SOTU: Health Savings Accounts Fail To Provide Savings Or Address Costs
SOTU: Health Savings Accounts Fail To Provide Savings Or Address Costs
Bush said: “We will strengthen Health Savings Accounts – by making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get.”
FACT — HSA USERS MORE LIKELY TO HAVE DIFFICULTY PAYING MEDICAL BILLS: Individuals with high-deductible insurance plans (HDHPs), which are mandatory with health savings accounts, are “more likely than those with traditional medical coverage to have difficulty paying their medical bills. Forty-nine percent of consumers with deductibles above $500 per year wound up with outstanding medical debt, vs. 32% with regular coverage.” [WebMD Medical News, 1/27/05]
FACT — HSA COST SAVINGS ARE ILLUSORY: HSAs are supposed to save costs by discouraging people from obtaining unnecessary health care. But about 70 percent of costs in the U.S. health system are for the top 10 percent most expensive people. These people’s costs are well above the deductible, and they usually require hospitalization or are chronically ill. A high deductible won’t change their behavior. [New Yorker, 8/29/05]
FACT — HSA USERS PAY MORE OUT-OF-POCKET COSTS: According to one study, “more than two-fifths (42 percent) of individuals with HDHPs [high-deductible insurance plans] and 3 in 10 (31 percent) in CDHPs [”consumer-driven” health plans] spent 5 percent or more of their income on out-of-pocket costs plus premiums in the past year, compared with about 1 in 10 (12 percent) in comprehensive health plans.” [Commonwealth Fund/Employee Benefit Research Institute, December 2005]
FACT — HSA USERS MORE LIKELY TO AVOID, SKIP, OR DELAY HEALTH CARE BECAUSE OF COSTS: Individuals in health savings accounts were “significantly more likely to avoid, skip, or delay health care because of costs than were those with comprehensive insurance, with problems particularly pronounced among those with health problems or incomes under $50,000.” Over 30 percent of individuals in these programs “reported delaying or avoiding care, compared with 17 percent of those in comprehensive health plans.†[Commonwealth Fund/Employee Benefit Research Institute, December 2005]
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18 Responses to “SOTU: Health Savings Accounts Fail To Provide Savings Or Address Costs”
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what a fu….. TRAIN WRECK!!
January 31st, 2006 at 10:05 pmFACT - WHOEVER WROTE THIS ARTICLE KNOWS NOTHING ABOUT HEALTH INSURANCE OR THE DIFFERENCE BETWEEN HSA AND NON HSA HEALTH PLANS.
FACT - I WOULD INSERT THE WORD FICTION, EVERYTIME THE WORD FACT IS USED. THAT WAY, YOU WILL GET THE TRUTH.
AMAZING USE OF THE WORD FACT………….
January 31st, 2006 at 10:34 pmIf you live from one paycheck to the next, then it is NOT possible to put money away into a Health Savings Account!
If you are wealthy, then you do NOT need such an account!
This plan is just a ruse by Bush to distract Americans from demanding universal health care like Canada has now!
January 31st, 2006 at 11:30 pmOnly 1 in 10 people who qualify to set money aside in an HSA actually do so.
http://www.latimes.com/ news/ nationworld/ nation/ la-na-health27jan27,0,3096646.story?coll=la-headlines-nation
Currently 3 million Americans are covered under High Deductible Health Plans. This is expected to grow rapidly as businesses can save 30-50% on their health insurance benefit costs. Yet, only 300,000 are setting money aside tax free in an HSA to pay their first dollar medical expenses. If it such a great game, why are so few playing?
This is not the answer to getting lots more people covered. It is the answer to reducing employer benefit costs. Between pensions and health care, the average American worker is taking it on the chin!
February 1st, 2006 at 9:15 amFact -James S doesn’t like to hear the truth. Fact—-
February 1st, 2006 at 10:24 ammost likely a troll. Fact — this plan is designed to benefit corporations not the individual. Fact —-W works for us, not the other way around.
