Gov. Jim Doyle of Wisconsin is expected to veto - for the fourth time - legislation that would exempt health savings accounts from state taxes.
Bankers support the legislation as a way to boost retail and business deposits, and they predict they will eventually win the fight for an exemption.
"The longer these accounts are out there, the more these will help businesses and the uninsured, and the statistics showing the benefits of HSAs will be too much for anyone to ignore," said Kurt R. Bauer, the president and chief executive officer of the Wisconsin Bankers Association.
The proposal has made it through the Legislature four times in the last two years, most recently last month. But Gov. Doyle, a Democrat, has vetoed the measure three times, and Matt Canter, a spokesman for the governor, said last week that he would do so again.
The bill "does nothing to make health care affordable for middle-class families," the spokesman said.
Gov. Doyle prefers broader legislation that would include a low-cost health plan for children and a catastrophic health care plan that employers could join, Mr. Canter said. "The governor said he is not fundamentally opposed" to a tax exemption for HSAs.
Wisconsin is one of six states where the accounts are not tax-exempt, according to the National Conference of State Legislatures. The others are Alabama, California, Maine, Massachusetts, and Pennsylvania.
Under federal law, people may deduct the money they put into HSAs from their taxable income. Congress created the accounts in 2003 to help people pay for medical care. They are designed to be combined with high-deductible insurance plans that have lower premiums.
Both employees and their companies may contribute to the accounts, and unused funds may be rolled over to the next year. When an account holder reaches age 65, the funds may be withdrawn for non-medical uses, but taxes would be owed.
Mr. Bauer said the Wisconsin bankers group would continue its efforts to make the accounts tax-exempt. He noted that the Legislature came within four votes of overriding the governor's September veto. The trade group surveyed its members in December and found that 69% believe health savings accounts would be more attractive if they were tax-exempt.
"When 69% of my industry agrees with anything besides 'Credit unions are bad,' I take notice," Mr. Bauer said.
In a letter to Gov. Doyle last month, Mr. Bauer cited statistics from American Health Insurance Plans, a trade group for the health insurance industry, that shows the number of people with the accounts tripled over the last 13 months, to 3 million. About one-third of account holders were previously uninsured, and 40% have an annual income of less than $50,000, AHIP said.
In his 2004 veto message, the governor wrote that he opposed giving tax exemptions to the accounts because doing so would cost the state too much, encourage employers to offer only health insurance policies with high deductibles, and benefit only people with high incomes.
The Wisconsin Division of Executive Budget and Finance estimated that making HSAs tax-exempt would cost the state about $45 million of lost revenue from fiscal 2007 through fiscal 2013.
