Congress quietly expands unregulated health cost-sharing, fragmenting insurance

What it does

This bill expands Health Savings Accounts (HSAs) by allowing people to use them for a much broader range of medical arrangements—including direct-pay doctor fees, health care sharing ministries (religious cost-sharing groups), and insurance premiums—while nearly doubling contribution limits to $10,800 (individual) and $29,500 (family). It also lowers the tax penalty for non-medical HSA withdrawals from 20% to 10%, and explicitly exempts health care sharing ministries from being treated as insurance, allowing them to operate outside standard insurance regulations.

Why we flagged it

The bill's primary function is to expand tax-advantaged savings for health care, but its secondary and arguably more consequential effect is to legitimize and expand health care sharing ministries—unregulated cost-sharing arrangements—by exempting them from insurance law and treating their fees as tax-deductible medical expenses. This deregulatory component is buried in sections 5, 8, and 9.

What the text implies

• Health care sharing ministries are explicitly exempted from being treated as insurance, meaning they are not subject to state insurance regulation, solvency requirements, or coverage guarantees. Members have no legal recourse if the ministry fails or denies a claim.
• By allowing HSA funds to pay for ministry membership fees and periodic provider fees without insurance intermediation, the bill incentivizes a shift away from regulated insurance toward unregulated cost-sharing and direct-pay arrangements, fragmenting the insurance pool and potentially raising costs for those who remain in traditional insurance.

The full analysis lists 5 implications of this text.

Who stands to gain

health care sharing ministries; direct-pay primary care practices; high-income individuals and families