Cato Institute scholars first proposed health savings accounts in
the 1980s and were leaders in popularizing them among the public
and policymakers. Although health savings accounts do not eliminate
the price distortions that follow from the differential tax
treatment of employer-provided health benefits, they greatly reduce
the incentives for third-party payment.
By habituating Americans to controlling their own health care,
health savings accounts can mitigate the fear and dislocation that
would result from going directly from the current system to one in
which third-party payment receives no government encouragement.