The leading Republican presidential candidates say health savings accounts should figure prominently in replacing the Affordable Care Act. That would require significant changes to HSAs and to healthcare more broadly. Even then, higher income Americans would benefit most.
HSAs are accounts that patients own and manage themselves. People can contribute to them, tax free, up to a certain amount and then use the funds to pay for qualifying medical expenses. They are now exclusively paired with high-deductible health insurance plans. Employers can contribute to them and the amount in them rolls over from year to year.
Gary Claxton, a vice president with the Kaiser Family Foundation, said HSAs are intended to make healthcare consumers more cost-conscious shoppers. When prices aren't masked by large insurance payments, people may feel more invested and be more likely to look for a good value.
“The idea was that consumers would have more at risk and would be more sensitive to the cost from one provider to another,” he said.
They have grown in popularity since their introduction in the Medicare Modernization Act of 2003. Since 2005, enrollment in HSAs has grown by about 1 million per year and nearly 20 million people were enrolled in one by January 2015, according to America's Health Insurance Plans. Some states have required regular contributions to HSAs as part of an agreement to expand Medicaid under the ACA.
Texas Sen. Ted Cruz has repeatedly laid out three main goals for establishing health insurance after repealing the ACA. He would allow insurance to be bought across state lines, de-link insurance with employers and “expand health savings accounts so people can save in a tax-advantaged way for more routine health care needs.”
Front-runner Donald Trump's recently released a seven-point plan for healthcare that includes allowing health savings accounts, which are already legal, and allowing them to become part of a person's estate and therefore inheritable.
“These funds can be used by any member of a family without penalty,” his plan states. “The flexibility and security provided by HSAs will be of great benefit to all who participate.”
Joe Antos, a health policy expert at the American Enterprise Institute, a right-of-center think tank, said for HSAs to be a bigger factor in the healthcare system, there would need to be far more transparency in pricing. It would need to go beyond a few price listing. It should include expected out-of-pocket costs without any surprises such as a provider who is out of network.
Getting these changes across the board would probably have to start with requirements from a government program like Medicare, he said.
“To be realistic about any of this...we're going to need to see some changes in Medicare to get providers to act in the way they as patients would like to see,” he said.
Claxton said one limitation of HSAs is that they are vastly more beneficial for people in a high tax bracket. Those in lower brackets who don't have much savings don't see a great help because tax breaks for them are nominal.
“If you don't have much cash, then the fact that you can make your $1,500 deductible pre-tax doesn't make much of a difference,” he said.
Another concern is how HSAs would fit in with the movement toward value-based payments. The only services paid for with an HSA before the deductible is met are preventive care.
Antos said easily available and understandable quality measures would be needed for consumers be more active participants and push for value in their healthcare.
In a proposal for healthcare reform (PDF) that Antos and others with the American Enterprise Institute wrote last year, the experts called for a one-time federal tax credit to encourage people to create HSAs, even if they don't have a high-deductible plan. They also suggested incorporating the accounts into Medicare and Medicaid and allowing them to pay for medical expenses that are not fee-for-service.
The report also advocates allowing people to designate a family member to inherit their HSA and letting people 75 and older withdraw money from their account as long as they leave a minimum balance that could pay for two years of nursing home care.
Antos cautioned that none of the candidates' healthcare proposals include the details necessary to truly evaluate them. They don't explain, for instance, whether and how they would continue to ban insurers from discriminating against consumers with pre-existing conditions.
“If you can figure out what the Republican candidates stand for, please let them know,” he said.
