• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • More Americans Using HSAs—Under Threat from Obamacare

    Spending in the U.S. health care system is growing too fast to ignore. Yet, the Patient Protection and Affordable Health Care Act (PPACA), also known as Obamacare, does nothing to “bend the cost curve.” Containing health spending requires engaging consumers in their health care expenditures, and one way to achieve this is through high-deductible health plans paired with Health Savings Accounts (HSA), which a recent report shows are gaining in popularity.

    HSAs represent a market-based solution which, as America’s Health Insurance Plans (AHIP) explains, “give[s] consumers incentives to manage their own health care costs by coupling a tax-favored savings account used to pay medical expenses with a high-deductible health plan (HDHP).”

    Earlier this month, AHIP released its 2011 Census Report on Health Savings Accounts, which suggested the plans are growing in favor among Americans as a cost-effective alternative to more expensive coverage options. Enrollment has grown every year since the inception of HSAs in 2003. Just this past year, it grew by nearly 1.5 million and now accounts for 6.6 percent of all private insurance. The plans are empowering consumers to become more conscious of their health decisions. AHIP writes, “Over 85 percent of responding companies reported offering online member access to HSA account information, health education information, physician-specific information, and personal health records as consumer decision support tools for their members.”

    While more individuals and families are moving towards this consumer-based coverage, Obamacare will make it more difficult to use the accounts for health needs. Depending upon how the Secretary of Health and Human Services interprets and utilizes certain discretionary powers of the new law, HSAs could be considerably weakened or even banned de facto.

    To improve the American health care system, reform must encourage better value and higher-quality care. The best way to do this is by letting the marketplace lead the way. The success of HSAs shows that not only are consumer-driven health plans effective, but they are popular as well.

    This post was co-authored by Kyle Rusciano, a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm

    Posted in Obamacare [slideshow_deploy]

    8 Responses to More Americans Using HSAs—Under Threat from Obamacare

    1. Tony says:

      I sense a little confusion here. The article talks about HSAs. HSAs are health savings accounts. These are accounts that can be funded by the insured, the insurer or employer, or both, and are tax advantaged. Eligible medical expenses, such as pre-deductible expenses and copays can be paid for out of this account. The balance of such an account rolls over year to year. The accounts are usually coupled with a high-deductible catastrophic plan. It balances exposure of the insured to medical costs to allow the market to function with protection against being wiped out by a catastrophic illness. I don't believe HSAs can be used to pay for OTC drugs at all, with some exceptions – my company's RX plan covers a select group of OTC drugs, with a doctor's prescription, as if they were RX drugs, and copayments on those drugs are paid from my HSA balance. Not that it much matters all that much, because Obamacare criminalizes the high-deductible plans with which HSAs are generally paired, which will effectively eliminate the HSA once it phases all the way in in 2014.

      What you describe with respect to requiring a doctor's RX to get coverage for certain OTC products applies to Flexible Spending Accounts, or FSAs. These are different from HSAs. They are always entirely funded by contributions from the insured. They are tax advantaged like HSAs, but they don't roll over year to year – whatever you don't use by 12/31, you lose. And as far as I know, except for the degradation already imposed by the Affordable Care Act, these accounts are not going anywhere. They will remain legal, just a little less valuable.

      Both HSAs and FSAs are damaged by the Affordable Care Act, ironically in ways that will make care less affordable for all. But I felt that the distinction was important. An HSA was made available to me this year for the first time ever, and I love it, and would hate to see it – along with my accumulated balance – vanish in 2014.

      • Carol says:

        Tony,

        Thank you for that explanation. Previously, my husband's company offered the FSA and now the HSA. We find this latter plan beneficial too as we frequently use out of network providers. I've been wondering if European based companies with businesses in the US are subject to the Affordable Care Act.

        Do you know if that part of the ACA has been "read" yet? Sorry I couldn't resist. I'm really trying to be professional, but like you I would hate to see this program end and risk losing the accumulated dollars. Contact Washington and VOTE at every opportunity for regaining our right to choose.

      • T. Steve Ivan, DO says:

        HSAs are only "not able to pay for OTC products" due to more federal regulation. It is a godsend for those of us who don't have an employer contributing into our plan or a prescription plan associated with it.

    2. Bobbie says:

      Could someone addresses the president and show him what he stated to the people of America, as the purpose for obamacare to the contrast it factually is? We don't deserve micromanaging of our health just so 5 doctors can earn what one doctor could've done. Much more inefficiencies, incompetence and cover-ups for both, adding great potential to fraud in health and costs. Please invalidate immediately. We don't deserve this deception and con game with coercing excuses for what is happening that was already told would happen when it was first purposed. There is nothing to trust with obama and his gang. Pelosi set it up and lost all trust. Obama has an angle on anything he makes sound good and all simply dangerous!

    3. LibertyAtStake says:

      Repeal as a Presidential campaign platform, anyone? Mr. Cain? Ms. Bachmann? Ride the wave.

      d(^_^)b http://libertyatstake.blogspot.com/
      "Because the Only Good Progressive is a Failed Progressive"

    4. Bigtime Conservative says:

      What a stupid article. Absolutely no details to support the thesis. What exactly within Obamacare goes against HSA accounts? Give us some details or don't bother!

    5. glenn says:

      I was told the HSA that I have with my government will probably be going away because the amount that you can put away is greatly reduced from $6500 K to $2000 next year and in future years the contributions for HSA and Fsa account will not be allowed . This will increase my cost an additional $3000 because I can no longer put it in tax free. So it wont be worth to do this. So this is another tax on me. Looking at the bill the are an additional 12 or so taxes . Tax on home sales, bank transactions etc.its a nightmare of a bill.

    6. glenn says:

      Unless you are the big unions which sucked up to Obama and recieved a waiver from him and you have a good plan with your company you will have a 40 % TAX

      The new law imposes an excise tax of 40 percent on employer-sponsored coverage that has a benefit value in excess of $10,200 for single coverage and $27,500 for family coverage (indexed annually). The benefit value of employer-sponsored coverage would include the value of the group health plan and contributions to employees’ FSAs, HRAs, and HSAs. This tax would be imposed on insurance companies, including self-insured plans and plans sold in the group market, and plan administrators. However, this provision does not go into effect until 2018.

      H.R.3590 imposes a new annual limit on contributions made by employees to flexible spending arrangements (FSAs) for health care. The legislation limits contributions to no more than $2,500 annually. The limit is indexed to inflation for future years. H.R.4872 delayed the effective date of this provision to 2013.

      The legislation includes a provision that would prevent small employers from offering plans with deductibles greater than $2,000 for singles and $4,000 for families. The limits on deductibles are indexed to the percentage increase in average per capita premiums. Employers may offer plans with deductibles higher then $2,000 / $4,000 if the employer offers a flexible spending arrangement (FSA) that reimburses the difference between the higher deductible and $2,000 / $4,000. This provision will go into effect in 2014.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×