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The Medicare Modernization Act of 2004

The Medicare Modernization Act of 2004 included a provision authorizing the establishment of health savings accounts or HSAs. Such accounts have been proposed in the past, both in this country as medical savings accounts (MSAs) and in other countries, as one mechanism to extend health insurance to those without it and to provide some degree of cost containment. Review the history of these accounts, bringing us up to present day, including how they are intended to work and their advantages and disadvantages as articulated by health economists and others. Conclude with your recommendation of implementing HSAs or not, and why.

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I've written on HSAs before. Its an excellent idea and there are some problems. Here is the official IRS description:


The Mayo Clinic has this description:




The basic structure is this:

You must have a high deductible plan and no other plan;
You can open an account at a bank just for health care;
Your contributions to that account are tax deductible;
Employer contributions are not taxed, not considered income;
Interest and other earnings are tax free;
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Solution Summary

HSA references are clearly presented.