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For Health Savings Accounts (HSA) to be effective at bending the cost curve of health insurance, more needs to be done to promote price competition, argues James C. Capretta of the American Enterprise Institute.

Recent reforms passed by the U.S. House of Representatives would help, however, he argues for more dramatic steps. Specifically, he wants HSAs to be used to purchase services directly from providers.

One provision passed by the House does this on a limited basis. It would allow consumers to use their HSA balances to purchase services directly from primary-care providers for a fixed fee, up to $150 per month for an individual or $300 per month for a family. These arrangements would allow patients to get a predetermined level of access to care from physicians, such as a certain number of office visits, telephone consultations, and email communications, without paying piecemeal for every encounter.

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“HSA enrollees also would be able to more easily compare service levels and prices among the various primary-care options available to them in their communities. Consequently, primary-care providers would have stronger incentives than they do today to compete with each other by offering better access to their patients at lower monthly fees,” Capretta argues.

But why stop with primary-care providers?  Capretta says we should provide discrete, standardized packages of clinical services for common medical problems that could be purchased directly by all HSA enrollees at the prices posted by competing service providers.

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