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Congressional Quarterly HealthBeat
July 9, 2010 Friday
LENGTH: 866 words
HEADLINE: Health Savings Accounts Survive, but Conservatives See More to the Story
BYLINE: By Rebecca Adams
Health savings accounts, tax-preferred accounts used to pay medical bills, have been controversial since they first came into practice in the 1990s. They are the brainchild of conservatives who like the idea of giving people both a tax break and the ability to choose the kind of health care coverage they want. So when Democrats wrote this year's health care overhaul, it came as a surprise to many Republicans that the law did not ban the plans. Some conservatives are now convinced that the Obama administration will find a way to gut the accounts, and are maneuvering to protect them. "Everyone in this administration hates health savings accounts," said Grace-Marie Turner, founder and president of the Galen Institute, Inc., a public policy research organization that promotes market-oriented ideas. "It's pretty clear they're going to do everything they can to, if not kill them, at least undermine them."HSAs, as they are called, are used with high-deductible plans that cover catastrophic medical costs. Employers and employees can contribute to them, and the accounts do not require taxes to be paid on withdrawals unless the money is not used for health care. The 2003 law creating a Medicare drug benefit gave the plans a boost by lifting several restrictions on them.Some Democrats do not like the HSAs, saying that when younger, healthier people use them in conjunction with high-deductible plans, older and sicker people will pay more for insurance.But Democrats and some health policy analysts say the threat to HSAs is overstated. "It sounds great to say that HHS will try to blow up HSAs but I don't see it happening," said Robert Laszewski, an industry consultant who neither advocates for nor opposes the use of HSAs.Part of the reason Democrats are reluctant to tamper with the accounts is that their popularity grew after the 2003 law took effect. The number of high-deductible plans increased from 1 million in 2005 to about 10 million last year, estimates America's Health Insurance Plans (AHIP), a trade association.But conservatives point to several provisions in the law that they say constitute a threat. The biggest one, they say, comes from a provision in the new law requiring an insurance plan's value to meet certain basic thresholds. Conservatives fear that the administration might not count employers' contributions to HSAs when they are deciding whether a high-deductible plan meets those basic standards in order to qualify as insurance. If regulators do not count employers' contributions, then many high-deductible plans would not meet the actuarial value requirements and would not count as valid insurance. Under the law, most individuals must buy valid insurance or pay a penalty. Many health policy analysts downplay the risk. The Congressional Budget Office assumed employers' contributions would be counted. The law says HHS "shall issue regulations under which employer contributions to a health savings account . . . may be taken into account." This leaves wiggle room for regulators to target HSAs, says Roy Ramthun, a former Bush administration official who's now a consultant.Regulators "have an important decision to make with respect to the regs," said Karen Ignagni, the president and chief executive of AHIP. She expects that employers' contributions would end up being acknowledged. "If employer contributions are not included, it would be very hard to meet the test," she said.
Afraid of 'Mischief'The new law makes two other changes to HSAs, but most experts say they are not a threat to the program. In January, the tax that is assessed anytime someone uses an account to buy items that aren't related to health care will rise to 20 percent from the current 10 to 15 percent, depending on the type of account. Also starting in January, patients who have HSAs can no longer use them for over-the-counter drugs not authorized by a physician. Even with all these changes, Ignagni expects that HSAs will be available for consumers in the foreseeable future. Laszewski says the most important factor affecting HSAs may be that the law makes alternatives more attractive. Small business owners who now have a hard time buying comprehensive coverage for workers often turn to HSAs and the catastrophic plans. But starting in 2014, workers will have another choice in state-run exchanges.In the meantime, conservatives remain armed for battle."This bill does not explicitly exclude high-deductible health plans with an HSA, but it doesn't specifically protect them either," said Rep. Bill Cassidy, R-La., who has served as a Louisiana State University associate professor of medicine. Conservatives "are afraid that there is mischief in this bill beyond what they can see there. So the fact that it leaves the door open, if you will, for removing access to these in the future, I think, is of concern."During the health care debate, Cassidy sponsored an amendment in the House Rules Committee that would have shielded the accounts. Democrats did not include it in the final legislation. Source: CQ HealthBeat
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