So I'm confused. I thought that HSAs were being peddled by dishonest but well-funded rightwing ideologues anxious to have our health insurance system's collective principal shuttled over to Wall Street for a quick one-time windfall (our nation's hedge fund managers' yachts are dangerously tasteful, after all). I expect them to have tons of cash on hand to help them achieve this goal.

I know you're mostly being snarky, but this isn't really a valid criticism of HSAs--I don't think it's even the criticism that left-wingers tend to make. HSA's are just ordinary savings accounts that you can contribute to on a pre-tax basis. They're typically not turned over to Wall Street.

The standard lefty critique of HSAs goes as follows. Under a traditional group insurance plan, everybody pays high premiums (mostly through their employers) and then the insurance company pays everyone's health care. Under an HSA plan, everyone buys a high-deductible plan and deposits the savings in an HSA. Those who don't need a lot of health care build up an HSA balance. Those who do need a lot of health care end up having to cover the difference between their savings and the deductible out of pocket.

Hence, one effect of HSAs is that the young, healthy, and wealthy pay relatively less, while the old, unhealthy, and poor pay relatively more. Libertarians question whether health insurance markets are an appropriate way to accomplish wealth transfers in the first place (we don't have group auto insurance plans where middle-aged, responsible drivers subsidize teenage, irresponsible drivers), while liberals tend to take these wealth transfers for granted and see HSAs as those with low health care costs seeking to shirk their moral duties.

As for why they're under-funded: for a variety of complicated reasons, the insurance industry has never been especially interested in HSAs. The impetus has always been from free-market intellectuals, not the insurance industry or Wall Street. Our challenge in getting them adopted has come as much from convincing insurance companies to offer good plans, and businesses to sign up for them, as anything in the legislative arena.

Well, thank you for engaging with my fairly dumb post and teaching me something in the process.

I think I understood the basic dynamic you're describing over HSAs. I had assumed that HSA money would sit in some sort of investment vehicle as it waited to be drawn on in the case of an emergency. I'm kind of surprised to hear that that isn't the case.

I guess I confused HSAs with Social Security privatization, having assumed that pretty much all "increased personal freedom/responsibility" financial initiatives pushed by the Bush administration were motivated by a desire to send more money to Wall Street (not an innately bad thing, of course, but seldom a great primary reason for new policies).

Having just attended my company's benefits presentation on HSAs, you *can* invest your HSA money in stocks or mutual funds (at least at my company, you can - it's up to the plan administrator) so your money *does* get handed over to Wall Street. We can put our HSA money in a money market fund (to make it act like an interest-bearing-savings account, like Tim describes) or, if you're a complete idiot, bet it on stocks.

Talk about doubling your risk -- risking whether you've put aside enough to cover your future health needs and then risking *that* money by putting it in stocks.

(I opted for the traditional HMO over the HSA but do worry how much the premium for that is going to spike next time open enrollment comes around if the HSA poaches a lot of the young and healthy.)