Democrats Launch 'Stealthy Assault' On Health Savings Accounts With Provision In Tax Bill, Editorial States

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health
Article Date: 22 Apr 2008 - 5:00 PDT

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The House last week passed a tax bill (HR 5719) that included a provision under which individuals with tax-free health savings accounts would have to provide evidence that they used funds in the accounts for medical purposes, a "stealthy assault on Americans who prefer the private-sector option" of HSAs, a Wall Street Journal editorial states. According to the editorial, "Democrats have made affordable health care a mainstay of their election agenda, but apparently only if you're willing to get insurance through the government."

Democrats maintain that the provision would "ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod," the editorial states, adding, "In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs." The editorial questions the need for the provision because any "withdrawal from an HSA is already subject to a federal tax audit, just as individual tax returns are." In addition, "if people cheat on their HSAs, they are only cheating themselves" because, when a "medical expense arises below the insurance deductible, they will be the ones paying for it, whether from their HSA or another bank account," according to the editorial.

Democrats "decry the high and rising costs of health care, including insurance 'overhead,'" but supporters of the provision "want to impose the same bureaucratic overhead even on spending that consumers do with their own money," the editorial states, adding, "The Senate should stop this one dead in its tracks" (Wall Street Journal, 4/19).

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