To help foster this change, the insurance industry developed a new form of health plan carrying a low premium and a deductible -- the amount a customer must pay out of pocket each year before the insurance kicks in -- of $5,000 or more.
The federal rule changes in 2003 required anyone opening a health savings account to be covered by a qualified high-deductible plan, giving the insurance industry a convenient hook to market the products in tandem. The idea was that the tax break provided by HSAs would give individuals a greater incentive to buy a high-deductible plan.
Among the earliest promoters of HSAs were John Goodman of the National Center for Policy Analysis, a Dallas think tank that was instrumental in pushing President Bush's Social Security privatization plan, and J. Patrick Rooney, a libertarian insurance executive who had promoted a school voucher program in his hometown of Indianapolis.
Their first victory came in 1996, when Congress approved a four-year pilot program providing limited tax relief for what were then known as medical savings accounts. Rooney and his supporters pressed Congress to expand the concept. In 2003 they succeeded. Contribution limits were raised sharply and indexed to inflation. (In 2008, the limits are $2,900 for individuals and $5,800 for couples.)
Under the rules, contributions to HSAs are tax-exempt, as are their investment gains. Withdrawals are also tax-exempt if they are used for qualified medical expenses. Over time, HSA balances could grow to hundreds of thousands of dollars.
Already, HSAs and high-deductible plans have made strong gains in the marketplace. America's Health Insurance Plans, the industry lobbying group, reported that 6.1 million Americans were covered by high-deductible plans by the end of 2007, a 35% gain from a year earlier.
Only a fraction of those customers have also opened an HSA, however. That has led to charges from critics that the savings accounts function more as a tax shelter for wealthy taxpayers than as a tool to manage healthcare costs. A study this year by the Government Accountability Office found that the average taxable income among HSA holders as of 2005 was $139,000, more than double the average for all taxpayers.
The GAO also found that average withdrawals per year were less than half of contributions, suggesting that the account holders were building up retirement savings.
'Nothing is covered, absolutely nothing'
There is evidence that enrollment in high-deductible plans has grown not because the plans offer greater value but because they are often the only plans that customers can afford -- and sometimes the only plans an insurer will offer applicants with chronic conditions such as asthma, diabetes or depression.
That reflects the experience of Alex Kipper, 55, of Campbell, Calif., an engineer who lost his employer-provided health insurance during the dot-com bust when he was laid off by a Silicon Valley company. Since then he has eked out a living translating Russian medical and technical papers on a freelance basis, earning roughly $30,000 a year.
Because he has high blood pressure, Kipper found himself virtually uninsurable. Fearing that he could be financially wiped out in a medical emergency, he signed up for a bare-bones policy that provides no coverage until his medical expenses exceed $8,000 in a year.
His health plan's concession to preventive care was a $25 discount on a physical. Once diagnostic tests were included, the fee for the checkup came to more than $300, Kipper said -- which the health plan declined to pay.
He hasn't returned to a doctor's office in three years. He gets his blood pressure medicine from the discount retailer Costco, which charges him $15 for a month's supply. To renew his prescription, he goes to a local free clinic.
Although the policy costs only $200 a month, "nothing is covered, absolutely nothing," Kipper said. "This plan would be fine if it was really cheap, like $25 a month. But not $200."
A 2006 survey by the Kaiser Family Foundation found that although customers in high-deductible plans did cut back on medical services overall, they tended to avoid arguably beneficial services as well as purportedly wasteful ones.
They were more likely than participants in conventional plans to avoid filling a prescription or to take less than the prescribed dose, to skip a test, treatment or follow-up visit recommended by a doctor, or to skip a checkup.
"The basic premises of consumer-driven healthcare are seriously flawed," said Mark Hall, a professor of law and public health at Wake Forest University Medical School, who contends that people with serious medical conditions have little time or inclination to search for the most cost-effective treatment.
"They're not consumers, they're patients. And when you're a patient, you're not in a shopping mode. You have other things on your mind."