Policy Documents

Health Savings Accounts

Jeff Emanuel –
May 15, 2008

Health Savings Accounts are a way to provide affordable, flexible, consumer-directed health insurance for a population that has a growing need for quality coverage.

HSAs allow employers and employees to deposit money, tax-free, into an account that is used for short-term, low-cost expenses such as doctor visits. Account owners spend that money until the insurance plan's deductible is paid, at which time the insurance policy takes over payment. Unspent funds are allowed to accrue in the HSA over time and are portable. When an employee leaves a job, he can take that health insurance money with him.

HSAs are growing in popularity. It is estimated that by 2009, more than 30 million Americans will be enrolled in some type of HSA. Many already are, including public school administrators and government employees. Twenty percent of U.S. companies offer employees an HSA option or will do so by year's end. Almost 50 percent of companies report they would do so "at a future date."

Most recently, the state of Georgia enacted legislation that makes the insurance market more HSA-friendly by providing tax relief to insurers, employers, and consumers who deal in the high-deductible, consumer-directed plans.

The savings achieved through HSAs depend on the size of the deductible accepted by employers and employees. Devon Herrick, Ph.D., a health care expert with the National Center for Policy Analysis, reports a savings range between 25 percent and 50 percent, with a median savings of 33 percent.

With the current poor financial state of Medicare, Medicaid, and most State Children's Health Insurance Programs, offering HSAs at the state and local level will allow those governments to focus scarce resources on covering those who have no other option, while providing the rest of the population with affordable health insurance over which they have more personal control.


Georgia Governor Signs Consumer-Directed Health Insurance Measure
http://www.heartland.org/Article.cfm?artId=23245
This article, forthcoming in the July 2008 issue of Health Care News, details the new health insurance legislation that makes Georgia the first state to deliver patient-centered, prevention-focused, free-market health insurance to its citizens.

Consumer-Driven Plans Yield Savvy Health Care Consumers, Study Says
http://www.heartland.org/article.cfm?artId=22516
This January 2008 report from Health Care News reveals that participants enrolled in consumer-directed health plans are more likely to plan and save for health care, according to a survey by the Blue Cross and Blue Shield Association.

Consumer Power Report: Consumer-Driven Plans Deliver
http://www.heartland.org/article.cfm?artId=22311
Greg Scandlen, director of Consumers for Health Care Choices, analyzes the growing popularity of HSA plans.

Facts About Health Savings Accounts
http://www.texaspolicy.com/pdf/2007-05-PB25-HSAfacts-mks.pdf
HSAs would offer state employees a new option in benefits, allowing employees greater control over money already spent on their behalf by pairing a high deductible health insurance policy with a savings account for tax-free deposits and withdrawals for health care purposes, notes Mary Katherine Stout in this Policy Brief from the Texas Public Policy Foundation.

Wisconsin County Saves Money with HSAs
http://www.heartland.org/article.cfm?artId=23174
This June 2008 report from Budget & Tax News recounts Manitowoc County, Wisconsin's decision to offer HSAs to employees, causing health care costs to drop by thousands of dollars per employee, while coverage improved.

Restoring Individual Rights and Health Care Freedom
http://www.heartland.org/article.cfm?artId=20758
Dr. Roger Beauchamp writes that workers must consider whether they want to take charge of their health care in consultation with someone they choose and trust, or to allow bureaucrats and politicians to dictate what their care will be and when it will be available.

Interest in HSAs Will Surge in 2008
http://www.heartland.org/article.cfm?artId=22309
This article from Health Care News recounts the growing interest in HSAs, a trend that has continued from their inception to the present, with no sign of abating.

2008: Next Steps for Health Savings Accounts
http://liberty.pacificresearch.org/docLib/20080108_HPPv6n1_0108.pdf
According to this January 2008 study by the Pacific Research Institute's Diana Ernst, HSAs are still young, but they are part of a burgeoning reform movement that is proving to lower costs and encourage responsible behavior among Americans seeking to save more money for health care.

Banks Offer Health Savings Accounts to Meet Customer Demand
http://www.heartland.org/article.cfm?artId=23045
Customers have been asking financial institutions for HSAs ... and, according to a survey conducted by Wolters Kluwer Financial Services, banks and credit unions are beginning to respond to those requests.