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Health savings accounts are often redundant

July 24, 2020

Topics: Quote of the Day

By Jeffrey T. Kullgren, MD, MS, MPH; Elizabeth Q. Cliff, PhD; Christopher Krenz, BA; Brady T. West, PhD; Helen Levy, PhD; Mark Fendrick, MD; Angela Fagerlin, PhD
JAMA Network Open, July 17, 2020


Importance: Health savings accounts (HSAs) can be used by enrollees in high-deductible health plans (HDHPs) to save for health care expenses before taxes. Expansion of and encouraging contributions to HSAs have been centerpieces of recent federal legislation. Little is known about how US residents who may be eligible for HSAs are using them to save for health care.

Objective: To determine which patients who may be eligible for an HSA do not have one and what decisions patients with HSAs make about contributing to them.

Design, Setting, and Participants: This cross-sectional national survey assessed an online survey panel representative of the US adult population. Adults aged 18 to 64 years and enrolled in an HDHP for at least 12 months were eligible to participate. Data were collected from August 26 to September 19, 2016, and analyzed from November 1, 2019, to April 30, 2020.

Main Outcomes and Measures: Prevalence of not having an HSA or not making HSA contributions in the last 12 months and reasons for not making the HSA contributions.

Results: Based on data from 1637 individuals (American Association of Public Opinion Research response rate 4, 54.8%), half (50.6% [95% CI, 47.7%-53.6%]) of US adults in HDHPs were female, and most were aged 36 to 51 (35.7% [95% CI, 32.8%-38.6%]) or 52 to 64 (36.8% [95% CI, 34.1%-39.5%]) years. Approximately 1 in 3 (32.5% [95% CI, 29.8%-35.3%]) did not have an HSA. Those who obtained their health insurance through an exchange were more likely to lack an HSA (70.3% [95% CI, 61.9%-78.6%]) than those who worked for an employer that offered only 1 health insurance plan (36.5% [95% CI, 30.9%-42.1%]; P < .001). More than half of individuals with an HSA (55.0% [95% CI, 51.1%-58.8%]) had not contributed money into it in the last 12 months. Among HDHP enrollees with an HSA, those with at least a master’s degree (46.1% [95% CI, 38.3%-53.9%]; P = .02) or a high level of health insurance literacy (47.3% [95% CI, 40.7%-54.0%]; P = .03) were less likely to have made no HAS contributions. Common reasons for not contributing to an HSA included not considering it (36.8% [95% CI, 30.8%-42.8%]) and being unable to afford saving for health care (31.9% [95% CI, 26.2%-37.6%]).

Conclusions and Relevance: These findings suggest that many US adults enrolled in an HDHP lack an HSA, and few with an HSA saved for health care in the last year. Targeted interventions should be explored by employers, health plans, and health systems to encourage HSA uptake and contributions among individuals who could benefit from their use.



By Don McCanne, M.D.

High-deductible health insurance plans have become more popular primarily because the plans are less expensive. The insurers are able to spend less on health care for two reasons. The risk of first dollar coverage is transferred from the insurer to the insured, and, with high-deductible plans, that may amount to a few thousand dollars per patient. The second reason is that patients might find that first dollar coverage may present enough of a financial hardship such that they may forgo care that they really should have – forgone care that the insurers don’t have to pay for.

Health savings accounts (HSAs) were established to make available funds that could be used so that the patient would not forgo beneficial health care services that fell under the deductible. Services that did not seem to provide adequate health care value could be rejected by the patient. Thus HSAs were designed to put the health care shopper in charge of their own spending since the HSA funds were their own funds anyway. HSA funds are tax-advantaged which benefits those with higher incomes, but does nothing for those whose incomes are too low to pay taxes.

The study by Kullgren, et al shows that many individuals who have HSA-eligible high-deductible health plans have not established a health savings account, and the majority of those who do have HSAs are not contributing funds to them. The majority of patients are at risk of facing financial hardship from the deductibles simply because the HSAs are not funded or do not even exist, thus patients may end up forgoing beneficial health care services. Also they add more administrative complexity to our health care financing system which is already overburdened with costly administrative excesses. Bad policy all the way around.

Under a well designed, single payer, improved Medicare for All, first dollar coverage is provided which eliminates financial barriers to beneficial health care services. The single payer model uses other more patient-friendly tools to prevent excessive health care spending. The patient has enough decisions to make without insisting that they must also make decisions on how health care dollars are spent. Many other nations provide health care at an average of half the per capita cost of what we spend, and they don’t require patients to become informed shoppers to do it. High-deductibles and HSAs should be replaced with first dollar coverage under single payer Medicare for All.

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About the Commentator, Don McCanne

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Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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