ON-Lion Letter
For a February study from the Center for Medical Progress (CMP) at the Manhattan Institute for Policy Research in New York City, Benjamin Zycher evaluated the first four years of health savings accounts (HSAs) under the 2004 Medicare Modernization Act. 

The act allows employers and individuals to deposit pretax funds into HSAs, and subsequent withdrawals for qualified medical expenses are not subject to taxation.  HSA plans have higher deductibles, incentivizing increased discipline in using health-care services while preserving coverage for large medical expenses.

"Premiums for HSA-qualified policies are significantly lower than those for other types of plans -- by about 10 percent to 40 percent," according to Zycher's HSA Health-Insurance Plans After Four Years:  What Have We Learned?  Zycher is a CMP senior fellow.  He was a senior economist at the RAND Corporation and the vice president for research at the Milken Institute, both of which are in Santa Monica, Calif.

He also found, among other things, that "HSA-qualified health coverage has the potential to expand at least as sharply over time as" Individual Retirement Accounts "and defined-contribution retirement plans did, assuming conducive legal and regulatory developments" and that "relatively low percentages of consumers are 'extremely or very' familiar with HSA-qualified health coverage or find such plans 'easy to understand.'"

The Lynde and Harry Bradley Foundation in Milwaukee substantially supports the Manhattan Institute.
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