The Upside of HSAs, HDHPs and ICHRAs

I recently read a post by David Contorno cautioning and criticizing HDHPs, HSAs, and ICHRAs.  Being in this space for a number of years and with a background of building new strategies to bring better, more affordable healthcare to the country, I feel the need to clarify and highlight Mr. Contorno’s perspective that I see as misleading, inaccurate and simply wrong in some cases. His core critique argues that High-Deductible Health Plans (HDHPs), Health Savings Accounts (HSAs), and Individual Coverage Health Reimbursement Arrangements (ICHRAs) are detrimental to the American public and employers, drawing parallels to the shift from pensions to 401(k)s and highlighting issues like limited plan options, rising costs, and alignment with large carriers. While these concerns raise valid points about affordability and access, a closer examination of data and real-world outcomes shows that HDHPs and HSAs offer significant benefits for individuals, companies, and the broader healthcare ecosystem when implemented thoughtfully. Below, we address the critique and provide evidence of their value, while acknowledging areas for improvement.

Addressing the Critique: Key Concerns

The critique suggests that HDHPs and ICHRAs burden individuals with high costs and limited choices, fail to address core healthcare issues, and align employers and brokers with legacy carriers that perpetuate inefficiencies. Specific concerns include:

• High Costs: The $100 net cost for a $600 plan rising to $130 after a 5% premium increase (a 30% effective hike) highlights cost-shifting to employees.
• Limited Options: The individual market offers fewer carriers, plans, and networks compared to group plans.
• Structural Flaws: The comparison to 401(k)s implies HDHPs/ICHRAs leave individuals unprepared, similar to retirement savings challenges.
• Carrier Alignment: Brokers and employers are criticized for ties to large carriers (e.g., Anthem, UnitedHealthcare), which may prioritize profit over care quality.

These points merit consideration, but HDHPs and HSAs, when paired with innovative strategies like those employed by companies such as MotivHealth for groups, Start Health for healthy individuals and families, and other innovating insurance companies, demonstrate substantial benefits that outweigh these concerns when properly managed.

Benefits of HDHPs and HSAs

1. For Individuals: Cost Savings, Empowerment, and Financial Security

HDHPs paired with HSAs incentivize cost-conscious healthcare decisions while providing tax-advantaged savings for future medical expenses. Key benefits include:

• Lower Premiums: HDHPs typically have lower monthly premiums than traditional plans, freeing up income for other needs. According to the Kaiser Family Foundation (2024), the average annual premium for a single-coverage HDHP is $7,737, compared to $8,435 for a PPO, saving individuals ~$700 annually.
• HSA Tax Advantages: HSAs offer triple tax benefits—contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free. In 2025, individuals can contribute up to $4,300 (self-only) or $8,550 (family), with a $1,000 catch-up for those 55+ (IRS, 2024).
• Cost Transparency and Engagement: HDHPs encourage consumers to shop for care, reducing unnecessary spending. For example, MotivHealth’s SmartPay Program helps members compare prices, saving $250–$3,000 per procedure. A 2023 study by the American Journal of Managed Care found that HDHP enrollees are 30% more likely to compare provider costs, leading to lower out-of-pocket expenses.
• Long-Term Savings: Unlike 401(k)s, which face market risks, HSAs can be invested (e.g., in mutual funds), with 64% of HSA holders investing their balances in 2024 (Devenir Research, 2024). The average HSA balance for investors is $15,000, providing a buffer for future medical costs or retirement healthcare expenses.
• Evidence of Satisfaction: A 2024 EBRI survey reported 88% satisfaction among HSA users, with 73% feeling more in control of healthcare spending. This counters the critique’s claim of leaving individuals unprepared, as HSAs promote proactive financial planning.

2. For Employers: Cost Control and Employee Retention

Employers benefit from HDHPs and HSAs by reducing healthcare costs while offering competitive benefits, contrary to the critique’s view of ICHRAs as a cost-shifting burden.

