NCPA - National Center for Policy Analysis


September 28, 2007

Across Michigan, businesses, government and nonprofit organizations are attempting to revise the way they address skyrocketing health care costs.  One idea they should consider is health savings accounts (HSAs), says Michael LaFaive, director of the Morey fiscal policy initiative for the Mackinac Center for Public Policy.

The main benefit of HSAs is cost reduction.  It is estimated that by moving more than 52,000 classified state employees into HSAs, Michigan could save more than $194 million a year.  Savings like those are why these account-based plans are growing in popularity, says LaFaive:

  • It is estimated that by 2009 more than 30 million Americans will be enrolled in some type of HSA.
  • Many in Michigan already are, including public school administrators and county employees.
  • Recently, the global human resources firm Hewitt Associates published research saying 20 percent of U.S. companies offer employees an HSA option or will do so by year's end.
  • Almost 50 percent of companies reported that they would do the same "at a future date."

The amount of the savings from HSAs will depend on the size of the deductible accepted by employers and employees.  Devon Herrick, a health care expert with the National Center for Policy Analysis, reports a savings range between 25 percent and 50 percent, though the median savings is closer to one-third.

Source: Michael LaFaive, "Health Savings Accounts Could Save State $194 Million," Mackinac Center for Public Policy, September 28, 2007.

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