March 27, 2006

A bill introduced by Sen. George Allen (R-Va.) on March 15 seeks to boost the amount of pre-tax money high-deductible health plan (HDHP) enrollees can contribute to their health savings accounts (HSAs). And up to five additional bills - each addressing other elements of President Bush's proposals to expand HSAs - are expected this spring. But it is impossible to predict how many, if any, of those bills will make it out of committee.

With mid-term elections less than eight months away, policy experts say some Republican legislators are trying to distance themselves from a president whose approval ratings seem to be in a free fall. "Republicans are not together on a vision of health care consumerism," says Ron Bachman, president and CEO of Healthcare Visions, Inc. and a senior fellow with The Center for Health Transformation. "Many are still trying to create a force away from an employer-based health care system, while others want to empower employees and create ownership whether it is under an employer plan or individually purchased."

HSA critics have been quick to point to a comment made this month by Senate Finance Committee Chairman Charles Grassley (R-Iowa). In his opening statement at a March 8 hearing on health tax incentives, Grassley said that because Democrats largely oppose HSAs, it would be hard to win legislative support for expanding them this year.

Despite that comment, Grassley does support the president's proposals," according to White House health policy adviser Roy Ramthun. During a March 16 session at the National Business Group on Health's (NBGH) annual meeting in Washington, D.C., Ramthun said that Grassley's comment had been misconstrued. "When we have talked with him, he has a much more favorable outlook on the president's proposals," Ramthun said.

Senate Finance Committee spokesperson Jill Gerber tells AIS that while Grassley supports the HSA concept, "he wants to review any expansion in the context of all employer-provided tax breaks, which already are quite expensive and may not be working as well as intended, given the large numbers of uninsured Americans," she explains. "The outlook for expanded HSAs in the Senate is somewhat dim," she admits, "because of Democratic opposition."

Laura Capps, a spokesperson for Sen. Edward Kennedy (D-Mass.) agrees with Gerber and tells AIS that the HSA proposals will be difficult to sell on Capitol Hill... "so much so that they weren't included in the Republican budget." In a prepared statement, Kennedy compared the president's HSA-expansion strategy to his failed proposal to privatize Social Security. Like most HSA critics, Kennedy says HSAs benefit only healthy and wealthy Americans and will do little to make health coverage more affordable or available.

HSA Proposals Still Kicking

Despite the opposition among Democrats and tepid support by some Republicans, the HSA bills are far from being dead on arrival, says Paul Fronstin, senior research associate at the Washington, D.C.-based Employee Benefit Research Institute. "Three years ago, I would have said 'not a chance.' But the Medicare reform bill [signed into law in late 2003] was a defining moment about how health policy is made," he says. "If the [Bush] administration feels strongly about this, they will push it. At this point, anything is possible."

Ramthun said the overall reaction to the HSA proposals among lawmakers has been "the exact opposite" of the reaction they had to last year's Social Security proposal. "Members [of Congress] are falling all over themselves to try to be the first to introduce proposals," he said. "I have not seen this energy and excitement around [a proposal] in many of my years in Washington," he told attendees at the NBGH meeting.

Of the president's proposals to expand HSAs, boosting the annual contribution limit, as addressed in Allen's bill, is the most attractive, says Michael Cannon, director of health policy studies at the Washington, D.C.-based Cato Institute. The higher contribution limits, he says, level the playing field between people who have insurance through an employer and those who purchase health coverage on their own.

"If they can pass [all of the bills together], then great," he says. "If they can only pass one, [Allen's bill] is better than nothing."

While HSA legislation would likely speed the adoption of HSA-based plans, Bachman says the marketplace will ultimately determine the direction various CDH strategies take. Even if the Republicans lose control on Congress this fall, he says CDH will likely continue, albeit at a slower pace.

"Health care consumerism is a mega-trend that will continue regardless of who is in power," Bachman says. "The timing and legislative and regulatory support may slow the process, but much like welfare reform, the concepts will be too strong for partisan politics to stop. They can only be delayed."

Reprinted from the March 24, 2006, issue of INSIDE CONSUMER-DIRECTED CARE.