- The Washington Times - Thursday, September 28, 2006

A House committee yesterday approved legislation to encourage and expand the use of health savings accounts, a program that Republicans say could transform the health care system by giving patients more responsibility and control.

The accounts, called HSAs, were created as an option under the Medicare law that went into effect in 2004. House Ways and Means Committee Chairman Bill Thomas, California Republican, yesterday said people “have already begun to see the tremendous potential of consumer-driven health insurance.”

His committee approved the legislation on a 24-14 party-line vote.

HSAs allow an employer and employee to contribute money into a tax-free savings account owned by the employee. The employee is covered by a high-deductible insurance plan and uses the HSA to pay deductibles and other health care costs. The balance rolls over from year to year, potentially accumulating a reserve to help pay for serious health care needs in the future.

Democrats said HSAs are designed for the rich and provide an inadequate cushion for the average American. They argued that federal money proposed for HSAs should be used instead to bolster existing government programs, such as Medicaid.

Rep. Pete Stark, California Democrat, said the bill “sums up the entire Republican health care agenda: You’d better hope you don’t get sick, because you won’t be able to afford medical care.”

The disagreement over HSAs highlights a deeper ideological divide between those who think government should be more responsible for managing health care and those who want consumers to take on more responsibility.

Proponents say HSAs encourage people to save for medical needs, take steps to improve their health and become better shoppers for services that insurance companies now negotiate. Consumers eventually will demand price comparisons and force the health care industry to become more transparent.

The legislation, which would reduce tax revenue by about $1 billion over 10 years, would allow people to roll over individual retirement accounts and other savings into their HSAs, would increase the annual contribution level to $2,700 for single coverage and $5,450 for family coverage, and would let those who enroll midyear to contribute the full annual amount.

Mr. Thomas called these “modest incremental” changes.

He said the accounts are far exceeding expectations, citing industry estimates that more than 3 million people have HSA-type plans. Initial estimates said HSAs wouldn’t hit that mark until 2014.

Democrats accused Republicans of inflating those numbers and said the official number of HSA accounts is unknown. Administration aides yesterday confirmed that specific numbers won’t be available for another month or so, until tax information from 2005 is analyzed.

“HSAs are still relatively new, but we are already seeing them quickly grow in popularity in the early stages,” Mr. Thomas said.

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