Excluding employer-provided health benefits from taxation was supposed to make coverage more affordable. Instead it is a classic example of government failure that disproportionately harms women. Expanding Health Savings Accounts (HSAs) would make coverage more affordable and responsive to women’s needs.
- The tax code contributes to today’s skyrocketing costs. Since World War II, medical prices have risen faster than other prices in all but four years. By 1997, excess consumption caused by the tax code accounted for nearly 30 percent of health spending. One estimate puts the amount of waste at $150 billion annually. The exclusion is a major reason why, in 2003, health insurance premiums rose an average 15 percent — the largest increase in more than a decade — and the number of uninsured Americans grew to 43.6 million.
- Women suffer disproportionately under the tax exclusion. Women have greater medical needs than men, and spend 68 percent more out-of-purse on medical care during their childbearing years. Their lower incomes make them more likely to forgo needed care due to cost. Further, women tend to work in jobs where health benefits are less common, and are more likely to lose coverage due to divorce, a spouse’s death, or from leaving the workforce. As a result, the number of uninsured women is growing at three times the rate of uninsured men.
- HSAs are improving women’s coverage. HSAs are already making coverage more affordable and portable for women, expanding their coverage options, and enabling women to save money tax-free for their greater medical needs in old age.
- Expanding HSAs would improve women’s coverage further, now and in retirement. Though a boon for women, HSAs are too restrictive at present. Expanding access to and the flexibility of HSAs would allow more women to control their health decisions and save hundreds of thousands of dollars for needed medical care in their golden years.