Sunday, August 30, 2009

Tax Breaks for the Medical Savings and Loan

This post is in response to a twitter question from My1stAmendment.

The Medical Savings and Loan program is not dependent on tax breaks or any special laws from Congress. The idea is primarily about re-organizing health care financing so that it is based on the life-cycle of the individual as opposed to basing it on the experience of a group.

If the health care financing were owned by the individual, it would automatically be portable. People would have health care resources when laid off, etc..

The program is currently hendered by tax law as health insurance is favored to medical savings and is favored to direct payment of doctors. A person self-financing care must pay with post tax dollars.

There actually is one big problem with the medical savings and loan. The problem is the temptation people have to use their health savings for other ends. I think the government would be wise to let people place money in their HSA without taxes. They would get taxed and pay a penalty if they withdrew money.

The model is not dependent on any government action. It could be implemented by any group wanting to lower the cost of their health care by moving from pooled financing to individual financing. For that matter, I think one of the biggest problems in our healthcare today is that people plan their health care around tax considerations rather than around their health needs.

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