NCPA - National Center for Policy Analysis


April 23, 2008

This week, the House passed legislation that included a provision to require every Health Savings Account transaction be reviewed and verified as a legitimate medical expense. Democrats say this is to ensure that consumers are using their tax-free withdrawals for a knee replacement, rather than a new iPod.  In reality it adds a layer of bureaucracy that could sharply reduce the appeal and cost savings of HSAs, says the Wall Street Journal.

This is health insurance many Americans can afford, and it doesn't force those who have better use for their scarce dollars to buy gold-plated insurance with special-interest mandates that Democrats want to force on everyone.


  • Since HSAs were created in December 2003, 3.2 million HSA accounts have been opened, covering 4.5 million Americans.
  • Nearly a third of new HSA users previously had no insurance and bought coverage on their own.
  • Thirty-three percent are small businesses that had not previously offered coverage to their employees.

Isn't this what good progressives claim to want?  Apparently not if it means a free market in health insurance, says the Journal.

Having lost the policy argument when HSAs were created, Democrats are now trying to kill them with regulatory subterfuge.  The new scheme purports to ensure that money saved tax-free in an HSA is actually used for health expenses.  But any withdrawal from an HSA is already subject to a federal tax audit, just as individual tax returns are.

In any case if people cheat on their HSAs, they are only cheating themselves.  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, says the Journal.

Source: Editorial, "Health Savings Sabotage," Wall Street Journal, April 19, 2008.

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