Opposition to Health Savings Accounts

A 2007 survey of American employees by the human resources consulting firm Towers Perrin showed satisfaction with account-based health plans (ABHPs) was low. People were not happy with them in general compared with people with more traditional health care. Respondents said they were not comfortable with the risk and did not understand how it works.

The Heritage Foundation in 2006 claimed a growing success of HSAs, but it must be remembered that they are a strong advocates of HSAs. What constitutes success is also open to question. By mid-2007 an estimated 4.5 million people were enrolled in HSAs, which is considerable given their newness. On the other hand, that’s a small percentage of insured Americans and still leaves tens of millions of people uninsured. Advocates point to the large number of uninsured as a reason to expand HSAs. Critics say that it proves people don’t like HSAs.

It should also be noted that some of the 4.5 million in HSAs did not have a choice of another health plan offered by their employer, so it was either HSA or nothing. The Des Moines Register reported a Kaiser Family Foundation report says 40% of employees in a CDHP had no other insurance alternative through their work.

However, the libertarian group National Center for Policy Analysis claims “there are no perceptible income differentials between HSA purchasers and users of managed care plans.”

In April 2008 (on tax day April 15), the House of Representatives passed a bill, HR 5719. requiring that HSA withdrawals be “substantiated” to pay for medical expenses. This type of requirement is in effect for Health Reimbursement Arrangement (HRA) money, but the situation is slightly different because HRAs are funded by employers. HSAs by contrast are legally owned by the individual and it is currently legal for those individuals to use the money for non-medical purposes. The Senate has not passed any similar bill, and a representative from the White House promised a veto if the bill reached the President.

Further, criitics point out that the institution of HSAs is detrimental to the federal budget deficit and the Treasury Department estimates HSAs would cost the government $156 billion over a decade. Of course, advocates would say that this is a small price to pay for more efficient health care leading to potentially higher tax revenues from other sources.

A projection by researchers at the Stanford University Graduate School of Business found that “HSAs require upwards of 20 years for most households before they can be relied upon with great confidence to cover all future healthcare costs.”


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