Improving the One Big Beautiful Bill: Adding the HSA Option

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The One Big Beautiful Bill includes an appropriation for the Affordable Care Act’s cost-sharing reduction (CSR) program. Doing so provides payments to health insurers for insurers to reduce plan deductibles, copayments, and out-of-pocket limits. The CSR appropriation will reduce premiums for silver plans, will reduce premium subsidies that are tied to silver plan premiums, and will reduce the deficit by a projected $50 billion.

In 2022, Paragon developed the HSA option, which builds on the CSR program to give lower-income Americans the option to gain greater control over their health care spending. Under the proposal, ACA exchange enrollees who qualify for CSR subsidies would have the choice to receive their CSR funds as deposits into Health Savings Accounts (HSAs) or HSA-like accounts rather than insurer-controlled reductions in out-of-pocket limits.

The HSA Option features:

• Patient Control: Enrollees—not insurers—decide how to use funds.
• Flexibility: Enrollees can use funds for a wide range of health services, including dental, vision, over-the-counter items, and more.
• Savings Growth: HSA balances roll over year after year and can be invested tax-free, building resources for future health needs.
• Improved Access: HSA funds help patients navigate narrow ACA provider networks and pay for out-of-network care if needed.
• Improved Incentives: HSAs incentivize providers to serve patients directly rather than insurers. Other markets are built on providers serving consumers because consumers are the ones with the money, so businesses have to compete by either lowering prices or increasing quality. Health care is different because the third-party payment system insulates consumers from the true cost of services. By giving patients more control to shop for care, the HSA Option would bring greater consumer involvement to the market, thus lowering prices and increasing quality.

For lower-income enrollees (under 200% of the federal poverty level), the HSA Option would provide up to $2,000 annually in tax-free government contributions. Enrollees would receive a funded debit card that they could only use for qualified health care expenses. This empowers patients to manage their health care more effectively, fosters market-based competition, and addresses a key flaw in the ACA’s design: the overconcentration of subsidies and spending power in insurers’ hands rather than patients’ pockets.

Together, the CSR appropriation and the HSA Option would reduce ACA plan premiums, reduce subsidies, federal deficits, promote patient choice, and create a more competitive and efficient health care system.