A January 2006 preliminary report from America’s Health Insurance Plans (AHIP), which represents major insurers and health plans, revealed enrollment in health savings accounts (HSAs) has tripled since March 2005. In a survey of its members, AHIP found more than three million people now are enrolled in HSAs.
While critics claim HSAs are a new tax break for the rich and are attractive only to the young and healthy, studies show they in fact have broad appeal and provide a new option for the uninsured.
Falling Costs
A May 2005 study by AHIP found 37 percent of those purchasing individual HSA policies were previously uninsured.
In January 2006, the Washington, DC-based Deloitte Center for Health Solutions found the relative cost of consumer-driven plans is falling. Among 152 major companies surveyed by Deloitte, the cost of consumer-directed health plans increased by only 2.8 percent last year. That is about one-third the rate of increase for traditional plans.
In its survey of people who had purchased health insurance from among the 6,500 products it offered in the first six months of 2005, eHealthInsurance reported costs were dropping while plan offerings were attractive:
- premiums for HSA-eligible insurance dropped 15 percent between 2004 and the first half of 2005;
- nearly two-thirds of HSA purchasers paid $100 a month or less for their plans;
- HSA plans are comprehensive, with most covering 100 percent of the costs of hospitalization, lab tests, emergency room visits, prescription drugs, and doctors’ visits after the deductible is met;
- HSAs continue to be attractive to those with modest incomes. More than 40 percent of HSA-eligible plan purchasers earned $50,000 or less annually; and
- age distribution continues to follow a bell curve: 55 percent of HSA purchasers are under age 40, and 45 percent are over 40 or older, including nearly 19 percent who were age 50 or older.
Enrollees Varied
Assurant Health, one of the leading health insurers to individuals and small groups, analyzed its data in 2005 to see who was purchasing HSAs and found:
- 73 percent were families with children;
- 57 percent were over age 40;
- 29 percent had family incomes of less than $50,000; and most importantly,
- 40 percent did not indicate having prior health insurance coverage.
In a September 2005 survey, Blue Cross Blue Shield found HSA-eligible enrollees are of all ages and of no different health status than people enrolled in traditional coverage. In addition:
- the proportion of previously uninsured persons currently enrolled in an HSA-eligible product is double that of such enrollees in traditional insurance products (12 percent to 6 percent);
- HSA-eligible enrollees are more likely to access information and services available to assist them in decision-making than are individuals with traditional insurance; and
- HSA-eligible enrollees are far more likely to use wellness programs and online tools to track costs than are enrollees in plans that are not consumer-driven.
Additional Benefits
Aetna studied companies that had purchased Aetna HealthFund Accounts, its brand name for health reimbursement arrangements (which are similar to HSAs but available only to those with employment-based insurance). Aetna prepared a study in June 2005 and found:
- insurees’ use of preventive services increased by 23 percent;
- 50 percent of employees had some funds left at the end of the year to roll over into their account for the next year;
- lower use of inpatient, laboratory, and primary-care physician visits drove costs down;
- consumer-driven health care plan participants are more likely to visit ambulatory care facilities and specialists than are their colleagues in traditional plans; and
- health measurements were stable for members with chronic conditions.
The company also found that those with chronic conditions, such as diabetics, continued to seek necessary care, and there were increases in the use of preventive services.
Flawed Survey
Not all of the surveys about HSAs are positive. The Commonwealth Fund and Employee Benefit Research Institute (EBRI) released the results of a survey in December 2005 reporting “individuals with more comprehensive health insurance were more satisfied with their health plan than individuals in high deductible plans.” That survey also found people with consumer-directed plans spent more out of pocket and were more likely to forgo care.
The Commonwealth/EBRI survey had a sample size of 1,204 participants, however, and only 1 percent were in consumer-directed plans. While some adjustments were made to the study to correct for the small sample size, it’s difficult to accept that this small number could be representative of the 3 million people in HSAs across the nation.
The survey was conducted online by Harris Interactive, and people volunteered to participate. More than half of those enrolled in consumer-directed and high-deductible plans did not have a choice of health plans.
McKinsey & Company found in May 2005 that people who didn’t have a choice of plans were less satisfied with consumer-directed plans than those who voluntarily selected this coverage option on their own, which suggests a further skewing of the Commonwealth Fund/EBRI sample and results.
Comparisons Unclear
In addition, out-of-pocket spending doesn’t reflect total spending. Those with traditional insurance said they spent less out of pocket than those with consumer-directed plans, through lower deductibles and office co-payments, but that’s not the full picture. Health insurance is part of an employee’s overall compensation package, and health costs are part of their pay package. Traditional health insurance generally has higher premiums, so those with this coverage are likely paying more through higher premiums and hidden costs, such as lower wage increases. Consumer-directed plans simply make the spending more visible.
Grace-Marie Turner ([email protected]) is president of the Galen Institute.
For more information …
The July 2005 eHealthInsurance report, “Health Savings Accounts: The First Six Months of 2005,” is available online at http://www.ehealthinsurance.com/content/ReportNew/072705HSA6mosReportFinal.pdf
A June 2005 McKinsey & Company report, “Payor/Provider: Consumer-Driven Health Plan Report,” is available online at http://mckinsey.com/clientservice/payorprovider/Health_Plan_Report.asp.
