NCPA - National Center for Policy Analysis


June 23, 2006

John Goodman, president of the National Center for Policy Analysis, has been called the "father" of Health Savings Accounts (HSAs).  Created by the Medicare bill signed by President Bush on December 8, 2003, HSAs are designed to help individuals save for future qualified medical and retiree health expenses on a tax-free basis.

HSAs will continue to be popular and will continue to meet the needs of patients. Yet, we are not fully taking advantage of them, says Goodman.  Furthermore, the greatest opportunity is with the chronically ill, he says:

  • Healthy people tend to interact with the healthcare system episodically. Once in awhile they go to the emergency room or take a prescription drug.
  • On these occasions, they gain knowledge that improves their skills as medical consumers. But it may be several years before they use that knowledge again, by which time it may be obsolete.

The chronically ill are different, says Goodman:

  • Their treatments are usually repetitive, requiring the same procedures, visits and/or medicines, week after week, year after year.
  • Consequently, cost-saving discoveries by these patients are not one-time events. Rather, they pay off indefinitely.

Numerous studies have found the chronically ill can reduce costs and improve quality by managing their own care.  But healthcare management is difficult and time-consuming.  So patients should reap both health rewards and financial rewards from making better decisions.  Insurers should be able to create versatile HSA accounts for patients with differing chronic conditions.  They should be able to adjust the accounts' funding to fit specific circumstances, says Goodman.

Source: Matthew DoBias, "HSA architect sees more opportunities; Benefits expected for chronically ill," Modern Healthcare, June 19, 2006.For NCPA text:


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