Health Savings Account Blog

Health Savings Accounts are available through many employers as pre-tax savings accounts into which employees can deposit money that they can earmark to pay for qualifying medical expenses. Health Savings Accounts accompany high deductible health HSA insurance plans that have low monthly premiums and maximum annual out-of-pocket expense amounts for participants.

The Reid bill is designed to assert more governmental control over Health Savings Accounts. According to some critics, Health Savings Accounts will be “barred from the insurance ‘exchanges’ that will demolish and supplant today's individual market.” Moreover, say the critics, once the government has the power to "define the essential health benefits" that should be offered as part of all plans, employers will lose control over what benefits they can and can’t offer to employees.

The Democrat’s argument against Health Savings Accounts is that Health Savings Account participants aren’t contributing as much money to a generalized health insurance pool that all can benefit from. As such, participants of Health Savings Account programs will not be engaging in as much risk sharing as participants in more traditional health insurance programs that come with high monthly premiums.

Consider, though, the demographics of people who participate in Health Savings Account programs; Approximately 40% of tax filers with who have Health Savings Accounts earn less than $60,000 per year, according to the IRS. According to the Employee Benefit Research Institute, 4% of adults with private insurance have a Health Savings Account for 2009, which is up from just 1% in 2006. About 9% of those adults receive their Health Savings Accounts as part of a consumer-directed health plan through their employers. Moreover, Health Savings Account beneficiaries are evenly split between those with health problems and those without major health problems.

According to the Blue Cross Blue Shield HSA Association – an organization with a high percentage of members enrolled in Health Savings Account programs - says that Health Savings Account participants are more likely to be better healthcare consumers than individuals with traditional health insurance.

As such, Health Savings Account beneficiaries are more likely to track expenses (63% to 43%), put money away for the future (47% to 18%), and research information about the quality of healthcare providers before scheduling a visit (20% to 14%). Health Savings Account beneficiaries are also more likely to participate in wellness programs, such as weight loss, fitness, and smoking cessation programs. After all, Health Savings Account participants have invested their own financial resources into their healthcare management and they want to get the most from their investment.

According to media executive David Goldhill in an article he wrote for Atlantic Monthly, if a 22-year-old starts at his company today earning $30,000 and health costs grow at 3%, by the time he retires he'll have paid out $1.77 million in healthcare premiums, earned lower wages, paid more for out-of-pocket costs and contributed to both sides of the Medicare payroll tax.

However, if that 22 year-old were to invest his healthcare money into a Health Savings Account, he would not only save a significant amount of money each month off of the cost of healthcare premiums, but he would also be able to grow his savings account for future healthcare expenses, and receive a tax benefit for his savings. "And wouldn't you consume health care differently if you and your family didn't have to spend that money only on care?" asked Goldhill.

However, opponents of the Reid bill argue that liberals fear Americans having more control over their healthcare expenses because it would result in diminished governmental and political control. The Reid bill creates an environment where it is impossible for people to choose their own healthcare plans and options.

Still, the Reid healthcare bill is seemingly being pushed through the Senate at an alarming speed, even though the public opposes the bill, President Obama’s approval rating has tanked to only 44%, and business and healthcare providers are growing increasingly concerned over the consequences of the impending healthcare reform. It seems, critics argue, that even in the face of so much opposition and disgruntlement, the government seems not to care; the healthcare bill appears to some to be more about control than creating a solid healthcare plan that will benefit America for the long-run.