Many are predicting that health savings accounts will not fare very well in the upcoming administration. However, this recent Congressional Research Service Report indicates why we should keep them alive:
Whether moving to higher insurance cost sharing would reduce health care spending is not at issue; notwithstanding measurement difficulties, economic theory, actuarial experience, and empirical studies all indicate that it does. Probably the most frequently cited research demonstrating this point is the RAND Health Insurance Experiment (HIE), a carefully designed study of nearly 6,000 people between 1974 and 1982. Among other things, the study showed that per capita expenses for patients with a 95% coinsurance requirement for outpatient services were 31% lower than those for patients without cost-sharing. Reductions were also present but somewhat smaller for patients with lower coinsurance requirements, as they were for those with deductible policies. Reductions occurred for a broad range of conditions, especially for ambulatory care but also for hospitalization.More debatable is what effect reductions in spending have on individuals’ health, which could affect measures of the welfare loss. A common reading of the RAND HIE is that the health outcomes of those with high cost sharing were not different from those having conventional coverage, with several exceptions. (The exceptions included high blood pressure and vision imperfections in adults and anemia in children.) Although more health problems might have arisen for the high cost sharing group had the experiment continued longer, there is no way to prove or disprove this now.
Also, this article here notes:
More than 12 million lives are now covered by a health plan that either includes a health reimbursement arrangement (HRA) or is compatible with an HSA. And with more employers than ever offering such plans to employees during this fall’s open-enrollment period, that number is expected to jump on Jan. 1. Plus, banks collectively now hold more than $4 billion in HSA assets.
And finally this from the article:
Jay Savan, an employee benefits consultant in the St. Louis office of Towers Perrin, says the potential for account-based health coverage actually remains as bright as ever. The exclusion of employer contributions for health coverage now is uncapped and is the Treasury Dept.’s third-largest tax expenditure. Savan contends that the tax break will need to be capped at some point, “particularly if Obama intends to have any money left to pay for an expanded [State Children’s Health Insurance Program] or other federal subsidies that ensure children have health coverage, as he’s maintained as part of his platform.”And if a cap is placed on the amount of pretax dollars employees can contribute to their health coverage, employers will be pressed by their employees to offer options that don’t exceed the tax cap. Low-premium, account-based plans might be an attractive option, Savan says.
Ramthun says he’s encouraged that HSA-based health plans remained available in Massachusetts after the state enacted its landmark health reform efforts. “That is a likely model given the [Sen. Ted Kennedy] connections to Obama. I don’t believe Kennedy will go farther than where Massachusetts has gone.