Dems Work to Kill Health Savings Accounts

[AFTiger 282]

Health Savings Sabotage

April 19, 2008

Democrats have made affordable health care a mainstay of their election agenda, but apparently only if you're willing to get insurance through the government. Witness their stealthy assault on Americans who prefer the private-sector option of Health Savings Accounts.

This week, the House passed legislation that included a provision to require every HSA transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod. In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs.

A key player here is Ways and Means Health Subcommittee Chairman Pete Stark, whose main purpose in politics is to give the U.S. a government-run health-care system. He is a known opponent of HSAs – once comparing them to "weapons of mass destruction" – because they introduce more individual choice into the health-care marketplace.

Pushing for the provision was a company called Evolution Benefits, which has patented a system for the substantiation of health-care expenses. Evolution's lobbyist, John McManus, was the former staff director of the Health Subcommittee under Republican Bill Thomas. The company first lobbied for the HSA provision, then withdrew its support when Republicans began to focus on its role. But Ways and Means Chairman Charlie Rangel helped make sure the provision was in the bill, which passed largely on partisan lines.

Liberals claim HSAs are insurance for the "healthy and wealthy," but there's little evidence this is true. How they work is that an employer or individual first buys a cheap, high-deductible policy for large, unexpected medical costs. Then the insured can open an HSA and make an annual contribution up to $2,900 for an individual in 2008, which he can use to pay for ordinary health needs. Savings not spent in any given year can build up tax-free.

This is health insurance many Americans can afford, and it doesn't force those who have better use for their scarce dollars to buy gold-plated insurance with special-interest mandates (cover the chiropractors!) that Democrats want to force on everyone. HSAs also give consumers more reason to care about prices, bringing much-needed market discipline.

Since HSAs were created in December 2003, 3.2 million HSA accounts have been opened, covering 4.5 million Americans. Nearly a third of new HSA users previously had no insurance and bought coverage on their own. Thirty-three percent are small businesses that had not previously offered coverage to their employees. Isn't this what good progressives claim to want?

Apparently not if it means a free market in health insurance. Having lost the policy argument when HSAs were created, Democrats are now trying to kill them with regulatory subterfuge. The new scheme purports to ensure that money saved tax-free in an HSA is actually used for health expenses. But this is a nonproblem: Any withdrawal from an HSA is already subject to a federal tax audit, just as individual tax returns are. In any case if people cheat on their HSAs, they are only cheating themselves. When a medical expense arises below the insurance deductible, they will be the ones paying for it, whether from their HSA or another bank account.

Democrats, including Hillary Clinton and Barack Obama, decry the high and rising costs of health care, including insurance "overhead." Mr. Stark and his friends want to impose the same bureaucratic overhead even on spending that consumers do with their own money. The Senate should stop this one dead in its tracks.

linky

[TitanTiger 20,542]

Ridiculous. Such plans aren't practical for my family with two young kids and all the doctor's visits that can involve, but if others prefer a plan like this, why try to drive them out of existence just because it doesn't fit your utopian paradigm of universal coverage? And all because some company has developed a software system that needs Congress to create a market for it?