There was an AP story in Foxnew.com talking about capping employee’s allowable contribution to health care flexible spending accounts (FSA).  The current proposed bills in the House and Senate have the pre-tax cap set at $2,500 a year that an employee could contribute to the plan.

The reason for the cap is to raise more than $13 billion over the next 10 years to help pay for health care legislation. (Which is now around $1.2 trillion right now.)

Two things are fundamentally wrong with doing this.  First, a flexible spending account is a great way to save pre-tax dollars and pay for items not covered by medical, dental, or vision insurance.  It holds the individual responsible for their own health, and it has been proven plans that drive a consumer to be accountable for where THEIR money is being allocated make better choices.

It seems that any plan that makes the individual responsible for their health insurance congress wants to destroy or significantly limit. These plans help customize care for individuals while keeping down the cost of insurance.

Second, if F.S.A.’s are going to be limited will Health Reimbursement Accounts (H.R.A’s) and Health Savings Accounts (H.S.A.’s) also be eliminated or limited as well?  An H.S.A. allows individuals to either themselves or their employer to put in pre-tax dollars into an account that can be carried over year after year to spend on medical care.  I do not see any other reason why congress would want to limit these types of plans unless they want to systematically eliminate any type of consumer driven healthcare.

My third point comes from a statement made in the AP article that the reason they are capping the F.S.A.’s is to help raise money for the new health bill.  Unfortunately, politicians think the average American is an idiot and do not think that if they cap one pre-tax vehicle that the average American will not put money into another type of pre-tax vehicle, such as an individual H.S.A., 401(k), or SEP IRA. The fundamental belief that they are going to raise all this money by simply capping one pre-tax vehicle is absurd.  People will find other ways to shield their money from taxes driving that $13 billion number considerably down.