The Affordable Care Act will add between $346 billion and $527 billion to the federal deficit over the next decade. And it’s set to increase national health spending by $311 billion through 2020 — when such spending will consume $4.6 trillion, or one-fifth of the American economy.
Lawmakers will have to rein that in — or the country will go bankrupt. The best way to do so? By repealing Obamacare and implementing reforms that harness the power of competition to lower costs and improve access to affordable health coverage.
The feds can start by increasing the availability of high-deductible plans coupled with health savings accounts (HSA), where patients can save pre-tax dollars for health services. This approach empowers patients to decide how to spend their healthcare dollars. As a result, healthcare providers have to compete for patients’ business. Expanding such competitive forces would help rein in costs.
Federal lawmakers must also reform the way they tax health benefits. Right now, people who get their health insurance through work do not pay income tax on the value of their benefits. By contrast, individuals who buy insurance on their own must use after-tax dollars to do so. So they miss out on a substantial tax benefit.
Legislators should eliminate this discrepancy. Doing so would grant individuals — rather than employers — control over their health benefits. And it would free people up to seek employment opportunities they actually want — rather than simply those that offer health benefits.
The Supreme Court may have rendered its verdict on Obamacare, but the law is still years from fully taking root. This fall, voters can instruct Congress and the president to throw out the Affordable Care Act and replace it with reforms that put patients — not government — first.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare (Regnery 2012).