I keep reading that we should not be using this for current health expenses. Isn't that what it's for?
If you can max all your tax-advantaged options (401k, HSA, IRA, etc.) then paying current health expenses from cash flow while allowing the HSA to grow tax free works well.
If you can't max all your tax-advantaged options (401k, HSA, IRA, etc.) then using the HSA to pay current health expenses so you can max (or at least contribute more to) the non-HSA tax-advantaged accounts works well.
This is the key point that I've seen people miss when discussing this topic. If you can't max out all other tax advantaged accounts in addition to paying medical expenses out of pocket then leaving money in the HSA is either worse or at least no better than withdrawing and contributing to another account and adds the administrative burden of tracking expenses for many years.
If you can max out all other tax advantaged accounts in addition to paying medical expenses out of pocket then leaving money in the HSA is essentially giving you another tax advantaged account that you wouldn't otherwise have which is generally better than investing that money in a taxable account.
I'm still not sure I fully understand this argument. Am I correct in thinking that the main concern here is the issue of keeping the receipts to be reimbursed at some point down the road? I guess my thought with an HSA is to use it for medical expenses in retirement. As a PP mentioned and linked, there will be plenty of them. So I'm less concerned about the issue of saving receipts. Am I thinking about this wrong?
If you can afford to pay all current medical expenses out of pocket and max out all available tax advantaged accounts, including the HSA, then no, you're not thinking about it wrong.
However, if you can't afford to pay all current medical expenses out of pocket and max out all available tax advantaged accounts, including the HSA, then I think you are. Let's look at a couple of examples.
Let's say you have a $1000 medical expense, $1000 in a bank account, your HSA has been maxed for the year (2019 family limit = $7000), but there is $1000 of space left in other tax advantaged accounts. You could pay the medical expense from your HSA (Option 1: $1000 cash, $6000 HSA), you could pay it from cash (Option 2: $0 cash, $7000 HSA), or you could pay from HSA and contribute cash to either a traditional or Roth IRA/401(k)/403(b)/etc (Option 3a: $0 cash, $6000 HSA, $1000 Roth IRA; Option 3b: $0 cash, $6000 HSA, $1000 traditional IRA). All have the same net in that the medical expense is paid and you have $7000 remaining, the only difference is where the money is located.
Remember that all of these options assume you've maxed your HSA, and the only question is whether or not you withdraw from the HSA. This means that you've already gotten the income tax deduction, and the FICA tax reduction (if you contributed through payroll), so the only question is whether you keep the tax deferred or tax free growth (depending on whether it's used for medical expenses in the future.
Option 1 is suboptimal because any earnings on the money will be taxed.
Option 2 is good because as long as you save receipts you can withdraw that money at any time without paying tax, however any earnings on that money will be taxed unless they're spent on medical expenses
Option 3a is good because contributions and growth within a Roth IRA are never taxed again. This is nearly equivalent to leaving money in the HSA (Option 2) but it's better because you don't have to keep receipts in order to never have the contribution taxed again, and growth within the IRA is never taxed again no matter what it's spent on, but growth within an HSA is only never taxed again if spent on medical expenses.
Option 3b is good because you receive a tax deduction when you contribute to a traditional IRA. If you're in a higher tax bracket now than when you withdraw this is better than leaving the money in the HSA for the same reason that contributing to a traditional IRA is better than contributing to a Roth IRA: money in the Roth IRA or HSA (if used form medical expenses) will not be taxed in the future, but it's better to avoid tax at a high rate now and pay tax at a low rate later (see
https://www.bogleheads.org/wiki/Traditional_versus_Roth). Traditional IRA contributions may not be an other depending on income, but this applies to workplace retirement plans as well
I think where people get tripped up is the trope that "The HSA is a triple tax advantaged account (tax free in, no FICA, and tax free growth/out), so it's better than all the other tax advantaged accounts" but they forget that once you've contributed to an HSA you've already realized the first two tax advantages. The only remaining tax advantage (tax free growth/out) is slightly worse than a Roth IRA (receipt tracking and growth must be spent on medical expenses), and potentially much worse than traditional IRA depending on current vs future marginal tax brackets.