Health insurance: Can HSAs help replace Obamacare?
“The health savings account is having its moment,” said Kris Mamula in the Pittsburgh Post-Gazette. As Republicans debate how to repeal and replace the Affordable Care Act, two things look certain: “Consumers will shoulder a bigger share of health-care costs in the future” and any GOP health-care plan will heavily rely on HSAs. The accounts, which are usually paired with high-deductible healthinsurance plans, allow people to set aside money tax free to pay for medical expenses not covered by health insurance, such as copays and deductibles. HSAs have grown in popularity since they were introduced in 2003, and some 30 percent of employers now offer an HSA-eligible health-insurance plan. Republicans want to expand the use of these savings accounts because they see them as an effective tool to drive down overall health-care expenditure. When consumers have to spend their own money rather than an insurer’s, HSA advocates argue, they’re more likely to search for better, cheaper care options. Every GOP health-care plan under consideration would dramatically expand the use of HSAs, said Julie Appleby in CNN.com.
This year, contributions to the savings accounts are capped at $3,400 for an individual and $6,750 for a family. House Speaker Paul Ryan’s plan would raise the HSA contribution limit to match the total of the participant’s annual health-insurance deductible and out-of-pocket maximum. Sen. Rand Paul’s plan would remove caps entirely and allow HSAs to be offered with any type of insurance, “not just high-deductible plans.” But critics point out that raising contribution limits benefits only those who can afford to contribute large sums. And while money invested in an HSA grows tax free, similar to a 401(k) retirement fund, “older or sicker consumers could blow through their entire fund every year and never accumulate any savings.”
Studies do suggest that people with HSAs use less health care than those without such plans, said Gillian White in TheAtlantic.com. But there’s little evidence that this behavior is good for their health. Patients sometimes “forgo medical care while waiting for their accounts to build up.” One study of high-deductible plans found that rather than shopping around for the best and cheapest treatment, many individuals simply opted for less medical care, “including the types of preventive care that could result in fewer medical emergencies, and financial shocks, later on.” For HSAs to truly succeed, “we’d all need to change our mindset,” said April Fulton in NPR.org. We like to think of our future selves as healthier and more financially secure—when in fact health and income both tend to decline with age. Our refusal to recognize that reality is one reason that half of Americans don’t have a retirement account. If those people won’t or can’t put aside money for their old age, will they really save for an unforeseen health crisis?