House, Senate Bills Would Expand Health Savings Accounts

Published February 4, 2020

Introduced in December 2019 by Sens. Ted Cruz (R-Texas) and Mike Braun (R-Indiana) in the Senate and Reps. Chip Roy (R-Texas), Andy Biggs (R-Arizona), and Mike Johnson (R-Louisiana) in the House, the Personalized Care Act (PCA), S. 3112 and H.R. 5596, would expand health savings accounts and make several other reforms aimed at giving patients more choices in selecting their health-care coverage.  

HSAs, a pre-tax savings tool used by millions of Americans to cover the cost of their health care, have become an increasingly attractive option for consumers. According to Devenir Research, the number of Americans with an HSA grew from 6.3 million in 2011 to more than 25 million in 2018. Although the market share of HSAs has shown consistent growth, the bills’ sponsors believe Congress can take additional steps to unleash the power of the marketplace and expand HSAs.

To that end, the Personalized Care Act would increase the maximum annual contribution limit for HSAs from $3,550 for individuals and $10,800 for families to $7,100 for individuals and $29,500 for families. The bill would also decouple HSAs from high-deductible health plans (HDHPs) and extend HSAs as an option for those enrolled in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).

Addressing the Disparity in Tax Treatment

The bill would expand people’s choice in selecting their health coverage by allowing them to use their tax-free HSA dollars to purchase their own health insurance plan. The change addresses the disparity in tax treatment between employer-provided health coverage and plans on the individual market.

By further expanding the scope of HSAs, the PCA allows the purchase of over-the-counter prescription drugs using HSA funds and allows users to purchase alternative coverage arrangements, such as health sharing ministries, short-term-duration plans, medical indemnity plans, and direct primary care plans.  It would also allow individuals and families to use their HSAs to pay for health insurance premiums.

“With the recent focus on price transparency, HSAs are a market-minded way to help accomplish this goal, without coercion from the federal government,” stated Adam Brandon, president of FreedomWorks, on his organization’s website. “As more Americans enroll in HSAs, consumer demand for price transparency will grow. Additionally, because HSAs are a direct way for Americans to pay for healthcare, rather than relying on going through a third-party payer, this may have the positive effect of making Americans more cost-conscious in their healthcare choices.”  

“System in Dire Need of Fixing”

“The ‘market’ for health care has been largely destroyed, and in its wake remains a complicated, confusing system in dire need of fixing,” said Roy in a press release. “Prices are too high, and choices are too few, and the federal government’s response has long been more government and money.”

Roy says the United States spent $2.6 trillion on health care in 2010.  

“In the post-Obama era, this number is expected to reach $3.8 trillion in 2019, and national health spending is expected to grow at an average rate of 5.5% per year to reach nearly $6.0 trillion by 2027,” Roy said.

Upon introducing the legislation, Cruz stated now is the time for reform. 

“The pressure to change the health care status quo is rightfully building, and the key question is whether Congress will use this pressure to finally create a true free-market health care system or build on the failures of Obamacare,” Cruz said.

Neither the Senate nor House bill (they are identical) have any Democratic co-sponsors. Even though HSAs have grown in popularity, with Democrats controlling the House and Republicans far short of a filibuster-proof majority in the Senate, the bill stands little chance of enactment in this session of Congress, particularly in a highly-charged election year. Its real significance may lie in providing a contrast to plans such as Medicare-for-All that emphasize a larger role for government.



Bonner R. Cohen, Ph.D.([email protected]is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow.

Internet info:

Personalized Care Act of 2019, December 20, 2019: