Economist John C. Goodman is generally credited with being the “father of Health Savings Accounts.” They were enacted into law as part of the Medicare Prescription Drug, Improvement , and Modernization Act of 2003 signed by President George W. Bush.
Health Savings Accounts are healthcare dollars put away for medical expenses. They have several advantages:
- Contributions to an HSA are tax-deferred.
- HSA deposits are owned by the insured.
- HSA deposits can be carried over from year to year.
- Because they are coupled with high-deductible insurance plans, the premiums of these plans are lower.
- They may be used for both medical and dental expenses.
- They may be used to pay any family member healthcare expenses.
Studies have shown that people with HSAs spend 30% less on healthcare per year. Every since they were created in 2003, they have grown in popularity. Last year nearly 20 million Americans were enrolled in HSA plans.
Studies have also shown that people with HSAs received higher levels of recommended care, were more likely to engage in wellness programs, reduced total medical costs, and were more savvy healthcare consumers. What’s not to like?
ObamaCare Discourages HSAs
With all these advantages, you would expect the government to encourage people to enroll in HSAs. That was true of the Bush administration, but not the Obama administration.
Beginning with the original writing of ObamaCare, the Obama White House began to discourage HSAs. First, they lowered the allowed deductible in these plans to $2000 for individuals and $4000 for families. This raises the price of the premiums and lowers the amount of money saved that could have been put in the HSA account instead.
Second, they increased the penalty from 10 percent to 20 percent for spending HSA dollars on non-medical expenses. Third, they disallowed using HSA funds to pay for over-the-counter medicines, which were previously approved by the Bush administration.
New ObamaCare Regulations Worse
In his last year in office, President Obama seems determined to double-down on his failed healthcare law. The Obama administration has just published final regulations that HSA expert Roy Ramthun says, “will make it impossible to offer HSA-qualified plans in the future” on the ObamaCare exchanges.
Grace-Marie Turner, writing in Forbes, says the Department of Health and Human Services (HHS) new rules govern the “standard benefits designs” for Bronze, Silver and Gold plans in the exchanges. According to Ramthun’s analysis, the new rules mean:
- The specified deductibles for the plans and out-of-pocket limits to be offered in the exchanges will be outside the requirements for HSA-qualifying plans.
- Plans will have to cover services below the deductible which are not allowed under the legal definition of HSAs.
- Ramthun believes it is unlikely any HSA plans will be offered in the exchanges in 2017 as a result.
What does this mean for consumers on the exchanges?
It means if you buy your health insurance on the ObamaCare exchanges, you won’t have the advantages these HSA plans offer. It means you will have fewer options to consider than those who get their healthcare through their employers or apart from the exchanges.
Why would the Obama administration try to discourage HSAs?
This is a difficult question to answer. When trying to discern the thinking behind many of the ObamaCare rules and regulations that don’t make sense, it is best to understand that the progressive vision of healthcare is total government control. Anything that gives consumers more freedom to make their own healthcare decisions is to be discouraged – even when it saves money and provides higher quality healthcare.
The Republican proposals to replace ObamaCare all contain provisions for the expansion of HSAs with less restrictions on their use, higher contribution levels permissible per year, and the creation of such plans even for the poor through government contributions. HSAs are a great way to improve the quality of healthcare, increase freedom of choice, and lower the cost for both consumers and the government. Now that’s an idea the government should be happy to promote!