[…] Where Mr. Bush continues to promote an untenable approach to solving the healthcare crisis in America, Mr. Kaine touted Virginia’s Better Way: covering 98% of children with health insurance. […]
February 1st, 2006 at 1:32 pmUnless you are in the top 10% on icomes no one can afford to start a health savings plan. If the only health insurance one can afford qualifies for these accounts then they most surely cannot afford to put anything into them. For the vast and increasing number of those who can never be able to afford health insurance under any circumstance nothing has changed. Those who can afford it don’t need it and those who need it can’t afford it.
Ask yourself this question: If you make under $60K/year can you afford to remove funds essental to living to even start such a fund? and: If you do start one is it remotely possible that it can ver accumulate enough to be of any significant help?
Like virtually all of Bush’s proposals the icing of his words appear sweet but the substnce of the Cake below is rotten and poisonous to the core.
February 1st, 2006 at 1:57 pmNone of the comments bashing Health Savings Accounts are based on knowledge. As the new owner of an HSA with a high deductible plan, I have been more pleased with this plan than with any other plan I have ever had.
Also, most employers who start an HSA are also helping to fund it. My employer is contributing $2000 of the $4000 deductible. I get to use the money for healthcare related expenses that I need, not just what is covered by a traditional insurance plan. My wife had to have a crown a few months ago and $400 was not covered by our dental insurance. Instead of having to come up with the money out of pocket, we used our HSA.
I wish your comments would relate to fact on not just your hatred for Bush and wanting socialized medicine at all cost.
February 1st, 2006 at 3:15 pmIf you don’t like HSA’s its because you don’t understand simple economics and you haven’t read up on the structure of HSA’s. Pick up an Economics book then read further.
Socialized medicine delivers seriously sub-par care to all. Socialism, like communism, eliminates incentives for cost-cutting, efficiency, productivity improvement, etc. HSAs introduce healthy competition to the health care providers, and gives more of an incentive to the individual to take better care of him/herself. ‘Personal Responsibility’ comes to mind. Capitalism and competition works and will bring down health care costs for all.
Lets say your employer pays you 1200/month and pays an additional 600/month for your health insurance. With HSAs your employer can pay you more, say 400/month extra, while saving the company 200/month. You can then put that TAX FREE 400 each month into a HSA. As you take care of yourself (and scrutinize charges your hospital or doctor levies against you) you find yourself saving money for tougher times, leading a healthier life and pushing health care providers to improve and operate more efficiently.
Don’t think for a minute that your company-provided health insurance is free. You’re paying for it in the form of forgone income. If you’re getting paid 2k a month and your company pays another 500 for your insurance, they would have paid you, say, 2400/month if they didn’t provide that benefit for you. There are no free lunches.
February 1st, 2006 at 4:18 pmeconometrica: Do you really think employers will pay their people more money if health care costs go down? Heck no, the savings will go to the shareholders (and the top executives will get bonuses). You have a nice theory, but in practice, paychecks almost never increase when benefits are cut.
If socialized medicine is so bad and it eliminates incentives for cost-cutting and efficiency, why is American health care more expensive and less effective than in other industrialized nations that have socialized medicine? Your sacred capitalism and competition just aren’t working in this industry, and it won’t change because the pharmaceuticals, HMOs, doctor organizations, etc. have more “buying power” with politicians than ordinary voters do (Exhibit A: the Medicare prescription drug plan).
HSAs encourage competition for services like check-ups that aren’t really expensive anyway. People aren’t going to use HSAs to pay for heart bypass surgery, organ transplants, etc. — most of that money will come from insurance, which doesn’t give care providers any more incentive to lower costs for big-ticket procedures than they have today. HSAs are Bush’s way of offering us a bone while saving the steak for his corporate benefactors.
