CAJ note: We recently participated in a phone conference with Congressmen Mike Pence and Paul Ryan. During the call Rep. Ryan said that a provision to end HSAs is also in the Pelosi version of the bill.
The End of HSAs
Harry Reid wants to kill consumer-driven health care.
The Wall Street Journal
November 23, 2009
About the best that can be said about the Senate health-care bill that Harry Reid revealed this week is that it’s marginally less destructive than the House monster. By a hair. Its $1.2 trillion cost (more like $2.5 trillion if you discount the accounting gimmicks), multiple and damaging new taxes, and new regulations will make health insurance more expensive for most Americans while reducing the quality of medical care.
We’ll dissect the damage in the days to come. But for today let’s focus on the damage the bill would do to consumer-driven health plans—the kind that give individuals more control over their health dollars and insurance choices. The 2,074-page bill crushes them with malice-aforethought.
Start with its attack on flexible spending accounts that are an important part of many employer plans. Flex accounts let employees set aside some portion of their pre-tax pay for out-of-pocket costs or medical services that their insurance plan doesn’t cover, such as a child’s orthodontics or testing supplies for diabetics. The Reid bill caps these now-unlimited accounts at $2,500 per year and imposes new restrictions on qualifying medical expenses, raising some $5 billion by exposing income above the non-indexed cap to taxes.
Democrats say flex accounts encourage wasteful spending, because an arbitrary “use it or lose it” rule doesn’t allow balances to roll over year to year. But they really hate them because they give consumers a more active role in managing spending, instead of having the government decide.
The Reid bill also assaults health savings accounts, or HSAs, which allow individuals to accumulate tax-free funds for future medical expenses when coupled with low-premium, high-deductible insurance. The Reid bill changes tax provisions to make HSAs less attractive, but the real threat comes via increased regulation.
The rest is at WSJ
