied with their employer’s group health plan, instead can be offered a health reimbursement arrangement to purchase a plan from the individual market.

Health reimbursement arrangements, which don’t have the administrative expenses of normal health insurance plans, can be much less costly than traditional employer-based group health insurance, an important consideration for small businesses. [read more]

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• Can Socialists Save Us from Surprise Medical Bills?
• Rejecting Democrats' Socialist Healthcare Schemes
• The Healthcare Death Spiral That’s Waiting to Happen
• How America’s Decision on Health Care Will Affect Doctors, Patients, and Taxpayers
• When Government Runs Health Care