The growing prevalence and amount of deductibles has resulted in an increasing percentage of covered workers enrolled in a plan with high deductibles. In 2012, about a third (34%) of covered workers were enrolled in a plan with a deductible of a $1,000 or more compared to 10% in 2006, and 14% were enrolled in a plan with a deductible of $2,000 or more compared to 3% in 2006. The percentages of workers include workers who are enrolled in a high deductible plans with a savings account (HDHP/SO), such as an HSA or an HRA, and those who are in a plan without a savings account.
Source: Kaiser Health News.
Almost a quarter of Americans have less than $100 in their emergency savings fund, according to a recent TNS survey for CashNetUSA. Of the 1,000 participants surveyed, a staggering 22.8 percent reported that if they needed to cover an emergency expense within one day, they would have less than $100 available.
Both males and females reported similar savings patterns, however, 55 percent of Americans with children under the age of 18 reported having less than $800 in emergency savings compared to 42 percent of those without.
Source: It’s Economic.
The Kaiser Family Foundation conducts an annual survey of employer-sponsored health plans. According to the 2012 survey, one-third (31 percent) of firms that offer health coverage offers a consumer driven health plan (CDHC) option. Approximately one-in five covered workers are in CDHC plan. Eleven percent of covered workers are in a Health Savings Account-qualified (HSA) plan in 2012 — up from 9% in 2011; while 8% are in an HRA plan in 2012 — about the same as in 2011.
About 149 million people are covered through an employer health plan. The report didn’t break down HSAs/HRAs by the number of people enrolled. But the data suggests that as many as 28 million people may be in an employer HRA/HSA plan.
The Treasury Department is seeking comments on whether it should eliminate or modify a rule that requires U.S. residents to use all the money in their tax-free health flexible spending accounts or forfeit the balance to their employer, National Journal reports.
Don’t tarry. Deadline is Friday. There is no reason workers should be forced to spend their Flexible Spending Account (FSA) funds in December on unnecessary purchases like prescription sunglasses rather than forfeit the money. With a tax free rollover, 35 million people would be added to the 27 million or so who already have a “use-it-or-save-it account” (Health Savings Accounts and Health Reimbursement Arrangements). So this could have a huge impact on health care markets.
Two unresolved problems: Would people be able to withdraw unused funds, pay taxes and spend the money non-health consumption? They should. Another restriction that needs to go is the rule that an unused balance in an employer FSA account precludes obtaining a Health Savings Account (HSA) because HSAs cannot coexist with other types of coverage that provide for first-dollar benefits.
HT: American Healthline.
AHIP’s latest census of HSA-qualifying insurance coverage contains some fascinating information. Keep in mind these numbers are for HSA-qualifying coverage only. It does not include HRA plans or stand-alone high deductibles.
The finding reported in most of the news stories is that enrollment in these plans grew from 11.4 million in January 2011 to 13.5 million in January 2012, an increase on 18% in one year.
This continues the steady growth documented by AHIP’s annual surveys. The trend line is unmistakable –
While politicians and policy wonks are obsessed over the latest to-ing and fro-ing in Washington, in the real world Health Savings Accounts continue to grow as the future of health care financing. To wit –
Milford, Indiana switched to an HSA program for the town’s nine employees effective July 1. An article in the Mail-Journal reports, “The change will nullify a 12 percent increase in the town’s cost for the next fiscal year and improve preventative coverage. In fact, the town will see a four percent — or $6,000 — yearly decrease in premium rates under Medical Mutual of Ohio. Covered employees will see their deductible rise by $500, but their post-deductible, out-of-pocket expenses will be covered at 100 percent — an improvement over the current plan.” The town will also contribute $200 to the HSAs of single employees and $400 to families.
Question: If I asked you to point to the most obvious examples of wasteful health care spending, where would you direct me? This is a no brainer. There is nothing more wasteful than first-dollar health insurance coverage. Even deductibles as low as $1,000 or $1,500 are incredibly wasteful in many places. By that I mean that if you choose a higher deductible, the premium savings is greater than the additional expense you are exposed to. That means you can put some of the premium savings in the bank to cover the additional risk exposure (dollar-for-dollar) and still come out ahead.
Second question: When is the last time you saw an article in Health Affairs or any other health policy journal pointing out this obvious way to eliminate waste? My guess is that your answer is “never.” I’m sure you have seen articles about the hazards of high deductible insurance. Why are the journals so reluctant to focus on the benefits?
Every serious study that has ever been done on the subject has found that patients spend less on health care when they are spending their own money. The latest study by the RAND Corporation estimates that families with high deductible plans and Health Savings Accounts spend about 30% less than families with conventional insurance. And that’s with HSA plans designed by Congress. Think how much more effective the accounts could be if they were designed by the marketplace.
Further, no patient group was harmed by the switch to high-deductible insurance — not even vulnerable populations. This echoes the earlier findings of the RAND Health insurance experiment more than 30 years ago.
Ooh I’m driving my life away,
looking for a better way,
From an EBRI Issue Brief by Paul Fronstin:
Asset Levels Growing: In 2011, there was $12.4 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 8.4 million accounts, according to data from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, sponsored by EBRI and Mathew Greenwald & Associates. This is up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2010, when 5.4 million accounts held $7.3 billion in assets.
After Leveling Off, Average Account Balances Increased: After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011. In 2006, account balances averaged $696. They increased to $1,320 in 2007, a 90 percent increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively. In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. In 2011, average account balances increased to $1,470, a 9 percent increase from 2010.
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