HSAs do nothing to solve the problem of people who can’t afford health care or health insurance in the first place. Even if the insurance became more affordable, those people wouldn’t be able to pay the high deductible. HSAs also do nothing to improve the quality of American health care. HSAs are not bad for those who can afford to fund them, but they are not the solution to our health care woes.
I will ignore your patronizing remarks about opening an Economics book if you will take the time to close yours and look at the real world.
February 1st, 2006 at 6:55 pmChicago Dave,
The business world, like the human body, is a very complicated thing. There are countless factors that affect it. What are the reasons benefits are being cut? The answer is different for each case. If the company is going through hard times then cutting benefits is one, of maybe several, ways of reducing costs…to thus stay in business. Remember, the migration to HSAs isnt a ‘reduction of benefits’.
My ’sacred capitalism and competition’ ARE working…when they’re allowed to exist. Our current system has VERY little of those two ingredients. Talk to your British or Canadian friends who have visited the US for any length of time and been able to experience our level of health care. Why do Canadians have to wait much longer for surgeries than their American counterparts? Why do they basically get turned down for many procedures after they reach a certain age? Yes, meds are cheaper but thats because the government is paying the difference…and where did they get that money from??? Bob and Doug McKinzie. (remember, There are no free lunches)
Please tell me you’re kidding when you say capitalism and competition dont work.
If you know the structure of HSA’s you know that after a certain dollar amount an insurance policy does kick in. Lets say i get in a car wreck and yes, i may shell out a few hundred or thousand dollars for dr. visits and physical therapy. (remember that i’ve saved up several thousand, or more, in my HSA). Well, then i get a blood clot and need some big time medicine. Thats when my ‘major’ policy kicks in. Remember, I (or my company in many instances) has been paying a much reduced premium for this. So, i’m not in such bad shape after all.
And a check up isnt ‘really expensive anyway’? Where are you going? My doctor charges my insurance company over $100 for a nurse to take my BP and weight and for him to listen 3 times for me to cough. Dont get me wrong, the hernia check is worth the price alone, but do you think that’s inexpensive? Recently i was chatting with an MD who runs a practice close by. I mentioned HSA’s and said ‘what if i come in, tell you i’m paying you cash out of my HSA, are you going to charge me $105?’. The answer: “No. We already have people like that. They pay about half.”
He recognizes that that (a) his costs go down due to eliminating dealings with the insurance company, and (b) his patient can go elsewhere to the guy who’ll provide the same service at a lesser price. Our old friend competition comes to the rescue. Hey, and i didnt even read that out of a book.
People who cant afford HSA’s or insurance, as you state, are a separate issue. You’re now talking about poverty, its causes and solutions. Thats a different comment section.
One more thought. You mention corporations and elude to their greed. Corporations do cater to the shareholder, true, they have to, but they do offer jobs. If you dont want to work for a corp, then you can choose to work elsewhere. I did. Also, corporations are only a fraction of employers. I work for a company of 150ish, and have had chats with our HR/Finance vice president. When asked about HSAs and this whole scenario, he definately believed that the company could pass much of the savings on. I’ve witnessed their actions for 5 years and fully believe him.
Of course HSA’s arent THE solution, but a very large step in the right direction. My apologies for the patronizing remarks, they really weren’t intended to come across so harshly.
February 2nd, 2006 at 7:54 amChicago Dave,
HSA’s encourage competition for may different services than just check-ups. The cost of MRI’s and CAT scans vary widely. I recently spoke to someone who did a study that MRI’s varied from as low as $350 to over $2,000 depending on the facility that was in the same city. The technology is coming very soon to be able to compare hospitals and providers for quality as well as price.
February 3rd, 2006 at 12:53 pmHSA’s are going to do more for curbing medical inflation than any kind of government plan could ever do. Bush keeps promoting the idea of “price transparency”. This is a direct effect from the growth in HSA’s. The state of Minnesota and 14 others have enacted legislation to encourage “price transparency. I am currently writing legislators in my state to enact such legislation.
