HSA proposal packed with common sense

If we had to describe the new health savings account reform proposal advanced by the Bush administration in a word or two, it would be common sense.

As we report on page 1, the proposal in the administration's 2008 federal budget package unveiled last week includes several HSA-related changes that are so logical it would make one wonder why these were not included in the original 2003 HSA law.

For instance, take the most significant provision in the package that would allow employers to link employees' HSAs to a health care plan other than one that has a high deductible—as now is the case.

Under the proposal, a health care plan would be eligible to be linked to an HSA if it imposed at least a 50% coinsurance requirement.

That would be a welcome broadening of current law that says eligible HSA-linked health plans must have high deductibles. This year's minimum deductible is $1,100 for single coverage and $2,200 for family coverage.

We understand the need for a high level of cost-sharing as that gives participants a powerful incentive to use health care services carefully. Still, the required deductibles may be intimidating, especially for lower-income workers who fear big medical bills.

Allowing a 50% coinsurance requirement—in lieu of a high-deductible plan—would reduce that fear, leading more employees to enroll in HSAs, while still, we believe, giving employees a sufficient incentive to use medical services prudently.

For many reasons, employees may not open HSAs simultaneously with their enrollment in the linked health plan. In such situations, it hardly seems fair to deny employees the right to cover medical expenses by withdrawal of contributions from their HSAs.

The proposed changes would make HSAs much more attractive to employees, which would increase enrollment. While we don't believe HSAs by themselves are the cure for all that ails the nation's health care system, we also know that consumer-driven plans are integral to shoring up the system and must be encouraged.