HSAs Grow Faster than Critics’ Understanding of HSAs

An article in today’s Detroit Free Press reports that health savings accounts (HSAs) are catching on, and showcases some of the less-valid criticisms HSAs.

In the article, Jason Furman of the Center on Budget and Policy Priorities argues that a family of four with an annual income of $30,000 and the usual expenses is unlikely to be able to save $5,000 per year in an HSA.

There are a number of problems with that argument.  For example, it doesn’t address the question, “Compared to what?”  The alternative to HSAs is usually comprehensive third-party health coverage, which carries much higher premiums than high-deductible health insurance.  If the family can’t afford to save, where are they supposed to get the money to pay those higher premiums?  Also, there’s nothing in the HSA law that says a family must have $5,000 of cost sharing.  The family’s cost sharing could be as low as $2,100.  (Less cost sharing means higher premiums, but shouldn’t the family be able to make that tradeoff for themselves?)

The article raises a number of other criticisms of HSAs, all of which I address in a study released today by the Cato Institute titled, “Health Savings Accounts: Do the Critics Have a Point?