Health Savings Accounts: A Survey of the Literature

Consumerism in health care also has led to new incentives for people to be more engaged in managing their health. Many companies are instituting new programs to provide better coordinated care for those with chronic conditions, such as diabetes, heart disease, and asthma. One study found that patients in consumer-directed health plans were 20% more likely to comply with treatment regimens for chronic conditions.

Other findings?

• America?s Health Insurance Plans, which represents major insurers and health plans, surveyed its members in January and found that more than three million people now are enrolled in HSAs, with enrollment tripling in 10 months.

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  • An earlier study by AHIP found that 37 percent of those purchasing individual HSA policies were previously uninsured.

• Deloitte?s Center for Health Solutions found the cost of consumer-driven plans is falling. The cost of consumer-directed health plans increased by only 2.8 percent last year among the 152 major companies it surveyed. This is about a third the rate of increase for traditional plans.

• eHealthInsurance, the largest on-line health insurance broker in the US, conducted a survey of people who had purchased health insurance from among the 6,500 products it offered in the first six months of 2005. It reported that:

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  • Premiums for HSA-eligible insurance dropped 15% between 2004 and the first half of 2005.
  • Nearly two-thirds of HSA purchasers paid $100 a month or less for their plans.
  • HSA plans are comprehensive, with most covering 100% of the costs of hospitalization, lab tests, emergency room visits, prescription drugs, and doctors? visits after the deductible is met.
  • HSAs also continue to be attractive to those with modest incomes: More than 40% of HSA-eligible plan purchasers earned $50,000 or less annually.
  • Age distribution continues to follow a bell curve: 55% of HSA purchasers are under age 40, and 45% are over 40 or older, including nearly 19% who were age 50 or older.

• Assurant Health, one of the leading health insurers to individuals and small groups, analyzed its data in 2005 to see who was purchasing Health Savings Accounts and found:

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  • 73% were families with children
  • 57% were over age 40
  • 29% had family incomes of less than $50,000
  • And most importantly, 40% did not indicate having prior health insurance coverage.

• Blue Cross Blue Shield in a September 2005 survey found that HSA-eligible enrollees are of all ages and of no different health status than people enrolled in traditional coverage. In addition:

   

  • The number of previously uninsured currently enrolled in an HSA-eligible product is double that of enrollees in traditional insurance products (12 percent to 6 percent).
  • HSA-eligible enrollees are more likely to access information and services available to assist them in decision making than individuals with traditional insurance.
  • HSA-eligible enrollees are far more likely to use wellness programs and online tools to track costs than non-CDHP enrollees.

• Aetna studied companies that had purchased Aetna HealthFund Accounts, its branded name for Health Reimbursement Arrangements which are similar to HSAs but only available to those with employment-based insurance. Aetna prepared a study in June, 2005, and found:

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  • Use of preventive services increased by 23%
  • 50% of employees had some funds left at the end of the year to rollover into their account for the next year.
  • Lower use of inpatient, laboratory, and primary-care physician visits drove costs down.
  • CDHC plan participants are more likely to visit ambulatory care facilities and specialists than their colleagues in traditional plans.
  • Health measurements were stable for members with chronic conditions.

The company also found that those with chronic conditions, such as diabetics, continued to seek necessary care, and there were increases in the use of preventive services.

Answering the critics:

But not all of the surveys about HSAs are positive. The Commonwealth Fund and the Employee Benefit Research Institute (EBRI) released the results of a survey in December, 2005, reporting that ?individuals with more comprehensive health insurance were more satisfied with their health plan than individuals in high deductible plans? and that people with consumer-directed plans spent more out of pocket and were more likely to forgo care.

• Survey methods: The survey had a sample size of 1,204 participants, and only one percent were in CDHC plans. While some adjustments were made to the study, it?s difficult to assume that this small number could be representative of the 3 million people in HSAs.

• Satisfaction: The survey was conducted online by Harris Interactive, and people volunteered to participate. The data shows that more than half of the people in the consumer-directed and high-deductible plans did not have a choice of health plans, and therefore were most likely enrolled in a ?full-replacement? plan by their employers.

McKinsey found in an earlier study that people who didn?t have a choice of plans were less satisfied with CDHC than those who voluntarily selected this coverage option on their own, further skewing the sample results.

• Out of pocket spending doesn?t reflect total spending. Those with traditional insurance said they spent less out of pocket than those with CDHC through lower deductibles and office co-payments, but that?s not the full picture. Health insurance is part of an employee?s overall compensation package, and health costs are part of their pay package. Traditional health insurance generally has higher premiums, so those with this coverage are likely paying more through higher premiums and hidden costs, such as lower wage increases. Consumer-directed care plans simply make the spending more visible.

• Use of medical care: One third of people with CDHC were likely to delay or avoid care, compared to 17% with traditional coverage. But Dr. Jack Wennberg and his colleagues at Dartmouth have shown that more health spending is often associated with worse health outcomes for patients ?Clearly, the financial incentives of third-party payment promote the use of additional treatment that, on the margin, can provide very little value.