Initial Data on Individual Market Enrollment Fail To Dispel Concerns About Health Savings Accounts

Publication Date: September 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Robert Greenstein; Edwin Park

Research Area: Health

Keywords: Economic projections; Health care costs; Health insurance; Economic inequality

Type: Report

Abstract:

Debate continues over Health Savings Accounts. Many leading health care analysts and economists have warned that HSAs pose a high risk of causing “adverse selection,” under which healthy people and less-healthy people separate into different insurance arrangements and the cost of insurance for the less-healthy consequently rises, which can place them at risk of becoming uninsured or underinsured. Past studies by the Urban Institute, the American Academy of Actuaries, and RAND concluded that accounts like HSAs would have these effects if use of the accounts became widespread. Analyses by health and tax policy analysts also have concluded that HSAs are likely to be used extensively as tax shelters by high-income individuals.

HSA proponents have long dismissed these warnings and criticisms, and they recently have begun citing what they say are new data that refute these critiques. This analysis considers the new data. As it demonstrates, careful examination of the new data shows that they do not support the claims of HSA proponents and shed little light on the issues being debated. The use of these data to claim that concerns and criticisms about HSAs are unfounded does not withstand scrutiny.