I (and others) have long opined that HSAs are thinly-disguised tax breaks for the well-to-do. Touted as a solution to the growing number of the uninsured and cited as the plan of choice for the newly-insured, HSAs have been the darling of the conservative think-tank set.
Now, the Wall Street Journal, that paragon of conservative ideology, has described Health Savings Accounts as “an astute financial strategy for the well-heeled” which “can provide a valuable source of retirement income alongside” other retirement vehicles.
The article notes that the “biggest beneficiaries” of health savings accounts “are proving to be well-to-do investors looking for another way to fund their retirement savings.”
Not the uninsured with modest incomes, not the middle-class families, not the near-poor, but the “well-heeled”.
In contrast, here’s what Grace-Marie Turner of the Galen Institute said about HSAs in 2006:
“Critics contend that HSAs will appeal only to the young, the healthy, and wealthy, but that doesn’t appear to be the case. Forty percent of HSA purchasers make less than $50,000 a year, about half are over age 40, and the biggest share of purchasers are middle-aged families with children.”
To be fair, Ms. Turner’s comments were almost two years ago, and the latest comments from the WSJ were likely based on more recent reports. But Ms. Turner’s comments were misleading even way back then in the early days of CDHPs. Her contention that critics said HSAs were for the young, healthy AND wealthy is a classic strawman. Most of the critics (myself included) based their criticism on the disingenuous marketing of HSAs as a solution for the uninsured when they are clearly not.
And now even the Wall Street Journal agrees.
Instead of mis-representing HSAs, Turner and her ilk should have been working to convince legislators and HSA marketers to alter the plan design to encourage preventive care and management of chronic conditions; income index out-of-pocket limits, and change from a deductible to coinsurance arrangement. I don’t know why these folks haven’t been pushing forward on such ideas, but it could be that these changes, which would certainly make HSA plans more useful and practical, will do little to reduce the tax burden of their wealthy backers.
It is clear that consumerism should be, and will be, a key part of the solution to the health care mess. No thanks to Ms. Turner et al.