President Bush has proposed -- and legislators are now considering -- several options for increasing the attractiveness of HSAs, including raising contribution limits and allowing the funds to be put toward health insurance premiums.
Low-income consumers should be given credits to help pay for the policy. Employers should be allowed to contribute more to the HSAs of chronically sick employees.
An executive order signed by the president on Aug. 22 will help give patients and physicians the price and quality information they need to take advantage of these policies.
HSA-based policies can help achieve more affordable and higher-value health care.
First, they can help bring down overall health costs.
Roughly half of all national spending by those under age 65 is accounted for by people with medical bills below the typical out-of-pocket maximums of a high deductible health policies. Only about 20 percent of spending goes toward medical emergencies, and evidence suggests strongly that, when patients and their families are given the information they need, they choose care that is of higher quality and higher value than they would otherwise.
Second, high deductibles do not make these policies out of reach of the poor. Focusing exclusively on the deductible misses half of the picture. Lower premiums for these policies make them affordable for people who couldn't otherwise afford insurance.
A recent survey suggests that a third of the individual purchasers of HSAs were previously uninsured, and a third of the small firms newly offering HSAs did not offer insurance to their employees before.
Third, HSA-based policies are not just attractive to the healthy. Their caps on total out-of-pocket spending limit families' financial exposure in the case of catastrophic illness, and by encouraging high-value health spending, HSAs make health dollars go further.
That said, those who are chronically ill need additional ways to obtain insurance, such as through state high-risk pools or through such innovations as the provision of risk-adjusted health insurance vouchers.
We need to focus not only on how much we spend on health care but on making our health care dollars go further.
Combined with other policies to improve the effectiveness of public health insurance spending, leveling the playing field for different types of insurance policies and health care spending can give patients the power to use their health care resources in the way that's best for them, leading to greater provider competition, more cost-effective technology and higher value health care.