More Americans Using HSAs—Under Threat from Obamacare

Kathryn Nix /

Spending in the U.S. health care system is growing too fast to ignore. Yet, the Patient Protection and Affordable Health Care Act (PPACA), also known as Obamacare, does nothing to “bend the cost curve.” Containing health spending requires engaging consumers in their health care expenditures, and one way to achieve this is through high-deductible health plans paired with Health Savings Accounts (HSA), which a recent report shows are gaining in popularity.

HSAs represent a market-based solution which, as America’s Health Insurance Plans (AHIP) explains, “give[s] consumers incentives to manage their own health care costs by coupling a tax-favored savings account used to pay medical expenses with a high-deductible health plan (HDHP).”

Earlier this month, AHIP released its 2011 Census Report on Health Savings Accounts, which suggested the plans are growing in favor among Americans as a cost-effective alternative to more expensive coverage options. Enrollment has grown every year since the inception of HSAs in 2003. Just this past year, it grew by nearly 1.5 million and now accounts for 6.6 percent of all private insurance. The plans are empowering consumers to become more conscious of their health decisions. AHIP writes, “Over 85 percent of responding companies reported offering online member access to HSA account information, health education information, physician-specific information, and personal health records as consumer decision support tools for their members.”

While more individuals and families are moving towards this consumer-based coverage, Obamacare will make it more difficult to use the accounts for health needs. Depending upon how the Secretary of Health and Human Services interprets and utilizes certain discretionary powers of the new law, HSAs could be considerably weakened or even banned de facto.

To improve the American health care system, reform must encourage better value and higher-quality care. The best way to do this is by letting the marketplace lead the way. The success of HSAs shows that not only are consumer-driven health plans effective, but they are popular as well.

This post was co-authored by Kyle Rusciano, a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm