Health Savings Accounts (HSAs) have become the focus of increased political posturing on health policy in Congress. Legislators appear to be under increasing pressure to toe the party line on HSAs, short-circuiting a more careful examination of the facts and data being collected in the marketplace.
Some Democratic strategists are hoping to tar President George W. Bush’s proposals to expand HSAs with the same brush they used to derail his proposal to allow private investment accounts as part of Social Security reform. Still smarting from watching Republicans claim victory in “their territory” when the GOP expanded Medicare with a prescription drug benefit, Democrats pulled out all the stops and successfully derailed any changes to Social Security by telling voters the president wanted to “gut” the program.
Some in the party are hoping to use the same playbook in dealing with HSA proposals. In February, Senate Minority Leader Harry Reid (D-NV) articulated what he hopes will become the party line on HSAs with the following statement about Bush’s proposals to expand HSAs:
“His plans for Health Savings Accounts will increase the number of uninsured Americans, make health care more expensive for millions, and do nothing to help the over 46 million Americans who don’t have health care coverage today. It’s just not credible to call it a solution. Democrats know that together, America can do better.”
While the party leadership may be pushing them to oppose HSAs, a few centrist Democrats are pushing their more moderate peers to keep an open mind about HSAs … because consumers appear to like them.
Facts vs. Speculation
Reid bases his claims on a study released by Jonathan Gruber, an MIT economist who served under Bill Clinton as deputy assistant secretary of the U.S. Department of Treasury.
Joe Antos, health care economist at the American Enterprise Institute and formerly with the Congressional Budget Office, said the Gruber study is flawed. “His results are only as good as his assumptions,” Antos noted, “and his assumptions do not reflect the changes we can already see happening with HSAs.”
Despite the availability of demographic data that tell the “real life” story of who is actually purchasing HSA plans, the Gruber study relies solely on hypothetical predictive modeling, ignoring the copious facts already available.
Gruber’s predictive model says HSAs will increase the number of uninsured by 600,000. Others say the very opposite is already happening. In March, for example, the trade association America’s Health Insurance Plans (AHIP) released a new report on the demographics of those purchasing HSAs with high-deductible health insurance coverage (HSA/HDHP plans).
“The latest study confirms earlier trends: Small businesses and individuals are finding affordable health insurance for the first time because of Health Savings Accounts,” reported Mohit Ghose, AHIP’s vice president for public affairs. “In fact, our survey shows that approximately one-third of small businesses who are offering HSAs did not previously offer health care coverage.”
As the AHIP study and others show, two groups that make up some of the biggest numbers of the uninsured–small businesses and individuals who lack employer-sponsored health insurance–are getting coverage through HSAs.
Katie Strong, director for congressional and public affairs at the U.S. Chamber of Commerce, said their small business members are looking for affordable options, and HSA sales confirm they meet the need.
|33% of the small businesses that offered HSA/HDHP plans did not previously offer coverage|
|31% of individuals purchasing HSA/HDHP plans were previously uninsured|
|Source: America’s Health Insurance Plans|
“The rapid success of Health Savings Accounts, especially among small businesses and individuals, signals the need for more affordable options in the marketplace,” said Strong. “In the traditional small group market, due to heavy state regulation and mandates, insurers do not have the ability to creatively design products that meet the needs of consumers. HSAs do allow that flexibility, which is exactly what small businesses and individuals want.”
In addition, the data show those who purchase Health Savings Accounts are evenly distributed across the age spectrum: HSAs are not just draining the young and healthy out of insurance pools.
The AHIP study did not report on the income levels of those who have purchased HSA plans. But other studies have shown that 42 percent of HSA purchasers have incomes of less than $50,000 (eHealthInsurance, 2005) and that 27 percent have a net worth of less than $25,000 (Assurant Health).
Risky Political Strategy
If a calculated political strategy is the driving force behind congressional opposition to Health Savings Accounts, thoughtful opponents had best beware: There are key differences in voter satisfaction when it comes to Social Security versus affordable health coverage and care. No voter groundswell of support existed to change Social Security. It was therefore easy for powerhouse groups such as AARP to push for the status quo.
|Age Breakdown of HSA/HDHP Owners|
|(3.2 million total)|
|Source: America’s Health Insurance Plans|
The same cannot be said of voter satisfaction with health insurance coverage. Polls show the sharp increases in health insurance premiums and in the numbers of uninsured have made health care affordability a key issue with voters. People fear losing coverage and believe something should be done.
Admittedly, the public perception of HSAs is still in its infancy. The Kaiser Family Foundation reports 71 percent of the public does not know what Health Savings Accounts are. Certainly the debates in Congress and media reports will have some effect in shaping public perceptions.
Laura Clay Trueman ([email protected]) is executive director of the Coalition for Affordable Health Coverage and senior director of Jefferson Government Relations, LLC.