Healthy Skepticism

A leading federal workers' union launched a sharp attack on the Veterans Affairs administration this week, accusing them of politicizing the consolidation and modernization of the VA's health care system.

Veteran's Affairs Secretary Anthony Principi unveiled the Capital Asset Realignment for Enhanced Services plan last Friday, which will close hospitals in Pennsylvania, Mississippi, and Ohio, while building new facilities in Florida and Nevada. VA officials also are planning to ask Congress to appropriate billions of dollars for modernization and for the development of 156 outpatient clinics nationwide. AFGE officials said the plan had the markings of a political ploy.

"We are happy to hear that the [Bush] administration plans to build new state-of-the-art facilities in three battleground states," said AFGE National President John Gage, referring to states where the November presidential election is still hotly contested. "However, dozens of VA medical centers across the country must continue to operate under threats of closure… seven rural medical centers are left in limbo for the political season."

AFGE, however, may be alone in its criticism of CARES.

A broad range of lawmakers and veterans groups who commented on the plan this week maintain that CARES is fundamentally sound. They were unanimous in saying the plan only will remain popular if the government keeps existing facilities open until their replacements are ready, as Principi promised last week. That theme sounded louder than any complaint on CARES as it is laid out.

Rep. Sherrod Brown, D-Ohio, is perhaps the plan's most stringent opponent, and he found several flaws with the relocation of mentally ill veterans to Cleveland's inner city. His most rigorous complaint, however, was with the honesty of the Bush administration.

"They have broken their promises to veterans in the past," Brown said of President Bush and Principi. "A lot of veterans don't trust them."

David Autry, deputy national director of communications for Disabled American Veterans, applauded the appointment of a commission that will keep track of the CARES progress and evaluate its success.

"Overall, it's a good plan, and we will continue to monitor [it]," he said.

Even the AFGE complaint focused on the potential promises.

"Will their vets be made to seek care hundreds of miles from home once the election is over?" Gage asked.

Flexible Spending The Treasury Department and the IRS issued a ruling Tuesday to clarify how Health Savings Accounts can be used with other health-care spending options, including Flexible Spending Arrangements and Health Reimbursement Arrangements.

Officials from the Office of Personnel Management and Treasury Department have pushed HSAs as an affordable health-care option for workers with low regular medical bills. Employers and workers can put pre-tax money into the accounts.

HSAs would be available to members of the Federal Employees Health Benefits Program who are not eligible for Medicare and who are enrolled in a high-deductible plan. Money saved in the accounts could be used for regular medical bills, while the high-deductible plans would serve as a safety net for catastrophic injuries.

"Although the statute does not permit individuals to contribute to an HSA while being covered by general-purpose health FSAs and HRAs, the guidance provides significant flexibility to employers in structuring health reimbursements for employees," said Greg Jenner, Treasury's acting assistant secretary for tax policy.

According to Revenue Ruling 2004-45, some eligible employees may be covered by high-deductible plans, contribute to an HSA and also remain covered by certain limited and restricted HRAs and FSAs.

"We believe that the ability of employers to allow employees to temporarily suspend reimbursements from HRAs so they can contribute to an HSA without forfeiting accumulated HRA benefits provides important transitional relief for employers adopting high-deductible health plans with HSAs," Jenner said.