Health Savings Accounts answering the critics

Critics of Health Savings Accounts (HSAs) have a litany of complaints. They are essentially the same complaints critics made a decade ago, at the dawn of the consumer-driven health care revolution. We now have evidence that consumer-driven health care works. In addition to the decade of experience with Medical Savings Accounts (MSAs) in South Africa, Americans have had six years' experience with a MSA pilot programme, four years with similar accounts called Health Reimbursement Arrangements (HRAs) and two years with HSAs themselves, say John C. Goodman, president of, and Devon Herrick, a senior fellow with, the National Center for Policy Analysis.

What follows are answers to some of the most important criticisms.

Criticism: HSAs primarily benefit the healthy.

Reply: People with significant health problems benefit from HSA plans because they have a maximum out-of-pocket expenditure, whereas traditional health plans have no such limit. That is why out-of-pocket spending for such patients often goes down when they switch to HSA plans.

Criticism: HSAs won't help reduce the number of uninsured.

Reply: HSAs have already reduced the number of uninsured Americans. America's Health Insurance Plans, a trade group for health insurers, reports that about one-third of people who individually purchased HSA plans were previously uninsured. This is consistent with reports from Assurant and eHealthInsurance, which found that about half of those with incomes under $35,000 had not had coverage for at least six months prior to enrolment.

Criticism: Consumers don't like HSAs.

Reply: HSAs are spreading rapidly. A survey by America's Health Insurance Plans finds that about 3.2 million people are enrolled in HSA plans and another 3 million have HRAs. A U.S. Treasury estimate projects 14 million HSA accounts by 2010 and 21 million if President Bush's recent proposals are adopted.

Source: John C. Goodman and Devon M. Herrick, Health Savings Accounts: Answering the Critics, Part I, II, III, National Centre for Policy Analysis, March 21, 2006.

For Part I text:

For Part II text:

For Part III text:

For more on Health:

FMF Policy Bulletin/ 28 March 2006

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