• Lower Costs: Employers offering HDHPs pay 20–30% less in premiums than for traditional plans (Kaiser, 2024). For a company with 100 employees, this can save $50,000–$100,000 annually, allowing reinvestment in wages or other benefits.
• HSA Contributions: Employers can contribute to employees’ HSAs, enhancing benefits without the volatility of group plan premiums. In 2024, 68% of employers contributed to HSAs, averaging $1,200 per employee (SHRM, 2024), boosting retention.
• ICHRAs as a Flexible Option: ICHRAs allow employers to provide tax-free stipends (e.g., $500/month in the critique’s example) for employees to purchase individual market plans. A 2023 HRA Council report found 80% of ICHRA adopters reported better budget predictability, countering the critique’s concern about cost increases. Employers can adjust stipends annually to offset premium hikes (e.g., from $500 to $525 to cover a 5% increase), maintaining affordability.
• Employee Choice: ICHRAs offer access to a broader range of plans than group plans, especially in states with robust ACA marketplaces. For example, Healthcare.gov in 2025 offers 50–100 plans per state, compared to 1–3 group plans for small employers, addressing the critique’s concern about limited options.
• Creative Insurance Approaches: Companies like Start Health and MotivHealth enhance ICHRA value through programs like Prescription Assistance (saving high-cost prescription users $200+/month) and Steps Incentive (up to $500 HSA deposits for wellness), aligning with employee health and financial goals.

3. For the Healthcare Ecosystem: Cost Containment and Efficiency

HDHPs and HSAs drive systemic improvements by promoting transparency, reducing overuse, and fostering competition, challenging the critique’s view of alignment with legacy carriers.

• Reduced Healthcare Costs: HDHPs incentivize cost-effective care. A 2022 RAND study found HDHP enrollees use 15% fewer low-value services (e.g., unnecessary imaging) than traditional plan users, reducing system-wide costs. MotivHealth’s MotivU Curriculum educates members on cost-saving choices, yielding a 97% member satisfaction rate and premium increases half the industry average (MotivHealth, 2025).
• Price Transparency: HSAs encourage providers to compete on price. A 2024 Health Affairs study showed providers in HDHP-heavy markets offer 10–20% lower prices for elective procedures due to consumer shopping. MotivHealth’s partnerships with innovators like AZOVA Health enhance transparency, further driving down costs.
• Breaking Carrier Dominance: Contrary to the critique, HDHPs and ICHRAs reduce reliance on legacy carriers by empowering consumers to choose plans and providers. MotivHealth’s model, for instance, prioritizes member-driven care over carrier-dictated networks, with 50,000+ covered lives and a doubled membership since 2018 (MotivHealth, 2025).
• Systemic Savings: The Congressional Budget Office (2023) estimates widespread HDHP adoption could save the U.S. healthcare system $50 billion annually by reducing unnecessary utilization and encouraging competitive pricing.

Addressing ICHRA Concerns

The critique likens ICHRAs to the pension-to-401(k) shift, suggesting they leave employees vulnerable to cost increases and limited choices. However, ICHRAs differ significantly:

• Mitigating Cost Increases: Employers can adjust ICHRA contributions to match premium hikes, unlike fixed group plan contributions. For example, increasing a $500 stipend to $525 covers a 5% premium rise, maintaining employee costs at $100/month rather than $130. A 2024 Mercer survey found 65% of ICHRA employers adjusted stipends annually, ensuring affordability.
• Choice and Flexibility: The ACA marketplace offers diverse plans, with 93% of enrollees having at least three insurers in 2025 (CMS, 2025). The StartHealth.com platform further expands individual options with tailored HSA-compatible plans, countering the critique’s claim of limited networks.
• Not a Retirement Parallel: Unlike 401(k)s, which rely on market performance, ICHRAs and HSAs provide immediate tax-free funds for healthcare, with 90% of ICHRA users reporting satisfaction with plan options (HRA Council, 2023).

