The idea behind Health Savings Accounts (HSAs) is quite simple. Individuals should be able to manage some of their own health care dollars through accounts they own and control. They should be able to use these funds to pay expenses not paid by third-party insurance, including the cost of out-of-network doctors and diagnostic tests. They should be able to profit from being wise consumers of medical care by having account balances grow tax free and eventually be available for nonmedical purchases.

As of January 1, 2004, 250 million nonelderly Americans now have access to HSAs, provided they are combined with catastrophic insurance.

Read the full Policy Note here