“I think the impressionable libertarian kids are going to save our nation.” — Igor Birman
Late last year, I ran across video of Igor Birman, who immigrated to the United States with his family as the Soviet Union was collapsing, warning against a more centralized government healthcare system. Birman, who now serves as Chief of Staff to Rep. Tom McClintock (R-CA), was explaining that the Soviet system relied on rationing of healthcare, which would be the end result of ObamaCare.
Earlier this week, I had the chance to sit down with Birman to discuss his story, the transformation of the United States into a police state, ObamaCare, the budget, and other destructive economic policies that are being pushed by the White House.
When asked about the recent filibuster in the Senate, Birman applauded Sen. Rand Paul and noted that it was refreshing to hear a politician be so passionate. He also compared the policies implemented as part of the “war on terror” to life in the Soviet Union, where the government frequently searched homes of ordinary citizens without cause, which he called a “fact of life,” noting that “you just accepted it as much as you did the cold weather and the long lines for the basic staples of food and water.”
Birman experienced this first-hand. “A week before we left for the United States, we went to say goodbye to my uncle in St. Petersburg and when we came back, we found our apartment just absolutely ravaged,” recalled Birman. “The authorities must have been looking for whatever lame excuse they could find to either delay or disrupt our departure.”
This is the second of three posts on the primary consumer-driven health care arrangements under the current Internal Revenue Code.
The first post on consumer-driven health care discussed the health FSA, a useful but ultimately flawed vehicle hampered primarily by the use-it-or-lose it rule and ObamaCare limits. This post discusses the HRA, a more dynamic arrangement that can be used in many creative and powerful ways - pending a number of ObamaCare changes that will dramatically limit the HRA’s versatility.
As stated in the first post, the ideal consumer-driven health care vehicle should strive to achieve three main objectives:
- Provide incentive for the individual to spend less on health expenses;
- Maximize the individual’s flexibility in contributions and ownership of all assets contributed; and
- Limit the individual’s financial exposure by including an out-of-pocket maximum
What is an HRA?
A health reimbursement arrangement (HRA) is a creature of Sections 105 and 106 of the Internal Revenue Code. It’s an entirely employer funded account used to pay for health care expenses on a tax-free basis. Employers can structure HRAs to offer many benefits, including:
- Direct reimbursement for medical expenses as the primary form of health coverage;
- A way to pay for deductibles and other out-of-pocket expenses from major medical coverage;
- As an account to pay for the premiums for major medical coverage; or
- Any combination of those purposes
This versatility, as well as a few other key advantages over the health FSA, have made the HRA a commonly used employer-sponsored plan since 2002 when IRS guidance first blessed the HRA concept.
This is the first of three posts on the primary consumer-driven health care arrangements under the current Internal Revenue Code.
What is Consumer-Driven Health Care?
As with almost all political issues today, there are two factions in the health plan industry constantly in conflict over the best structure for covering the cost of health expenses. On one side is the defined benefit-type philosophy. Under this traditional approach, an individual or combination of employer/employee pays a relatively high premium to receive coverage for most health expenses that the participant might incur during the plan or policy year. This style of coverage typically comes with negligible or non-existent cost-sharing requirements for the participant to access services (e.g., copays for doctor visits, coinsurance, deductibles).
Consumer-driven health care, on the other hand, generally attempts to reduce the cost of health coverage by empowering individuals to control their health expenses. Under this defined contribution-type approach, an individual or employer/employee combination contributes to an account or arrangement that can be used to cover health expenses. The individual therefore has an incentive to limit health expenses that does not exist under traditional health coverage.
In my opinion, the ideal consumer-driven health care vehicle should strive to achieve three main objectives:
Earlier this week, Mitt Romney visited Israel, and in a speech praised the Israeli healthcare system for keeping down costs. This sounds like an utterly uncontroversial statement (Republican politician praising Israel), until one realizes that Israel has a single-payer, universal health care system.
