Cantor health savings account bill clears committee

WASHINGTON -- A bill sponsored by Virginia Rep. Eric I. Cantor to enable more people to participate in health savings accounts was advanced by a key House panel yesterday.

The House Ways and Means Committee voted 24-14 to approve the bill to make changes to rules governing HSAs, including allowing most account holders to contribute more money to them.
The Ways and Means chairman, Rep. Bill Thomas of California, labeled the proposals modest, yet some Democratic foes assailed the legislation. It is estimated to cost $1 billion over a 10-year period.

"It seems we are providing an additional billion-dollar tax shelter to upper-income Americans," said Rep. Pete Stark, D-Calif.

Health savings accounts are designed to help people save for medical and retirement health expenses on a tax-free basis. People with a health insurance plan carrying a high deductible may set up the accounts, which have been available since 2004.

Cantor, R-7th and a member of the committee, said in a statement the bill will "put Americans in the driver's seat by giving families more access to quality, affordable health care."

It would allow a one-time rollover into HSAs from other plans called Flexible Savings Accounts or Health Reimbursement Accounts; let most HSA holders make greater contributions to the accounts; and allow a one-time rollover of Individual Retirement Account funds into an HSA.

Critics brought up a recent Government Accountability Office study that said the average gross adjusted income of income-tax filers who reported HSA contributions was $133,000, compared with an average of $51,000 for all taxpayers in 2004.

"HSAs are not health policy, they are tax policy," Stark said.

"Attempts to make HSAs even more attractive, like the one we have before us today, threaten traditional insurance coverage and shift more of the cost burden for health care to workers," he said.
Defenders of the legislation countered that the GAO based its study on a small survey and said an estimated 31 percent of those with HSAs now couldn't get health insurance at all before the accounts were made possible.