The HSA Mirage

Just about everyone agrees that the current health care system in the United States costs too much and doesn't do a good enough job serving those who need care.

Americans are ready for substantive health care reform, but reform only makes sense if it is effective.

During his State of the Union speech, President Bush proposed expanding the use of tax-subsidized health savings accounts (HSAs) as a controversial solution for one of the most intractable challenges in health care - controlling rising costs.

The president's proposal would give individuals that purchase HSAs on their own the same tax advantages as those with employer-provided insurance and would eliminate all taxes on out-of-pocket spending through HSAs.

Such proposals put individuals who buy HSAs on their own on a level playing field with those who get coverage from their employer. That's fairer than the current system, but it won't have a major effect on health care spending.

The HSA Mirage
Source: UPI.com