The Choices for All Project: Healthcare Reforms for the Future. Lanhee J. Chen, Tom Church, and Daniel L. Heil, Hoover Institution, 2023.
Choices for All is a set of healthcare reforms built around one idea. Patients should see meaningful prices and have real choices about their care and coverage. Each chapter below stands alone and can be downloaded on its own.
Introduction. Introduction to the Choices for All Project
Why the US healthcare system fails to deliver affordable care, why past comprehensive reforms fell short, and the patient-driven alternative the rest of the project lays out.
Chapter 1. Create Individual Health Accounts (IHAs)
A new tax-advantaged account, part IRA and part HSA, that lets people save more for healthcare when they choose lower-premium plans.
Create new tax-advantaged accounts for future healthcare needs.
Accounts would be available to all individuals with at least catastrophic coverage, from either a private or public plan.
Annual contribution limits would be set much higher than current HSA limits, but allowable contributions would be reduced by the enrollee’s premiums.
Contributions would count as “above-the-line” deductions.
Withdrawals would count as taxable income unless spending is on qualified medical expenses, but there would be no additional tax penalty for unqualified withdrawals.
Chapter 2. Expand the Tax Deductibility of Out-of-Pocket Payments
Let everyone deduct out-of-pocket medical spending, which narrows the tax code’s tilt toward high-premium employer plans without raising anyone’s taxes.
Replace the existing tax deduction for out-of-pocket spending with an “above-the-line” deduction.
Make the deduction available to taxpayers regardless of income or whether they itemize their deductions.
Reduce the bias in the tax code favoring the selection of high-premium ESI plans.
Maintain existing ESI and self-employed premium tax preferences.
Begin to level the income tax treatment between premiums and OOP payments (but maintain payroll tax exclusion only for premiums).
Chapter 4. Empower Medicaid Recipients and ACA Participants
State-level reforms, backed by sturdier federal waiver rules, that give Medicaid and ACA enrollees more control over the money spent on their behalf.
Ensure existing waiver authority is broadly available to facilitate innovative state-based health reforms.
Strengthen waiver authority rules to ensure continuity across presidential administrations.
Allow ACA recipients to select low-cost catastrophic plans with the remaining subsidy balance deposited into our newly proposed individual health accounts (IHAs).
Provide Medicaid recipients with an option to receive partially funded IHAs (owned by the recipient) that can fully cover new cost-sharing requirements.
Allow states to use waivers to pay for direct primary care (DPC) memberships for Medicaid enrollees.
Chapter 5. The Budget Effects of Proposals in the Choices for All Project
Ten-year budget estimates for the project’s tax changes and options to pay for them.
Without individual health accounts (IHAs), extending out-of-pocket (OOP) deductibility of health expenses would reduce ten-year federal revenues by $79 billion.
Separately, IHAs would reduce federal revenues by $82 billion over ten years if contribution limits were set at the 50th percentile of current employer-sponsored insurance (ESI) premiums.
Combined, IHAs and full deductibility of OOP spending would reduce federal tax revenue by $94 billion over ten years.
These policies can be paid for by ending the enhanced Affordable Care Act (ACA) subsidies from the Inflation Reduction Act or adding work requirements to Medicaid.