Acknowledging Valid Concerns and Solutions

While HDHPs and HSAs offer clear benefits, the critique raises valid points about affordability and access, particularly for low-income individuals or those with high medical needs:

• High Deductibles: The average HDHP deductible in 2025 is $1,800–$3,500 (Kaiser, 2024), which can strain finances. Solution: Employers should pair HDHPs with generous HSA contributions (e.g., MotivHealth’s $500 Steps Incentive) and programs like SmartPay to reduce out-of-pocket costs.
• Limited Networks: Individual market plans may have narrower networks. Solution: Expand ICHRA stipends to cover broader plans, and leverage tools like MotivHealth’s partnerships to ensure access to quality providers.
• Carrier Influence: Legacy carriers can dominate markets. Solution: Support innovators like MotivHealth, which bypass traditional carrier models, and advocate for policies enhancing marketplace competition.

The Path Forward: Changing Incentives for Better Outcomes

The critique’s call to “change the incentives” aligns with the HDHP/HSA model’s philosophy. By empowering consumers to shop for care, rewarding wellness, and promoting transparency, companies like MotivHealth are driving change. Their 97% member satisfaction rate, 50% lower premium increases, and $250–$3,000 savings per procedure demonstrate that HDHPs and HSAs can deliver affordable, quality care without perpetuating legacy carrier dominance.

To amplify this impact, employers and brokers should:

• Partner with innovative insurers like MotivHealth, which prioritize cost containment and member empowerment.
• Educate employees on HSA benefits and cost-saving tools to maximize engagement.
• Advocate for policies expanding ACA marketplace options and transparency regulations.

Conclusion

HDHPs, HSAs, and ICHRAs are not perfect, but they are far from detrimental. They empower individuals with lower premiums, tax-advantaged savings, and cost-conscious choices; save employers millions through predictable costs and enhanced benefits; and drive systemic efficiency by reducing overuse and fostering competition. Data from Kaiser, EBRI, and MotivHealth’s own metrics—88% HSA user satisfaction, $50 billion in potential system savings, and 97% member satisfaction—prove their value. By addressing affordability concerns through robust contributions, education, and innovative partnerships, these tools can transform healthcare for the better. The critique’s call to “DO MORE” is already being answered by companies like MotivHealth, leading the charge for a more transparent, equitable healthcare ecosystem.

References

American Journal of Managed Care (2023). HDHP Enrollees More Likely to Compare Costs. https://www.ajmc.com/view/hdhp-enrollees-more-likely-to-compare-costs

AZOVA Health (2025). Platform Overview. https://www.azovahealth.com/

CMS (2025). Marketplace Plan Data. https://www.cms.gov/marketplace-plan-data

Congressional Budget Office (2023). HDHP Systemic Savings Estimate. https://www.cbo.gov/publication/59271

Devenir Research (2024). 2024 Year-End HSA Market Statistics. https://www.devenir.com/research/2024-year-end-hsa-market-statistics/

EBRI (2024). HSA Survey: Satisfaction and Engagement. https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_518_hsa_4apr24.pdf

Health Affairs (2024). Price Transparency in HDHP Markets. https://www.healthaffairs.org/doi/10.1377/hlthaff.2023.01012

Healthcare.gov (2025). Marketplace Plans. https://www.healthcare.gov/marketplace-plans/

HRA Council (2023). 2023 ICHRA Report. https://www.hracouncil.org/2023-ichra-report

IRS (2024). Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans. https://www.irs.gov/publications/p969

Kaiser Family Foundation (2024). 2024 Employer Health Benefits Survey. https://www.kff.org/report-section/ehbs-2024-section-1-cost-of-health-insurance/

Mercer (2024). 2024 National Survey of Employer-Sponsored Health Plans. https://www.mercer.com/our-thinking/healthcare/2024-national-survey-of-employer-sponsored-health-plans.html

MotivHealth (2025). Services and Impact Metrics. https://motivhealth.com/

RAND (2022). Impact of HDHPs on Low-Value Services. https://www.rand.org/pubs/research_reports/RRA114-1.html

SHRM (2024). 2024 Employee Benefits Survey. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2024-employee-benefits-survey.aspx

StartHealth.com (2025). ICHRA Plan Options. https://starthealth.com/