PLANADVISER - Spring 2023 - 34

Q&A
Missed Opportunities
Researcher studies the consumer use of HSAs as savings vehicles
deciding how much to save is a hard
problem for anyone to solve. And not
only are these choices complicated,
but I think most people probably don't
enjoy making them. Therefore, I was
curious to learn whether HSAs could
work in practice.
Since then, I've looked to answer
various questions about how people
should use their HSAs, how they use
their HSAs in reality, and what can
explain this behavior? I find these questions
interesting because they concern
important financial decisions many
people make year after year. Over time,
these choices have important implications
for a person's economic security
and the nation's aggregate health-care
spending. [In my work] as a professor
of public policy, the ultimate objective
of my research is to find ways that
improve the design and operation of
health-care financing.
Health economist Adam Leive is an assistant professor at The Goldman School of
Public Policy, University of California, Berkeley.
DO EMPLOYEES get the most out of their health savings
accounts? Adam Leive, health economist and assistant
professor of public policy at the University of California,
Berkeley, delved into this subject with his study " Health Insurance
Design Meets Saving Incentives: Consumer Responses
to Complex Contracts, " published in the American Economic
Journal: Applied Economics 2022. PLANADVISER Managing
Editor Judy Faust Hartnett asked him about his findings.
PLANADVISER:
Please
share
your background and
interest in health savings accounts-why is this topic
important to you?
Adam Leive: I began studying health savings accounts as
a doctoral student in health economics at The Wharton
School. My main area of research was in health insurance
markets, but I had side interests in retirement saving and
personal finance. When I realized HSAs sit at the intersection
of these topics, the accounts quickly became my focus.
I was intrigued by the design of HSAs combined with highdeductible
health plans as an innovative approach to efficiently
containing the growth of health care costs. At the
same time, I knew that choosing a health insurance plan or
PA: Why are consumers not using
their HSAs as savings vehicles as
intended, and what are the implications
for participants, and for the
overall policy of using the funds to pay as you go?
Leive: My research suggests there are several reasons
why most people don't use their HSA as a savings vehicle.
One important reason is liquidity. Many people lack other
savings they can easily access without penalty to pay their
deductible and copays. In collaboration with Brent Davis
and Andrew Gellert at the TIAA Institute, I surveyed how
1,900 employees at 15 universities use their HSA. We also
measured the employees' financial literacy-as defined by
their ability to correctly answer questions about compound
interest, inflation and investment diversification-and
whether they faced liquidity constraints. Then we merged
their survey responses to TIAA's administrative records of
their retirement account balances.
Employees who reported that they were uncertain they
could finance a $2,000 emergency expense or who had an
outstanding retirement-account loan made lower HSA
contributions, had lower HSA balances and were more likely
to withdraw all or most of their HSA each year. When asked
how they plan to use their HSA, these employees were less
likely than those without liquidity constraints to say they
planned to use it for health expenses in retirement.
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