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The Spin On Health Savings Accounts

posted on:  12/12/2006    revised: 3/10/2010


I frequently receive questions from reporters on the topic of health savings accounts.  Reporters are often looking for an angle to their story or for a specific quotable response.  I receive these requests because I was one of the first to publish on the topic a few years ago and have recently published a book and recorder a CD on the topic that is sold by another company. While it does not seem to be in my best financial interest to help another writer with a story that I cover extensively, I usually do so anyway simply because I think the topic is important for consumers. My usual logic is the more information that is out there, the better.

Lately I have noticed that the questions from reporters make no sense; indicating that either the reporter's premise for the article is wrong or that the reporter simply dies not understand the basics of the issue under discussion. For example, one reporter from New York City stated that he believed that the low rate of participation was due to lack of consumer education on this topic. I suggested that he consider the conflict between federal laws and NY state insurance laws as the primary cause of the problem in his market -especially for individuals who buy their own health plans.  He was entirely unaware of the state legal issues and the market realities.  After some further investigation, he responded that the story idea was scrapped because there was no point in writing about something that did not make sense for his readers.

Separately, I was surprised by the handful of new legislative proposals intended to reform health savings accounts. I wondered if the advisers to Congressmen endorsing the proposals really be so uninformed about basic health care financing. (I later concluded that pure ignorance could be the cause after hearing an NPR show about how Congress members state that information available to them within the DC beltway is often limited or distorted- that they get better information at the coffee shop back in their home town).  I covered this topic in a recent article posted at http://healthsavingsaccount-hsa.com/articles/summay-of-hsa-reform-proposals-for-2007.htm .  There is no need to repeat this discussion, but the main point is that Congress seems to be taking the position that the HSA program is going great; that we should stay the course and simply fine-tune the program.  Yes, just like the Iraq war.  Nothing could be further from the truth.

Why all the sudden craziness about HSAs? I even started to wonder if perhaps my own perception was off-center.  Perhaps my own assessment is wrong and these Congressmen and reporters are right? Do we just need a fine-tuning of the HSA program? After all, how could so many otherwise intelligent people be taking such a stand on this topic?  If so, I still cannot see it.  I remain convinced that the HSA program needs major revision in order to be successful in terms of impacting the delivery and financing of health care on a national basis.  The basic concept was a good, but as soon as it entered the budget-sensitive political arena we killed most of the possible benefits.  It seems that if we wake up to the facts soon enough then we might save the program.  But is no actions are taken, I predict that HSAs will become "part of the problem" rather than "part of the solution" within a few short years.

The basic problems behind health savings accounts have remained steady since the inception of the program in 2003:

1) The required health insurance is viewed as too expensive by many people.

2) Most health insurance policies do not qualify for a health savings account.

3) Most health savings account balances are too low to be useful in covering actual out-of-pocket medical expenses.

4) Employers and self-employed individuals are switching to HSAs for the wrong reasons (to save cash in the short term) and then failing to fund the HSA account as originally planned.


About the Author:  Tony Novak will deliver an update on the status of Health Savings Accounts on February 8, 2006 through Rockhurst University.  Live subscriptions to the event or a copy of the recording/publication will be available.  See details at www.natsem.com .


keywords:   HSA, health savings account, reform


related topics:


article: "Summary of Health Savings Account Proposals for 2007"





Copyright 2010 by Tony Novak. Originally produced and published for the "AskTony" column syndication prior to 2007. Edited and independently republished by the author in March 2010. All rights reserved.