Myth: Health Savings Accounts (HSAs) will not be popular.
Response: HSAs will revolutionize the U.S. health care and health insurance industries. Authoritative sources, like the Bureau of National Affairs and Health Affairs journal, predict consumer-driven plans like HSAs will dominate the health insurance market in less than five years. In a recent poll, two-thirds of the members of the National Association of Business Economists said consumer-driven plans were the future of health insurance.
Myth: HSAs have no tangible benefits.
Response: Expanding HSAs will dramatically improve health care by reducing the need for managed care rationing, allowing workers to save for health needs in retirement; containing medical inflation by giving consumers an incentive to forgo unneeded care; and eliminating waste and bureaucracy by giving patients a stake in the savings.
Myth: HSAs are not politically viable.
Response: HSAs appeal to liberals because they offer an alternative to HMO rationing; conservatives like them because they are an alternative to government rationing.
Myth: HSAs will be expensive to administer.
Response: Administrative costs should be lower for HSAs than for managed care; in fact, administering HSAs should be no more difficult than using a debit or credit card.
Myth: Why would HSAs be successful when fewer than 1.5 million workers are now enrolled in consumer-driven plans, like Archer MSAs??
Response: HSAs replace Archer MSAs and do not suffer from the “use it or lose it” provisions restricting Archer MSAs. Health care contributions and investment gains rolled over from year to year have the potential to accumulate huge balances, putting consumers in a better position to pay for their own health care as they grow old and costs typically peak. In addition, the new law gives HSAs the same tax advantages now granted only to health insurance premiums.
Myth: HSAs won’t help solve the problem of uninsured Americans.
Response: HSAs and other consumer-driven health insurance plans reduce the number of uninsured by making coverage more affordable. According to the IRS, for example, 73 percent of Americans with MSAs were previously uninsured.
Myth: HSAs are a tax shelter for high-income Americans.
Response: Beginning January 1, 2004, some 250 million non-elderly Americans are eligible to enroll in HSAs. Because premiums will be lower and any unused money can be rolled over to succeeding years, HSAs are more attractive to low-income than high-income workers.
Myth: People will skimp on needed medical care to save money in HSAs.
Response: The evidence shows that’s not the case. In South Africa, for example, where MSAs have captured half of the health insurance market, an NCPA study found no evidence that MSA account holders skimp on needed care. That’s consistent with a major finding of the RAND Health Insurance Experiment.
Myth: HSAs won’t control costs.
Response: Health accounts encourage patients to shop and control costs. In South Africa, MSA enrollees spend 47 percent less on average for non-chronic prescription drugs than those with traditional insurance.
Myth: HSAs will encourage employers to cut benefits.
Response: Employers don’t need a law to cut benefits. Employers who cut benefits risk losing workers, with or without HSAs.
Myth: HSAs fragment the insurance risk pool.
Response: HSAs do not fragment the “insurance risk pool” because there is no such thing: There are tens of thousands of risk pools in the U.S. In addition, HSAs won’t fragment the risk pool because everyone stands to gain.
Myth: HSAs will adversely affect people with chronic illnesses.
Response: Because the maximum out-of-pocket cost (cost-sharing) is limited to $5,000 per individual, people with chronic illnesses may actually be better off under HSAs.
Dr. John C. Goodman is president of the National Center for Policy Analysis (NCPA), a think tank headquartered in Dallas, Texas. His email address is [email protected]. For more information about NCPA, visit its Web site at http://www.ncpa.org.
