Posted on 10/13/2004 5:41:31 AM PDT by ejdrapes
President Bush has made health savings accounts one of his central campaign remedies for the nation's health care problems, but so far employers and workers have been slow to accept the accounts as an alternative to conventional health insurance. People around the nation are now taking part in the annual enrollment season for health care plans, but only a tiny fraction of employers are offering the new plans. The plans let workers create tax-free savings accounts to use for medical costs, combined with lower-cost, high-deductible insurance to cover major medical care. Most employees who already have health benefits said in an insurance industry survey that they would be reluctant to switch even if they were offered one of the new plans. The UnitedHealth Group, for example, the nation's largest health insurer, representing employers who cover more than 18 million workers, expects only about 150,000 of those employees to choose health savings accounts for 2005. Aetna, the second-largest underwriter of employer health care plans, says that only 38 of the hundreds of employers it covers are offering the savings plans for 2005. The plans, which were inserted without full House or Senate debate into last fall's 700-page Medicare legislation, are meant to provide basic, high-deductible insurance while letting people accumulate money tax-free to be spent on medical services or saved to pay for future health care needs. President Bush, who is expected to discuss the plans again tonight in the domestic policy debate with Senator John Kerry, extolled them in last Friday's debate. "You own your own account,'' he said. "You can save tax-free.'' But nonpartisan health policy experts say the plans are apparently too new and untested to appeal to many employers and may simply not be financially feasible for middle-income families. "It's hard to imagine that a guy who makes $50,000 a year is going to have $2,000 for him and his family to stick in this plan," said Ira S. Loss, a health policy expert with Washington Analysis, a business consulting firm. Insurance brokers say the accounts appeal primarily to lawyers, doctors and partners in small businesses who may welcome tax-free savings accounts for themselves. Many small businesses may like the plans as a way to reduce their own outlays for employee health insurance. Some employers are offsetting their lower insurance premiums by contributing some money into workers' savings plans. But a drawback for employers, experts say, is that workers can take their accounts with them when they change jobs - undermining the employee loyalty and retention companies seek to cultivate by providing health coverage in the first place. Among individuals, the accounts may be unattractive to hard-pressed lower-income workers and families with a chronic illness to manage. "People with chronic conditions will not be able to save anything," said Anne K. Gauthier, vice president of Academy Health, a nonprofit research organization that held a conference last fall on consumer-driven health care. In a recent survey of 500 registered voters with insurance conducted for America's Health Insurance Plans, a trade group in Washington, 62 percent of those surveyed said they would not be likely to exchange their current coverage for a health savings account. As for employers, a survey recently conducted jointly by the Kaiser Family Foundation and the Health Research and Educational Trust, 6 percent of all companies said they were very likely to offer some type of high-deductible plan linked to a savings account in the next two years, while 21 percent said they were "somewhat likely" to do so. Big employers, with 5,000 or more workers, were more likely to offer the option: 22 percent said very likely and 28 percent somewhat likely. The Bush administration recently announced that it was adding health savings account plans to the health insurance options available to federal employees. But industry consultants said that most employers were mainly biding their time, waiting for the new health plans to establish a track record. Consultants note that consumer-managed health accounts that are similar in some ways to the new saving plans, and have been available for several years, have not attracted many subscribers. Such plans now cover fewer than 1.5 million people, according to industry estimates, of a total of 160 million active workers and their families who have health insurance; 45 million Americans are uninsured. But unlike those earlier consumer-directed plans, which are called medical savings accounts or health reimbursement arrangements and which are controlled by employers, the new health savings accounts would belong to the account holders to spend at their discretion and to take along if they changed jobs. And unlike the earlier plans, the new savings plans would enable a healthy person with low medical expenses to build a nest egg for health and, after age 65, for any purpose. Banks and investment funds are arranging to manage the accounts for insurance companies. UnitedHealth recently