What Minnesota has done…is to require medical facilities (including doctor’s offices) to make public a single price for medical procedures that can be performed in that facility. This is in direct response to the HSA movement. People are asking for this information as they try to plan for these expenses (as paid from their HSA). The medical establishment, particularly hospitals, does not want this information to become public. They are free to charge whatever price they want. If they accept insurance, they will accept the negotiated rate from that plan. They charge a lower fee for procedures that are covered by insurance and if you don’t have insurance…they can charge whatever they want.
With published rates…competition will begin to take place. People will be able to shop for the most competitive rate. Competition will drive the cost of procedures down.
Under our current system, hospitals compete with each other to offer the highest technologies. Technologies cost money and doctors in a hospital system are encouraged to use these high priced technologies. Insurance pays for it so usage is high. This causes medical inflation and it encourages hospitals to pursue even more technologies. Every hospital doesn’t need to have every technology.
Competition drives costs down. Hospitals will need to evaluate their technologies and decide which ones to keep. Specialization of hospitals will take place. The role of the hospital is already diminishing. Outpatient surgery centers provide many of the same procedures as hospitals, but at a much lower cost. They do not have all of the overhead that hospitals do.
MRI centers are sprouting up, as well as urgent care centers. Even Wal-mart has announced plans to offer low cost clinics in their stores.
Another big benefit of published prices will be the diminishing role of PPO networks. When you have insurance you are provided a list of doctors and hospitals that are IN Network. These doctors/hospitals accept the insurance company’s negotiated rates (see above). If you go to a doctor or hospital that is OUT of Network, you pay a much higher price for these procedures and you can be balanced billed for everything that insurance doesn’t cover. If hospitals are required to establish ONE rate for a procedure, we no longer will have to worry if it is IN or OUT of network.
When it’s your money that you are spending from a HSA, you are more likely to ask for generic medicines versus accepting a higher priced brand name. You question the cost of procedures and you are more likely to shop around. Plus, you are paying for procedures with CASH, which means there will be less billing. This alone will help lower medical inflation. Competition only hurts those that are profiting from our current system.
February 3rd, 2006 at 8:18 pmMy family is one of those families who is not in the top 10%. We just cleared $50,000 last year and we are a family of 5. My employer started offering an HSA this year (finally). I saved about $200 a month in premiums which I am putting in my HSA along with the money I was saving previously to cover my copays and the like. The biggest hinderance to me saving was not my “lack” of income, but the amount of debt that we had run up. We are half way through a plan to totally pay off all of our debts and live debt free. The biggest problem for the majority of Americans is that we tie our own hands by borrowing money for everything when we can not afford it. We don’t need a $20,000 car when a $5,000 one will do us just fine. We get America living with in its means (government as well) then we can solve a lot of problems, but until that happens and people don’t take personal responsibitily for ourselves then we will live in the entitlement age were we everything from healthcare to retirement paid for by someone else.
February 5th, 2006 at 9:38 amFact: nothing that was proposed has anything to do with cutting medical costs. Not the HSA’s or prohibiting bad doctors for being sued.
As long as we allow the insurance companies and their accountants dtermine who and waht gets covered only the rich will get heathcare and education.
We need healthcare in this country not another republican insurance scam.
Bush keeps mentioning how the tax cuts allow us to keep more money and to create small business. I have a proposal, why not allow every tax payer to open a “family business”. Just like in business, there is revenue ( what you take in.. paychecks) and there are expenses ( what it costs to generate revenue) the difference between the two is income and that is what we are taxed on. Individuals in this country are typically taxed on their revenue.
True middle class tax relief would include, deductions for all interest expenses ( the card companies charge 18%+ ), it should include the costs of getting to work ( milage, gas expense, car up keep, insurace etc). Medical insurance and school costs,
The middle class pays taxes on top of taxes. ( sales tax should be deductible ) As should all housing costs, be it renter or homeowner.
