Are “Large Health Savings Accounts” the Answer?

Michael Cannon has a paper on “Large Health Savings Accounts” in the Forum for Health Economics & Policy (registration required). Also listen to his Cato Podcast on the subject.

Essentially what he means by “large health savings accounts” are tax-free accounts from which all health expenditures are made. Compared with current health savings accounts, which are capped at $2,850 for individuals and $8,000 for familes, “large” HSA would allow contributions of $8,000/$16,000 to be contributed tax-free each year.

Individuals and employers (including multiple employers for individuals and families with more than one job) can contribute, and individuals/families can use the money both to purchase health insurance – including the plan offered by their employer – and health care services, as is allowed by current HSAs.

Individuals would not be forced to buy high-deductible insurance, or any insurance, but could self-insurance through the HSA. Money not used would carry over, as with current HSA law.