NCPA - National Center for Policy Analysis


August 4, 2008

John C. Goodman, president of the National Center for Policy Analysis, also known as "the father of health savings accounts" for having helped to create the HSA, has been meeting with government and business leaders this year to support the adoption of what he calls "Universal Health Savings Accounts."

This type of consumer-driven health plan would replace all other such plans, such as Health Savings Accounts, Flexible Spending Accounts (FSA) and Health Reimbursement Arrangements ( HRA), he said.  The motivation is the same -- to give the consumer more control and replace all such consumer driven health plans with just a single account: the Universal Health Savings Account."

A number of problems have surfaced with the current forms of consumer-driven plans, says Goodman:

  • The law for who can have a health savings account is too restrictive; and with FSAs, there is no rollover from year to year; lastly, with HRAs, there is no portability of benefits if a person changes jobs.
  • Federal laws that govern HSAs allow individuals to squirrel away up to $2,850 and $5,650 for families, tax-free, each year.
  • Those funds can be rolled over from year to year as well as carried from job to job.
  • The current form of HSAs is flawed because they must be paired with insurance plans with high deductibles of at least $1,100 or more for individuals or $2,200 for families.

"Ideally, people should be able to combine a health savings account with any plan, regardless of any deductible or co-payments," Goodman said.

Goodman did not provide specific numbers about the number of people who might opt for the new form of HSA, but said that with the change, "I would imagine virtually everyone who saves at all would tend to opt for a universal health savings account," he said.  "The reason: You can do everything with an HSA that you can do with an IRA or 401(k) plan, and buy tax-free health care."

Source:  Joyce Tsai, "Push on to change health savings accounts; Man known as the father of HSAs says current options have too many restrictions," Dallas Business Journal, August 1, 2008.

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