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December 3, 2004
NPR on HSAs
Yesterday morning National Public Radio had a segment on Heath Savings Accounts (HSAs). Despite a lead in which was along the lines of "HSAs: Some of the problems with the newest trend in health care", they did a good job of stressing that A) the new accounts are surprisingly popular and B) if customers start paying for their health care themselves, instead of through 3rd party payers, this will be the first step in controlling costs as people will start asking "How much am I paying for this?" and start shopping around.
Multiple times though, negative aspects of the HSAs were introduced by saying "consumer advocates" had concerns about the new accounts. By definition, consumer advocates should be concerned with the consumer. It was disappointing then that the report didn't mention what might be their most attractive feature to those who will be selecting the new plans.
What is that feature? Ownership.
Before the advent of 401(k)s and IRA accounts, people would often think twice about changing jobs, as this meant giving up many of the retirement benefits they had earned at their present company. The amount you received for retirement was largely determined by how long you had worked at the firm combined with your last year of salary. Changing jobs meant gaving up these benefits, so many would stick it out at jobs they didn't want simply to retain their retirement benefits. But once 401(k)s and IRAs came along, this all changed. Today if you want to change jobs and have a 401(k) you can bring all your benefits with you. You don't start over as you own your retirement account. This has led to a dynamic job market where employees are less dependent on their employers.
A similar situation has now developed on the health care front. One of the biggest concerns about leaving a job nowadays is losing your health care insurance whose cost is spiraling out of control. Not only do HSAs help control these costs, as mentioned above, but your health care coverage now becomes portable. You can transfer this account from job to job and use your money on health care costs while looking for employment if necessary. Obviously a plus for the consumer.
Too bad "consumer advocates" often seem to focus on the negatives of new products. Learning about the benefits is sometimes the most useful aspect.
Posted by Peter Mork at December 3, 2004 5:40 PM
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