HSA Bill Clears Key Committee in U.S. House

Published November 1, 2006

A bill that would allow more people to use health savings accounts (HSAs) passed the Ways and Means Committee in the U.S. House of Representatives on September 27, clearing the way for a full floor vote after the November elections.

The bill, H.R. 6134, sponsored by Reps. Eric Cantor (R-VA) and Paul Ryan (R-WI), suggests several improvements to the existing HSA law passed in 2004. It passed the committee on a 24-14 vote.

If approved by both chambers of Congress later this year and signed into law by President George W. Bush, it will save taxpayers an estimated $1 billion over the next 10 years.

More Flexibility

The legislation would:

  • allow employees to make a one-time tax-free transfer of unused funds from their Flexible Spending Account and Health Reimbursement Account into an HSA;
  • allow a one-time rollover from Individual Retirement Accounts into HSAs to free up funding immediately for health care expenses;
  • allow employers to make higher contributions for employees who are not well paid; and
  • simplify HSA rules so people can contribute the maximum amounts to HSA accounts, rather than the amount dictated by the deductible on their health insurance policy.

“HSAs are still relatively new, but we are already seeing them quickly grow in popularity in the early stages of their existence,” Ways and Means Committee Chairman Bill Thomas (R-CA) said in a September 27 statement. “The adjustments in this bill will make HSAs more attractive as Americans consider their health insurance options.”

Modest Proposal

According to testimony given before the committee in June, more than 3 million Americans already have HSAs. A Government Accountability Office study released in August reported 31 percent of those people were unable to afford any kind of health insurance before Congress passed the 2004 law.

Thomas said the proposals in H.R. 6134 are “modest,” but Democrats on the committee disagreed.

“Health care is certainly an issue we should be addressing in Congress. But make no mistake, HSAs are not health policy, they are tax policy,” said Rep. Pete Stark (D-CA) during the debate. “Attempts to make HSAs even more attractive–like the one we have before us today–threaten traditional insurance coverage and shift more of the cost burden for health care to workers.”

Karla Dial ([email protected]) is managing editor of Health Care News.

For more information …

The full text of the Health Opportunity Patient Empowerment Act of 2006 is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.policybot.org and search for document #19773.

“Health Savings Accounts: Early Enrollee Experiences with Accounts and Eligible Health Plans,” GAO-06-1133T, published on September 26, 2006 by the Government Accountability Office, is also available through PolicyBot™. Search for document #19774.