Yet, oddly, there was very little mention of this in conservative spots. I checked The Weekly Standard, Hot Air, the Washington Times, even The Blaze, but none of them talked about Romney’s statement. Not even Fox News seemed to have an article about it. Instead, places like the Boston Globe, the Washington Post (in particular, Ezra Klein), Matt Yglesias at Slate, and Steven L. Taylor at Outside the Beltway were the ones who seemed to actually notice what Romney said.
Yesterday, the White House responded via blog post to the court decision to allow the health care lawsuit continue forward. The White House’s Stephanie Cutter, who wrote the post, is either an idiot or a comedian. I’m not sure which. She apparently doesn’t even pretend to understand what the hell is going on in regard to the health care law, and doesn’t seem to understand much else.
Here’s some highlights.
Since the enactment of health reform legislation in March, several state Attorneys General have filed lawsuits challenging the constitutionality of the Affordable Care Act. Having failed in the legislative arena, opponents of reform are now turning to the courts in an attempt to overturn the work of the democratically elected branches of government. This is nothing new. We saw this with the Social Security Act, the Civil Rights Act, and the Voting Rights Act – constitutional challenges were brought to all three of these monumental pieces of legislation, and all of those challenges failed. So too will the challenge to health reform.
Yes, because two of those three trample on the rights of Americans in a very clear manner. The third, the Civil Rights Act, only partially hit the rights of the people and then only arguably did it hit anyone’s rights. The fact that the courts ruled in favor of the government in those days doesn’t make it a fact that they’ll do the same this time.
Nearly everyone in opposition to ObamaCare worked very hard to stop it before it made its way through both houses of Congress and to the President’s desk to be signed into law. Once President Obama signed the legislation into law, all of these wound up activists found themselves without an issue to focus on after a year of “debate” over healthcare reform. Some state officials took it upon themselves to file lawsuits over the newly signed law, while others sought to protect their constituents from the aspects they found to be Unconstitutional. Today, the Tenth Amendment Center provided another state-level action. From the press release:
“Now that Health Care reform has been signed into law, the question people ask most is “What do we do about it?” said Michael Boldin, founder of the Tenth Amendment Center. “The status quo response includes lobbying congress, marching on D.C. “voting the bums out,” suing in federal court, and more. But the last 100 years have proven that none of these really work, and government continues to grow year in and year out.”
“We recommend a different path, one advised by prominent founders such as Thomas Jefferson and James Madison - nullification,” said Boldin. Nullification, according to the Center, is the rightful remedy to an unconstitutional act, as it considers the recently-signed Patient Protection and Affordable Care Act to be. When a state nullifies a federal law, it is proclaiming that the law in question is void and inoperative, or non-effective, within the boundaries of that state; or, in other words, not a law as far as the state is concerned.
Podcast: Healthcare, CBO, Census, Immigration Reform, Pre-Crime Policing, War,Guests: Doug Mataconis, Brooklyn Roberts
And you really want government run healthcare?
Barack Obama’s first tax hike, a 62-cent increase on tobacco products, went into effect yesterday. The tax hurts the poor the most. One one hand they want us to believe that these taxes discourage and decrease smoking. On the other hand they say that they’ll fund various healthcare programs, in this case, SCHIP. That doesn’t make much sense.
Insurance premiums are rising. This has been a constant story since the passage of ObamaCare in 2010. Despite President Barack Obama’s insistence that his signature domestic policy would bring down the cost of health insurance coverage, Americans have seen their rates keep increasing.
While the Obama Administration has stuck to its rhetoric on the law, Jonathan Gruber, the architect of ObamaCare, admitted that those in the individual health insurance market would see an “average premium increase of 31 percent.” More recently, the Washington Post noted that individuals who purchase their own coverage and small businesses could see their premiums double, a far greater impact that what was conceded by Gruber.
So what’s the source of the increase in insurance premiums? According to Zeke Emanuel, brother of former White House Chief of Staff Rahm Emanuel, the reason for higher premiums is “uncertainty.”
“And the last thing, of course, is what happens with cost, which may be the biggest question of all,” Emanuel said during an appearance on Meet the Press. “Can the premiums be kept relatively stable and not growing at, you know, 10, 12 percent?”