HSAs are not a solution to rising health care costs

I've always felt that it's our societal duty to help lift everyone up, and our elected officials should especially share this perspective. Yet, Rep. Ashley Hinson and the Trump administration seem to address problems without considering how their decisions affect society's most vulnerable.

For example, SNAP payments were withheld during the government shutdown, there’s been no effort to raise the minimum wage, and we are seeing no support on health care as the Affordable Health Care (ACA) subsidies will expire this year.

Hinson, instead, proposes Health Savings Accounts (HSAs) as a catchall solution, in between her frequent mentions of waste, fraud, and abuse she doesn’t identify.

HSAs typically do not benefit low-income families and can even create substantial financial risks. This is largely because HSAs usually require being paired with high-deductible health plans (HDHPs), meaning individuals must pay significant out-of-pocket costs before insurance begins to cover expenses.

There are significant challenges with HSAs and HDHPs for low-income families.

• High up-front costs: Many low-income households cannot afford the high deductibles required by HDHPs, resulting in considerable personal expenses. This reality often leads to medical debt or forces them to delay or forgo essential care, leading to poorer health outcomes and higher emergency costs down the line.

• Minimal tax benefits: The tax advantages of HSAs are less meaningful for low-income individuals, who are in lower tax brackets with limited taxable income. Often, those with minimal tax liabilities gain little if any tax benefit from these deductions.

• Difficulty saving: Limited disposable income makes it hard — or impossible — for many low-income families to contribute significantly to an HSA, making long-term savings harder to achieve compared to higher-income households.

• High account fees: Studies show that HSAs sometimes impose "junk fees" and offer low interest rates, especially for those with small balances. Such fees further reduce any potential savings for low-income users who cannot invest extra funds.

However, there are better Alternatives for Low-Income Families

• Medicaid and other subsidies: Programs like Medicaid or premium tax credits available through the Affordable Care Act (ACA) exchanges generally provide better options for low-income families, as they are designed specifically to improve health care affordability. The ACA subsidies need to be extended.

HSAs do not lower insurance premiums; they're simply accounts to cover medical expenses. Hinson suggests that eliminating so-called "waste, fraud, and abuse" would solve all problems, yet examples always remain elusive.

Ironically, the only waste, fraud, or abuse I saw was exemplified by the two-month paid vacation Hinson and other GOP members of Congress took during the government shutdown. Please contact Hinson and Sens. Joni Ernst and Chuck Grassley to vote no on replacing the ACA subsidies with HSAs for all those desperately in need of health care now.

Bret Nilles has an economics degree from University of Iowa and professional experience in finance with Rockwell Collins.