Weekly Newsletter: April 14, 2008
Floor Vote Impending for Restrictions on Health Savings Accounts
The House Ways and Means Committee last week reported legislation that would enact new restrictions on Health Savings Accounts (HSAs) as part of tax legislation (HR 5719) anticipated on the floor this week. The legislative proposal would require all HSA account holders to independently verifiy the qualified nature of medical expenses for all withdrawals, subjecting those transactions not substantiated to income taxes. This language is a significant departure from an earlier draft proposal, which imposed an annual reporting requirement on beneficiaries to list their total substantiated and unsubstantiated HSA withdrawal amounts—but left enforcement in the hands of the Internal Revenue Service.
At the Ways and Means markup, Republicans and Democrats alike noted the scarcity of available data documenting whether and to what extent HSA holders are making non-qualified withdrawals without paying appropriate income taxes and penalties. In addition to the hurried process that saw the provision added to legislation without thorough vetting and/or committee hearings, some conservatives may be concerned by the Joint Committee on Taxation’s inability to determine what portion of the $308 million in purported “savings” from this provision stems from newly captured taxes and penalties and what portion of reduced tax expenditures comes from lower HSA take-up rates and contribution levels. In other words, it is unclear whether this provision will be effective in increasing oversight of questionable HSA expenditures—Democrats’ stated intent in passing this provision—or instead generate budgetary savings by making HSAs less attractive to consumers.
Some conservatives may be concerned that this proposal represents the first of perhaps many attempts by the Democrat majority to enact burdensome and bureaucratic regulations undermining HSAs, which in a few short years have proven successful at slowing the growth of health costs and insurance premiums for millions of individuals and small businesses. Some conservatives may also be concerned that the many banks and financial organizations who have expressed concerns about their ability to implement the substantiation requirements could end up increasing administrative costs for end users—or exiting the HSA marketplace entirely.
During floor debate, the RSC will weigh in to protect the important consumer-driven health programs which Republicans have succeeded in establishing in recent years.
An RSC Policy Brief discussing this issue is available here.
House Committee Marks Up Bill Overriding Medicaid Fiscal Integrity Regulations
On Wednesday, the House Energy and Commerce Committee held a subcommittee markup on legislation (H.R. 5613) that would impose moratoria on several proposed regulations issued by the Centers for Medicare and Medicaid Services (CMS) to restore fiscal integrity to the Medicaid program. The bill was passed by voice vote, after Members adopted substitute language that would narrow the scope of the moratoria to permit CMS to continue to negotiate agreements with states on issues related to the proposed rules.
Despite the narrowing of the proposed moratoria, some conservatives may remain concerned by congressional actions to block regulations that respond to more than a dozen Government Accountability Office (GAO) reports released since 1994 highlighting the various ways states have attempted to “game” the Medicaid program and increase the amount of federal matching funds received. Some conservatives also may be concerned that the moratoria on further regulatory action until April 2009 would transfer this issue to a new Administration, which could withdraw these proposed regulations to curb wasteful and abusive spending—and which will lower federal Medicaid spending by only 1% over the next five years.
Congressional Democrats have indicated their desire to include the moratoria provisions as part of the wartime supplemental appropriations measure. In addition, news reports have surfaced suggesting that a temporary increase in the federal Medicaid matching rate could be included in a second “stimulus” package, which could also be attached to the defense supplemental. Some conservatives may consider this proposed increase in federal matching funds a “bailout” to states who failed to incorporate into their long-term budgets the possibility of an economic downturn and its impact on state revenues.
Rather than attempting to enact measures that attempt to replace state funding with additional federal spending, some conservatives may believe that Congress should instead embrace the opportunity presented by this discussion to advance concepts for more comprehensive reform of Medicaid program financing, to control health care costs and set clear fiscal priorities for the use of scarce federal dollars.
RSC Policy Briefs on the federal-state Medicaid relationship can be found here and here.
Article of Note: “Is There a Doctor in the House?”
Last Sunday, a column in The Washington Post highlighted one of the key problems with government-funded health insurance—lack of access to care. The column cited a survey by the Medicare Payment Advisory Commission (MedPAC), noting that 29% of Medicare beneficiaries reported difficulty in searching for a new primary-care physician. Due to government-imposed price controls on physician reimbursement levels, many doctors have chosen not to accept additional Medicare-paying patients.
As Congress considers legislative actions connected with a 10.1% cut in physician reimbursements scheduled to take effect on July 1, some conservatives may believe that the access difficulties encountered by millions of American seniors—and the Medicare trustees’ recent funding warning noting that the Hospital Insurance Trust Fund will be exhausted in just over a decade—warrant a more comprehensive and lasting reform to entitlements. Converting Medicare into a system similar to the Federal Employees Health Benefit Plan (FEHBP), where beneficiaries receive a defined contribution from Medicare to purchase a health plan of their choosing, would ensure that all beneficiaries would have access to broad choices of insurance plans and physicians—rather than a government-controlled plan where rationed payments limit access to care. Just as important, by harnessing the benefits of competition, such a reform can slow the growth of health care spending, preserving Medicare for future generations.
Read the article here: “On Medicare and Scorned by the Docs” – The Washington Post