- The Washington Times - Wednesday, May 12, 2004


Workers who set aside part of their salaries in tax-free accounts for health bills could shift unused funds into the next year or long-term health savings accounts under legislation approved yesterday by the House.

The measure, approved 273-153, is one of three measures that Republicans are pushing during a week of increased focus on health care and the uninsured. All three have passed the Republican-led House previously, but have been blocked in the Senate — leading House Democrats to assert that the new round of votes is merely political theater.

A bill to place limits on medical malpractice awards passed on a partisan 229-197 vote. The House was expected to vote today on legislation to let small employers buy into national health insurance plans to receive more affordable rates for employees.

“We’re here today to debate issues that have already passed this House in bills that clearly won’t make a dent in the problem of the uninsured,” said Rep. Sherrod Brown, Ohio Democrat.

Flexible spending accounts help employees with copayments, deductibles and other health expenses not covered by insurance.

Employees who establish flexible spending accounts agree to set aside a specified amount of salary; for example, $1,000 for medical costs not covered by the employee’s health insurance. Workers’ taxable income is then reduced by that amount, saving them money at tax time.

Employees currently forfeit unused money to their employer, a major reason that spending accounts are held by only 7 million, or 18 percent, of the 37 million eligible employees, supporters say.

About 16 percent of American companies offer the spending accounts. Most companies with more than 200 employees do.

This use-it-or-lose-it provision also encourages a frenzy of end-of-year spending on eyeglasses and nonessential health procedures, supporters say.

Rep. Ed Royce, California Republican, said his interest in changing the law arose from his wife’s purchase of glasses she liked but did not really need.

“She purchased them because she said she didn’t want to lose the money in her flexible spending account,” Mr. Royce said.

The bill would allow up to $500 left over at the end of one year to be used for health care expenses in the next year or invested in the health savings accounts that were created in last year’s Medicare law.

The rollover provision was included in the House-passed version of the Medicare bill but was dropped in negotiations with the Senate.

While Democrats said they back rolling over the money from one year to the next, they opposed the provision that would allow people to invest it in the new health savings accounts. They argue that those accounts are tax shelters for the wealthy.

Health savings accounts are available to people with high-deductible insurance coverage. Money can be invested and spent tax-free. The earnings also grow free of taxes.

“The wealthy are able to take advantage of health savings accounts, but the poor are not,” said Rep. Louise M. Slaughter, New York Democrat.

Democrats also objected to the $8.4 million in lost revenue over 10 years that the bill entailed, but they failed to amend the legislation to close corporate-tax loopholes to offset the loss and strip the health accounts provision.

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