Government and HSAs
by J. Kevin McKechnie, Executive Director & Founder, ABA HSA Council
Last time HSAs were updated by congress, Nickelback was still a cool band. The year was 2006 and no, there weren’t cars with tape decks in them anymore but you take the point – this product, creature of the tax code that it is, needs some improvements. And, only congress can do that. Congress is the reason reform takes so long; asking a 535-member board of directors to agree to a decision is to efficiency what Rube Goldberg is to engineering.
Reform, if it’s possible, needs to respond to the twin exigencies of customer demands and government prerogatives. With respect to the former, we saw legislation in the House last year that would have added, as qualified medical expenses, many of the things employers suggest are important to their workforce. Direct Primary Care, coordination with Medicare, and assistance with chronic disease management were all improvements that should be considered qualified medical expenses, if the employer chooses to cover them, which is to say, pay for them.
It would also be prudent, in our opinion, that if HSAs are to be eligible for a wider field of expenses, more money should be allowed to be contributed to the account. Expanded ability to save for retirement would also justify higher contribution limits and we were under the impression that such a suggestion would attract bi-partisan support – it did – simply because neither democrats or republicans are making the argument that social security and Medicare are suffering from too much funding.
With respect to the latter, how can HSAs help government, there are few ideas with greater budgetary and social impacts than allowing Medicare enrollees to keep their HSAs. People are living longer; it costs more to pay for the things Medicare doesn’t in retirement. You wouldn’t know it to listen to congress but a solvency crisis in Medicare is coming just ten years from now. We can make the crisis less acute if a growing proportion of the population gets to the gates of Medicare with cash in an HSA.
We also see no reason to stop there: why shouldn’t veterans be able to receive their VA and TRICARE benefits in HSA form? For that matter, every government program should offer an account-based component, of which HSAs are the most versatile and valuable.
The member companies of the HSA Council – banks, insurers, TPAs and technology companies – are keen to make the case that before we can offload the entirety of our healthcare system to government control, we should explore the ability of individual account holders to stabilize costs and discover pricing efficiencies that only emerge through market dynamics. Consumers have been excluded enough in our current system; it will be worse when only the government has all the answers.