The HOPE Act Will Help Americans With Medical Debt

COMMENTARY

Members of Congress are moving to repeal President Joe Biden’s lame-duck attempt to unilaterally purge medical debt from credit reports, a naïve idea that would do little to solve its underlying causes.

But in correcting presidential overreach, lawmakers should address medical debt by giving patients new tools that make health care more affordable. 

Medical debt is a product of rising costs of care. Medical costs take up a larger share of the family budget every year. Insurance premiums have risen in each of the past four years and are expected to grow by another 7% in 2025. The cost of an average doctor visit has nearly tripled since 2003. 

It’s not a small problem. About 60% of Americans have under $1,000 in savings for an emergency medical expense. Over one in four Americans skipped going to the doctor in 2023, out of fear it would break the bank. That is, if they could even find a doctor. A third of Americans found it difficult to find a doctor in their area who will take new appointments. 

No wonder Americans increasingly feel like the system is rigged against them. They pay more and get less. 

A key source of this problem is the way the federal government subsidizes health care for those who need it. Instead of putting financial aid directly into people’s hands and letting them decide how best to spend it, Uncle Sam transfers hundreds of billions of dollars each year to health insurance companies in the hope that these massive corporate subsidies will translate into high-quality, affordable care. It’s a wasteful, trickle-down approach that doesn’t produce good results. 

It’s time to try something different. It’s time to fund patients rather than the system. Happily, there’s a bipartisan proposal in Congress to do just that: the Health Out-of-Pocket Expense Act.

Introduced by Rep. Blake Moore, a Republican from Utah, and Jimmy Panetta, a California Democrat, the HOPE Act creates a new type of savings account for all Americans who have health insurance, more than 90% of the population.

Similar to a Roth IRA or a Flexible Spending Account, a HOPE account enables individuals and their employers to set aside money for medical expenses on a tax-advantaged basis. 

Families can use their HOPE Account at any time to pay for out-of-pocket medical expenses like drugs, devices and doctor appointments, including ones that their insurance does not cover. Whatever you don’t spend stays in the account and grows tax-free, available for future medical needs and investments. 

Suppose you’re a middle-aged patient with good health. You may not need to spend on medical expenses for a couple of years. But if a health emergency does happen, your HOPE account savings will be there for you, to help cover the out-of-pocket costs associated with an expensive procedure. 

HOPE accounts fill a major gap in our current system. Today’s FSAs are subject to “use it or lose it” rules that discourage people from saving for health care. And thanks to government rules, existing Health Savings Accounts are only available to less than one-fifth of Americans. Unlike those options, HOPE accounts would encourage saving and be available to nearly everyone.  

What about Americans who lack the disposable income to fund their account? The bill offers them an additional benefit by exempting employer contributions to HOPE accounts from income and payroll taxes, for individuals making up to $100,000 per year and families making up to $200,000. State programs like Medicaid could also contribute to HOPE accounts, tax free. 

How much would this cost taxpayers? Less than you might think, because widespread adoption of HOPE accounts would put downward pressure on medical prices. Patients would have strong incentives to shop for value. A RAND Corporation study found that people with HSAs were more intentional about their health care spending, leading to reductions in overall costs of up to 35%. And as prices go down, so will medical debt. 

But more than its financial benefits, lawmakers and patients should celebrate the spirit of the HOPE Act. By giving patients more choice and control, it provides peace of mind.

Enacting the bipartisan HOPE Act would give 300 million Americans more affordable, personalized options and better access to the doctors they trust. It’s a smart idea whose time has come. Congress should pass it without delay. 

Dean Clancy is a senior health policy fellow at Americans for Prosperity. He can be found on X.