[Congressional Record Volume 152, Number 91 (Thursday, July 13, 2006)]
[Senate]
[Pages S7516-S7517]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CRAIG (for himself and Mr. Coburn):
  S. 3655. A bill to amend the Internal Revenue Code of 1986 to allow 
individuals eligible for veterans health benefits to contribute to 
health savings accounts; to the Committee on Finance.
  Mr. CRAIG. Mr. President, I seek recognition today to introduce 
legislation to allow veterans who use the VA health care system to 
establish health savings accounts, HSAs. This legislation will increase 
health insurance options for veterans and their families, provide 
future options in the choice of health care providers for veterans, and 
could ultimately allow veterans who are forced to rely on the VA health 
care system today to choose to receive care from the private health 
care system in the future.
  As my colleagues are aware, current law allows individuals who 
purchase a high deductible health insurance plan to contribute funds, 
on behalf of themselves and their family, to a health savings account. 
Funds are contributed to the HSA on a pretax basis and then can be 
withdrawn for qualified health care expenses without any tax 
consequence.
  In order for a person's HSA to be in ``good standing'' with the IRS, 
the individual cannot carry health insurance that provides coverage for 
any health services prior to reaching the deductible amount of the high 
deductible plan. Of course, like many government programs, there are 
exceptions to the rules for certain circumstance. Most notably, a 
person does not jeopardize an HSA by purchasing long-term care or 
accident insurance nor is the receipt of workman's compensation 
coverage disqualified from contributing to an account. Yet the IRS has 
advised the health insurance industry that VA health care would count 
as a health insurance plan that provides coverage for health care 
services prior to reaching the high deductible limit. Therefore, 
veterans who use VA are not eligible to establish health savings 
accounts.

[[Page S7517]]

  At the time this issue was brought to my attention, the argument was 
limited to the narrow issue of service-connected veterans being denied 
an opportunity to avail themselves of the tax advantages of an HSA 
simply because they suffered an injury related to their service in the 
military and the government was providing care for that injury. Of 
course, that seemed outrageous to me. Like any employer, the Government 
has an obligation to provide treatment for injuries sustained while 
military personal are serving our country. And if workman's comp is a 
current exemption, why not VA care?
  So, I set out to draft a bill to allow service-connected veterans who 
use VA for service-connected treatment to establish HSAs. But, the more 
I considered the arguments for allowing those who use VA for service-
connected conditions to have HSAs, the more I realized that the 
arguments applied just as strongly to all VA patients. I would like to 
take a moment to explain my arguments.
  First, the current law unfairly affects families of veterans when the 
veteran is the sole provider of income for the family. As everyone 
knows, VA is not a family health care provider except in the extreme 
case of a permanently disabled service-connected veteran. Therefore if 
a veteran--even a service-connected veteran--uses the VA health care 
system, current law does not even allow that veteran to contribute 
money on behalf of his family to an HSA. What good does that do? Why 
would we prohibit a veteran from providing health coverage to his or 
her family? In my opinion, that does neither the veteran nor his or her 
family any good. It is simply a well-intention policy when applied to 
HSAs, with a harmful, unintended consequence as applied to veterans.
  Second, under current law VA is permitted to bill insurance carriers 
for the treatment of nonservice connected conditions. Further, many 
veterans are required to pay copayments to VA in order to receive that 
same care. So, veterans have out-of-pocket medical expenses and VA can 
bill their insurance provider. Yet we have a policy that disallows the 
establishment of a tax free account to pay for those medical expenses 
and--even worse--provides a disincentive for the veterans to buy an 
insurance policy that VA could one day bill. Again, I understand the 
genesis of the policy. However, it is having unintended consequences 
when applied to our veterans.
  Finally, while it is true that more and more veterans are choosing to 
use VA as their provider of choice as a result of the excellent care 
provided by the system, there are still hundreds of thousands of 
veterans who use VA because they are financially unable to afford the 
private health system. I am proud that this Nation stands by those 
veterans who cannot provide for their own care in the private system. 
However, I do not think we should statutorily preclude them from even 
trying to take control of their own health care finances.
  What harm would come if a veteran, who uses VA today because he or 
she has no other option, was suddenly allowed to purchase a low 
premium, high deductible plan and then begin to contribute to a savings 
account that he or she would now own. I say no harm at all. The only 
thing that could come of this is that the veteran may one day say to 
his government: I was there for you when you needed me. You were there 
for me when I needed you. Now, I no longer need you.
  Again, I am not saying that veterans should feel as though I am 
trying to get them to leave the VA system. I am not. But, I certainly 
do not want to stop a veteran from choosing to buy insurance, start 
saving in an HSA, and one day leaving the system. I think one of the 
things government can do for its citizens is provide the tools and 
assistance that will allow Americans to provide for themselves. That is 
what this legislation is about.
  I am confident that many of you will agree with the premise that it 
is a basic issue of fairness to support allowing service-connected 
veterans to establish HSAs. But, I also hope that I have demonstrated 
here today that it is sound public policy to extend the HSA option to 
all veterans who use VA's health care system.
  I urge my colleagues to be cosponsors of this legislation and I urge 
passage of the bill as soon as possible.
                                 ______