It’s not a new topic.
The increasingly popular Health Savings Account (HSA) is making an impact on U.S. health care spending.
But at what cost?
Billion Dollar Baby
A recent study from the RAND Corporation, published in the May 2012 issue of Health Affairs, reviewed consumer-directed health plans, which includes personal health accounts and high-deductible health plans.
A reported 13 percent of all employer-sponsored health plans fall into this category. According to the study, if that number grew to 50 percent, health costs could drop by $57 billion annually.
But, there’s a catch.
There usually is when you’re talking billions.
It’s not clear if the cutbacks in spending will be at the expense of consumers’ health.
The basic concept of consumer-directed health plans is educating people to be better health care consumers. And therein lies the problem.
Consumers remain baffled about these types of plans.
How They Work
HSAs are the most popular of the consumer-directed health plans. Here’s how they work.
HSAs have two parts.
- A high deductible health plan
- A savings account for health care expenses
The money you put in your savings account can be used tax-free, provided the HSA meets certain IRS requirements.
The current HSA 2012 requirements for the annual deductible is a minimum annual deductible of $1,200 for an individual and a minimum of $2,400 for family coverage. There are also contributions and out-of-pocket restrictions.
- Deductible - Except for certain preventive services, you must satisfy your deductible first before the high-deductible plan pays a benefit
- Eligible expenses - You can use your tax-free savings for eligible health care expenses
- Tax penalty - Savings used for non-eligible expenses are subject to tax and a 20 percent penalty
The deductible does its trick – it stops consumers from consuming health care.
There’s a downside to that. It stops consumers from consuming the RIGHT kind of health care.
- Confusion or intent – consumers tend not to receive preventive services
- Even though some plans cover them at 100 percent
- And the deductible does not apply
Another downside of consumers not seeking care is the worsening of chronic conditions.
- Consumers don’t take medication
- They do not have preventive screenings
- They do not follow their physician’s treatment plan
Estimates for non-compliance is $300 billion in avoidable health care costs.
There’s those billions again.
Does the billions in non-compliance cancel out the billions in savings?
Are we cutting out the wrong kind of health care expenses – the kind that saves lives. We still search for the magic pill to health care. One that won’t cost a fortune and is easy to swallow.
My humble opinion? We’re not there yet. What do you think?
Notice of Disclaimer –Cathy Miller is not an attorney or health care provider and cannot provide legal or health care advice. The information provided is for your general background only, and is not intended to constitute legal or health care advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your physician for health care issues.