NCPA - National Center for Policy Analysis


July 22, 2005

Health savings accounts (HSAs) and other health care payment options have seen an increase in popularity. They have begun to receive wider acceptance in the work place and represent a philosophical shift toward consumer-directed health care, says the New York Times.

If successful, these accounts could dominate and become the exclusive option at some companies. According to the Times:

  • Nearly 8 percent of large employers already offer HSAs, 18 percent plan to offer them in 2006 and 47 percent are considering them.
  • But awareness of HSAs is quite low and confusion runs high, in part because health insurers, third-party administrators and banks can offer them and because the infrastructure to support these accounts is a work in progress.
  • In one case, UnitedHealth Group has established a bank, Exante, to offer HSAs, which will pay a 4 percent interest rate, include MasterCard debit cards and offers health reimbursement arrangements.
  • Meanwhile, some employers have began to offer pre-paid medical cards linked with FSAs (flexible spending accounts), which act as credit cards specifically designated for purchases authorized by FSAs.

Additionally, the number of health insurers offering HSAs has increased; thus, increasing enrollment, says the Pittsburgh Post-Gazette.

  • More than 1 million workers have enrolled in HSAs since 2003, when the accounts first became available.
  • Some employers have replaced older catastrophic coverage plans with HSAs to make employees more aware of their health care costs.
  • HSAs are becoming more attractive to younger, single individuals, those with higher incomes who can afford higher out-of-pocket costs and healthy individuals.

HSAs are a tax-free way for individuals to save-up the financial resources to cover the high-deductible insurance plans associated with the accounts.

Source: Jennifer A. Kingson, "Health Care at the Swipe of a Card," New York Times, July 16, 2005; Eileen Alt Powell, "Health Insurance can be more affordable with Health Savings Accounts," Pittsburgh Post-Gazette, July 18, 2005.

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