RALEIGH – For more than a decade, I have advocated the creation of tax-free health savings accounts (HSAs) as an alternative to expensive, first-dollar, tax-free, employer-based health insurance. Thanks to action by Congress and the Bush administration, HSAs are now legal – and I have one myself, as do some of my employees.

But I’m not sure what to make of them just yet.

Inconsistent? Hey, I’m as prone to unanticipated inconsistency as the next opinion writer. In this case, however, my views have been and remain entirely consistent. I favored the idea of making HSAs legal, with tax treatment at least roughly comparable to the general exemption received (via historical accident) by employer-based health insurance, because I didn’t think government should use its tax and regulatory power to constrain individual decisions. I never believed that HSAs would be the right solution for every family, employer, and specific situation – and I certainly never believed that they should be the new default mechanism for medical financing, to replace traditional health insurance.

My uncertainty about the likely benefits of HSAs, for myself and my colleagues, is primarily related to practical questions. When we show up at our doctors’ offices or hospitals, flashing our debit cards and asking for the appropriate discounted full price for services rendered rather than insurance co-payment amounts, will we be easily and satisfactorily served? If I use my HSA card to pay for non-prescription medicines or contact lens paraphernalia, how long will I need to keep the receipts? How aggressive the IRS audit those using HSAs? And given that some of the John Locke Foundation’s employees opted into our HSA-based health benefit, while others chose to stay in a previous program, how will our experience and premiums for the two plans change over time?

As with many other financial and insurance products, it is likely that HSAs will evolve over time even if their legal and regulatory constrains do not. It will take a while for agents and brokers to understand the product enough to market it effectively. It will take a while for insurers to work through transitional issues, look at their subscribers’ health care expenditures with and without HSAs, and to structure and price their HSA-insurance combos correctly. And it will take a while for medical providers to get used to the idea of patients paying immediately with debited cash, rather than with small-dollar copays. On the one hand, patients are likely to be peskier about asking about prices and the potential value of services, which will be good for patients but not necessarily for all providers. On the other hand, providers will get paid more quickly, which will be good for patients and providers but not necessarily for those who work in the insurance-claims field.

Actually, it is false to assume a fixed legal and regulatory environment for HSAs, too. Thoughtful advocates and critics of the reform are hard at work examining the early returns and considering changes. You can learn more about some of the issues involved – fairness to the health and sick, tax benefits for the wealthy and poor, adverse selection and the stability of health-insurance pools – by reading an excellent paper out last month from the Cato Institute. Michael Cannon, director of health policy studies at the libertarian think tank, has produced one of the better policy studies I’ve read on any subject in a long time. It takes the concerns of critics seriously – studying carefully and then rejecting some, studying and agreeing with others, and proposing changes that will make consumer-driven health care make more sense for more Americans over time.

I’m inclined to think that my HSA was a good choice for me. I hear that most of my colleagues are having good experiences with theirs, as well. But HSAs may not be the best choice for every possible individual circumstance – making them no different from most other choices we are presented with in life.

Hood is president of the John Locke Foundation.