Executive summary

On July 11, 2018, the House Ways and Means Committee advanced four bills aimed at expanding consumer-directed health care and lowering premiums through the expansion of Health Savings Accounts (HSAs) and other vehicles. Bills advanced out of committee include H.R. 6301, which would give health plans more flexibility to provide high-value, low-cost services like telehealth and chronic disease management while maintaining HSA eligibility; H.R. 6317, which would allow HSA-eligible individuals to participate in direct primary care (DPC) arrangements and DPC fees to be paid out of HSAs; H.R. 6305, which would clarify that certain employment-related services like on-site clinics are not treated as disqualifying coverage, among other things; and H.R. 6309, which would allow working, Medicare Part A-eligible seniors to contribute to HSAs.

Committee Chairman Kevin Brady (R-TX) opened the hearing by saying that proposed bills will provide "an off-ramp from Obamacare's rising premiums by allowing more choice and financial assistance both on and off government-sponsored exchanges." He added that HSAs "reduce the burden of high health care costs and enable families to plan ahead for events like the birth of a child." Ranking Member Richard Neal (D-MA), however,said the bills would do "very little for the average American" and that they should instead "be strengthening and protecting already existing health programs like the ACA, Medicare and Medicaid — not slashing them." He added that the bills would not address the issues of rising health care costs and instead "provide America's wealthiest another option to stash tax-free money at a cost of $92 billion to taxpayers."

Throughout the hearing, Democrats on the committee derided the ongoing sabotage of the ACA by the Republican Congress and the Administration, noting recent Administrative actions to undermine consumer protections and cut off funds for risk adjustment and asserting that HSAs primarily benefit the wealthy and do little to address health care costs while the proposed legislation adds nearly $100 billion to the deficit. Chairman Brady and other Republicans fought back on deficit concerns and instead blamed Democrats for a failed health care system and broken promises that led to the current health care crisis, adding that families — not Washington — know best about what to do with their health care dollars. Brady also refused to promise to deliver pay-fors for the legislation, as demanded by Democrats.

The committee will consider another seven bills, including bills that would: (1) increase the contribution limit for HSAs (H.R. 6306); (2) provide retroactive relief from the employer mandate in the Affordable Care Act (ACA) and one additional year of delay in implementing the ACA's so-called Cadillac Tax (H.R. 4616); and (3) allow premium tax credits to be used for plans outside of the ACA exchanges and to expand access to low-premium "catastrophic" plans.

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Markup detail

Motion to postpone

Rep. Lloyd Doggett (D-TX) raised a motion to postpone the hearing until Monday, July 16, requesting more time to learn about plans to pay for the $92 billon cost of the legislation and asking to hear from expert witnesses on the most effective path forward to improve the health care system. A motion to table the motion was passed 22-16.

Consideration of bills

H.R. 6301, "To amend the Internal Revenue Code of 1986 to provide high deductible health plans with first dollar coverage flexibility." Sponsored by Health Subcommittee Chairman Peter Roskam (R-IL) and Rep. Mike Thompson (D-CA), the bill would give health plans more flexibility to offer coverage for high-value, low-cost services like telehealth, chronic disease management, or primary care visits below the deductible while maintaining HSA eligibility.

— Discussion: In response to concerns from Democrats on the committee, Rep. Roskam cited data from WageWorks that the median household income for HAS enrollees is $57,000 and that 77% of use is by those born in 1965 or after, noting that account holders are very diverse. He said the bill would enhance the utility of HSAs and reduce costs down the line. Rep. Thompson agreed the legislation is important but said they cannot lose sight of the bigger issue and Republicans cannot continue to sabotage the ACA. Rep. Sander Levin (D-MI) asked for a distributive breakdown of HSA contributions by income, to which Mr. Barthold from the Joint Committee on Taxation (JCT) said he would deliver in the coming days.

— Action: Amendment in nature of substitute is agreed to and H.R. 6301 ordered to be reported favorably, as amended, by a vote of 24-14.

H.R. 6317, "To amend the Internal Revenue Code of 1986 to provide that direct primary care service arrangements do not disqualify deductible health savings account contributions, and for other purposes." Sponsored by Reps. Erik Paulsen (R-MN) and Earl Blumenauer (D-OR), the bill would allow HSA-eligible individuals that participate in a direct primary care (DPC) arrangement not to lose their HSA-eligibility merely because of their participation in a DPC and allows DPC provider fees to be paid for out of HSAs.

— Discussion: Reps. Paulsen and Blumenauer spoke in favor of the bill, noting that DPC encourages better patient-doctor relationships and avoids the need for billing and claims submission. Rep. Blumenauer said it is a "modest step" but that DPC is cost-effective and this will help it reach its full potential.

— Action: Amendment in nature of substitute is agreed to and H.R. 6317 ordered to be reported favorably, as amended, by a vote of 26-12.

H.R. 6305, "Bipartisan HSA Improvement Act of 2018." Sponsored by Reps. Mike Kelly (R-PA) and Earl Blumenauer (D-OR). The bill would expand access and enhance the utility of HSAs by: (1) clarifying that certain employment — related services (such as on-site clinics) are not treated as disqualifying coverage for purposes of HSAs; (2) allowing an eligible individual to make HSA contributions if a spouse has an FSA, provided that FSA does not also reimburse for expenses of the spouse with the HSA; and (3) allowing FSA and Health Reimbursement Account (HRA) terminations or conversions to fund HSAs.

— Discussion: Rep. Kelly spoke in favor of the bill, saying it gives employers the ability to innovate and the freedom to design products that work best for their employees while fixing the HSA spouse penalty and streamlining conversion of other tax-preferred accounts to HSAs. Rep. Blumenauer added that having access to care in the workplace increases the use of cost-effective care. In response to the bill, several Democrats raised objections based on the $4.3 billion costs and urged the committee to move forward in a fiscally responsible way.

— Action: Amendment in nature of substitute is agreed to and H.R. 6305 ordered to be reported favorably, as amended, by a vote of 26-13.

H.R. 6309, "To amend the Internal Revenue Code of 1986 to allow individuals entitled to Medicare Part A by reason of being over age 65 to contribute to health savings accounts." Sponsored by Rep. Erik Paulsen (R-MN), the bill would expand access to HSAs for working seniors.

— Discussion: Rep.Paulsen spoke in favor of the bill, noting that it would allow working seniors who want to continue contributing to HSAs to do so while saving Medicare money by allowing seniors to use their own dollars. Rep. Doggett spoke in opposition to the bill, saying that this group of fortunate individuals want to take advantage of Medicare, employer-provided insurance and HSAs, while others have practically nothing to protect them amid rising health care costs.

— Action: An amendment by Rep. John Larson (D-CT) that would restore the Medicare Hospital Trust Fund before the bill could go into effect was tabled. Amendment in nature of substitute is agreed to and H.R. 6309 is ordered to be reported favorably, as amended, by a vote of 23-16.

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