Uncertain Cure

The plans became legal in 2004 under a bitterly contested aspect of a Medicare law. House conservatives insisted on allowing HSAs in exchange for supporting an expensive new drug benefit for older Americans; many Senate Republicans were less enthusiastic, and most Democrats fought the idea. The critics say HSAs mainly provide a tax break for people with good incomes and health, and create a dangerous ripple effect in which traditional insurance eventually would cost more for everyone else.

During the past two years, about 3 million Americans, out of 170 million with private insurance, have started to try them, according to insurance industry figures. Bush has said repeatedly that a third of people with such a plan were uninsured beforehand, though two industry surveys suggest that is an overstatement. And though Bush has said that two-fifths of families with HSAs earn less than $50,000 a year, research and some companies' experience suggest the plans are most attractive to people who have relatively large salaries; people with modest incomes who have HSAs tend to be at small companies that do not provide a choice, early studies suggest. Unlike Wendy's, most of the big employers that are trying HSAs offer them as one alternative, and they are much less popular.

At the defense contractor Raytheon Co., for instance, about 1,000 of its 67,000 workers picked an HSA when the accounts became available at the beginning of this year. Rose Umile, senior manager of employee benefits, said the company offers to chip in about a third of the contributions to the health accounts, is fully covering preventive care and encourages employees to think of the plans as a way to get a head start on saving money for medical care once they retire. The result, Umile said, was that "higher-paid employees purchased it."

"The thing is, a lot of people can't come up with that kind of money out of pocket," said Adam Frieder, a dentist from North Potomac with an annual income of more than $150,000, who moved his family onto an HSA plan in January. Aside from his son's minor allergies and wife's high cholesterol, Frieder's family is healthy, and he thinks they probably will save several thousand dollars a year.

Mixed Reactions

When Impinj Inc., a semiconductor company based in Seattle, offered HSAs a year ago, Autumn West tried one. Last month, she returned to a traditional health plan. A 30-year-old single mother with a salary of about $60,000 as a human resources assistant, West uses more than $500 a month worth of medicine for severe allergies and asthma and needs treatments that her HSA plan counted as surgery, requiring her to pay a larger share. Even with Impinj chipping in most of her $3,000 deductible, she still found herself paying more than she used to. "It hasn't worked out," she said, "as well as I would have liked it to."

Several of West's co-workers at Impinj are happier with their new HSAs. One of them, Magdalene Adenau, who is 29 and single, ended last year with about $700 left in her health account. And when she needed a chiropractor, she went to one who charged about $60 until she shopped around and found one who charged about $30. "There's a real benefit to you if you use the money smartly," Adenau said.

But when his son was hospitalized, said Meschke, the Minnesota professor, "I realized that I neither had the bargaining power nor mental capacity" to influence the price of Jason's chest X-rays, intravenous fluids or antibiotics. The hospital staff he asked about the charges had no idea, he said, "and you are kind of overwhelmed with the medical aspects of this. If you're negotiating a car, you can always say, 'I'll walk off the lot.' If your 1-year-old kid has an I-V in his arm, you don't have the same situation."

A survey last fall by the Employee Benefits Research Institute found that people with HSAs were more likely than those with other health plans to delay or avoid care when they were sick. Neither that study nor any other has assessed whether such decisions are cost-effective or counterproductive.

Peter Oppenheimer, a psychologist in Barrington, R.I., remembers a woman who walked into his office a year ago, shortly after her husband had switched to an HSA, and said she needed treatment but could not afford to pay. "They clearly didn't have the cash on hand to pay for our sessions," Oppenheimer said, so she left, untreated.

Patients and employers alike are regarding HSAs as an experiment. "I don't know how it's going to pan out," said Frieder, the Montgomery County dentist.

The White House argues that Congress should give the proposal a chance. "If the market determines this is not a desired product, then so be it," said Trent Duffy, a spokesman for Bush. "Don't let the politicians determine. Let the people decide."