Incentives matter. That’s the idea behind Health Savings Accounts where 100% cost sharing will reduce unneeded medical utilization. Even critics of HSAs concede that they will induce individuals to economize on medical usage. The standard HSA design involves a high deductible plan of, say $5,000, for a family. The idea is the premium savings will be deposited into HSAs to pay for routine care. Suppose that amounts to $3,000. So funds are available for the first $3,000 in expenses. The next $2,000 is an out of pocket “corridor”. Then expenses above $5,000 are covered by catastrophic insurance.

Recently, innovations have been made in HSA design. One variant on this is a “reverse” HSA. Under this design all beneficiaries have an HSA with an initial zero balance. The health plan establishes certain types of desirable behavior for enrollees. When they undertake this “healthy” behavior then they earn funds in the HSA. The idea is essentially to pay people to be healthy. This “reverse” HSA is provided to every beneficiary in Florida’s Medicaid Reform demonstration. It has the advantage of a “reverse” working capital effect where Florida Medicaid incurs a liability to enrollees when they earn dollars but does not have to come up with the cash until they actually use the funds. Now it looks like private carriers are testing this model. See http://www.ncpa.org/sub/dpd/index.php?Article_ID=14961