Health Savings Accounts (HSAs) may well be the answer to the health care mess. They are tax-exempt accounts which allow employers and employees to contribute thousands of dollars annually toward paying for health expenses. In conjunction with high-deductible insurance plans, many people end up paying premiums up to one-third lower than a regular insurance option. Often, an employer will pay enough to cover the deductible into the HSA, and additionally cover the high-deductible premium.
In other words, if all Americans got HSAs overnight, we would immediately begin saving about one-third of our health care spending, and would instead put some of that away for a rainy day. This would increase family savings (a good thing) and would drastically lower the cost of healthcare for everyday Americans (an essential thing). Additionally, HSAs bring price transparency as well, since all health care costs—up to the high deductible amount—have to be bought by the consumer, not the insurer, again implying shopping around, competition, higher quality, more innovation, and lower prices.
Unfortunately, HSAs (along with their use-it-or-lose-it cousins FSAs) are also under the gun in the house bill released today: HSAs and FSAs will have to shoulder a medicine cabinet tax—meaning that while you used to be able to buy over-the-counter medicines with tax-free account money, you’ll now only be able to use after-tax dollars. The bill raises the additional tax on non-qualified withdrawals from an HSA (raising the tax from 10% to 20%). HSAs will effectively be killed by a final provision, which requires that most plans provide first-dollar coverage for most services.
Again, HSAs could save the system, but are being torn from the current health care fabric without thought of consequence. Pelosicare would destroy one of the best aspects of the current system.