Tag: "HSA"

High Deductible Health Insurance

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,
for me

Apr 09, 2012 | 50 comments | by

EBRI’s Latest on HSA and HRA Balances

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.

Jan 25, 2012 | 8 comments | by

John Goodman’s Health Policy Blog’s 10 Most Popular Posts from 2011

  1. What Most Needs Repealing and Replacing
  2. Health Problem Quantified
  3. Is Medicare a Good Deal?
  4. Bad News for ObamaCare
  5. Are Market-Oriented Economists Wrong About Health Care?
  6. Krugman Gets It Wrong Again
  7. Is RomneyCare Different from ObamaCare? This one was written by one of our talented guest authors, Linda Gorman.
  8. Why Do We Need Unions?
  9. What Is a Progressive?
  10.  HSAs vs. HRAs: Which is Better? This was written by another talented guest author, Greg Scandlen.

 

Dec 30, 2011 | 6 comments | by

New Regulation Threatens Agents, HSA Plans

HHS recently issued its final standards on how to rebate money from insurance carriers that fail to reach the Medical Loss Ratio (MLR) standards for 2011. This has sparked a new flurry of attention to the MLR issue, which requires insurers to spend no more that 20% of premium on administration in the small group and individual markets and 15% in the large-employer market.

Importantly, HHS decided not to exempt broker and agent commissions from being included in the administrative cost side of the equation despite a new National Association of Insurance Commissioners (NAIC) resolution urging it to do otherwise.

Dec 12, 2011 | 14 comments | by

Reforming Medicare the Right Way

With all of the heated rhetoric coming from Washington these days you would think there is a huge difference in the way Republicans and Democrats want to reform Medicare.

But did you know that over the next decade there is no difference at all between the agendas of the two parties? Although the House Republicans voted to repeal ObamaCare they did not vote to repeal the cuts in Medicare spending intended to pay for ObamaCare. So for the next ten years, there’s not a dime’s worth of difference between the two parties, to quote an all but forgotten political refrain.

Even more surprising, there is no difference between what the House Republican budget proposes and what Democrats voted for in last year’s health reform bill for anyone over the age of 55. It’s only young people who have a real stake in this fight. But as former Medicare Trustee Thomas Saving and I reported in The Wall Street Journal the other day, the cuts the two parties are proposing are so draconian, that there is little chance they will ever see the light of day.

In a way, that’s bad news. Absent politically unsustainable spending cuts, Medicare’s unfunded liability is almost $90 trillion at today’s prices, looking indefinitely into the future. That’s about six times the size of the entire U.S. economy. And Medicare spending is growing at twice the rate of growth of our national income. Clearly that cannot go on forever.

So what can be done? Fortunately, there are three common sense steps we can take that will give us substantial reform with a minimum of pain.

There is no sickness or toil or danger
In that bright land to which I go.

Jun 13, 2011 | 15 comments | by

Three Cheers for Sen. Hatch

The Family and Retirement Health Investment Act of 2011 will:

  • Allow a husband and wife to make catch-up contributions to the same HSA;
  • Remove the onerous new restrictions on the use of HSA and FSA dollars for the purchase of over-the-counter drugs;
  • Allow individuals to roll-over up to $500 from their FSA accounts;
  • Clarify the use of prescription drugs as preventive care that will not be subject to an HSA-eligible plan deductible;
  • Reauthorize the use of Medicaid health opportunity accounts;
  • Promote wellness by expanding the definition of qualified medical expenses to encourage more exercise and better diet;
  • Allow seniors enrolled in Medicare Part A to continue contributing to their HSAs; and
  • Allow for the purchase of low-premium health insurance and long-term care insurance with HSA dollars.

Read full post on the Family and Retirement Health Investment Act of 2011.

Jun 07, 2011 | 5 comments | by

EBRI Gets It Wrong — Again

The Employee Benefit Research Institute has put out another study of Consumer Driven Health Plans (CDH plans). They do this every six months or so, and every time they illustrate the limits of internet surveys. Yet compared to two other surveys, EBRI seems to be underestimating the number and size of CDH plans by a considerable margin.

In this case, EBRI tries to estimate the number of HRA and HSA accounts, the balances in the accounts, and the amount of money rolled-over from one year to the next. They began with a random sample of 2,007 from an internet list of people who have agreed to be surveyed, of which 21% responded — 94 people with a CD Health plan. So they went back and generated (oversampled) another 879 people with a CDH plan.

The whole methodology is suspect. Sampling can work well when you have a pretty good idea of the universe being tested. A manufacturer who produces 100,000 widgets might randomly sample 100 of them to test for quality. If 4 of the sample is defective, we can pretty well know that 4,000 of the universe is defective. But if you don’t know the universe, you can’t estimate how many defective widgets exist by testing a handful. Your sample may tell you that 4% are bad, but 4% of what? One million, ten million, one hundred million?

Mar 16, 2011 | 6 comments | by

I Predict This Is the First of Many

nHealth, a Richmond, Va.-based insurance company that specializes in HSA-qualified high deductible health insurance plans, will be closing its doors due to the regulations imposed by the new health care reform law.

See full story here. HT to Greg Scandlen.

Jun 09, 2010 | 4 comments | by

HSA Survey

A survey conducted by America’s Health Insurance Plans (AHIP) is the largest of its kind. Here are the highlights:

  • The number of people with Health Savings Account (HSA)/High Deductible Health Plan (HDHP) coverage rose to 10 million in January 2010, up from 8 million in January 2009, and 6.1 million in January 2008.
  • Overall, enrollment in HSA/HDHP coverage in the group market rose to 8.0 million in January 2010, up from 6.2 million in January 2009.
  • Nearly 3 million lives were enrolled in HSA/HDHP coverage in the small-group market, and almost 5 million lives were covered in the large-group market.
  • Enrollment in the individual market rose to 2.1 million covered lives in January 2010, up from 1.8 million in January 2009.
  • HSA/HDHP plans accounted for 11 percent of all new health insurance purchases in January 2010.

May 26, 2010 | 7 comments | by

EBRI Criticizes HSAs (Again)

In a widely publicized April 2010 Note, the Employee Benefit Research Institute (EBRI) deploys confusing calculations based on questionable estimates to demonstrate that Health Savings Accounts (HSAs) are inadequate vehicles for saving for health care costs in old age. Its trail of endnotes eventually leads to an estimate of the present value of lifetime Medicare benefits for a husband and wife that is attributed to a “personal communication.”

The Obama Administration is now writing regulations that could eliminate health plans that use HSAs to lower premiums, control costs, and improve health care. Given the explosive growth in consumer directed health insurance plans prior to the passage of the ObamaCare legislation (an estimated 23 million people now have them), eliminating HSA plans will be easier to do if government officials and the public can be convinced that they are an unimportant innovation.

Apr 30, 2010 | 4 comments | by
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