Continuation of Research on Consumer Directed Health Plans: HSA Simulation Model Refinement . VI. Summary


Our revised simulation model is more complete and adaptable than our previous version.  It is better able to model the 2006 State of the Union policy proposals by taking into account health status as well as allowing for age and income-related contributions to HSAs.  Without this last change, we would have been unable to model the 2006 proposals.

Our refined model produces similar findings.  Tax credits for high deductible health insurance premiums would reduce the uninsured.  That result, combined with the additional proposed policy change of making the HDHP premium tax deductible, would lead to an even greater reduction in the uninsured.  Increasing the limit of tax-deductible contributions to the HSA has little public policy impact and is the most expensive policy of the three outlined in the SOTU. Combined, the new policy options can have significantly more impact than the previous 2004 proposal with a reduction in the estimated per capita subsidy cost.  Of the three proposals, the most impact is produced by the tax credit proposal.  The least costly per capita is the deductibility of the HDHP premium.  The tax credit and premium deduction policies appear to have largely independent effects.  If the HSA contribution policy proposal is eliminated as an option, the tax credit and premium deduction components could be enacted in stages and not crowd out much of the other's effect.  If the goal is to maximize the reduction in the number of uninsured, pursuing the 2006 proposal could reduce the uninsured by nearly 10 million persons, affecting one third of that population.

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