HSAs, etc.
Wednesday, July 2, 2008New Guidance on HSAsBy Grace-Marie TurnerCategories: HSAs, etc.HSAs seem so simple. But even with these straightforward accounts -- a savings account coupled with health insurance -- there seems to be an endless number of questions about them.The Treasury Department recently provided 28 pages of guidance governing everything from how HSAs interact with Health Reimbursement Arrangements and Flexible Spending Accounts, to whether people can qualify for an HSA if they receive preventive care through the VA, to nuances about employer contributions to the accounts. This shows that any program authorized by government requires rules and complexity, but the department is to be congratulated for these clarifications.
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Tuesday, July 1, 2008Balances on HSAs Are UpBy Grace-Marie TurnerCategories: HSAs, etc.Two new reports give us updated data on health savings accounts. Among the things we learned: Average account balances hit $1,400, up from $1,028 in December 2006, according to an HSA Benchmarking Survey from Celent, a research and advisory firm.Also, an HSA Market Report from Canopy Financial, a provider of financial technology and electronic payment systems, reports that the average health plan had a deductible of about $2,500, that the average account holder was 43 years old, and that the average employer contribution was $68 a month, $58 for employees.
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Monday, June 16, 2008A Guide for HSA BuyersBy Grace-Marie TurnerCategories: HSAs, etc.Roy Ramthun, former Treasury official, senior health policy advisor at the White House, and now president of HSA Consulting, has updated his guide to Health Savings Accounts, and he also has released a version of the guide in Spanish. The "Buyer's Guide" provides advice, reminders, and things to consider when examining an HSA plus answers to frequently asked questions, definitions of terms, and a description of additional resources available throughout the Internet.
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Wednesday, June 11, 2008More issues with the Commonwealth Fund study of the underinsuredBy Peter NelsonCategories: HSAs, etc.Yesterday John Graham of the Pacific Research Institute outlined a number of problems with the Commonwealth Fund’s just released study that updates their 2003 survey indentifying the underinsured. Here's another issue: Using a high deductible as an indicator exaggerates the number of underinsured. (I touched on this point in an earlier post, but it's more problematic than I originally thought.) The study’s methodology classifies someone as underinsured if they meet one of three indicators of financial exposure, including: (1) Out-of-pocket medical costs equal to or greater than 10 percent of income; (2) medical costs equal to or greater than 5 percent of income for those with low-incomes under 200 percent of the federal poverty guidelines; and (3) a deductible equal to or greater than 5 percent of income. Lynn Blewett and Andrew Ward of the University of Minnesota and Timothy Beebe of the Mayo Clinic College of Medicine recently reviewed the academic literature related to the concept of underinsurance and found “great variation in the measurement and subsequent estimates” of what constitutes underinsured. Commonwealth Fund studies were the only reviewed studies that used a high deductible as an indicator of underinsurance. The deductible indicator hopes to measure "potential risk" of serious financial hardship. Using the deductible as a measure of potential risk raises three issues that exaggerate the number of underinsured. First, not everyone with a high deductible has the same risk of reaching the deductible because of the wide variation in health risks among people and so the deductible, by itself, is a poor measure of potential risk. For instance, a healthy 23-year old with a high deductible will be at a much lower risk than a similarly financially situated 54-year old with high blood pressure. By ignoring this distinction, the high deductible indicator likely includes people with incredibly low risks of ever reaching the deductible. Second, as the authors admit, some employers contribute funds to savings accounts matched with HDHPs to offset the deductible, which can eliminate any financial risk related to the deductible. Because the study fails to remove people with employer funding, it overestimates the number of people at financial risk from high deductibles. The authors dismiss the problem and claim that “recent studies find that most employers do not contribute.” But the study they reference makes the opposite point: most employers do contribute something. The authors must have mistakenly only considered employees with health savings account (HSA)-qualified HDHPs. It’s true that, according to their referenced study, only one-third of employers offering HSA-qualified HDHPs contribute to the savings accounts. However, HSA-qualified HDHPs only represent half of the HDHPs that enroll employees. Another type of HDHP, offered in combination with a Health Reimbursement Arrangement (HRA), enrolls the other half and, according to the study, all employers contribute to HRA accounts when they offer them. Consequently, the study cited by the authors actually finds that 66 percent of employers that offer HDHPs linked to an HSA or HRA contribute to their employees’ accounts. Third, without using some top-end income threshold, the methodology draws in a number of high-income people that are unlikely to be at risk. In the study, 9 percent of the underinsured have incomes between $60,000 and $99,999 and another 7 percent have incomes higher than $100,000. Over on quarter, or 26 percent of those added to the ranks of the underinsured by a high deductible had incomes higher than $60,000. Consider too that a 5 percent deductible would include someone with a $7,500 deductible who makes $150,000. It’s hard to believe that anyone with an income over $100,000 is truly underinsured. Despite these problems with the study’s methodology, we should not lose sight of the fact that many people struggle to afford medical care even when they have insurance. Some people are, in fact, underinsured and this group’s set of issues deserve serious attention. As a group, they will benefit most from policies that tear down barriers to affordable health care.
