HSAs expansion is a key to health care freedom

In the fight for free-market principles in the health insurance market, there is one policy in particular that all conservatives can agree on: the expansion of health savings accounts (HSAs). These accounts allow consumers to save their own money tax-free to be used for medical expenses, putting individuals in charge of their own health care dollars.

Last year’s failure to repeal ObamaCare or even reform the law was frustrating to any conservative and libertarian who has voted to put Republicans in control of Congress. Still, there have been some victories. The Tax Cuts and Jobs Act not only gave tax relief to the middle class, it also repealed ObamaCare’s individual mandate. More than 80 percent of households subject to the tax earned less than $50,000 annually.

{mosads}Separately, Congress delayed some ObamaCare taxes, including the “Cadillac tax” and the health insurance tax, and the Trump administration has taken steps to expand association health plans. These are steps in the right direction, although comprehensive health insurance reform still, let alone actual repeal of ObamaCare, remains out of reach.

The expansion of HSAs, however, have been one centerpiece of every replacement plan. Not only was HSA expansion part of the House-passed American Health Care and the Better Care Reconciliation Act, and the proposal put forward by Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.), it was also part of Sen. Rand Paul (R-Ky.) and Rep. Mark Sanford’s (R-S.C.) ObamaCare Replacement Act and Sen. Cassidy and Susan Collins’ (R-Maine) Patient Freedom Act.

Even as they stand, HSAs have become massively popular since their introduction into the market in 2004 and enrollee numbers are still continuing to rise. According to America’s Health Insurance Plans, the number of HSA enrollees in plans from 52 health insurance providers grew by nearly 10 percent — by 1.6 million enrollees — in just one year, from 20.2 million enrollees in 2016 to 21.8 million in 2017.

Public interest in these plans is so high for very good reason. HSAs offer a triple-tax advantage to their holders. Contributions can be deducted pretax from one’s income, interest or investment gains are tax free, and withdrawals for qualified medical expenses are as well. However, there are restrictions on HSAs that hamper their full potential. It is these restrictions that conservative-backed HSA expansion measures would eliminate.

Health insurance plans that HSAs are paired with must match certain criteria, including high deductibles. The accounts themselves have contribution limits, and premium costs are not included in qualified expenses.

Proposals from conservatives both last year and this year would expand the scope of and reduce restrictions on health savings accounts, giving consumers more flexibility to spend their savings on health expenses that they need to cover most. Rep. Dave Brat (R-Va.) and Sen. Jeff Flake (R-Ariz.) have introduced a standalone bill — the Health Savings Account Expansion Act, H.R. 247 and S. 28 — at the outset of last year to expand HSAs. Proposals to “repeal and replace” ObamaCare last summer included HSA expansion provisions. More recently, Sen. Paul included reconciliation instructions to expand HSAs in his Penny Plan Balanced Budget.

Conservatives still prioritize the repeal of ObamaCare, making it essential the Republicans in Congress succeed in mitigating the pain of the law for all those Americans which have been harmed by it. Expanding HSAs by increasing the contribution limit and expanding the eligible medical expenses including allowing premium payments from HSAs is absolutely one of these actions.

Senate Majority Leader Mitch McConnell (R-Ky.), in line with his transactional leadership style, is willing to move legislation that does not divide his conference. A push for  health savings account expansion does precisely the opposite. Even if Republicans do not agree on all elements of what health insurance reform should look like, there is widespread agreement that HSA expansion gets at the heart of health care freedom — returning power to consumers.

Republicans would do themselves well to take action on health care this year in a manner that will deliver concrete relief to the millions of Americans who need it without risking another failure reminiscent of last summer’s health insurance reform battle.

HSAs are a proven smart and effective way for consumers to lessen the burden of their health care costs. Expansion will begin to bend the health care cost curve, slowing long-term cost growth and representing a marked step toward reinstilling the health care space with truly free-market principles. If we cannot get a comprehensive, conservative health insurance reform bill done this year, we should at least focus on the expansion of HSAs as a step toward health care freedom. 

Adam Brandon is the president of FreedomWorks.