Key Point

“HSAs allow individuals to set aside money tax-free for uncovered health expenses. Because HSAs reward saving and help position consumers to be directly in charge of buying their own health care, they stimulate competition among health care providers. This translates into lower prices and better value for patients.

Yet, key misconceptions about HSAs persist in the public discussion as well as in the halls of Congress. Let’s clarify the most important points:

• The fundamental purpose of HSAs is to reduce the price of health care, NOT simply to provide a tax-sheltered benefit to cushion the blow of high health care expenses. 
• HSAs successfully reduce prices – and that benefits everyone who uses medical care, including people without HSAs.
• An HSA is not a tax benefit for the rich.
• HSAs could pay for most medical care events, even though many procedures and hospitalizations exceed HSA limits.
• HSAs increase the use of effective wellness programs and screening tests.
• Americans want HSAs, and Congress should respond.
• Price transparency is absolutely essential to generate competition among sellers, but it is not sufficient.
• The maximum allowable contribution should be raised, even though many people don’t fund their HSAs to today’s maximum. 
• The HSA is NOT an independent component of the health care system. To maximize the benefits of HSAs, other reforms are also necessary.
• Expanding HSAs would not create a tax revenue deficit, because other tax write-offs that disproportionately benefit affluent taxpayers today should simultaneously be eliminated.”

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