Health care and childcare: What’s ahead for Congress in 2023 for consumer-directed plans

After the end of the first quarter of 2023, we have a better picture about the legislative prospects for consumer-directed plans this year. Consumer-directed plans provide a tax-effective means of funding everyday expenses such as health care and childcare. In Congress, governing majorities have been set and committees have been established. In addition, the Biden/Harris Administration has released its budget that outlines its priorities for the year.

Congressional outlook

Republicans are in the majority in the House of Representative; but it is a slim and fractious majority as witnessed by the 15 votes that were needed to install Rep. Kevin McCarthy (R-Calf) as Speaker of the House. Rep. Hakeem Jefferies became House Minority Leader, with the former Democratic House leadership of Reps. Nancy Pelosi (D-Calf) and Steny Hoyer (D-MD) stepping down from the leadership posts they held for years. Once the Speaker was elected, committee assignments were made. The committees that have jurisdiction over consumer-directed account plans are the Ways and Means Committee (Jason Smith (R-MI) is the new Chairman), the Education and the Workforce Committee (Virginia Foxx (R-NC) returning as Chairwomen of the Committee), and the Energy and Commerce Committee (Rep. Cathy McMorris Rodgers (WA-R) is the new Chair).

With the number of new members in the House of Representatives, there are many members who do not have experience with the issues under their committee’s jurisdiction. Consequently, policy advocates will educate these newer members on the issues of concern. In the health care and childcare arena, these members need to learn about consumer-directed plans and how they provide help to working Americans to afford these expenses.

Democrats are in the majority in the Senate due to the three independents caucusing with the Democrats. Since Democrats will have a majority in all the Committees, it will be easier for committee chairmen to conduct committee business, such as legislative mark-ups and nominations. The committees that focus on consumer-directed accounts are the Finance Committee (chaired by Sen. Wyden (D-WA)) and The Health Education Labor and Pensions (HELP) Committee newly chaired by Sen. Sanders (I-VT). Generally, the members on these committees have experience regarding health care and childcare issues.

With a new Congress, all legislation introduced in previous Congressional sessions must be reintroduced in this new session. Already, we have seen the bill that would increase the maximum contribution amount for dependent care assistance flexible spending arrangements (DCFSAs) reintroduced by Reps. Schnier (D-WA) and Fitzpatrick (R-PA) have reintroduced the Improving Child Care for Working Families Act of 2023 (H.R 1421). This bill would make permanent the increase in the limit on amounts permitted under a dependent care assistance plan from $5,000 to $10,500 (the amount provided under the American Rescue Plan Act of 2021 for only one year). This bill acknowledges the reality that dependent care expenses have become more expensive over the years and Employers Council on Flexible Compensation has expressed its support for this bill.

We will likely see other bills introduced which will expand the opportunity for individuals to contribute to a health savings account. Legislation expanding the availability to contribute to a health savings account was introduced in the previous session of Congress and it is strongly anticipated that such legislation will be reintroduced in the current session of Congress. We are also aware of efforts to expand the expenses that can be paid for or reimbursed under consumer-directed health plans, so there are bound to be several bills introduced to expand the use of consumer-directed benefits plans.

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Congress seems to be using its investigatory power to examine the current environment regarding health care and childcare expenses. On March 23, 2023, Chairman of the Ways and Means Committee, Jason Smith, and Rep. Vern Buchanan (R-FL) held a hearing at the Health Subcommittee of the Ways and Means Committee of the House of Representative entitled “Why Health Care is Unaffordable: The Fallout of Democrats’ Inflation on Patients and Small Business.” While the intent of the hearing was to criticize the Biden Administration’ s health policy objections, ECFC used this hearing to advance its legislative priorities to expand the use of consumer directed health plans, such as health flexible spending arrangements and health savings accounts. On the Senate side of Congress, Senator Bernie Sanders has been using the bully pulpit of chairman of the HELP Committee to examine ways to make health care affordable for more Americans.

Biden/Harris Administration’s priorities  

In its budget for fiscal year 2024, the Biden/Harris Administration included health care as a priority for the Administration. Overall, the Administration is looking to reduce overall health care costs for Americans and extend access to affordable health care. The Biden/Harris Administration also looks to expand access to quality early childcare. Unfortunately, the Administration’s budget proposal does not have any proposals directly relating to consumer-directed plans. ECFC contends that its legislative priorities regarding consumer-directed accounts would help in that the Administration’s goals regarding health care and childcare affordability. ECFC advocates for the increase in the contribution limit to DCFSAs would make childcare more affordable to working families and that expand of the opportunities to use consumer-directed health accounts would extend access to affordable health care for working Americans.

What to watch this year

While the current split between Republicans controlling the House of Representatives, Democrats controlling the Senate and a Democratic President cause many to believe that nothing can be done legislatively this year, there are a number of legislative priorities that must be addressed in 2023.

Since legislation about the debt limit has been resolved, Congress will need to pass legislation to fund the government.  That must occur before the end of the federal government’s fiscal year – September 30. With this legislative “must-do,” there rides the opportunity for other legislation to be passed as part of the “must-do” legislation. Here, we may see opportunities for legislation to expand consumer-directed plans. There seems to be bipartisan consensus in Congress that Americans need help on health care costs and childcare costs. The Biden/Harris Administration is also concerned about these issues and would likely welcome legislation that helps in this area. Consumer-directed accounts can help Americans because pre-tax contributions to those accounts that are used to pay for medical and childcare expenses. While there may not be a clear answer on how to reduce the costs of medical care and childcare, the increased use of consumer-directed health and childcare plans will make these expenses more affordable.

While the beginning of 2023 may seem unruly and contentious with no possibility of compromise, as the year goes by there are opportunities for Congress and the Administration to come together and address these important issues. Advocates for consumer-directed plans need to start now to advocate for expanding these plans.

William Sweetnam is the legislative and technical director for ECFC, a non-profit organization dedicated to maintaining and expanding employee benefit programs on a tax-advantaged basis.