HSAs: The Deer Are Moving

House Republicans are making protecting the HSA system a campaign season talking point. The House Republic Conference has attacked one PPACA provision that tightens limits on use of HSA funds to buy over-the-counter drugs and another PPACA provision that increases the penalty tax on holders who use HSA funds for non-HSA purposes to 20%, from 10%.

House Republicans say Obama administration efforts to implement other PPACA provisions, such as the minimum medical loss ratio requirements, could also hurt HSA programs.

Paul Fronstin, a senior research associate at the Employee Benefits Research Institute, Washington, says Democrats are unlikely to make direct attacks on HSAs. "I think they have their hands full," Fronstin says.

Ramthun says one major PPACA component – a health insurance exchange distribution system that is set to open in 2014 – could help HSAs, because HSA-compatible coverage is usually cheaper than comparable traditional coverage.

"Once the employees (not the employer) are choosing their health insurance, most of them could gravitate to the cheapest plans," Ramthun says in a presentation prepared for a meeting organized by Health Information and Management Systems, Chicago.

Many Republicans and some Democrats, including Sen. Ben Nelson, D-Neb., and Rep. Betsy Markey, D-Colo., say using HSAs to "give patients skin in the game" encourages consumers to take better care of themselves, avoid unnecessary use of medical services, and do a better job of shopping for health care services.

"It appears that what HSAs do is a lot of what health reform is meant to do," Berkley says.

Some Democrats have suggested that high deductibles could discourage HSA holders from getting the kind of care that keeps small health problems from turning into big problems. In October 2009, as health bill negotiations were heating up, the House Energy and Commerce Committee brought in a witness, Nathan Wilkes, who testified that a co-worker with an unfunded HSA and a bad cut had persuaded a friend to sew him up on a kitchen table.

But researchers at the Commonwealth Fund, New York, say the mean deductible for traditional single coverage at employers with 3 to 199 employees was $1,040 in 2009 – just $160 away from the minimum HSA-compatible deductible.

Neeleman, a surgeon as well as a Health Equity executive, says his office manager likes seeing patients with HSAs, because she knows those patients have a way to pay their deductibles.

Berkley says employer matching contributions are the key to ensuring that employees fund HSAs. "If you can only do one thing, fund that account," Berkley says.