I spend a lot of time thinking about user experience. When I build something, I want it to be simple and clear for the people using it. That doesn’t always mean as simple as possible. Sometimes you want to add a little friction for people to pause and consider something before they do it. But it does mean making things as simple appropriate. I wish policymakers took user experience into account, but they seem to prioritize other things too often.
For example: Health care enrollment just ended a few weeks ago, and I just switched to a plan where I am no longer eligible to contribute to an Health Care Savings account (HSA).
When you switch from a high deductible plan to a more inclusive plan, you are only eligible for a Flexible Spending Account (FSA). Both allow you to set aside dollars tax free to pay for qualified health care costs. The big difference between the two is that with an HSA, you get to keep your contributions forever, and with an FSA, if you don’t use it you lose it at the end of the year you contributed.
But why? 1
Why is it use it or lose it? Why are there two different accounts? Why are their accounts at all? I don’t mean this rhetorically. Why did we make this so complicated.
Policymakers set out with a goal: encourage people to set aside savings dedicated to health care. It’s a good goal - you want people to have a stake in paying for their own care to help control costs, and many people can’t or won’t save much on their own. So policymakers went to the tool chest and came up with a tax break. Great! We don’t want to give out tax breaks without oversight, so we ask people to keep receipts for their spending to prove it’s appropriate. Here’s where I think things go off the rails to create what I call a bad citizen experience.
You can’t just spend any money on your healthcare spending and keep the receipt.
Why an account at all? So you have a place to put the money you pre-commit to saving for healthcare.
Why two accounts? So one of them can disappear at the end of the year.
Why do we want the savings to disappear at the end of the year if unused? Because we don’t want people to get too much of a tax break - we want them to save what they think they will spend.
That’s all well and good, but it added a ton of complexity and uncertainty. Now as a citizen, if you want to take advantage of the tax break to set aside money for your future healthcare spending:
You have to wonder if you are saving enough? If you have an FSA, you also have to wonder, are you are saving too little?
You pay fees on the account, because the bank that services the account has costs to administer and segregate the funds that need to be paid.
If you change your plan, you may have multiple accounts to keep track. I have 2 HSAs from two different insurers’ plans, and I’m about to add an FSA into the mix next year. I have to manage them all and decide how to spend among them.
As a financial professional, I can navigate this system pretty well, and go to the trouble of taking advantage of the tax break. But for most people, the simplest decision is not to participate.
Why so complicated?
Why did we need to make this so hard. To get the tax break on charitable donations, you just list what you donated and keep records in case you get audited. Why didn’t we ask people to do the same things with medical spending?
So banks could have an extra revenue stream? So people save some money but not too much? So we can recoup some of the tax break by people “oversaving” (unspent FSA money goes to the treasury)? So we could shoehorn a privatized, free market element into it? Those are uncharitable reasons. Some better ones are that HSAs can also be invested with tax free growth, letting you save now to spend much later. But FSAs don’t let you do that - they do set the money aside so it can be easily forfeit at the end of the year. But why do that at all? Why can you only use an HSA with a high deductible plan?
If we want people to save, wouldn’t it just be easier to let them save?
I don’t have answers. I just have a point of view. Too many policies get tinkered with to service ideological, policy, special interest, our other needs. I get that’s the reality of how laws get passed. But for our laws to be more effective, we can’t completely lose sight of the citizen experience. Did any of the complexity with HSAs and FSAs help us better achieve the goal? Some, but not much. We’d have better laws, and better government, by thinking through the citizen’s experience using the law and making it simpler for them to benefit from law’s meant to benefit them.
If I produced things like that at work, I’d be fired.
Keeping it Simple
As customers, we don’t choose the people who design the client experience, but we do choose who we spend with 2. With government, you don’t have much choice which one you live with. But you do have a choice in who and how they govern. We often talk about kitchen table politics, that’s less about the ideological issues and more about the gnawing feeling in your get before you walk into a post office or a DMV.
I’d love to see people run on making it easier to do business with the government. Giving people back their time - because time is money.Less forms filled out by you. More forms filled out for your review.