Congress considers new version of expanded MSAs

Tax-free accounts would cost the government $174 billion in lost tax revenue over 10 years.

By Joel B. Finkelstein, amednews staff. July 21, 2003.

Washington -- Proposed health savings account options aim to give patients more control over their health care, but critics charge that the cost may be prohibitive.

Legislation added to the recently passed House Medicare reform bill would let more companies offer medical savings accounts and create two new products called health savings accounts and health savings security accounts. At press time, House and Senate lawmakers were debating whether these provisions would be in the final Medicare package.

The health savings accounts could be used to pay for medical services in conjunction with high-deductible health insurance plans, while health savings security accounts could be used with or without other insurance. The main difference between these accounts and MSAs is that they can be used with lower-deductible insurance, both employers and individuals could contribute in the same year, and unused funds from flexible spending accounts could be rolled into them.

The health savings security accounts would let individuals sock away an amount equal to as much as 400% of their deductible in tax-deferred savings and receive contributions from family members. They would allow individuals to use untaxed money to pay for health insurance premiums.

The Joint Taxation Committee has estimated that this legislation would cost nearly $174 billion in tax revenue over 10 years. Nearly three-quarters of that would be incurred in the second half of the 10 years as the accounts spread, said the Center for Budget and Policy Priorities, Washington, D.C.

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