Remove the HSA Ceiling to Improve Health Care
According to the Centers for Medicare and Medicaid services, the health share of the economy is projected to rise from 17.7 percent in 2018 to 19.7 percent in 2028. Yet the average life span has only grown two years since 2000. The U.S. is a global outlier. While we spend more than any other nation on health, and more than three times other wealthy nations, our life expectancy is shorter than countries that spend far less. Considering our expenditures are higher than any other nation with less than desirable results, we should begin to look at new avenues for health reform by examining health care regulations rather than continually increasing spending.
Unsurprisingly, politicians hope to alleviate this health dilemma by, incorrectly, relying on “fat taxes,” banning snack cakes, and crouching closer and closer to the implementation of horrific socialized medicine. Rather than enacting such policies that prioritize top-down solutions, government should work to encourage personal responsibility for our well-being. To do this, policymakers should increase access to health savings accounts (HSA).
HSAs allow Americans to take control of their own health care. An HSA is operationally comparable to a 401(k). Individuals can set aside money from their salary on a pre-tax basis to pay for qualifying medical expenses, including deductibles and prescriptions. And, unlike flexible spending accounts, there is no “use it or lose it” policy. HSAs naturally incentivize prospective patients to be more cautious with their dollar and encourage patient-led health. Nationally, HSA account balances exceed $100 billion. But, alas, due to regulatory constraints, 90% of Americans have no access to an HSA.
Under current law, individuals may not open an HSA account unless they have a high-deductible health plan (HDHP). These plans typically have lower premiums but require more out-of-pocket expenditures before health insurance agrees to cover some costs. Unfortunately, on top of such restrictions, most employers fail to offer HDHP plans anyway, and federal insurance such as Medicare and Medicaid do not qualify. In addition, those lucky enough to access an HSA may not contribute more than $3,650 individually or $7,300 in a joint account. This hamstrings current contributors who may have high medical bills or wish to have more coverage.
These restrictions fail to accommodate health care innovation that lowers costs and improves the quality of care. By limiting patient access to HSAs, which can pay for lifestyle change services such as gym memberships, Congress is actively inhibiting healthier, more affordable living. To improve health outcomes and empower individuals, Congress must decouple HSAs from insurance. Unfortunately, though, Washington bureaucrats have failed to show much enthusiasm for expansion.
While we can't perfectly prevent unhealthy lifestyle choices, we can begin to fundamentally change the way our health care system works. Improving and expanding individual health care options emboldens patients to have more control over their health and respond to health concerns accordingly. Our health can only improve when our health care system is run by us, not government. Removing the HSA ceiling is a necessity.
Without federal action, 90% of Americans will continue to face barriers to care, and government will continue to spend wastefully, stalling any health improvement nationwide. To improve life expectancy, encourage healthier lifestyle choices, cut costs, and reform our disastrous, exclusionary health care system, HSAs must be accessible to all.
Jessica Dobrinsky is a Policy Analyst for the Cardinal Institute for West Virginia Policy.
