Health Savings Accounts Proposed as Alternative to Marketplace Subsidies

As millions of Americans face increased health care premiums due to expiring federal subsidies, U.S. Sen. Bill Cassidy has proposed redirecting Marketplace tax credits into Health Savings Accounts. The plan aims to give individuals greater control over healthcare spending. Some policy analysts warn that it may not address affordability challenges faced by lower-income Americans.

The Current Subsidy Situation

The Times-Picayune and the Baton Rouge Advocate report that, instead of using federal tax credits to keep Marketplace premiums affordable, Cassidy proposes redirecting those dollars into tax-free Health Savings Accounts. This would allow individuals to choose how to spend the money.

Qualified beneficiaries could decide on their own whether to purchase a less expensive policy and use the money to pay higher deductibles, copays and out-of-pocket expenses, Cassidy said in an interview. According to the Center on Budget and Policy Priorities, 82 percent of Marketplace enrollees had incomes below 300 percent of the federal poverty level, which equals $46,950 for an individual.

Why HSAs May Not Help Lower-Income Families

In 2021, households filing tax returns with incomes of $1 million or more were the most likely to report individual HSA contributions. Just four percent of HSA contributions nationally in 2023 were made by people with incomes below $50,000. For healthcare organizations serving predominantly lower-income populations, this structure could impact patients’ ability to manage healthcare costs and maintain coverage.

Impact on Healthcare Providers

The Center on Budget and Policy Priorities provides an interactive map with congressional district-level data on premium spikes should Congress fail to extend the health care tax credits. Healthcare organizations that rely on insured patient volumes should prepare for potential fluctuations in coverage rates and payment sources.

What Healthcare Leaders Should Monitor

Healthcare executives should track the progress of subsidy policy discussions. Key questions include whether tax credits are extended, modified or replaced, and how the timing of any changes might affect enrollment periods and patient coverage continuity.

Plan for Uncertainty

Clear financial reporting, robust revenue cycle management and strategic planning position organizations to respond effectively regardless of which policy direction ultimately prevails. Understanding which patients might be most affected by coverage changes helps organizations plan appropriate support services.

Looking to strengthen your organization’s financial health? Our healthcare CPAs and consultants help hospitals, clinics and medical groups plan confidently for what’s next. Connect with our healthcare team.

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