Health Savings Account Blog

Not everyone is enamored of the accounts.

"We're opposed to the concept of it," says Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities in Washington , which studies the effects of government programs and policies on low- and moderate-income people.

HSAs are similar to consumer-directed health plans, which many employers are trying as an alternative to managed care in their attempts to cut health benefit costs.

"This gives employees the opportunity to control their health care spending and choose a plan where they can manage some of their own health care dollars," Mr. Goodman says.

"If you assume responsibility for managing your own health care dollars," he says, "you have to think about how you spend them. You don't want to rush off to the emergency room for every little sniffle."

Also, he says, "I think this will completely replace the flexible spending account, because those accounts are 'use it or lose it,' while this account is 'use it or save it.' It does roll over, and you can continue it right up to the day you die."

Experts predict that accounts such as HSAs will dominate the health insurance market in less than five years, Mr. Goodman says.

The accounts could undermine comprehensive health insurance offered by employers, the budget and policy priorities center says.

"Healthy, affluent workers would have a strong incentive to opt out of comprehensive health insurance plans in favor of the new accounts," it says. "They would receive a large tax break, and they would not be much affected by switching to a high deductible health insurance policy, since they generally use fewer health services."

If large numbers of those healthy workers pull out of comprehensive plans, the pool of workers left would be older and sicker, causing their premiums to rise significantly, Mr. Park says.

"We think they're bad policy on the health care side," he says. "They are going to undermine the traditional employer-based health care system."

Mr. Goodman disagrees.

"Expanding HSAs will dramatically improve health care by reducing the need for managed care rationing, allowing workers to save for health needs in retirement, containing medical inflation by giving consumers incentive to forgo unneeded care, and eliminating waste and bureaucracy by giving patients a stake in the savings," he says.

HSAs have caught the eye of employers.

"Many more employers than we had expected are very interested in the health savings accounts," says Susan Relland, health policy legal counsel at the American Benefits Council in Washington, an employers' group. "We're seeing general trends toward consumer-directed health plans, and this is the perfect vehicle to do that."