OPINION:
Washington rarely sees healthcare reform that doesn’t rely on massive new federal spending or expanded entitlements. Health Savings Accounts (HSAs) are a notable exception.
As an administrator of HSAs for more than 10 million Americans, we have direct visibility into how consumers use and manage their healthcare dollars and we set out to better understand their experiences and decision-making. Our survey of over 600 employed Americans reveals something budget models consistently miss: when people control their own healthcare dollars, they spend smarter and waste less. The downstream savings can exceed the upfront tax expenditure over time.
Expanded HSA contributions reduce near-term tax revenue. But that cost is outweighed by measurable, recurring savings when consumers have real financial skin in the game. This isn’t theory it’s measurable behavior we observe daily across millions of transactions.
The Behavioral Economics Are Clear
HSA holders demonstrate fundamentally different consumption patterns. They comparison-shop, ask pricing questions before procedures, choose higher-value care and avoid unnecessary utilization.
We also found that HSA holders are 12.5% more likely to be prepared for routine healthcare costs and 16% more likely to have significant emergency savings. Most tellingly, they’re markedly less likely to skip preventive services when facing financial pressure behavior that drives up long-term costs.
The reason is straightforward: it’s their money. HSA dollars don’t disappear at year-end or belong to someone else. When consumers know they benefit directly from smart decisions today, they protect their own financial future. The data illustrates that HSA-holders are more likely to be prepared for routine medical bills and less likely to cut back on essential preventive care and treatment.
The Fiscal Math Washington Needs to See
Healthcare costs are projected to jump 9% in 2026, among the steepest increases in more than a decade. Middle-income families, along with their employers, already spend nearly $27,000 annually on healthcare, while half of American adults can’t cover a $500 medical bill. At the same time, 31 million Americans report they had to borrow an estimated total of $74 billion to pay for healthcare for themselves or a household member.
HSAs are already helping address this gap. Americans now hold more than $159 billion in HSAs across over 40 million accounts. Last year alone, HSA members spent $42 billion on medical expenses using their own saved dollars. Roughly 4 million accounts invest their HSA funds, giving them balances nearly 9 times larger than non-investing accounts and far greater capacity to absorb future healthcare costs without public assistance.
What’s more difficult to capture is behavior. When consumers ask about pricing, providers are incentivized to compete. Unnecessary tests are declined. Generic drugs get chosen when clinically appropriate. Urgent care replaces expensive ER visits. Preventive care increases, allowing health problems to be caught before they require hospitalization.
These are not marginal effects. They compound over time.
The CBO Scoring Problem
The standard budget scoring misses this dynamic entirely. The Congressional Budget Office excels at estimating federal expenditures, but it has limited tools for projecting multi-year behavioral changes that unfold gradually. As a result, models tend to capture the immediate tax revenue impact of HSA expansion but miss the long-term savings driven by consumer behavior.
We saw this dynamic with Medicare Part D. While not perfectly analogous, it offers a cautionary example: the program ultimately came in substantially below ten-year cost projections, as competition and consumer choice reduced spending far more than models anticipated.
A more complete HSA score would weigh tax revenue reduction against decreased Medicare and Medicaid spending as empowered consumers reduce system-wide costs. It would also factor in reduced disability claims and productivity gains when workers aren’t distracted by medical financial stress. Our survey found that people who understand their benefits are 45% less likely to report that financial concerns interfere with their work.
Proper accounting would materially narrow and could potentially eliminate the projected revenue gap over the long term.
Real Evidence from America’s Largest HSA Platform
Despite economic anxiety affecting 79% of employed Americans, survey respondents with HSAs report building emergency medical savings at substantially higher rates. When finances tighten, Americans often skip preventive care, delay prescriptions, or postpone mental health services. HSA holders are significantly more likely to protect these essential services because they understand long-term value.
They are also 46% more likely to thoroughly understand their employee benefits knowledge that translates into more confident, cost-aware healthcare decisions across their entire experience. This did not require new government programs or bureaucracy. It is happening because Americans were given ownership and control.
Empower, Don’t Subsidize
HSA expansion puts individuals in charge, rewards personal responsibility, relies on markets rather than mandates, and scales without expanding federal programs. Unlike most healthcare reforms, it reduces reliance on subsidies by helping Americans save for their own needs.
Yet arbitrary restrictions still block more than 140 million Americans from opening HSAs simply because they have the “wrong” insurance type. Congress doesn’t restrict IRA eligibility based on your employer’s pension plan. Why maintain barriers that prevent families from saving for healthcare?
The Reforms Congress Should Enact
First, decouple HSA eligibility from plan type, allowing every American to save regardless of insurance structure.
Second, allow HSA funds for insurance premiums. Today, Americans can use HSA dollars for nearly every medical expense except their monthly premium often their largest healthcare cost. Removing this restriction would allow individuals to pay premiums with pre-tax dollars, reducing the after-tax cost of premiums by roughly 25-30% for many middle-income families, depending on marginal tax rate and individual circumstances.
Third, raise contribution limits to reflect real healthcare inflation. Any adjustment would help families keep pace while strengthening long-term savings.
These reforms require no new spending authority, create no new entitlement and impose no mandates. They simply remove barriers that prevent Americans from helping themselves.
Healthcare consumes over $5 trillion annually nearly 18% of our economy. We can continue layering regulation and subsidies on top of a broken system, or we can trust Americans to make better decisions when they control the dollars and see the prices.
The evidence is clear. People with skin in the game spend smarter, save more, and achieve better outcomes. Expanding HSA access isn’t a cost; it’s an investment in a healthcare system that is more affordable, more resilient, and more accountable to the people it serves.
• Scott Cutler is CEO and President of HealthEquity, the nation’s largest Health Savings Account administrator.
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