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Health Savings Accounts: Will They Impact Markets?

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  • Richardson, David P.
  • Seligman, Jason S.

Abstract

Recently, the federal government began redirecting health care tax subsidies towards tax–exempt Health Savings Accounts (HSA). This tax program requires selection of high–deductible policies—shifting government tax subsidies away from the premium (pure insurance) component and towards the out–of–pocket (self–insurance) component of health insurance contracts. We analyze price sensitivity and relative risk burden effects from this policy change. Regarding risk burden allocations, we show HSA–eligible contracts can redistribute substantial health risk onto households. HSAs may reduce the moral hazard associated with traditional health insurance contracts but may increase adverse selection problems. Overall we find that HSAs are limited in their ability to effect heath care spending.

Suggested Citation

  • Richardson, David P. & Seligman, Jason S., 2007. "Health Savings Accounts: Will They Impact Markets?," National Tax Journal, National Tax Association;National Tax Journal, vol. 60(3), pages 455-467, September.
    • Handle: RePEc:ntj:journl:v:60:y:2007:i:3:p:455-67
    DOI: 10.17310/ntj.2007.3.07
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    References listed on IDEAS

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    1. Mitchell, Olivia S. & Smetters, Kent (ed.), 2003. "The Pension Challenge: Risk Transfers and Retirement Income Security," OUP Catalogue, Oxford University Press, number 9780199266913.
    2. Brigitte Madrian, "undated". "The Effect of Health Insurance on Transitions to Self Employment," University of Chicago - Population Research Center 98-5, Chicago - Population Research Center.
    3. Richardson, David P., 2005. "Opting Out of Social Security: An Idea That's Already Arrived," National Tax Journal, National Tax Association;National Tax Journal, vol. 58(3), pages 545-564, September.
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    Cited by:

    1. Ye, Jinqi, 2015. "The effect of Health Savings Accounts on group health insurance coverage," Journal of Health Economics, Elsevier, vol. 44(C), pages 238-254.

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