PUT IT IN AN HSA, INSTEAD OF TAKING IT HOME:

A minor tweak to our tax code could go a long way to bring more choice, affordability and personal control to how workers purchase health insurance. Current law allows individuals to avoid taxes on money spent on insurance premiums only if their employers purchase insurance on their behalf. What if employers transferred to their employees the amount they now spend on coverage and the law allowed employees to deduct that spending from their taxes?

And what if those laws allowed employees to opt not to spend that entire sum on health insurance, but instead take some home as wages? If an employee in a marginal tax bracket of 25 percent were given an $18,000 budget to purchase insurance, but opted for a plan that costs only $14,000, she could take an additional $3,000, post-tax, home to her family.

This slight change would turn the economic tables for the millions of Americans who get health insurance through their employers. Abundant research has shown that low- and middle-income workers have a strong preference for low-cost plans, much more than what their employers currently offer. If workers know they can increase take-home wages by purchasing less expensive insurance, they will demand more insurance options, and insurers are likely to respond. To avoid the chance that cash-strapped families purchase inadequate plans, insurance plans would have to meet the Affordable Care Act's minimum standards. The law's requirement to purchase insurance, with penalties for non-purchase, would lessen the possibility that workers would keep all the money rather than buy insurance.

Freeing workers' choices for insurance would also bring pressures on insurers to create new products that control costs, such as bundling of homeowners, auto and health insurances, or enabling people between 55 and 64 years old to access Medicare. State legislatures would feel similar pressures to adjust regulations to support competitive insurance marketplaces.

Stiffer competition and cost pressures on insurers, in turn, would force providers to offer more efficient care, such as by replacing outpatient and emergency room visits with telemedicine technology.

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