Health Savings Accounts (HSAs) are a way to achieve consumer-driven health care. With HSAs, you buy high-deductible insurance that is only used if you have excessive medical bills one year. Normally, you just pay cash for all medical services by using money saved in your HSA.

NoSpeedBumps has been proposing mandatory HSAs for all workers, including the poor. The poor will also get federal subsidies deposited in their HSAs. So their HSA funds will be a mix of their own savings and subsidies. Medicaid is eliminated.

Logical Meme has an interesting post regarding how Medicaid users frequently go to the ER for routine medical care:

[P]atients on Medicaid, the government’s health care safety net program for the poor, visited emergency departments up to four times more frequently than those with insurance.

This would change with HSAs because, if you don’t spend all of your HSA savings one year, you can withdraw it for personal use (although you cannot withdraw the portion that is from subsidies). It is a lot more expensive to go to the ER for routine medical care. The poor who use the ER like this would have a strong incentive to change their behavior.

Furthermore, a more important incentive is that as the poor earn more and improve their economic status, they do not become at risk of losing their Medicaid coverage. With the HSA plan from NoSpeedBumps, everyone has the same HSA funds regardless of your income.

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