Insurance Commissioner John Garamendi grabbed the spotlight this week by blasting Health Savings Accounts (HSAs) in his latest report ?Priced Out. Health Care in California? while stressing his demand for a universal, government-run health care system.
But his accusations against consumer-directed health care (CDHC) products are not backed by actual experience of people in the plans. Some examples from his report:
o Consumer directed plans “put the entire health system at risk,” Garamendi says, because they attract the young and healthy into leaner plans, leaving the older and sicker in traditional plans.
In fact, Assurant Health, which sells HSAs and other health insurance to individuals and small groups, found that 29% of its HSA policyholders had incomes of less than $50,000. In addition, 57% were over age 40, and 73% were families with children, closely reflecting purchasers of traditional health plans.
Importantly, America’s Health Insurance Plans, the trade association of health insurers and health plans, found that 37% of those purchasing HSAs were previously uninsured.
Further, the on-line health insurance broker, eHealthInsurance, found that most people with HSAs opt for more comprehensive plans that cover 100% of hospitalization, doctors’ visits, lab tests, emergency room visits, and prescription drugs after the deductible. These could hardly be called lean plans.
o “[F]inancial disincentives are likely to cause many to forgo necessary treatment at early stages.”
In fact, the consulting firm McKinsey & Co. found in an extensive survey that those in consumer-directed plans are more attentive to wellness and prevention and were 30% more likely to get an annual physical. Why? “If I catch an issue early, I will save money in the long run,” was the reply. And HSAs have a built-in incentive to encourage preventive care since federal statue provides that it can be part of the insurance contract.
o “Instead of bringing health care services to more people, we are pricing more people out.”
In fact, the latest eHealthInsurance data that shows that nearly two-thirds of HSA purchasers paid $100 a month or less for their plans. And seven of the least expensive cities for health insurance for 30-year-olds (who we need to attract to the insurance pool) were in California.
James Knight, M.D., of San Diego, who is actively involved in promoting consumer-directed health care marketplace, says that Garamendi’s attacks on HSAs and other consumer-directed health care products are based upon the threat they pose to his vision of a single-payer health care system.
“Once a significant number of Americans with health savings accounts are not only saving money on their health insurance, but fully vested in and in control of their own health care future, it will be an almost impossible sell politically to push these voters into government run health care,? Dr. Knight says.
“So, Mr. Garamendi and others who share his vision, quite rightly see the fast approaching tipping point for HSAs as a near and present danger to their plans for the future of healthcare in California and the United States.”
Health Savings Accounts were created by Congress in 2003 and allow individuals to put money into tax-free savings accounts if they buy higher-deductible ? and often less expensive ? health insurance plans. The money in the HSA account is theirs and can roll over from year to save for future health care needs.
This is one tool in the growing field of consumer-directed health care which gives more power and responsibility to individuals to make choices involving their health insurance arrangements and routine health care while giving them financial protection against major bills.
Garamendi may find that these plans offer solutions to the problems he describes in his report, offering more affordable insurance to millions of people and giving them market-power to solve problems in the health sector that have evaded political leaders for decades.
Grace-Marie Turner is president of the Galen Institute, www.galen.org, a health policy research organization based in Alexandria, VA. She is reachable at firstname.lastname@example.org