HSAs, FSAs Fall Short on Cost Clarity and Control
They were designed for patient empowerment. But Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), financial tools used by millions of Americans, are failing to provide the cost control and clarity they promised, according to a comprehensive new analysis.
The core of the problem is a severe information gap. A survey of 2,000 adults with employer-sponsored health insurance, detailed in the “Healthcare Cost and Consumer Experience Report” from health tech firm First Dollar, found that 84% of account holders feel they lack genuine control over their healthcare spending. It’s a staggering figure. The data reveals a user base struggling not with a lack of funds, but with a lack of functional, real-time information needed to deploy those funds effectively.
This uncertainty has direct clinical consequences. The First Dollar report documents that 68% of respondents have either delayed or entirely avoided medical care specifically because of cost uncertainty. Patients, unable to predict their out-of-pocket expenses, are opting out of the system. This directly undermines the premise of these accounts, which were intended to encourage smarter consumption of healthcare, not avoidance.
The promise was a consumer-driven market. The reality, according to health policy analyst Dr. Anjali Desai, is a “labyrinth of confusing rules and opaque pricing.”
Patients simply can’t shop for care if the price tag is invisible until weeks or months after a procedure. One patient cited in the report, Sarah Jenkins, captured this paralysis perfectly. “I have the money in my FSA, but I’m afraid to use it,” Jenkins stated. “What if the procedure isn’t covered? The bill comes months later, and by then it’s too late.”
A Failure of Infrastructure
The issue isn’t just policy. It’s technology. The digital platforms that power the HSA and FSA ecosystem are often built on old architecture, unable to integrate smoothly with modern healthcare provider systems. This creates significant operational friction and data latency.
Jason Bornhorst, CEO of First Dollar, argues these accounts have become “another layer of complexity” instead of a tool for simplification. The root cause, Bornhorst believes, is a “digital infrastructure” that is often “decades old.” This legacy tech prevents the real-time adjudication of claims, leaving both patients and providers in a state of financial limbo. The throughput of accurate pricing data from insurer to consumer is exceptionally low.
This fragmented ecosystem means critical data is siloed. The financial institution administering the HSA, the insurance company processing the claim, and the hospital billing for the service often can’t communicate efficiently. The result is a system where 79% of consumers, per the First Dollar survey, find it difficult to predict what they will owe.
Confusion Breeds Inaction
The complexity extends to the basic rules of the accounts themselves. A majority of users, 55% to be exact, admit they are confused about which medical expenses are even eligible for reimbursement from their HSA or FSA funds. This confusion is compounded by the structural differences between the accounts, particularly the “use-it-or-lose-it” nature of most FSAs, which creates an annual cycle of anxiety and rushed, often inefficient, spending.
While HSAs now hold over $100 billion in assets nationally, their potential to create a more competitive healthcare market remains unrealized. Without transparent, accessible pricing data, consumers cannot make the informed choices the model depends on. Some fintech companies are attempting to build a new software layer to bridge these information gaps, deploying APIs designed to integrate disparate systems and provide consumers with upfront cost estimates. But getting these new platforms to scale across the vast, entrenched user base of providers and financial administrators remains a significant challenge. The adoption of this new technology, for now, is slow.