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Tuesday, June 3, 2008For Wall Street Journal, Lightning Strikes TwiceBy Patrick EckelkampCategories: HSAs, etc., Insurance Regulation, MissouriThere are two editorials in last week's Wall Street Journal that discuss and highlight the proper solutions (read: abolish needless government regulations) to the worsening health care situation in the United States. Both editorials are spot-on in their assessments, and should be read by all those who are looking for a solution. The first editorial focuses on the Florida legislature's unanimous passage of a health care reform bill during this last session. The bill was aimed at kicking the government out of our health care decisions, rather than trying to further regulate and manipulate the free market. Gov. Charlie Crist signed the bill in an effort to combat the notion that health care coverage has to be an all-or-nothing decision. Before this bill was signed, health care coverage plans were littered with state mandates and regulations that often drove up the price of the plan beyond the reach of average individuals. As the author points out, these erstwhile mandates included such "necessary" procedures as the age-old practice of acupuncture, not to mention chiropractic visits (I searched a long time for a clip from the Simpsons episode where Homer sort of becomes a chiropractor, but had no luck). All kidding aside, this is quite an accomplishment for those free-market advocates who think the government would only worsen the problem (jeez, who could think something like that!). The second editorial also focuses on a bill that is working its way through the legislature in New Jersey (yeah, I know, New Jersey is ahead of Missouri — uh oh) that will allow residents to cross states borders to buy an affordable health care policy. By opening out-of-state markets, it allows competition to flood the New Jersey market, which can only benefit that state's consumers. Rather than being held hostage by existing health care companies in the state that are able to coordinate and charge higher premiums, consumers will be able to select from a number of approved health care providers (don't even get me started on what approved means, but that is a topic for a different day) throughout the United States. Because New Jersey's average health care costs are almost double the national average, this bill should be welcomed with open arms. Nevertheless, opponents of the bill say policy buyers will only be able to get "bare bones" coverage. That is simply not true. Even if did happen to be true, it is not like policy holders would switch to a lesser plan than they originally had; this would simply allow those who had nothing before to have something. Let's all hope this bill succeeds, and Missouri legislators take notice.
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Friday, May 23, 2008The Fatal Flaw and New Options for State EmployeesBy John LaPlanteCategories: HSAs, etc., South CarolinaMark Sanford, the governor of South Carolina, might serve as a model for other politicians when it comes to health care. Here's what he told a writer from the Wall Street Journal [ellipses in the original] "Our contention has been that the fatal flaw with our health-care system is that someone else pays. And as long as someone else pays, there is unlimited demand for a product . . . someone is going to cap it. It's just a question of who it is going to be? A government bureaucrat? An HMO bureaucrat? Or is it going to be you? But it is going to be somebody, because we can't keep growing health care at double digits and expect to be competitive. . . . "So we were the second state in the nation to offer health savings accounts to all state workers and all state retirees. We got that one through. We are the first state in the nation to be offering the health care choice system [for Medicaid]. . . that offers everything from traditional fee-for-service to HMOs to PPOs, but the big one that I like is the individual health savings accounts." There's a long road until health care policy is made sane, but offering a new set of options for state workers is a place to start.
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Thursday, May 22, 2008Should we end ERISA?What is seen and what is unseen By Joseph D. ColettiCategories: HSAs, etc., Individual Mandates, Insurance Regulation, North CarolinaSomebody suggested the other day getting rid of the health insurance component of ERISA. Duke economist Chris Conover estimated that the ERISA mandate actually produced $46 billion in net benefits. In North Carolina, ERISA preemption of state law galvanized small businesses to oppose a tax on health insurance policies to pay for a health insurance high-risk pool with optional HSA coverage in 2007. But many of us are predisposed to remove mandates wherever they exist, and in this case the (seen) benefit mainly exists because it prevents other mandates from increasing the cost for a large segment of those with insurance. Is ERISA that rare jewel, a good mandate, or does it simply hide the cost of other mandates (like an employer mandate to provide insurance) and so make them easier for large firms and legislators to accept? However you answer that question, is ERISA worth keeping?
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Tuesday, May 20, 2008What a Successful Patient-Powered System Looks LikeBy John LaPlanteCategories: HSAs, etc.Jim Frogue of the Center for Health Transformation gives the idea of patient-powered health care some a real-life example when he alerted me to a presentation by Wayne Sensor, CEO of Alegant Health. Alegant, Frogue is a non-profit faith-based hospital system based in Omaha. Sensor, Frogue said, "testified to the House Ways and Means committee about his innovative leadership around consumer-driven health plans and transparency of cost and quality outcomes." Sensor offered the following points about the options that his 9,000 employees have, and what they do with those options. Quoting Frogue's comments: · 92 percent of employees chose an HRA or HSA plan over the standard PPO
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Thursday, May 15, 2008HSAs for State EmployeesBy John LaPlanteCategories: HSAs, etc., MichiganThe Mackinac Center for Public Policy suggests a way to save taxpayer money, and advance a patient-centered approach to health care at the same time: shift state employees to high-deductible health insurance plans coupled with health savings accounts (HSAs.) The state would come out ahead even if it maxed out the annual contribution to the HSA each year and also paid all of the premium for the insurance policy. Michael D. LaFaive and James Porterfield estimate that the state could save $16.2 million in the first year alone.
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Tuesday, May 13, 2008UnitedHealth Group: HSA Enrollment Exceeds HRA EnrollmentBy Grace-Marie TurnerCategories: HSAs, etc.UnitedHealth Group recently said that for the first time enrollment by its members in health savings accounts (HSAs) have surpassed enrollment in more traditional health reimbursement arrangements (HRAs), reports the Minneapolis/St. Paul Business Journal. UnitedHealth said it had 2.7 million individuals enrolled in its consumer-driven health plans; 1.38 million were enrolled in HSA-qualifying insurance as of March 31, compared to 1.34 million members who were enrolled in HRAs. The figures include plans which are employer-sponsored as well as plans purchased by individuals and families. More than 22,000 employers now offer such plans through UnitedHealthcare, and it recorded an increase of 325,000 participants from December 2007 to March 2008, reports the Business Journal.
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