Health Reform Perspective: Taxing Middle Class FSAs is Bad Policy, says ECFC

WASHINGTON--(Business Wire)--
Amidst the sound and fury of concern over various aspects of President Obama's
health care reform proposal, observers too often lose sight of the core
fundamental principles on which the President is correct, according to the
Employers Council on Flexible Compensation.

"The benefits of the world's greatest health care system are not adequately
shared by all Americans," said Dennis Triplett, chairman of ECFC, and CEO of UMB
Healthcare Services. "Health care inflation is unsustainable for families and
employers. And the cost of overhauling our system must not be `shouldered by
families who are already having a tough time.`"

Triplett continued, "Unfortunately, Congress is considering a proposal to
effectuate these principles by undermining all of them, and no one is speaking
up in defense of the very people the President seeks to help. Specifically, some
in Congress want to severely limit citizens' ability to make tax-deductible
contributions to flexible spending accounts, or FSAs, in an effort to raise
revenue to pay for other reforms. Such caps on FSA contributions would be bad
health policy and a punch-in-the-pocketbook for middle income Americans."

Millions of Americans use FSAs, making tax-free contributions for medically
necessary goods and services, to help finance their out-of-pocket costs. Most
enrollees are middle income - the average FSA account holder's salary is
approximately $55,000. FSAs help healthy citizens pay for wellness programs and
to cover vision and dental costs; they help patients cover a myriad of
out-of-pocket expenses that inevitably result from chronic conditions; and they
help families handle their recurrent but unpredictable children's medical
expenses.

"FSAs should enjoy staunch support across the ideological spectrum," Triplett
said. "For moderates and conservatives, FSAs are essential tools for controlling
health care costs. They give health consumers some `skin in the game,`
exercising greater discretion before purchasing health goods and services with
their own resources."

For liberals and progressives, FSAs are essential tools for those who need the
most help. Nearly 72 million working age Americans have chronic conditions such
as diabetes, with out-of-pocket expenses of $3,000 - $5,000 or more, even when
covered by a comprehensive, low-deductible health plan. The Robert Wood Johnson
Foundation noted that out-of-pocket spending for individuals with one or more
chronic conditions averages $4,398 per year, far higher that the caps being
proposed in Congress. Capping contributions to FSAs will result in lower
medication compliance, poorer health, and higher medical bill problems for those
who need the most help.

"FSAs are incredibly powerful and effective tools to restrain health spending
and promote better lifestyles," Triplett said. "And they could be improved while
saving taxpayer dollars. Ending the current 'use-it-or-lose-it' regulations
would help people in their budgeting process, especially if coupled with the
ability to roll FSA dollars over from one year to the next."

Triplett concluded, "It is unfortunate that more politicians are concerned about
raising taxes on millionaires than about raising taxes on the middle class and
chronically ill by capping FSAs. In fact, this is downright shocking. But policy
makers still have time to do the right thing and heed the President's admonition
to first do no harm to the 'little guy' when constructing health reform."

About ECFC:

The Employers Council on Flexible Compensation (ECFC) is a non-profit
organization dedicated to the maintenance and expansion of private employee
benefit programs on a tax-advantaged basis. The organization has two driving
missions. The first is to represent and promote flexible compensation programs
through effective lobbying. The second is to provide information on flexible
compensation programs to member, national opinion leaders and the general public
to help create a positive climate for the growth of flexible compensation.

Employers Council on Flexible Compensation
Kristin Kovach, 816-960-3122

Copyright Business Wire 2009