House Democrats Propose Misguided HSA Reforms

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8d ago 18:46

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House Democrats are moving to curb the benefits of Health Savings Accounts (HSAs), arguing that the popular tax-advantaged accounts increasingly double as investment vehicles for the wealthy rather than a way for families to pay medical bills.

Rep. Lloyd Doggett, a longtime Texas Democrat and the ranking member on the House Ways and Means Health Subcommittee, has introduced the Health Savings Accounts (HSA) Consumer Protection Act.

The bill arrives just as millions of Americans are facing some of the largest health care insurance premium increases ever. While HSAs are a great tool to invest and build wealth - their key benefit is to help families afford the high cost of healthcare in America.

Democrats point to a new Government Accountability Office report (PDF File) and other analyses showing HSAs skew heavily toward higher-income, healthier, and disproportionately White and Asian account holders. They also highlight projections that HSAs will reduce federal tax revenues by roughly $180 billion over the next decade.

But it's important to note that wealthier families opt towards HSAs because they have to - not by choice. These plans are typically the cheapest option in the face of ACA penalties. And this potential fix would punish everyone due to changes in qualifying expenses and reimbursement options.

In short, this proposal is bad for everyone except the government. All it would do is increase taxes for Americans, while providing no benefit to those who are trying to pay for the excessive healthcare costs created by the current healthcare system. It's even bad for health insurance companies and HSA providers, who'll be subject to more record-keeping and potential taxes. It's actually pretty wild to see such a terrible bill proposed.

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