started its own bank to manage health savings accounts, including debit cards that can be used to pay for medical services. Senator Kerry has not indicated his position on health savings plans. But he said in the debate last Friday that he would lower insurance premiums for everybody by creating a federal fund to pay for the high costs of catastrophic cases. The health savings accounts are meant to help reduce wasteful spending by involving consumers more directly in weighing the costs of alternative types of care. Spending out-of-pocket money, for example, they may select cheaper drugs and take a more active role in deciding what tests and treatments they need. The higher deductibles - families may be responsible for up to $5,000 of costs before insurance kicks in - translate to lower monthly premiums, a saving that some, but far from all, employers say they would share with their workers. Although the largest companies typically offer high-deductible plans as one of several health plan alternatives, employees at smaller firms may not feel they can afford the cost of offering a range of choices. The president of AZ Container Freight Station, a port warehouse in Newark, recently switched all 25 employees - including himself - to a health savings account plan. With AZ's old H.M.O. plan, the premiums this year were going to rise by $1,100 a family, said AZ's president, Richard Lombardi. He said the new plans, with a $5,000 deductible for a family, saved the company more than 20 percent. He is using part of the savings to contribute $25 each week, or $1,300, into employees' accounts. Employees must contribute $75 weekly, the same amount as their share of the former H.M.O. premium. For the insured person, "in the worst case scenario, you get nothing" after paying medical bills, said Mr. Lombardi, who is 49 years old. In the best case, he said, the full amount of each account rolls over each year. "I'm on the healthy side,'' Mr. Lombardi said. "For me it was a very good deal." Tom Beauregard, a health policy analyst at the benefits consulting firm Hewitt Associates, said that studies showed that the savings plans attract healthier enrollees, leaving behind sicker people in the old plans. To average out the risks, he said, an employer might ask people who move to health savings plans to pay an additional premium. Uwe E. Reinhardt, a Princeton University economist and health policy expert, said the new plans were "a bum deal" for people with chronic illnesses. But "for chronically healthy people,'' he said, "it's another 401(k) savings account, and Wall Street is licking its chops at the prospect of managing the money." Bush Health Savings Accounts Slow to Gain Acceptance
Of course it's going to take time for people to be comfortable with these types of health plans as it always does when people are asked to try something new. Leave it to the NY Slimes to be pessimistic about it.
i have one and its great...... have used up my allotment i chose for this year next month.... will expand it to the full amount next cycle..... and get lazic
I have had a medical savings account for two years. My husband and I are self employed. Before the MSA we had a personal family plan at Kaiser Permanente. Our premium was over $600. We were able to cut that premium in half and save for future medical needs.
Just to have another option is a good thing. The democrats hate people that have freedom to choose their own plan. They want total control. One plan fits all will always fail. The democrats always try to undermine our health care system. They have to destroy it, so they can "fix it".
I am self-employed and had traditional Blue Cross previously that was about $870 per month, for a family of 5.
This year I got an MSA, with a $4950 deductible. The premium is $375 per month and I put $400 per month into the MSA. So, I saved $100 per month, plus all my eyecare and dental expenses are paid from the MSA. Plus, I'll end up with a couple of thousand of my money left over in the plan this year to forward to next year.
MSA's are great.
I have high deductible health insurance (am self-employed) but don't know how or where to open an HSA. Any tips ? websites ?
Check out Golden Rule (www.goldenrule.com).
This is actually a big plus for small businesses. Who wants employees that are only sticking around for the health insurance ??
I like the idea of having a health savings account that I can take with me. I think all health spending accounts should be this way no matter what kind of insurance you have. They should change the law. For those who are not self-employed, I think the current plan would mainly appeal to younger, healthier people who have lots of time to save up for a health nest egg.
The company I work for (UnitedHealth Group) owns Golden Rule. They are the pioneers of MSA's - long before Bush was ever pushing for them. So for the NY Slimes to call these "Bush Health Savings Accounts" is ridiculous.
The only knock I have heard is paperwork, I don't know how hard it is to get a health savings account or how to open one.
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