GOP Lawmakers Add Provision to Passing Tax Package

Measure Expands the Amount That Can Be Given Tax-Free to Health Savings Accounts

Republican lawmakers, with little public debate, quietly added a billion-dollar health-care benefit to legislation that was rushed through Congress just before it adjourned Saturday morning.

Acting at the urging of several major business lobbies eager to reduce their medical-insurance costs and the outgoing chairman of the House's tax-writing committee, lawmakers adopted the provision even though only a single committee had previously approved it.

The provision, which materialized without fanfare late last week inside a massive tax-cut measure, expands the amount of money that can be contributed tax-free to health savings accounts (HSAs). The accounts can be used to pay medical bills and for other health-related coverage.

The legislation allows anyone to shelter thousands of dollars annually in HSAs, regardless of how much that person pays for a health-insurance deductible. Current law limits HSA contributions to the amount of a person's deductible. The expansion would cost the government $1 billion in lost tax revenue over the next decade.

Democrats, who will take control of Congress next month, have generally opposed the expansion. But supporters said that House Ways and Means Committee Chairman Bill Thomas (R-Calif.) championed it and pressed it through to final approval in the wee hours Saturday morning.

A coalition of high-profile corporate organizations, which pushed for the legislation, spent last week deploying lobbyists across Capitol Hill and urging their members back home to write letters and place phone calls to lawmakers. The U.S. Chamber of Commerce, the National Federation of Independent Business, the American Bankers Association, the Business Roundtable and several insurance companies belonged to the coalition, according to Paul Dennett, vice president for health policy of the American Benefits Council, a leading participant in the group.

Even the advocates doubted until the last minute that their provision would succeed.

"We nicknamed [ourselves] the 'Keep Hope Alive Coalition,' " Dennett said. "It seemed that the provision might fall off the wagon."

That it remained in the bill was thanks largely to Thomas, who "quite clearly played the strongest role," Dennett said, adding, "In Democratic offices, this was something they didn't want to do."

Organized labor, a major backer of Democrats, has disparaged HSAs as a way for companies to unload more of the cost of medical coverage on their workers.

The American Benefits Council, meanwhile, has argued that HSAs allow both employees and employers to save money. Dennett said the newly approved provision merely improves the program, which was first enacted in 2003 and now is used by more than 3 million Americans.

"These are modest but sensible kinds of things that need to be done," he added.