Enhancements to health savings accounts tucked inside a massive tax bill that Congress approved in the waning hours of its December 9 session may represent a last hurrah for the controversial plan before Democratic majorities take over Capitol Hill in January.
The measure, which is headed for President Bush’s desk, would raise the limits on the amount of money employees can contribute to HSAs, permit one-time rollovers to HSAs from flexible spending accounts or health reimbursement arrangements and allow a one-time rollover from individual retirement accounts to HSAs.
Under the new law, individuals would be allowed to contribute more to their HSAs than the amount of the deductible of their health plan. The new limits would be raised to $2,850 for individuals and $5,650 for families.
The HSA provisions received a strong push from corporate lobbyists, and their approval was one of the final achievements in the career of outgoing Ways and Means Committee Chairman Bill Thomas, R-California.
But the Republican majorities that supported strengthening HSAs will give way to Democratic control on Capitol Hill in January. The policy road ahead for HSAs is sure to be more difficult under the Democrats.
As the House and Senate wrangled over the tax bill late last week, an aide to incoming House Speaker Nancy Pelosi, D-California, characterized Republicans as advocating the $1 billion HSA measure while dragging their feet on a provision related to health insurance for children. Eventually, both were approved.
“That is the symbolic difference between Republicans and Democrats in health care,” said Wendell Primus, Pelosi’s senior policy advisor for health care, at a December 8 meeting at the Kaiser Family Foundation.
He cited a Kaiser poll released that day that showed most Americans favor universal coverage for children.
“The public appreciates the Democratic priorities,” he said.
Rep. Pete Stark, D-California, the incoming chairman of the
Proponents of HSAs argue that they are a centerpiece of the effort to make consumers more aware of health care costs because they’re spending their own money.
But many Democrats say that HSAs do nothing to expand coverage to the uninsured or lower bills for those who do use them. HSAs only put their owners on the hook for more of the cost burden.
“The idea of shifting risks onto consumers is not something Democrats are comfortable with,” Kate Leone, a health care policy aide to incoming Senate Majority Leader Harry Reid, D-Nevada, said at the Kaiser event.
Not surprisingly, the Bush administration has a different take. Julie Goon, a White House domestic policy advisor, said HSAs don’t increase risks for individuals; rather, they force them to be tougher health care purchasers.
“It’s about shifting responsibility for thinking about things,” Goon said at the Kaiser event.
But for consumer-driven health care to save money, the public has to have access to much more price and quality information, according to Elizabeth Hall, a health aide to outgoing Senate Majority Leader Bill Frist, R-Tennessee.
The popularity of HSAs, however, will hinge on the financial status of those who have signed up for high-deductible plans, according to one expert.
“The reason they do not purchase [HSAs] is because they cannot afford to,” says Dallas Salisbury, president and CEO of the Employee Benefit Research Institute. “If they don’t have enough money to get in the door, they’re not doing it.”
The EBRI released a survey December 7 showing that 1 percent of the privately insured