Health Savings Accounts and Other Account-Based Health Plans

This paper examines accounts that can be used to pay for health care services on a tax-favored basis. Starting with health savings accounts (HSAs), the function of these accounts is described, followed by a discussion of issues related to the accounts, whether expectations for the accounts will be met, and recent evidence on their impact. The introduction and use of HSAs is one piece of a larger movement toward more consumer involvement in the financing and delivery of health care. Some employers have used high-deductible account-based health plans as a way of encouraging more consumer involvement in the health benefits. Other employers have increased deductibles and co-payments. Many have added incentives for employees to use less-costly physicians, hospitals, and prescription drugs. Taken together, these changes may mean that the way in which health care is delivered and paid for in the future could look a lot different than it does today