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The Catch: Paying for FSA and HSA Improvements

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Rep. Sander Levin says Republicans should come up with the cash to pay for any moves to make flexible spending accounts (FSAs) and health savings accounts (HSAs) friendlier to consumers.

The House Ways and Means Committee today marked up four FSA and HSA program bills — H.R. 436, H.R. 1004, H.R. 5842 and H.R. 5858 — and several related measures, such as alternatives to the main health account bills.

The bills sailed through the committee today with support from Democrats as well as Republicans.

H.R. 436 would repeal an excise tax that would be imposed by the Patient Protection and Affordable Care Act of 2010 (PPACA).

H.R. 1004 would eliminate the rule that now causes FSA holders to lose any unused FSA balances at the end of the year. Employers would pay out any unused balances at the end of the year, and the Internal Revenue Service would treat the payments as ordinary, taxable income.

H.R. 5842 would let workers use FSA and HSA funds to pay for over-the-counter (OTC) drugs without a prescription. The drafters of PPACA eliminated that ability in an effort to increase tax revenue.

H.R. 5858 would let early retirees use HSA funds to pay for health insurance.

Ways and Means Chairman Dave Camp, R-Mich., said in an opening statement at the markup that implementing the bills would lower consumers’ costs and increase their flexibility, and he noted that the bills had bipartisan support.

Levin, D-Mich., the highest-ranking Democrat on the committee, said budget analysts have estimated implementing the bills as written could cost about $42 billion.

“It is simply unacceptable for the Majority not to pay for them,” Levin said. “It is equally unacceptable that they have not told us how they plan to pay for these bills if they intend to do so.”

One problem with spending so much money on improving FSAs and HSAs is that the accounts do notprovide comprehensive health coverage for participants, Levin said.

Implementing the Patient Protection and Affordable Care Act (PPACA) would do far more to expand access to affordable, comprehensive coverage, Levin said.

CARE COSTS

More on this topic

Analysts at a health research institute affiliated with PricewaterhouseCoopers, New York, say the medical cost trend — the increase in the underlying cost of health care, could slow to 7.5% in 2013.

A year ago, the analysts were predicting costs would increase 8.5%. The actual increase has been about 7.5%.

The analysts note that the actual rate of increase has been lower than the projected rate for the past 3 years.

The analysts say employers are holding down costs by expanding wellness and condition management programs as well as by increasing employees’ share of the plan costs.

Increased availability of cost information and the fact that major drugs are coming off patent are also helping, the analysts say.

PPACA TAKES A HIT

The popularity of PPACA fell in May, but the percentage of U.S. adults who want to see Congress expand the law or keep it as is held steady.

A team of researchers led by Mollyann Brodie of the Henry J. Kaiser Family Foundation, Menlo Park, Calif., has reported that finding in a summary of results from the foundation’s latest health tracking poll.

The May telephone survey sample included 1,218 U.S. adults ages 18 and older, including 2294 cellular telephone users who had no land lines.

The percentage of participants who said they have a favorable view of PPACA fell to 37%, from 42% in April, and the percentage who said they have an unfavorable view rose to 44%, from 43%. The percentage who refused to answer or said they don’t know increased to 19%, from 15%.

The percentage who said they want Congress to keep the law as is or expand it was 47%, the same as in April.

About 56% said they disapprove of efforts by congressional opponents of PPACA to cut off implementation funding. Only 32% of the survey participants said they approve of de-funding efforts.