Health Savings Accounts, Not ObamaCare, Bending Health Care Cost Curve Down


A new study credits the rising number of consumer-driven health savings accounts (HSAs), not Obamacare, for bending the cost curve down and reducing the growth of health care spending nationwide to its lowest point since the 1960s.

“Obamacare just went into effect. This started 10 years ago,” Peter Ferrara, a senior fellow at the National Center for Policy Analysis (NCPA) and co-author of the study, told HSAs were first proposed in a paper Ferrara co-authored with NCPA founder and president John Goodman back in 1981.

“As individual accounts have grown, national health spending has slowed,” the NCPA study reports.

“Total HSA costs have run about 25 percent less than costs for traditional health insurance. Annual cost increases for HSA/high-deductible plans have run more than 50 percent less than conventional health care coverage, sometimes with zero premium increases,” the study found.

The number of HSAs - which were approved by Congress in 2003 and allow people to save for medical expenses in a tax-free account - has exploded from 1 million participants in 2005 to 15.5 million last year.

During that same time period, the annual growth rate of health care spending declined from 6.8 percent in 2005 to 3.7 percent in 2012.

Ferrara says that’s not a coincidence.

“I’m arguing that this is a cause and effect because both of these things happened at the same time,” he told “Everything President Obama’s done has added to the cost of health care.”

“Instead of spending the insurance company’s money, people are spending their own money and the HSAs are designed to have that effect. We predicted that if you change the incentives, you change the behavior,” Ferrara added, noting that more people now have HSAs than belong to Health Maintenance Organizations (HMOs).

In contrast, “over the past three years, almost all the significant features of the Patient Protection and Affordable Care Act have increased, rather than reduced, health costs by providing risk pool insurance to the uninsurable, forcing private plans to cover more benefits, and adding such extras to Medicare as free ‘wellness exams’ and closing the prescription drug ‘doughnut hole’,” the study noted.

People purchase a high-deductible policy to cover themselves in the event of a catastrophic illness or injury and put the savings from the lower premiums into an HSA to pay for more routine medical expenses.

According to the non-partisan Employee Benefit Research Institute (EBRI), $23.8 billion was deposited in HSAs and related Health Reimbursement Accounts (HRAs), a 282 percent increase since 2007,

“When people spend their own money in the medical marketplace, they typically shop more carefully than when they are spending money that comes from a third-party payer – an employer, an insurance company or government,” the NCPA study noted. “HSAs and their incentives have proven very effective in controlling costs in the real world.”

Besides slowing the national growth in health care spending, HSAs are also changing the supply side of health care, Ferrara explained.

“More customers are now paying cash, and more health care providers are geared towards them” such as freestanding urgent care clinics and “Doc-in-the-Box” outlets, Ferrara said, predicting that they will be a “growth area’ in the future.

“Young people are not signing up for Obamacare as expected,” he told “It’s probably wiser for them to start an HSA than to go on the exchanges.”