The trouble with health savings accounts: a social work perspective.

In recent years, conservatives have promoted health savings accounts (HSAs) as a way of addressing the growing cost of health insurance (Hubbard, 2006). HSAs were introduced under the Medical Modernization Act of 2003 as "an alternative to traditional health insurance" (U.S. Department of the Treasury, 2006, [paragraph] 1). They are at the heart of an effort to replace our current system of insurance with consumer-directed health care (Robinson, 2005). In this article, I examine HSAs and consider their implications for social workers. To open an HSA, an individual must first buy a high-deductible health plan (HDHP), which requires the consumer to assume responsibility for at least the first $1,050 in costs ($2,100 for families), up to a maximum of $5,250 ($10,500 for families) (U.S. Department of the Treasury, 2006). (Claxton et al. [2005] found that average deductibles were $1,901 for individuals and $4,070 for families; two of three employers offering these plans contributed to workers' accounts.) HDHPs may offer preventive care on a "first-dollar" basis, although they are not required to. Individuals with HDHPs can establish HSAs, into which they "can deposit money ... reap investment returns and withdraw money for eligible medical expenses, all tax-free" (Ginsburg, 2004, p. 2). Employers can also contribute to HSAs on behalf of their workers. Although the number of individuals with HDHPs or HSAs is relatively small, experts believe this could increase (Claxton et al.). Advocates of HDHPs and HSAs believe health care inflation is rooted in our system of employer-based insurance and low-deductible policies, which "insulate[s] people from the cost of ... medical care" and enables "the vast majority of Americans" to consume health care "as if it were free" (Hubbard, 2006, p. 3). This is the well-known theory of moral hazard, which assumes that if individuals can buy a good for less than its market price, they will consume more of it than they ordinarily would. "To the extent that this increase in use or spending arises from the lower user price that health insurance brings about, it is called 'moral hazard'" (Pauly, 2004, pp. 113-114). HDHPs and HSAs seek to address moral hazard by "giv[ing] consumers an incentive to spend wisely" (Hubbard, p. 4). PROBLEMS WITH HSAS Unfortunately, there are problems, both theoretical and practical, with HSAs. To begin with, as Nyman (2004) pointed out, moral hazard is not necessarily inefficient, or welfare decreasing. Moral hazard occurs when third-party payments encourage individuals to buy "more health care than they would have purchased at normal market prices" (p. 194). However, not all this spending is a welfare loss. Third-party payments enable many individuals to obtain care that they cannot afford but would buy if they had the money. This is particularly true for patients needing "more serious procedures," such as "organ transplants[,] ... trauma care," and "many cancer treatments" (p. 197). In these cases, subsidized care actually represents a welfare gain. Advocates of HSAs assume that demand for health care is infinite, that patients will consume as much of it as they can, whether they need it or not (Gladwell, 2005). This is questionable, however. For many people, visiting a physician is not an enjoyable experience. As Reinhardt (cited in Gladwell) put it: You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it's free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf? (p. 47) The answer seems obvious: "Few if any people would frivolously choose to endure coronary bypass surgery just because the price had dropped to zero" (Nyman, 2004, p. 197). Advocates of HDHPs and HSAs also assume that we can shop for health care in the same way we do for other goods, such as automobiles or iPods. …