Are health savings accounts good medicine?

And younger, healthier people who use health services only occasionally will opt into these plans because it benefits them financially, leaving older, sicklier patients in traditional insurance plans, where they could see their health-care premiums rise, Berliner adds.

The self-employed benefit the most from HSAs, notes JoAnn Laing, author of “The Consumer Guide to HSAs.”

“They get a double benefit because they get to write off as a business cost both the cost of the health insurance premium and the amount they contribute to their HSA each year,” Laing says, adding that businesses also benefit, as they can write off the cost of providing catastrophic health insurance for their employees, which already costs less than regular health insurance.

Increase in HSAs expected
To date, only a limited number of companies have adopted HSA plans, but many more are expected to do so this year.

A recent survey by Mercer Human Resource Consulting of nearly 1,000 employers shows almost three-quarters expect to offer HSAs by 2006.

Advocates see HSAs as the wave of the future, turning Americans into value-conscious shoppers in the health-care marketplace. But such a radical shift in attitude toward health-care consumption will be challenging, notes Laing, and will require good information sources for patients to make smart choices.

West says his company data show medical savings accounts, the precursor to HSAs, led to a 35 percent decrease in the use of medical services. Still, he isn’t worried that HSAs could deter health-care consumers from using vital medical services.

“A doctor talks to a patient about the cost of a procedure and tells them they really should get it done," he says. "And in my experience when you have that conversation they tend to go and get it done.”

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