By L. Bogaert | At 2019-02-18
For over quarter of a century the heads of the financial and health-care sectors have been pointing to warning signs about the blatantly flawed incentives and increasingly high costs in the American system for Health Insurances being offered or sponsored by employers.
A system which hosts nearly 150 million Americans has until now, proven resistant to any reform.
Less than a week ago, the executive branch of the White House put the final touches on a new rule that would allow employers to fund (HRAs) Health Reimbursement Arrangements that can be utilized by employees to choose and buy there own coverage on the individual market. This almost insignificant change has the potential energy to change the private health insurance market as we know it.
For the time being, employer-sponsored health options are seen as a defined benefit. But, only if the sponsored health insurance coverage is bought as group coverage, the value of that benefit is exempt from being taxed. The JCT, Joint Committee on Taxation has placed an estimated value to the tax break of close to $300 billion a year.
This would surely incentivize employers to make health insurance benefit more readily available to new employees but also motivate companies that traditionally do not offer health benefits to jump on the bandwagon. Making the appeal of the tax break a definite driving force for the employer’s to offer health insurance as a staple of the job market.
Some, like institutions, mainstream media and political figures see giving the employees the power to choose their own coverage as an unfavorable direction for the market. Stating that a common employee would not have the knowledge nor tools to be able to choose for themselves. This seems to be a short-sighted viewpoint as it assumes that most Americans are incapable to make an educated decision when it comes to their own future. Calling the new rule Ninth-Party Health Care.
The rule would prompt new business to seek tax breaks by investing in their employees HRAs. Given enough time this would give the traditional American workers more transparency and control on how there health-care funds are spent. Forcing Health-Care companies to compete for customers instead of locking them into half-heartedly built plans for a 12 month period.
Many politicians want to block any change to the status quo. Motivated by the traditional lobbyist that represent the traditional Insurance Companies that participate in the dying ObamaCare market.
The Trump initiative moves against the established norm, aiming to place health-care decisions back into the hands of hard-working Americans.