What to know about the GOP proposal to steer money into health savings accounts

Lisa Desjardins:

With these Affordable Care Act subsidies set to expire, we looked yesterday at how they work. Tonight, we take a closer look at one of the main Republican alternatives to replace them and help Americans pay for their health care, something called health savings accounts.

The pushback started almost immediately.

Protester:

You lied!

Protesters:

You lied!

Protester:

You lied!

Protesters:

You lied!

Lisa Desjardins:

The Affordable Care Act was an instant lightning rod, which conservatives decried, challenged, and worked to replace. That effort peaked in 2017, when a bill to repeal the ACA died with a dramatic thumbs down from then-Senator John McCain.

Since then, Republicans, including President Trump, in last year's debate, have struggled to articulate a specific Obamacare reform plan.

Linsey Davis, Moderator:

So, just a yes or no, you still do not have a plan?

President Donald Trump:

I have concepts of a plan.

Lisa Desjardins:

But now conservatives are rallying behind a policy prescription predating Obamacare, the HSA, or health savings account.

John C. Goodman, President and CEO, Goodman Institute: A health savings account allows people to manage some of their own health care dollars, and they decide how those dollars are spent.

Lisa Desjardins:

Let's stop here.

This is John Goodman, known as the father of the HSA.

John C. Goodman:

Primarily, people who save money get to keep it.

Lisa Desjardins:

Because, in 1992, he co-authored the book "Patient Power" laying out the idea. It is the same today. HSAs are accounts patients can use tax-free to save for health care. They attach to the cheapest insurance plans, called high-deductible plans.

In those plans, patients pay less up front, but each time they need health care, they will pay more, maybe a lot more than in traditional plans. That's a risk. HSAs are designed to provide a cushion or a reserve of health care cash.

Ten years after Goodman's book came out, in 2003, President George W. Bush signed HSAs into law.

(Applause)

John C. Goodman:

And it started out slowly, because this was something new that employers, insurance companies weren't used to. But, today, there are 40 million of these accounts, and they cover 60 million people. And, also, the idea has spread abroad. Even China has health savings accounts. South Africa has them. Singapore has them. So it's not just an American idea.

Lisa Desjardins:

And not just a private insurance idea. Now HSAs are central to Republican plans for reforming in government, meaning Obamacare. ACA subsidies vary by income. Republicans want to see income caps, but they also want to change how the money flows.

Right now, individuals choose an insurance plan on the ACA marketplace. And in most cases, the federal government sends subsidy money to the insurance company. Republicans instead want subsidies to go to health savings accounts controlled by each person. And they would then choose how to spend it, including on an insurance plan.

That may seem like a small difference, but supporters say it can cut down on fraud and changes the equation, because consumers are the best decision-makers.

Ge Bai, Johns Hopkins University:

Health care relates to our life, right? But it's a business for everybody else.

Lisa Desjardins:

Ge Bai is a Johns Hopkins professor specializing in health care policy. She testified last week in Congress about the Affordable Care Act.

Ge Bai:

Many people believe health care is a right. That is fundamentally wrong. Health care is a commodity.

Lisa Desjardins:

We spoke shortly after.

Ge Bai:

Once the patients control their dollars, all the providers have to compete to make patients happy. So that will change all the incentives on market.

Lisa Desjardins:

Bai argues, give patients more control of dollars, and companies will compete for them directly, with some lowering costs.

Ge Bai:

You're going to see price collapse everywhere.

Cynthia Cox, Program on the ACA Director, KFF: I think it would be very difficult for most people to shop around for health care.

Lisa Desjardins:

Cynthia Cox of KFF is among the health care analysts who say there are some practical issues and some big trade-offs with HSAs. She says people can't yet access health care prices fluidly, and the very sick account for most health care spending, and usually blow through their deductible, leaving little incentive to shop around.

Cynthia Cox:

While it could potentially lead to lower costs for everybody if people do shop around more for health care, I think the savings would be pretty minimal from that.

Lisa Desjardins:

Critics on the left argue that HSAs disproportionately benefit the wealthy, who can put more into the accounts with large tax advantages. But there is another factor. Some Republicans want to dramatically expand HSAs, give qualifying Americans HSA accounts to spend on any insurance plan in or out of the ACA.

Cynthia Cox:

Which would create a huge incentive for younger, healthier people to not be purchasing into the ACA plans, which would lead to a death spiral potentially in the ACA markets. It would effectively undo the Affordable Care Act.

Lisa Desjardins:

But that is the point for many conservatives like John Goodman, who see Obamacare as bad policy. But he admits HSAs similarly don't solve a key problem.

John C. Goodman:

We're spending a lot on health care that doesn't extend our life expectancy or cure diseases. We need to take a close look at the whole system and where the money is going.

Lisa Desjardins:

HSAs and the Affordable Care Act are important competing ideas that try to address who can get health care and how much they pay. But also important, neither fundamentally shifts the bigger issue. America's expensive health care system is not making America healthier.

For the "PBS News Hour," I'm Lisa Desjardins.