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HSA Hearing Turns To Cap On Group Health Deductibility

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Lawmakers talked Wednesday about capping deductibility of employer health insurance expenditures during a House Ways and Means Committee hearing on health savings accounts.

Ways and Means Chairman Bill Thomas, R-Calif., convened the hearing to assess the HSA program and talk about future program adjustments.

The topic of employer health premium deductibility came up after HSA supporters clashed with skeptics.

“HSAs are helping a substantial number of previously uninsured consumers purchase coverage, accumulate savings for their future medical needs, and access preventive care services,” said Karen Ignagni, president of the America’s Health Insurance Plans, Washington. “HSAs also are enabling many small employers to offer health coverage to their employees for the first time.”

But Sara Collins, a health policy specialist at the Commonwealth Fund, New York, objected to efforts to fight health care cost inflation by increasing patients’ out-of-pocket costs.

Many backers of the HSA program say Americans spend too much on health care because they are protected from its real cost, but there is no evidence to back that claim, Collins said.

“Americans already pay far more out of pocket for their health care than citizens do in any other industrialized country,” Collins said.

“The major beneficiaries of the tax savings available through HSAs are likely to be healthier and more affluent taxpayers who already have health coverage–and can afford the financial risk posed by higher-deductible plans,” Collins said.

Rep. Pete Stark, D-Calif., compared HSAs to the Iraqi weapons of mass destruction.

“It’s not that people are lying about it, but there is a lot of misunderstanding on the issue,” Stark said.

Only 100,000 of the 3 million people who have signed up for HSAs have actually set up the savings accounts and contributed to the accounts, Stark said.

“This is a case where the administration is trying to solve a problem by throwing extra dollars at the rich, while ignoring the middle class, as they have done before,” he said.

Thomas then asked hearing witnesses if they could support a “reasonable cap” on employer deductions to help pay for coverage for low-income people.

“I believe so,” said Jeff Cava, executive vice president for human resources at Wendy’s International Inc., Dublin, Ohio.

Ignagni said AHIP would be “concerned” about a cap on employer deductions.

Collins said she would be concerned about breaking up the group market.