Health savings accounts best thing to come from medical cost debates

Editorial

The lame-duck session of Congress that also marked the end of 12 years of Republican domination of the legislative branch ended Saturday morning with more of a whimper than a bang. Nine of the 11 “normal” appropriations bills remained unpassed, leaving the federal government to rely on “continuing appropriations” that will fund agencies at current levels until mid-February.

The end of the session also highlighted disappointment with Republicans who took majorities in both houses of Congress in 1994, with a reform-minded “Contract with America.” The Republican commitment to fiscal discipline, a balanced budget and regulatory and welfare reform — a genuine accomplishment, but that was back in 1996 — disappeared when a Republican won the White House.

Discretionary domestic spending increased more rapidly under President Bush than it had during LBJ’s heady Great Society days. Earmarks — special spending programs inserted by individual members of Congress at the behest of lobbyists or special interests back home — burgeoned. Congressional oversight of executive branch power grabs like warrantless wiretapping and indefinite detention without charges virtually disappeared.

A few of the final bills passed were worthwhile. Congress did pass an omnibus trade bill that restored normal trade relations with Vietnam and four South American countries. An energy bill expanded offshore drilling opportunities in the Gulf of Mexico. The national Institutes of Health and the Postal Service were restructured. An agreement to extend nuclear cooperation with India was passed.

Perhaps the most important accomplishment was an increase in the tax deductibility of Health Savings Accounts. These high-deductible medical insurance policies allow families to sock away money tax-free to pay for out-of-pocket medical expenses — and to shelter the money they don’t spend as ongoing savings accounts with the potential to build wealth over time.

Under current law account holders could shelter only the amount of their insurance deductible, up to $2,700 a year or $5,450 for families from taxes. The new provision will allow any account holder to shelter the maximum amount.

Health Savings Accounts, which encourage policyholders to be careful consumers, are one of the few healthy innovations put forward in the ongoing debate over rising medical costs. Making them more attractive was a good piece of work.