Monday, September 21, 2009

Lord Help Me, I Disagree With Ezra on Something Regarding Health Care

I have a somewhat different take on some of Olympia Snowe's amendments than he does. For the most part he's almost certainly right. But there are a couple where I think may have missed the mark.
  • The amendment to raise the maximum contribution to a tax-free FSA isn't a very good idea. FSA's are basically tax deductions for health care expenses that you get when you deposit the money into a special account, not when you file your taxes. But since they're deductions, rather than credits or refundable credits, they primarily benefit those who are already better-off; after all, you have to be able to save moeny to put in their FSAs, and working-class families usually don't save much. FSAs are also "use-it-or-lose-it", so you can't save your FSA deposits for a few years, and then use them to pay off your deductible when you end up in the hospital. Essnetially they are a way for the upper-middle class to pay for their co-payments and their kids' orthodontics with pre-tax dollars. There are much more urgent public policy priorities when it comes to health care.
  • The amendment to cap deductibles doesn't help that much. As I read the amendment, it only caps deductibles, not the overall out-of-pocket maximum. The current maximum is simply too high, unless everyone between 133% and 300% of FPL gets subsidies here too (and I doubt they will, since then we'd have to subsidize household earning that much money who get their insurance through an employer, which is a ton of people). What you really need is to cap either the out-of-pocket maximum and/or raise the actuarial value of minimum creditable coverage. Several Democrats offered amendments to this effect.
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