Debate Desk
Do Health Savings Accounts Only Help the Rich Save on Taxes?
HSAs give families control over health dollars and an incentive to shop for price; they work best for those who can save, and the design can be widened.
The claim
Critics say that health savings accounts help those with spare money to save, that low-income families cannot afford high deductibles, and that the tax break flows mostly to higher earners who would have paid for care anyway.
The answer in three points
- An HSA puts money in the patient's hands and gives him a reason to ask what things cost. When patients spend their own money, they compare prices, which pushes providers to compete. Those who have spent from an account often say it changed how they use care.
- The account belongs to the owner, rolls over year after year, and can be used for retirement. It pairs with a high-deductible plan that protects against catastrophe. A young worker can build a cushion over decades.
- The objection that it favors the better-off has some truth, and the answer is to expand access, not drop the idea. Higher contribution limits, employer deposits, and tax credits for low-income savers can reach those who now benefit less. Employer-sponsored insurance already gives the largest tax break in health care to those with job-based coverage.
If the test of a health policy is whether it gives ordinary people more control over their care and more reason to ask about price, accounts pass. Making them larger, simpler and available to more households would extend the benefit, and none of that requires a larger government program.
The numbers
- The Internal Revenue Service set the 2025 contribution limit for health savings accounts at $4,300 for self-only coverage and $8,550 for family coverage.
- The Joint Committee on Taxation estimates that the exclusion for employer-sponsored health insurance is among the largest tax expenditures in the federal budget.
- Health savings accounts were created by the Medicare Modernization Act of 2003, according to the Internal Revenue Service.
What they will say next
"High deductibles lead people to skip care." Some do, which is why a plan should cover preventive care before the deductible and why accounts should be funded. The design matters.
"Low earners pay little in taxes, so the deduction is worthless." That is why a refundable credit or employer contribution is a better tool for them, and conservatives have proposed these.
"Insurance should cover everything." Insurance that covers everything has no price signals, and costs rise. Coverage for the large, rare event and cash for routine care is more efficient.
"The rich can game it." Limits and rules can restrict that, and the amounts are modest. The larger inequity is the unlimited exclusion for employer-paid insurance.
Direct primary care and price transparency work well with these accounts.
"Low earners cannot afford a high deductible." That is a fair concern, which is why plans should offer first-dollar coverage for chronic care and why employers and the government can deposit money into accounts for lower-income workers. A well-funded account gives such a family a cushion it would not otherwise have.