HSAs also work for lower-income individuals

Kaiser Health News, in conjunction with the PBS News Hour, has an article on “Quick Facts About High-Deductible Health Plans.”  It is refreshing to see coverage of this increasingly popular form of health coverage.  America’s Health Insurance Plans reports that enrollment reached more than 11.4 million in January 2011, up from 10 million in January 2010.

While most of the article provides accurate information about the value of these plans, Paul Fronstin of the Employee Benefit Research Institute is quoted as saying, “The plans are problematic for low-income individuals, especially those with chronic conditions, such as diabetes.”  He says that the  says “HSAs/high-deductible plans have a ‘straitjacket design’ in which consumers are responsible for paying the full-dollar amount of their medical expenses until they meet their deductible. People with health problems can have the toughest time meeting the deductible, because their illnesses can keep them from working.”

Most employers who set up HSAs/high-deductible health plans provide a contribution toward the Health Savings Accounts to help employees with the costs of care below the deductible.  Sometimes employees “earn” these deposits by getting health assessments, joining gyms, or taking classes to help them stop smoking and lose weight.  This engages employees as partners in managing their health care and their health spending.  Because unused deposits roll over from year to year, employees can accumulate savings in their accounts to help defray the deductible and even provide funds to continue their insurance contract if they leave or change jobs.

Help with deductibles can also be part of public-sector programs. For example, the HSA-like model that Gov. Mitch Daniels designed in Indiana requires the state and the individual to contribute toward the $1,100 spending account, and the lower the person’s income, the greater the proportion the state contributes.

I think it is inaccurate to say that these plans put people in a “straightjacket” that particularly disadvantages low-income people.  Employers and others offering these plans work hard to provide them with resources to help with the deductible as well as providing access to preventive care services outside the deductible as part of the insurance contract.

Further, people with chronic conditions often find that HSAs are the best insurance arrangement for them.  Their out-of-pocket costs are capped, the insurance is general more comprehensive and provides better access to physicians, and they can plan their health spending because they know just what their out-of-pocket costs will be.