Inflexible Spending Account

For the half-dozen or so of you who may — I repeat, may — have missed my absence from this website over the last month or so, I can only plead laziness. Even though the world is infested with evil, I have been unsure quite what to write about. The Secret Service has been nice to me lately, my personal life has been more or less uneventful, many others at have been doing a much nicer job of chronicling and commenting on the events of the day than I could, work has filled more of my life than I’d like, and I’ve been busy working on some songs in my home recording studio.

There are only so many hours in a week, and it’s difficult to stay motivated writing for this web site when I see so many people doing it better than I can. Makes me want to stay quiet when I don’t feel terribly passionate about anything.

But I can add one more excuse now. A couple of weeks ago, late one Monday evening, on the very tail end of my bike ride home, I wiped out. Bad. I was crossing badly graded railroad tracks on a poorly maintained road (probably too fast), and as I came down off the last track, the rear tire either hit very loose gravel or came down at such an angle that it could not get planted properly on the ground. The rear wheel came out from underneath me while forward momentum tossed me over the handlebars to perfect three-point landing on my face, my left arm and my left knee.

(I recently got Shimano SPD clips and pedals, and wondered: what happens if I fall? Answer: the feet twist right out of the clips. At least mine did not keep me from becoming airborne.)

The bike’s fine, if you’re curious. The rear wheel is out of true — I will fix that when I recover — and the frame is unbent, unbuckled and unbroken. God bless Reynolds air-hardened steel, White Industries tandem hubs and Sunringle rims!

However, I am a little worse for wear. I am no uglier for landing on my face (you’ll have to take my word for it), thanks largely to the fact that my helmet kept my face from grinding into the pavement. I had quite a black eye and had some nifty scratches on my face and forehead (all healed now), and nose bled off-and-on for 12 hours after the accident (cleared up my left sinus, too!). I have some fairly impressive scrapes on my left knee, but that didn’t even hardly hurt.

I did fracture my left arm, right below the elbow. Actually, I only cracked the bone, and it didn’t hurt much. Thanks to the synthetic opioid prescribed by the ER doctor, it still doesn’t hurt much. And I may have bruised or fractured a rib, I’m not sure, but I know there’s little I can do about it regardless. I wrote the first draft of this one-handed, with an arm in a cast, though I can now pound away with both index fingers. Tap, tap, tap, 50 words per minute! About as fast as I think when I write.

Had I not been wearing a helmet, I likely would have stayed there in the middle of that road, flat on my bloody face, until some jogger or motorist happened upon me. As it was, my head got a pretty good whack. I was hard pressed to remember the date in the emergency room and, worse, had a whole lot of very jumbled but vivid "memories" of things I’m pretty certain never happened. Strangely, I also had distinct memories of things that "happened" several months from now. It was very disorienting, but if it was the gift of prophesy, it was fleeting. I recall the mishap, but none of the things it apparently bonked into existence in my mind.

So, I am grounded for a while. My wife is taking very good care of me.

At the beginning of the year, I signed up for a new "benefit" my employer offers — a flexible health care spending account. A certain amount is deducted pre-tax from my paycheck — in my case, $100 each month — to pay for all out-of-pocket medical expenses, such as visits to doctors, prescription co-pays, over-the-counter medicine, things like that. While the goal was to make sure that my wife’s asthma, thyroid and allergy meds could get paid for, more-or-less tax-free, I’ve used it just as much, what with two ER visits (the first, earlier this summer, was the result of a serious allergy to soy beans I appear to have developed), antibiotics to kill bronchitis, and now this. The account has seen more action than I anticipated.

While the product of a very Democratic Congress and signed into law in 1979 by a Democratic president, I’m guessing somewhere in the bowels of Heritage and/or Cato, someone really giggled senselessly and pinched themselves red over the flexible spending account. And why not? Despite its late-1970s pedigree, it is, after all, the perfect, overly complex Reagan-Gingrich-Bush era conservative "social program" that promises to "return" control to individuals but, of course, fails to do any such thing.

