HSAs Hit The News With Varied Opinions
Health Savings Accounts (HSAs) are in the news and the biggest buzzword in the insurance industry.
Opinions on the value and success of the HSA vary wildly. Some advocates believe that an HSA is the
wave of the future and will provide Americans with a chance to become value-conscious shoppers in the
health-care marketplace. Critics of the plan question whether HSAs might lead to sicker patients and
higher health costs.
HSAs on the move
While one survey states that employees are not aware of HSAs, another states they are on the upward
swing. It all depends on how you view the big picture. On the consumer end, a study by America's Health
Insurance Plans (AHIP) labeled HSAs to be "off to a fast start." Yet HSAs seem to remain unpopular among
many employers.
The analysis found 438,000 people chose high deductible, lower-premium coverage through September 2004.
While forecasters predict that millions will eventually change health plans and adopt the HSA design
concept, the AHIP survey found 91,500 employees enrolled in employer-sponsored high-deductible health
plans with HSAs. About 81 health insurers now offer high-deductible health plans with HSAs.
Some proponents advocate that the HSA market only needs more time. Since the law was passed 13 months
ago and final regulations governing them are only about 6 months old, HSAs are still in the infancy stage
and need more time to grow further.
Employees unaware of HSAs
Despite many news reports about consumer-directed health care, many workers are still unaware of HSAs or
how they work, according to a survey by Watson Wyatt Worldwide. After an explanation was provided to those
surveyed, many respondents liked a few of the features such as control of funds and lower premiums. On the
other hand, they disliked the risk of higher prescription drug payments and deductibles.
The Watson Wyatt survey of nearly 1,000 individuals found 29 percent had heard of HSAs, 61 percent had not
and 10 percent were unsure. Of those aware of HSAs, only 33 percent understood how they worked. Thirty-four
percent said they had some understanding of the plans, while the remainder had no understanding or were not sure.
The survey found that individuals with higher incomes were more likely to know about HSAs. Those who earn less
than $35,000, 14 percent had heard of HSAs, while 41 percent of those who earned more than $75,000 were aware of them.
In addition, the survey found participants who were in very good or excellent health, 35 percent of the respondents,
were more likely to have heard of HSAs, compared to those in poor or fair health at 23 percent. Thirty eight percent
of the healthier participants also reported having a better understanding of HSAs than their less healthy counterparts.
Like the AHIP survey, after HSAs were explained to the individuals there were positive responses to features such as
having control of HSAs funds. Sixty percent of those surveyed said that control was extremely important, even after
leaving their current employer. The lower premiums were also popular for 55 percent of those questioned.
However, the participants were concerned about the out-of-pocket cost increases. Two out of three respondents said
that paying the full price of prescription drugs before meeting the high deductible was extremely undesirable, and
57 percent expressed a similar opinion about paying higher deductibles in general.
Congress created HSAs to encourage consumers to be more engaged in making health care decisions and to increase employees'
responsibility for managing their own health care spending. Employers ready to implement HSAs will need to educate employees
thoroughly with the rewards of this new approach.
A goal for HSAs is to reduce the unnecessary use of health care services by empowering consumers to make cost-conscious
decisions. However, consumers are not viewing HSAs as a financial incentive. Participants were questioned on whether
financial incentives would have a significant influence on their decisions to use health care services. Fifty-one percent
stated it would influence them. The question was rephrased to ask if the consumption of health care services would remain
unchanged if enrolled in an HSA, and 59 percent agreed.
The biggest hurdle for HSAs and other consumer-directed health plans, which may be the insurance industry darlings of 2005,
is they also could be a devil in disguise if consumers do not obtain better access to information on quality of care, healthcare
providers and best practices in medicine. This leads back to the need for employers to provide meaningful financial incentives
and education to encourage HSA participants to change their purchasing behavior.
Infinisource Inc. has partnered with the Alliance Benefit Group to offer an innovative HSA solution that boasts market driven interest earnings on accounts and a high level of plan design flexibility for employers. Visit our website www.benefitsolved.com for information on how you can assist clients to set up an HSA or contact our office at 800-779-6384.
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