Wisc. Passes HSA Bill, But Veto Expected

Published June 1, 2006

Wisconsin state legislators say it will take a change in governorship before consumers can deduct from state taxes their contributions to health savings accounts (HSAs), after Gov. Jim Doyle (D) promised in May to veto a bill proposing to do so.

Though the federal government allows consumers to deduct their HSA contributions from federal taxes, Wisconsin is one of only six states that do not give the same break on state taxes. In 2004 Doyle vetoed an earlier bill the legislature passed to create such a tax credit.

“Our goal is to create a more consumer-driven health care system in Wisconsin, and the first step has to be having access to HSAs,” said Sen. Alberta Darling (R-Milwaukee), who sponsored A.B. 4 in the Senate. The bill passed on an 18-14 vote April 25; the General Assembly had passed it 60-36 in February.

“HSAs help people become more motivated,” Darling said. “It’s their money, and then they become more savvy consumers of health care, because they have a vested interest in it. That will change health care in Wisconsin, because we have some of the highest costs in the country.”

Conflict of Visions

The HSA bill would have given state residents a 6.5 percent credit for the amount they claimed as HSA contributions on their federal taxes. But critics, including Doyle, called the tax breaks “elitist,” claiming they will benefit only the rich and not the rising number of low-income workers who are choosing HSAs.

“This is not a proposal that by itself is going to help anyone get health coverage,” said Dan Leistikow, Doyle’s spokesperson. “What the governor thinks we ought to be doing is looking at ways to make health insurance more affordable for middle-class people that are being squeezed.

“Here in Wisconsin, the governor is launching an effort to reduce the price of catastrophic insurance by creating a statewide buying pool,” Leistikow said. “Businesses worry that one employee with high costs can bankrupt their business. This is one way to manage catastrophic care costs and reduce prices for everyone. It would be a lot better if the legislature worked with the governor to do that instead of focusing on tax breaks for wealthy and healthy people.”

State Rep. Mark Honadel (R-South Milwaukee) disagreed.

“Some people say HSAs do not help people of lesser income, and that’s just false,” Honadel said. “If a young person starts in the workforce and starts an HSA, he can save just the same way as the next guy. It’s not dependent on wage structure. It just comes down to the fundamental issue of do we want government to take care of us all the time, or do we want to take care of ourselves? A lot of people want to take care of themselves, especially if they’re young and healthy.”

Persistent Support

“Unfortunately, I think our governor is one of the last in the country that continues to veto this legislation, so it’s becoming very frustrating,” Honadel continued. “As a team in Wisconsin, [the legislature] has been passing very good HSA legislation, but the governor keeps vetoing it. So we either have to get a new governor, or he has to wake up.”

Darling said she would reintroduce the bill in the next legislative session.

“We passed [similar] legislation two years ago. We could have been up and running by now,” Darling said. “People are going to hear about this in November.”

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