At the risk of boring anyone, it works like this. You specify how much you want withheld, it goes into an account managed by a company contracted with by your employer, and when you incur a covered expense — say the co-payment for a bottle of hydrocodone, or the tab for over-the-counter motrin — you merely fill out a form with a copy of the receipt and the firm managing the account will (very likely) reimburse you. I’m guessing the idea was to give people more "control" over "their money," thus leading people to either use more or less health care, depending on how much they’ve set aside. That is, after all, what public policy is: use of state power to make or affect the choices people make. It’s why there is not, and can never be, any such thing as libertarian public policy.

The only real benefit that flexible spending accounts have is the money funneled into the accounts is not taxed. Don’t get me wrong, I’m not arguing with that in and of itself. The $1,200 I set aside this year is income I do not have to pay taxes on. That’s a good thing.

However, let’s also be clear — there’s a good reason for that tax break. That $1,200 really isn’t my money anymore, either.

Here’s why. On the reimbursement check I receive after I file a claim, there is what you’d expect: columns stating how much I elected to deposit this year, how much I’ve actually put in, how much I’ve claimed, and how much has been denied. Denied. The company that manages the account has the ability to deny a claim. It hasn’t happened to me yet, and I do not know if it will, but it could. (I may find out soon, as I have claimed cab fare to and from the emergency room the night of my wipeout.) The company that manages my flexible health care savings account could one day say "no."

There is only one true way to test whether property is truly private — can the owner of that property do as he or she sees fit with that property, use it (or not) as he or she desires, short of injuring others or damaging or destroying their property? Or, as I wrote elsewhere when dealing with Bush Jong Il’s now-dead proposal for, ahem, personal retirement savings accounts: "It is my money if I can do with it what I please — spend it, save it, set on it fire, bury it in a deep hole in the ground." My flexible health care spending account does not pass that test. Not by a long shot.

To be fair, I did not have to enroll in the flexible account, I elected quite voluntarily to use this, though once committed, it appears I cannot pull out until the end of the calendar year. However, I cannot spend the money as I see fit; a manager, somewhere, interprets internal revenue regulations as to what an appropriate claim is. It may be a manager with a private, for-profit concern, but the rules the company operates by are based on IRS regulations, and not on anything the company’s owners or managers want or on any contract I have signed with them.

Plus, it turns out that any funds left unused after the end of the year become the property of the company that holds the account. Same if you leave your job without using all of the money in "your account." Actually, I will have a few months of next year to use any left-over funds, but again, that was the result of government rule making done earlier this year, and not anything that I or the company holding the account have decided.

If the purpose of the account was to exclude health care spending from taxed income, then it sort of works, though there are other, better ways to do that. If the goal of the account was to encourage prudence and force people to budget and limit their health care spending, like most government programs, it has the exact opposite effect. I may or may not spend $1,200 on health care on myself and my wife in a normal year, but I have every incentive to this year. I worked for that money, I would like to be able to spend it. And make no mistake, this is a government program. It may not have created a huge government bureaucracy, it may not have required huge budget outlays, but hundreds or thousands of tiny, "private" bureaucracies were willed into existence solely by federal law and the tax code and are profitable only because of that law.

If that’s not also big government, I don’t know what is.

I won’t do this next year. Real flexibility allows me to spend or save my money as I see fit, and these accounts are too inflexible. I’ll take my chances next year, knowing that I will pay tax on all my income (yuck, but then I should not have to appeal to Caesar to keep all of my money) but also knowing that I can spend what I need to spend — without any false incentives or imposed constraints — on health care. I don’t like that option, but I don’t like filling out a form and waiting a few weeks to get "my money" either.

Charles H. Featherstone [send him mail] is a Washington, D.C.-based journalist specializing in energy, the Middle East, and Islam. He lives with his wife Jennifer in Alexandria, Virginia.