Health Savings Accounts

HEALTH SAVINGS ACCOUNTS -- (House of Representatives - March 16, 2004)

The SPEAKER pro tempore. Under a previous order of the House, the gentleman from New Hampshire (Mr. Bradley) is recognized for 5 minutes.

Mr. BRADLEY of New Hampshire. Mr. Speaker, it is with great pleasure that I rise tonight to spend 5 minutes talking about health savings accounts. Clearly, much of the attention that our Nation has given to the medicare drug benefit has focused on the long overdue nature of the fact that we do need a drug benefit for senior citizens on medicare. For instance, Mr. Speaker, it is not acceptable that under medicare, expensive heart surgery is paid for, but the far cheaper prescription medications that will prevent senior citizens from having to have expensive heart surgery is not paid for.

And this is a long overdue reform.

But a little noticed section of the Medicare drug benefit legislation deals with health savings accounts.

Mr. Speaker, you may recall that in the past we have had medical savings accounts that individuals can use but they have been very flexible and difficult to use. And with this important legislation that now allows for health savings accounts along with House passed efforts for medical liability reform, as well as associated health plans, we are making attempts in the House to lower the cost of health insurance and to improve accessibility.

How do health savings accounts work? Well, first of all, individuals, their family members, or their employers can put tax-free dollars into an IRA-type of account that will be able to be rolled over for use for bona fide medical expenses.
An individual can contribute $2,600, a family, couple, $5,150.

As I said, if you do not use all of the health savings account tax-free dollars that you have put into your account in one year, it can roll over, can accumulate so senior citizens can use it, for instance, when they retire, for some expenses that they might not traditionally found Medicare has paid for. It can be part of one's estate, inherited by one's children.

As I indicated before, individuals can contribute to this as can family members or employers. It can be transferred from job to job. And if you are in the age group of 55 to 65, you can do catch-up contributions of up to $1,000 more because retirement is coming along fairly quickly. This increased flexibility is what has made health savings accounts very exciting for people that are looking for market-based mechanisms to reform health care and to improve its delivery across our Nation.

What can health savings accounts be used for? Number one, for bona fide medical expenses. It can be used for many different things that are not traditionally covered by health insurance, chiropractic care, acupuncture. This will enable alternative medicine to get the kind of attention that sometimes is missing from health insurance policies. And it can be used for the purchase of higher-deductible health care policies, $1,000 for an individual, and $2,000 for a family.

So the use of tax-free dollars, Mr. Speaker, for medical attention, for medical care, is going to transform, I believe, the way that we purchase health insurance in this country and how we judge health insurance. Because no longer will it be somebody else's money, an insurance company's money or something like that; it will be our own money that we have earned.

And so the practice of defensive medicine might be shrunk a little bit, unnecessary tests will be diminished because anybody using their health savings account dollars will be using their own money. So we will be much wiser consumers of medical care in this country.

So, Mr. Speaker, I certainly encourage all Americans who are eligible for health savings accounts to look at them carefully because they are part of the law that has already been implemented.

One can create their own health savings account as of January 1, 2004. And as we approach April 15, it is a good time to think about doing that. Because as I said, like an IRA, they are simple to use, easy to set up, and certainly, when all is said and done, this will transform how we purchase health insurance in our country in a very positive way.