Consumer-Driven Market Is Sizzling

Published November 6, 2009

While President Barack Obama and Congressional Democrats studiously avoid consumer-driven health care models for reform, in the real world, among real people, they continue to be popular.

The Miami Herald reports that Blue Cross Blue Shield of Florida has decided to use only a health savings account (HSA) program for all its 5,000 employees. The article says, “The Jacksonville-based insurer’s leaders have become firmly convinced that an HSA plan makes sense because it requires workers to make their health care decisions—and rewards those with healthy behaviors.”

It adds that this year about three-quarters of employees have opted for the HSA on a voluntary basis, so it is not much of shock to switch and only three or four employees have raised concerns. The company assesses premium contributions on a sliding scale, so lower-income workers pay much less than the higher-income managers.


Business Insurance reports that General Motors is also using a full replacement HSA for its white-collar retirees. Jerry Geisel writes, “the annual deductible will be $2,500 for individual coverage and $5,000 for family coverage. The maximum annual out-of-pocket expense will be $3,500 for individuals and $7,000 for families.” The company is working with Bank of America as the default HSA administrator, though retirees are free to use any administrator they prefer.


Forbes adds a cautionary note for people with HSAs. Ashley Hawkins writes, “At last count 8 million participants had $10 billion in HSAs. That figure will rise to $71 billion within five years, figures Eric Remjeske, president of Devenir Group, a Minneapolis consultant to HSA plans. He forecasts that a seventh of the dollars will be in balances large enough that the HSA operator can offer mutual funds as an investment option. A typical plan has $2,000 as the minimum for that feature. But he warns that some administrators are charging excessive administrative fees for investment funds that can eat away at the balances.”

She cites United’s Optum Bank, which switched from the Vanguard Fund to funds like Munder and Thornberg. The service charges tripled when that happened. The article goes on to discuss the pros and cons of these fees, but she clearly prefers Vanguard over other investment managers.


And writing on Colin Hanna asks, “If President Obama is serious about ‘bending the cost curve’ on health care, as he says, then why is he trying to kill health savings accounts, one of the few proven methods of controlling health-care costs?”

Hanna cites some of the recent studies showing that HSAs do indeed “bend the cost curve” and says, “Despite these cost benefits, the future of HSAs is in jeopardy. All of the health care bills making their way through Congress require minimum benefits in excess of the low premium, high-deductible plans associated with HSAs.”

Hanna cites a number of people who are thrilled with their HSA experience and concludes, “If Obama is interested in cutting health-care costs and increasing patient choices, and if he wants to show that he means it when he says that he is open to Republican ideas, he should embrace the effort to expand the availability of HSAs. They save money for employers and employees alike.”


Greg Scandlen ([email protected]) is a senior fellow of The Heartland Institute and director of Consumers for Health Care Choices.