Ron Paul Classic: Give Seniors HSA

Former Texas Congressman and Chair of the Ways and Means Committee Bill Archer recently penned an Op-Ed for The Hill advocating adding Medicare Savings Accounts to Medicare:

Allowing Medicare HSAs would give seniors a new and better Medicare option that offers the same freedom that Americans under 65 enjoy to make their own decisions about their health care. It would give people on Medicare greater choice, flexibility, control, and peace of mind. What exactly is an HSA? It’s a special kind of financial account that you can use to help pay your personal medical expenses – things like copays, deductibles, and prescription drug purchases – tax-free.

The money in the account is yours. You own it. You control it. You can spend it on just about any kind of health care item or service you like. And it’s never taxed. The money rolls over year to year, so it can grow, tax-free. You can keep it as a rainy-day fund, or even invest it in, for example, a mutual fund of your choice. And when you die, you can leave the money to your loved ones. And an HSA is a wonderful tool for people with chronic conditions (like diabetes, for example) who have a lot of predictable medical expenses, and who have to manage their own care, day to day.

The basic requirement of an HSA is that you must pair the account with an HSA-qualified health insurance plan. That’s to ensure you have sufficient financial protection for major medical expenses. There are limits on how much you can contribute to your HSA each year. In 2017, the limit for people over age 54 is $4,400 for an individual and $7,750 for a family. Established in their current form in 2003, HSAs today benefit more than 20 million Americans. Allowing them in Medicare would give seniors the freedom to choose the health care that’s best for them.

Consider the benefits, if you’re a senior on Medicare. You can use your HSA to pay for things Medicare doesn’t cover, like dental care, eyeglasses, smoking cessation, weight-loss programs, and so on. Once you’ve reached your annual deductible (the amount of money you must pay before your insurance kicks in, which is currently about $3,500 on average), Medicare will cover 100 percent of your Medicare benefits from there on out. And if you’re low-income, Medicare will fund the account for you.

How much would this new option cost taxpayers? The answer is nothing, if it’s structured correctly. Indeed, Medicare HSAs could even save taxpayer money. Recently, the American Bankers Association’s HSA Council, which is the trade association representing HSA-sponsoring banks and health plans, commissioned a study that estimates the federal government could actually save $72 billion over ten years by letting working seniors contribute to an HSA, provided they also have an HSA-qualified health plan through their employer and pay for all of their own medical costs below the deductible. Insurance would only cover costs above the deductible.

That last point is the key to the power of the HSA. When people are spending their own money, they spend more carefully and waste less. This fact is well documented, going back to national studies done by the Rand Corporation in the 1970s. Just think of buying a meal on an expense account. You order differently than if you are paying for it yourself.

Read the whole piece here.

Campaign for Liberty Chairman Ron Paul championed Medicare Health Savings Accounts. In 2001, he introduced legislation to give seniors access to Medicare Savings Accounts (MSAs), which is what HSAs where called at the time.

Dr. Paul’s legislation would have allowed seniors to use funds in an MSA for prescription drugs without having to create a costly new program.

Here and below is Dr. Paul’s official statement on the bill:

 Mr. PAUL. Mr. Speaker, I rise to introduce legislation which enhances senior citizens’ ability to control their health care and use Medicare money to pay for prescription drugs. This legislation accomplishes these important goals by removing the numerical limitations and sunset provisions in the Medicare Medical Savings Account (MSAS) program so that all seniors can take advantage of the Medicare MSA option.

 Medicare MSAs consist of a special savings account containing Medicare funds for seniors to use for their routine medical expenses, including prescription drug costs. Seniors in a Medicare MSA program are also provided with a catastrophic insurance policy to cover non-routine expenses such as major surgery. Under an MSA plan, the choice of whether to use Medicare funds for prescription drug costs, or other services not available under traditional Medicare such as mamograms, are made by the senior, not by bureaucrats and politicians.

 One of the major weaknesses of the Medicare program is that seniors do not have the ability to use Medicare dollars to cover the costs of prescription medicines, even though prescription drugs represent the major health care expenditure for many seniors. Medicare MSAs give those seniors who need to use Medicare funds for prescription drugs the ability to do so without expanding the power of the federal bureaucracy or forcing those seniors who currently have prescription drug coverage into a federal one-size-fits-all program.

 Medicare MSAs will also ensure seniors access to a wide variety of health care services by minimizing the role of the federal bureaucracy. As many of my colleagues know, an increasing number of health care providers have withdrawn from the Medicare program because of the paperwork burden and constant interference with their practice by bureaucrats from the Center for Medicare and Medicaid Services (previously known as the Health Care Financing Administration). The MSA program frees seniors and providers from the this burden thus making it more likely that quality providers will remain in the Medicare program!

 Mr. Speaker, the most important reason to enact this legislation is seniors should not be treated like children and told what health care services they can and cannot have by the federal government. We in Congress have a duty to preserve and protect the Medicare trust fund and keep the promise to America’s seniors and working Americans, whose taxes finance Medicare, that they will have quality health care in their golden years. However, we also have a duty to make sure that seniors can get the health care that suits their needs, instead of being forced into a cookie cutter program designed by Washington-DC-based bureaucrats! Medicare MSAs are a good first step toward allowing seniors the freedom to control their own health care.

 In conclusion, Mr. Speaker, I urge my colleagues to provide our senior citizens greater control of their health care, including the ability to use Medicare money to purchase prescription drugs by cosponsoring my legislation to expand the Medicare MSA program.