Wednesday, August 26, 2009

HSAs: Putting Patients In Charge of the Rationing

Investor's Business Daily -- Health savings accounts (HSAs) are still alive and growing. Not only that, they seem to be working as planned.

From 2007 to 2008, the total cost of premiums and employer cash contributions to HSAs rose by 2.3% for family coverage, less than half the 4.7% rise in premiums for family coverage overall. HSA-linked coverage is also much cheaper than conventional plans. Its average annual total costs to employers and employees, according to Kaiser, were $10,623 for a family plan in 2008 vs. $12,680 for all family plans. This alone means HSAs would help hold overall premium costs down if they continue to get a larger market share.

HSAs reward consumers for price-conscious decisions by giving them a tax-sheltered account to salt away the money they save. Patients get a little richer by choosing generics over brand-name drugs and staying alert to overbilling. Where there's rationing — in the sense of deciding whether this procedure or that drug is worth the cost — it's the patients themselves who make that call.

This is true reform because it fundamentally changes the way people pay for health care. The role of the third-party payer shrinks, and medicine starts returning to what it once was: a two-way relationship between patients and providers.

Originally posted at Carpe Diem.


At 8/26/2009 11:13 AM, Anonymous Junkyard_hawg1985 said...

I have an HSA and it definitely affects how I spend money. An example of this is that the prescription drug benefit is included in my insurance deductible of $2300. I realize that my family will probably not reach the $2300 spending level. As such, it is worth my time to schedule to pick-up two monthly prescriptions at Kroger 25 miles away ($4 & $9) instead of paying $9 and $27 locally ($26 savings/mo). If a third party is paying the bill, there is no incentive for me to go to the trouble of getting them at Kroger.

At 8/26/2009 11:45 AM, Anonymous Jon said...

HSAs are definitely worth it if you are on either end of the health spectrum. I myself just banked $3000 untaxed dollars for having a healthy year & knowing that I'm ultimately the one who has to pay for minute health expenses.

At 8/26/2009 3:09 PM, Blogger KO said...

HSAs have not gotten nearly enough coverage. They counter the "all you can eat" incentives of regular plans. I pay about 2/3 less than a regular insurance plan and have built up $11k in my HSA savings account. I'm self employed so I saw the full costs of a regular plan.

John Stossel for his "Sick in America" program on 20/20 interviewed the Whole Foods CEO about their change to an HSA program. Ironically, his article in the WSJ on healthcare reform has sparked boycotts of Whole Foods. I would wager these same folks would have been championing the Whole Foods plan a year ago.

At 8/27/2009 12:02 PM, Blogger sethstorm said...

Good only if you're consistently on the right side of the stratospheric deductible. Otherwise, you're screwed (healthy or not).

While a full-on government "option" does not solve it, HSA's aren't either.

At 8/27/2009 2:05 PM, Blogger KO said...

In my case, my premiums plus the maximum contribution to the HSA savings account run slightly less than regular plan premiums. So I can use all that money up and still be about even. I can save a further $40/month by changing to Kaiser. (But I don't like Kaiser.)

There's nothing stopping companies from putting money into the employee's savings account as Whole Foods does. Even though they put money into employee's accounts Whole Foods saved money when they switched plans.

The worst off would be those with large families who can now ridiculously pay the same premium if they have 1 kid or 7 kids. Plus others with chronic diseases. They'd use all their savings every year.

HSAs don't fix everything, but they would actually bend the cost curve over time because people actually care what it costs for services.


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