Why is there so much excessive—indeed, downright wasteful—spending in health care? One reason is the disconnection between patients’ wallets and their health care bills.
Most Americans get health insurance through their employers. They neither witness nor control the flow of their dollars from employer to insurer to health care provider. Yes, those health care dollars are their compensation, just like wages. But with no visible “skin in the game,” they have little incentive to limit spending.
Engaging patients in the cost of their own care is one way to motivate them to seek better value for the health-care dollar–good quality health care at a reasonable price. And consumer-driven health plans, such as health savings account (HSA) plans, do just that.
As America’s Health Insurance Plans (AHIP) explains, HSAs “give consumers incentives to manage their own health care costs by coupling a tax-favored savings account used to pay medical expenses with a high-deductible health plan (HDHP) that meets certain requirements for deductibles and out-of-pocket expense limits. Most HDHPs cover preventive care services (e.g., routine medical exams, immunizations, well-baby visits) without requiring enrollees to first meet the deductible. The funds in the HSA are owned by the individual and may be rolled over from year to year.”
Increasing numbers of Americans are finding value in these plans. AHIP reports that 10 million Americans were enrolled in HSA/HDHP plans at the start of this year. That’s a 25% increase over January 2009 levels and a 64% jump in the last two years. Today, more than one of every 10 newly purchased health plans are HSA/HDHP plans.
Unfortunately, Obamacare threatens to render HSA/HDHP plans a thing of the past. It’s a regulatory thing. It all depends on how the Department of Health and Human Services decides to calculate the actuarial value of HDHPs. According to Roy Ramthun of HSA Consulting, if HHS opts not to “count” contributions to HSAs as part of the actuarial value, then “HDHPs, many of which have actuarial values below 60 percent (or whatever the final standard becomes) based on the insurance coverage alone, could no longer be sold.”
Will HSA contributions be included in these calculations? HHS Secretary Kathleen Sebelius will be The Decider on that one. If she rules “no,” then high-deductible health plans including HSAs will no longer be viable… and you can kiss such plans good-bye.