A legislative staffer I deal with a lot sent me a link to a recent article by Steve Davis, the editor of Inside Consumer Directed Healthcare. In this case, he was writing in a sister publication, Health Plan Week. The story is about state and local government feeling besieged by rising health care costs. My contact was particularly interested in part of the story that cites Meeker County, Minnesota as experiencing rate increases of 16.8 percent this year and 17 percent last year, even though they had switched to an HSA program three years ago. The article concludes that, “the strategy has been ineffective to date at holding down rate hikes.” What’s going on here, my contact wondered.

The article mentions that the County got its coverage from Blue Cross Blue Shield of Minnesota. To understand the significance of that, you have to have read an earlier article in the Minneapolis Star Tribune by Chen May Yee. This story was widely noticed for highlighting the travails of a Josh Gruber who had been disappointed in the savings from his HSA, especially in light of the added work involved with the program.

Less noticed in the story was this quote:

Blue Cross confirms that premiums for its HSA-linked plans -- the fastest-growing segment of the health-insurance market -- are rising in tandem with older plans.

Minnesota's biggest health insurer explained that the new plans are still based on the old concept in insurance: pooling risk. HSA enrollees are pooled with those in traditional plans to fix next year's premiums.

"It's not intuitive," admitted Shawn Patterson, Blue Cross vice president of marketing. "But the more people who sign on, the greater the likely impact on spending.”

So, HSA experience is pooled with the experience of every other type of program, and they all get the same rate increase – even though other studies confirm that the trend for HSAs is about one-third of HMOs and PPOs. When Mr. Patterson says larger enrollment will have a greater impact on spending, he means only that people in HSAs will lower the cost increases for everybody, not that they will benefit from their own prudent use of services.

This is outrageous. There is a rationale for pooling different kinds of benefit designs together if one design is a tiny niche product that doesn’t have enough enrollment for “credible” experience. But that is not the case for HSAs, which the article describes as “the fastest growing segment of the insurance market.”

No. What all this says is that BCBS of Minnesota doesn’t want HSAs to grow because BCBS of Minnesota doesn’t get as much premium revenue from this product. They don’t want HSA holders to benefit from their reduced consumption. They want HMO and PPO enrollees to benefit from what HSA holders are doing.