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Insurers Give Congress 3 Ideas for Making HSAs Work Better

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Agents, insurers and benefit plan administrators and consultants are hoping new efforts to expand the health savings account (HSA) program can give Republicans and moderate Democrats a chance to get ordinary bills through Congress this summer.

The House Ways and Means health subcommittee today gave HSA program supporters, and critics, a chance to talk about the program at a hearing.

Matt Eyles, the new president of America’s Health Insurance Plans, a group for health insurers, gave lawmakers three proposals for changing the HSA program.

1. Make plan design rules more flexible.

Congress should make sure that consumers in the individual major medical market, including the Affordable Care Act public exchange market, can buy high-deductible policies that are compatible with HSA program requirements, Eyles said.

Congress should also let issuers provide pre-deductible coverage for people with chronic conditions, such as diabetes, who want to set up HSAs but need to use products such as insulin as part of their routine preventive care.

2. Make HSA spending rules more flexible.

Congress should let HSA holders use HSA money to pay for products such as over-the-counter drugs, and premiums for dental insurance and vision insurance, Eyles said.

3. Improve HSA features for consumers who have no access to employer-sponsored coverage, are self-employed, and earn too much to qualify for ACA public exchange plan premium subsidies.

People who earn more than 400% of the federal poverty level get no premium subsidy help, and many are struggling to pay their health insurance premiums, Eyles said.

The HSA program gives people a way to contribute cash to health accounts, without paying income taxes on the money contributed, and withdraw the cash to pay for eligible expenses without paying income taxes on the withdrawals. To use the program, a taxpayer must buy major medical coverage that has a high deductible, but also has an annual out-of-pocket spending maximum below a limit set by the HSA law.

Some Common Ground

Most major Republican proposals for changing or replacing the Affordable Care Act have included provisions that would expand the HSA program, or create major, broader health account programs that would be similar to the HSA program.

(Related: How Dr. Bill Wants to Change Health Insurance Now)

Many Democrats in Congress are cool toward the HSA program, or hostile, arguing that the HSA program does more to lower the tax bills of high-income Americans than to help other Americans pay for care.

Other Democrats in Congress support the HSA program.

Roy Ramthun, president of HSA Consulting Services LLC, pointed out that lawmakers have introduced many HSA-related bills during the current Congress, and that Democrats are supporting some of those bills.

Rep. Diane Black, R-Tenn., noted that she has joined with Rep. Earl Blumenauer, D-Ore., to introduce a bill that would help people with chronic conditions use HSAs while, at the same time,


Jody Dietel, chief compliance officer at WageWorks Inc., a company that administers HSA programs for many employers, including the federal government, provided detailed internal data on WageWorks’ own HSA users.

She reported that the median household income for a WageWorks HSA account holder is just $57,060, and that WageWorks HSA users carry only about 25% to 35% of annual contributions over to the following year.


Sherry Glied, dean of the New York University public service graduate school, testified that there is little evidence that HSAs increase Americans’ access to care or increase the efficiency of the U.S. health care system.

People with the high-deductible plans having more trouble paying medical bills than comparable people with traditional medical insurance do, and people who have both high-deductible coverage and HSAs report similar types of problems with paying medical bills, Glied testified.

“For lower middle-income households in high-deductible plans, whether you have an HSA or not has absolutely no effect on whether you can afford your medical bills,” Glied said.

Another challenge is that HSAs have done little to affect the efficiency of the health care system, partly because HSAs have done little to increase the likelihood that consumers will shop carefully for care based on price, Glied said.

One challenge is that patients who are very ill account for most health care spending, and those patients are not in a good position to compare the cost and quality of care providers, Glied said.


House Ways and Means has posted many resources related to the hearing, including a video of the hearing and links to written versions of the witnesses’ testimony, here.

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