An Entrepreneur/Thought Leader Asks: Why Should HSAs Be Tied to a Medical Plan?

By William G. (Bill) Stuart | Originally posted on LinkedIn for MaxHSA

Health Savings Accounts represent a trade-off. Is that trade-off necessary?

Americans are finding it increasingly difficult to fund the cost of medical care. Whether they are covered via an employer-sponsored plan, buying coverage in the nongroup market (either through an employer-funded Individual-Coverage Health Reimbursement Arrangement, with advance-premium tax credits through a government-facilitated marketplace, or with their own money, affordability is an issue. Patient out-of-pocket financial responsibility, like premiums themselves, is rising far faster than incomes

What is the solution? The answer is complex. Misaligned incentives, structural inefficiencies, and a disconnect between buyers and sellers make the financial aspects of the ecosystem far less than efficient. Fixing them will take political courage.

Health Savings Accounts are not the solution. They are, however, an important tool to help Americans manage their financial responsibility for coverage and care until we confront the systemic issues that drive costs and prices. And permitting more consumers to own, fund, and manage Health Savings Accounts should be a top political priority.

The Cuban Challenge

Mark Cuban, the serial entrepreneur whose ventures include Mark Cuban CostPlus Drug Company raised an interesting question last week in a tweet on X. He wrote:

"Why are HSAs connected in any way to insurance policies?

"Don't we want people to save as much as possible for their healthcare?

"Remove the link to insurance, increase the caps considerably, or remove them altogether.

The post, with more than 570,000 views and hundreds of comments, hit a nerve. As it should.

Why are HSAs connected in any way to insurance policies? Several responders to Cuban's tweet noted that federal tax law requires it. But Cuban's point is valid: Should HSAs be connected to insurance policies?

Don't we want people to save as much as possible for their healthcare? This clearly should be a national priority. Federal tax law allows almost anyone to save for general retirement expenses or education through tax-advantaged vehicles because this saving is considered good public policy to help people pursue these goals. Medical care is more universal because it starts well before people reach their seventh decade and affects more than just those who themselves or whose children pursue education deemed qualified by the federal government.

So, why not, indeed?