February 5th, 2006 at 5:23 pmForgive me if I think that “shopping” around for a “cheap” doctor to take care of my kids is a bad idea. And what’s this talk about choice of treatment? I have a standard insurance plan now through my employer and NO ONE gives me or my family treatment without our approval.
I agree that cost inflation begins with the health care provider. But this is also an argument AGAINST privatization. Providers stock up on all the latest hi-tech equipment to gain customers and be competitive, which is what is driving up the costs.
I agree that single-payer has its draw backs, but none of the existing countries (every other first world nation except ours) who have single-payer implements it in the same way. While we do have great health care here in the US, its quickly becoming unaffordable, beating out inflation by leaps and bounds each year. When Wal Mart says that health insurance is too expensive for them, its too expensive for the rest of us.
HSAs are about the worst idea I’ve ever heard of. Teh point of insurance is to share risk. HSAs appeal to people who are relatively healthy and can afford a $2100 deductible, the premium, and the uncovered expenses that their insurer won’t cover. Those who need more care get stuck with standard plans (because the hi deduct plans have a cap on allowable out of pocket expenses), which will be more cnocentrated with other hi risk people, justifying even higher premiums. As the NJ Chamber of Commerce posted on their website earlier this year, HSAs are a “victory for the insurance industry”. HSAs shift the costs to the consumer, period.
Fortunately for me, I have an employer who understands this, explained it to the staff, and is going to keep our benefits just as they are.
That posting up above about how employers will pay you more if they don’t give you health benefits is laughable. Theory sounds great, in the real world that doesn’t work quite like that. And I’m speaking from experience on that one.
February 28th, 2006 at 5:22 pmOne of the really terrible things about Vietnam was that those guys (and gals) who served came back, not only with the memories of what they had been through, but that they were stigmatized by having done it by many in the anti-war movement. That was horrifically wrong of the anti-war movement. I had guys in my neighborhood come back, & they were different. Some were OK with what they had gone through, some you could tell weren’t. Some of they guys I knew, came home in pine boxes.
November 20th, 2006 at 6:29 amOne of the basic tenets of Consumer-Directed Health Care is reducing medical costs by putting the choice in the consumer’s hands. I have seen the attitude of employees who have all or most of their insurance paid for by the comoany and have copays of $10/15/20 for prescriptions. Many of those people don’t think beyond their own wallet. They don’t care that the same policy they have had for years may have grown 25-40% in cost each year. They think it is horrible to have their copays for prescriptions raised, but they don’t even consider that one reason their employer’s insurance costs are skyrocketing is because prescription costs inflate faster than the other medical costs.
So if someone has to pay a much higher out of pocket cost for the latest and greatest brand name versus a equally-helpful generic, they may go for the generic. If the cost to them personally is only $10 difference, what do they care that the actual cost to the employer or insurance company is hundreds of dollars different?
CDHC drives the individual to make choices. If it’s not as easy to run to the emergency room for a head cold or a bad headache, maybe they will save their insurance money by getting some tylenol or hot chicken soup. Maybe they will shop around their local pharmacies to find out that the retail cost of the medicines they buy are different from place to place, and the pharmacy that has one drug teh cheapest may not have the other drug they want the cheapest.
Take personal responsibility, educate yourself, be a consumer and look for the best prices. A less expensive doctor is not necessarily a less qualified doctor, and a less expensive treatment is not necessarily a less-effective one. Balance the wallet with what else you learn and what else concerns you about a doctor or treatment.
I just started on an HSA this year. I look forward to something that both has tax savings and allows me to carry funds over from year to year. I have been jobless at times and coincidentally had medical issues during those periods, and I wish I had this kind of thing back then.
But it is true that this is not a plan for everyone. I think it’s great because the money that would have been put toward a policy I would not have “gotten my money’s worth” from is now in an account for me, in case some day I do need more money. I can see how it might be harder for a family of 5 or more. But having children is a choice, and as they say, the only sure things in life are death and taxes.
January 26th, 2007 at 12:57 pm