Republicans in both the House and Senate are talking about expanding health savings accounts (HSAs) and association health plans (AHPs). There is a growing sense that these policies will help grow health coverage and reduce health insurance costs. Interest in HSAs and AHPs appear to be the emerging Republican answer to the Affordable Care Act (ACA).
HSAs combine high-deductible health plans (HDHPs) with tax-free savings accounts that can only be used, pre-retirement and without penalty, for health expenses. AHPs are associations that allow employers and the self-employed who are connected only by geography to band together to purchase less expensive health coverage for their members’ employees.
Opponents of both HSAs and AHPs are vocal—they say HSAs benefit the wealthy, who can afford the contributions, and the high deductibles that come with HDHPs. HSA funds can be used, penalty-tax-free, after retirement for any purpose. So, opponents say, they are actually more like a tax-favored savings plan than they are a way to save on health care expenses. AHP opponents claim that AHPs allow for “junk insurance” that does not provide the breadth of coverage that comes with ACA health insurance.
Prospects: Although Congressional Republicans have pretty well given up on their efforts to repeal the ACA in the face of the growing popularity of “Obamacare,” they have not given up on trying to enact alternatives to the ACA. Washington insiders expect this effort to take the form of expanded eligibility, de-coupling HSAs from HDHPs, and perhaps increases in the amount that can be contributed annually to HSAs, and to further expand availability of and eligibility for AHPs. We expect this to be a priority issue for GOP health and tax writers early in the 119th Congress.
NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org