Using Health Savings Accounts to Provide Low-Cost Health Care

Abstract

The recent Medicare Modernization Act made health savings accounts (HSAs) available to all non-Medicare individuals in the United States. HSAs can be combined with high-deductible health insurance plans to provide organizations with an economical approach for providing comprehensive health care coverage to their employees. Because unused funds accumulate over time, consumers are more likely to economize on their use of medical care. Proponents of HSAs argue that HSAs will slow the growth of health care costs in the United States Alternatively, critics suggest that HSAs will cause consumers to avoid necessary preventive care and will penalize the chronically ill. This article addresses these issues and includes examples of how HSAs affect both employers and employees.