Democrats Want To Slow Spread of Health Savings Accounts
Jon Sheiner, a legislative assistant to Rep. Charles Rangel (D-N.Y.), on Wednesday told a group of business leaders in Washington, D.C., that Democrats this year will seek to reverse an expansion of health savings accounts supported by Republicans, the Washington Times reports. HSAs, which allow consumers to save funds tax-free for future medical expenses, are available to members of health plans that have annual deductibles higher than $1,000 for individuals and $2,000 for families (Lopes, Washington Times, 3/21).
A bill (HR 6111) passed by Congress and enacted by President Bush late last year included a provision to eliminate a requirement that annual contributions to HSAs not exceed the amount of the annual deductibles for the health plans to which they are linked. The legislation increased the maximum annual contribution to HSAs to $2,850 for individuals and $5,650 for families (California Healthline, 12/21/06).
In addition, the bill included a provision that allowed a one-time, tax-free transfer of funds from HSAs to IRAs.
According to the Times, Democrats "question whether HSAs will lead to the savings touted by proponents and fear that they will leave sick people financially vulnerable while shutting out people with chronic or pre-existing conditions."
Sheiner said, "There is not a whole lot of affection for the health savings account provisions passed last year. We as Democrats are not going to be supporting health savings accounts, and we will try to turn around those provisions snuck in last year."
Brendan Dunn, a legislative assistant to Sen. Orrin Hatch (R-Utah), said, "I can tell you right now that there will be a serious fight from Senate Republicans if there is any effort to roll back these provisions."
David Merritt, a project director at the Center for Health Transformation, said, "For businesses, these plans mean that more employees can get insurance coverage as a third of all new health savings accounts were opened by individuals who had no previous insurance." He added, "These plans have delivered significant declines in health care cost trends, making American businesses more competitive" (Washington Times, 3/21).