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Can HSAs reform health care?

By Jay MacDonald ·
Friday, September 21, 2012
Posted: 10 am ET

While voters assess the stark contrast between President Barack Obama and Republican challenger Mitt Romney over health care reform, a sea change is already underway in the workplace as employers scramble for affordable ways to offer health insurance to their workers.

A new survey by the business consulting firm Aon Hewitt finds that "consumer-driven health plans," or CDHPs, have overtaken health maintenance organizations, or HMOs, as the second most popular health plan offered by U.S. employers. While preferred provider organizations, or PPOs, still dominate with 79 percent of employers offering them last year, 58 percent of the 2,000 U.S. employers surveyed now offer CDHPs, while just 38 percent offer HMOs.

Haven't heard of consumer-driven health plans? You may know them as high-deductible health savings accounts (HSAs) or health reimbursement arrangements (HRAs).

Their warmer, egalitarian-sounding name (with the word "consumer" in there) is preferred on the campaign trail this election cycle. The health care reform plank of the Republican platform recommends them, and GOP presidential candidate Mitt Romney singled them out for expansion when he signed the Massachusetts health care reform legislation in 2006.

Caught between the recession and the rising cost of health insurance, a growing number of employers now offer HSAs and HRAs as sort of a gateway plan to whatever comes next under health care reform.

Employees, however, have been less enthusiastic about CDHPs. The survey found that 7 in 10 workers prefer PPOs rather than risk the potentially heavy out-of-pockets of a high-deductible plan. So to sweeten the deal, roughly a third of employers surveyed either subsidize premiums, cover preventive medications before the deductible, or contribute directly to employee HSAs and HRAs.

Conservatives maintain that rampant overuse of health care services has led to the skyrocketing cost of health care and that the only way to reverse the trend is for consumers to take more responsibility for their health. Certainly the obesity epidemic would seem to support this position.

But is (cost) shifting the nation to high-deductible accounts the answer?

A recent study published in the journal Medical Care found that employees who contributed to their own HSA were more likely to moderate their use of health care services than those with employer-paid HSAs. The researchers noted that having "skin in the game" significantly altered whether an employee seeks care.

But that study also expressed concern that if employees skip routine exams and avoid early detection screenings for cost reasons, consumer-driven health plans could have a negative impact on public health.

What's your diagnosis and treatment for America's ailing health care system? Would we all be better off with consumer-driven health plans?

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October 24, 2012 at 6:54 am

This nurse isn't surprised at the heactsniy. It requires consumers to equate selecting and purchasing healthcare providers and services with selecting fresh fruit at the local gorcer's. Well, at the grocer's, the produce manager is readily available to have face to face discussions about the relative merits of the available fruit, what's on order, and what the best estimates are for near future pricing. Ergo, the consumer has the info needed to make a safe and palatable choice.Choosing healthcare providers and servies based on those same criteria will place the burden on consumers to speak to physicians, medical office managers, hospital registration managers and the like in order to obtain the info relative to credentialing, quality and affordability, let alone access. Then the consumer will have to compare the merits of plans which may not be comparable. Out of that miasma, some sort of choices must be made. And the onus is squarely on the shoulders of the patient to navigate this byzantine non-system system quickly, efficiently and with dead aim in order to choose correctly.At the end, even with the optimal choice made, a catastrohpic illness may doom the patient to financial ruin, bankrupcty, chronic unemployement and denial of insurance coverage.It's akin to mandating that citizens serve as their own attorneys. The knowledge and power base to advocate effectively for oneself and one's family are simply not in place. We're creating a population of unserved, underserved and vulnerable people who are punished for their vulnerability.

September 24, 2012 at 2:54 pm

Just like pensions are giving way to 401k's & IRA's, health insurance will go the way of HSA's. My employer has a great offering. There's the traditional plan (with 80/20, copays, etc) and the HDHP. Both plans cost the same for me to cover my family. But with the HDHP, my employer kicks in quite a bit to my HSA. So really, my health care is covered 100% up to the point of my employers contribution, then I pay 100% until the (high) deductible is met, then 100% is covered through insurance.