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On behalf of our activist community, I urge you to contact your representative and ask him or her to cosponsor the Healthcare Freedom Act, H.R. 3594. Introduced by Rep. Chip Roy (R-Texas) and Rep. Andy Biggs (R-Arizona). The Healthcare Freedom Act would create “health freedom accounts,” a version of a large health savings account that would put the individual in control of choosing their own health coverage and care options with equal tax treatment to employers.
Health savings accounts (HSAs) have grown in popularity since they were introduced in the health insurance market in 2004. Enrollment grew from 1.031 million in 2005 to 21.8 million in 2017, but HSAs are exclusive to high deductible health plans (HDHPs) and restrict what coverage and care options consumers are able to purchase.
The Healthcare Freedom Act would greatly expand HSAs and rename them as “health freedom accounts (HFAs). The annual tax-free contribution limit for an individual would be increased from $3,500 to $12,000. The contribution limit for a family would be increased from $7,000 to $24,000. Additionally, catch up contributions for consumers who’ve reached 55 years of age or older would be increased from $1,000 to $5,000.
Under a health freedom account, consumers will be allowed to make tax free withdrawals for payments for healthcare coverage options, including payments for direct primary care arrangements and cost-sharing arrangements, such as healthcare ministries. Additionally, prescription and over-the-counter drugs may also be paid from an HFA.
Perhaps one of the most important aspects of the HFA is that it would allow portability of health coverage while still allowing employers to provide funds for healthcare benefits. The employer-based health insurance system isn’t responsive to consumers because, ultimately, employees don’t own their health plans. This system eliminates choice, and health insurance companies don’t look at employees as their customers. Rather, they treat the employer or third-party administrators as the customer. The employer-based system also creates job-lock, a scenario in which an employee may feel stuck in his or her job because of the fear that he or she will lose health coverage.
The Healthcare Freedom Act addresses this issue by changing the tax exclusion for employer-sponsored health insurance to an exclusion for employer contributions to a health freedom account. Employees currently in an employer-sponsored plan will be able to keep their plan, and employers will still be able to exclude these funds, but after five years from enactment, for all new employees, employers will only be able to exclude contributions to HFAs.
Nothing prevents an employer from providing group health insurance to their employee, and no one will lose their current plan, but over time millions of employees who would have otherwise had healthcare tied to their work, will now have control over their healthcare choices and both employees and employers will have the ability to exclude contributions – equalizing the tax treatment between employees and employers.
By detaching healthcare coverage from employers, individuals will have a robust portable vehicle that will mitigate much of the pre-existing condition problem. Instead of protecting people from gaining coverage after they develop a condition, H.R 3594 will allow the millions in the employer market to purchase healthcare coverage before they become a part of the pre-existing condition population.
The answer to America’s healthcare problems isn’t a single-payer, government-run model. Bureaucrats already have too much power over healthcare, especially since the Affordable Care Act became law. The answer is a model that puts Americans directly in control of their healthcare. The approach taken by Rep. Roy and Rep. Biggs will empower consumers and control healthcare costs because the healthcare system will ultimately become more responsive to the individual. For these reasons, I urge you to contact your representative and ask them to cosponsor the Healthcare Freedom Act, H.R. 3594.
Adam Brandon, President, FreedomWorks