Who Invented Health Savings Accounts?

By Grace-Marie Turner

A Washington Post Fact Checker has captured a concise history of Health Savings accounts in an article investigating whether former Pennsylvania Senator Rick Santorum is the father of HSAs.

Post reporter Michelle Lee gives Santorum two Pinocchios, concluding he was not correct in saying earlier this month in Iowa:  “I know Al Gore invented the Internet, but I invented health savings accounts, believe it or not. I was the first member of Congress back in 1992 to introduce health savings accounts in the United States Congress.”

Lee credits Santorum with introducing H.R. 4130, the Health Care Savings Plan Act of 1992 in January of that year. The legislation would have amended the Internal Revenue Code to allow individuals and families to set up medical savings accounts and to make tax-free deposits to spend on medical services.  She doesn’t find any earlier legislation that would have created similar plans available to most Americans.

Today, more than 30 million people have health insurance accompanied by a Health Savings Account or their sister program, Health Reimbursement Arrangements.  Lee tracks the idea from the early 1980s when several economists, including former AMA economist Jesse Hixon, NCPA Senior Fellow Gerald Musgrave, and John Goodman, now president of the Goodman Institute.

Lee cites a short paper by Devon Herrick at the National Center for Policy Analysis that also provides a chronology. Success has a thousand fathers, and so do HSAs (and their predecessors, Medical Savings Accounts).   Patrick Rooney, former chairman of Golden Rule Insurance, was the first to offer MSAs to his employees. Goodman, Hixson, Musgrave, and Rooney have all been called the “Father” of HSAs and MSAs, she reports.

And many, many other organizations, including the Galen Institute, the Cato Institute, the Council for Affordable Health Insurance, The Heritage Foundation, the American Enterprise Institute, the Pacific Research Institute, the Manhattan Institute, the Heartland Institute, and many others have been engaged in the educational effort about HSAs.


Originally published on Forbes, March 25, 2015

Posted in: Uncategorized