Surprise: Senate Health Care Bill Destroys Health Savings Accounts, Health Flex Plans
The liberals are fond of draping their health care efforts in free market rhetoric. They tell us that the “public option” would just be another choice on health. That the government-run health care exchanges will make it easier for citizens and/or their employers to choose their health care plans.
But the reality is that the Senate health care bill limits choice. And in one key area, limits choice when it comes to things like health savings accounts of health care flex plans which allow citizens to save some of their own money and use it for care.
Start with its attack on flexible spending accounts that are an important part of many employer plans. Flex accounts let employees set aside some portion of their pre-tax pay for out-of-pocket costs or medical services that their insurance plan doesn’t cover, such as a child’s orthodontics or testing supplies for diabetics. The Reid bill caps these now-unlimited accounts at $2,500 per year and imposes new restrictions on qualifying medical expenses, raising some $5 billion by exposing income above the non-indexed cap to taxes.
Democrats say flex accounts encourage wasteful spending, because an arbitrary “use it or lose it” rule doesn’t allow balances to roll over year to year. But they really hate them because they give consumers a more active role in managing spending, instead of having the government decide.
The Reid bill also assaults health savings accounts, or HSAs, which allow individuals to accumulate tax-free funds for future medical expenses when coupled with low-premium, high-deductible insurance. The Reid bill changes tax provisions to make HSAs less attractive, but the real threat comes via increased regulation.
These insurance products will likely be barred from the insurance “exchanges” that will demolish and supplant today’s individual market. Employers will also find them more difficult if not illegal to offer once the government has new powers to “define the essential health benefits” that all plans must eventually offer. Plans that focus mainly on catastrophic health expenses, instead of routine procedures, aren’t generous enough for Democrats.
Health savings accounts enhance choice. Citizens can choose the insurance plans to couple with their HSA’s and customize them to cover what they need. They can then use the money they put into their tax-sheltered HSA’s to cover a lot of the things normal health insurance plans don’t. Like vision. Dental. Orthodontics.
What’s more, with a HSA people are essentially spending their own money. Meaning that they’ll be more frugal in seeking care, something that will in turn drive down health care prices through competition.
If we really wanted to introduce more choice into health care, if we really wanted to drive down prices, then enhancing things like HSA’s is what we should be doing. Not hamstringing them.
But that’s presuming that those pushing this health care bill really want you to have more choice in health care. Which, of course, they don’t.
