December 23, 2005

Steve Laffey, Health Savings Accounts, and Conservatism, Part 1

Carroll Andrew Morse

The attention given to the vote on ANWR earlier this week stepped on bit of news relating to Steve Laffey in another significant policy area…

Laffey Introduces First HSA Plan in New England for Municipal Employees.

Last night, Cranston’s City Council voted to ratify the tentative agreement negotiated between Mayor Laffey and Local 251, the Teamsters – comprised of 162 City employees. Most notable in the agreement is the introduction of Health Savings Accounts (HSA’s) as an option for the municipal employees.

HSA’s have potential to be the reform that fixes the healthcare mess in this country.

Here’s how they work. An employer makes regular (tax-free) contributions to an HSA. The employee spends from the HSA’s for routine medical expenses, preventative check-ups, vaccinations, etc. The employee also purchases high-deductible catastrophic medical insurance (which is cheaper than comprehensive insurance) in case of a major medical emergency. The idea is to return insurance to being insurance -- many people pooling their money to help a few who need major assistance when an emergency strikes.

We’ll talk more about healthcare policy specifics in the coming year, but for now, I want to use this issue to emphasize Justin’s point from a few days ago – that the why of policymaking in many ways, is as important as the what and the how. The official announcement of HSA program from the Laffey campaign site is strong on the fiscal responsibility and the economic libertarian angles. These are both good arguments, but to fully understand the importance of HSA’s you need to go one step further

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As this is only part 1, I hope on not stepping on Andrew, but might I suggest reading "Who Wants Health Insurance" by Arnold Kling, which goes into a bit more detail on the idea of "catastrophic insurance" and other matters touched upon in this post.

Posted by: Marc Comtois at December 23, 2005 9:16 AM


Excellent posting. Health care insurance, like most other forms of insurance should be limited for large expenses of a catastrophic nature, not routine doctor visits, and check ups. Otherwise, health services get over-utilized, which leads to higher costs for everyone. Free insurance or near free insurance, like many government employees enjoy in RI, worsens this problem. As Marc noted in another posting, there is something of a two-class society developing in the workforce between public and private sector workers. I hope when Laffey becomes a Senator he makes HSAs mandatory for all public sector workers (federal, state and local) ...this will help our health care problems, and avoid making a two-class workforce. Hey, before I retired I had to pay for my own health insurance, and let me tell you that the junk business is not lucrative.

Posted by: Fred Sanford at December 23, 2005 5:57 PM

This entire issue is indicative of how Laffey is the one person on the forefront of true reform. Not only are the HSA's that he established the first in all of New England, but the contract also calls for 20% co-pays. Nobody has negotiated a contract like this - not Cicilline, not Avedesian - nobody.
As I look back at what Laffey has accomplished in fixing Cranston - firing the crossing guards, balanced budgets, audits performed on time, 20 co-pays, HSA's - it just shows that he is exactly what we need down in Washington.

Posted by: Jim at December 23, 2005 9:42 PM

Give that Jimbo a hammer.

That boy knows how to hit the nail on the head.

J Mahn

Posted by: Joe Mahn at January 11, 2006 8:35 AM