Insurance Choice & Health Savings Accounts (HSAs) Issues
For most Americans, their health insurance is linked to their employment or government. Private businesses pay for approximately 27 percent of citizens’ health-care expenditures while government pays for 35 percent (18 percent federal and 17 percent state and local). It’s well known that he who pays the piper calls the tune. And when it comes to health care, employers and government are making important health-care decisions for the majority of Americans—deciding which treatments and providers are approved, and which are not, under various insurance plans.
Health Savings Accounts (HSAs) change that dynamic by giving individuals more control over their health-care dollars. When consumers spend their own money (rather than paying insurance companies to pay their bills for routine care), they become more cost-conscious. On the other hand, when insurers pay the bills, consumers tend to overconsume goods and services and push prices higher.
All told, HSAs provide strong economic incentives for more rational use of medical care, give patients strong incentives to demand higher quality care (after all they are paying for it), and help keep prices competitive.
[Back to related articles]
(Summary updated November 2009)