Today's Downsizer Dispatch
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Quote of the Day:
"The welfare of the people in particular has always been the alibi of tyrants, and it provides the further advantage of giving the servants of tyranny a good conscience."
- Albert Camus
Subject: Answers to a question about Ron Paul's health care bill
A DC Downsizer, using the pseudonym "Taxpayer," has posted an excellent question on our blog about Ron Paul's health care bill. We're answering it here for the benefit of all. "Taxpayer" writes . . .
"I agree that government-funded or government-mandated medical care is a bad idea, but I do not understand why Ron Paul's proposal is much better. If I am refunded taxes equal to the amount I spend on medical care or insurance, I still have no incentive to control costs unless they exceed my taxes."Here's our answer . . .
Congressman Paul's bill would incentivize cost reductions by expanding Health Savings Accounts (HSAs). Ron Paul's bill would . . .
- Enable your employer to deposit up to $8,000 per year into your HSA tax free
- The interest you will earn from this account will also be tax free, but . . .
- The more you spend out of your HSA the less you will earn in interest, while . . .
- The less you spend, the MORE you will earn
- The tax credit refund doesn't change the economizing incentives created by HSAs because the tax refund will only come at the end of the year -- every dime you spend today out of your HSA is a dime that won't earn interest during that year
The tax credit would also incentivize a major switch from "Cadillac" insurance plans that pay for "health care oil changes," to major medical policies that would only cover expensive procedures. After all, why should you pay a premium price to an insurance company to cover things you could pay for yourself, cheaper? The resulting lower insurance premiums would mean that . . .
In addition, insurance premiums would also be eligible for the tax credit so that . . .
- The cost of employing people would plummet, creating new jobs
- You would save money on your health insurance premiums, allowing you to maintain a larger balance in your HSA
- Your doctor would save on administrative costs, by not having to fill out insurance forms for every little procedure
- Everyone would be able to afford insurance
- There would no longer be any tax advantage to carrying health insurance through an employer
- People would do better by having their employer pay the money that formerly went to company owned insurance policies directly into each employee's Health Savings Account (tax free) so workers could purchase their own insurance
- Changing jobs would no longer cause people to lose coverage
A nationwide switch to major medical policies would bring a nationwide reduction in health insurance costs, as well as the costs of administrative overhead, part of which could be passed on to consumers as health care providers compete for customers.
- The more you make health care providers compete by charging lower prices (as with Lasik eye surgery) the larger your HSA will grow through compounding interest
- The larger your HSA grows, the larger the deductible on your major medical policy can be
- The larger the deductible on your major medical policy is, the less your premiums will be
- The less you spend on insurance the more you can save in your HSA, at compounding interest
Imagine having a big pile of cash to cover your health care expenses as you age, independent of insurance companies or Medicare rules. Imagine having health care that becomes better and less expensive because of competition. These benefits can be yours if you demand that Congress give them to you.
Ask Congress to pass Ron Paul's health care bill. You can do so here.
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