The first academic
research on Health Savings Accounts (HSAs) has just been published in
the November/December issue of Health Affairs, a publication respected
by many within the health policy establishment who often have been
naysayers regarding the potential of consumer-directed health care and
HSAs.
Until recently, much of the data available on HSAs
have come from individual carriers, conservative think tanks, and trade
associations. HSA skeptics have doubted their figures--that between 33
percent and 40 percent of those purchasing HSAs were previously
uninsured.
The
Health Affairs report, "Health Savings Accounts: Early Estimates of
National Take-Up," by Roger Feldman, Stephen T. Parente, Jean Abraham,
Jon B. Christianson, and Ruth Taylor, reviews the relative merits and
potential of various proposals to expand HSA affordability for the
uninsured.
Even the most basic statements made by these University of Minnesota researchers are likely to make waves in certain circles.
For
example, the authors find "widespread national adoption of individual
HSA plans is possible" and "early indications are that they [HSAs] are
a viable alternative to existing plans [traditional PPO and other lower
deductible plans]."
The Minnesota team performed
sophisticated forecasting simulations of the extent to which several
different policy proposals--including President George W. Bush's health
care tax credit for HSAs--would:
- reduce the number of uninsured;
- reach the low-income uninsured; and
- cause
people receiving employer-subsidized group coverage to drop it and move
to the individual market (presumably for a better deal).
The
study found a health care tax credit would lower the number of
uninsured by 10 percent. Coauthor Feldman's baseline for the number of
uninsured excluded those who had access to some form of coverage,
including full-time college students, people enrolled in public health
programs, and those who had the option to be covered though a spouse's
policy. That brought the baseline number of uninsured to 27 million
people. Under the president's health care tax credit, Feldman says in
the report, 2.9 million people would gain coverage.
According
to the study, even more people would be likely to obtain HSA coverage
with a health care tax credit if the authors had assumed lower
deductibles. For their simulations, they assumed a plan requiring a
$3,500 deductible for a single person and a $7,000 deductible for a
family. Those deductible amounts are far higher than what is required
by current HSA law, which is $1,000 for a single and $2,500 for a
family.
The president's health care tax credit does help
people meet their deductible by making a contribution to their HSA
account (as well as helping with their monthly premium costs). But that
assistance is nowhere near enough to cover these assumed deductibles.
That means there is a "doughnut hole"--a gap in coverage that must be
met by the individual or family.
Under Feldman's
assumptions, a single person would have $1,000 in his or her HSA
account. But with a $3,500 deductible, he or she ends up with a $2,500
"doughnut hole." For families, the exposure is even greater, with
$2,000 in an HSA account but a $7,000 deductible, producing a $5,000
hole to be filled with family resources.
Clearly,
those numbers would give pause to many people, particularly when
Americans are so used to modest deductibles and first-dollar coverage.
For uninsured folks who have modest resources, those numbers are
downright scary.
For an HSA health care tax credit to make
a greater dent in the uninsured population, less out-of-pocket exposure
would be needed. The authors affirm that in their article, even while
noting the cost to taxpayers then increases as well.
At a
cost to the government of $2,761 per year per person covered, the
health care tax credit is one of the more cost-effective proposals
Feldman and his coauthors studied. The study also found the health care
tax credit proposal is the least disruptive to the group market,
keeping Uncle Sam from subsidizing people who already have private
coverage.
A health care tax credit would gain its take-up
from those who most need it, the study found, with at least 40 percent
of the newly covered coming from the bottom 25 percent of income
brackets and a full 75 percent from the bottom half.
Currently,
Congress finds itself in tight budget constraints, but doing nothing
won't save federal dollars, because taxpayers will end up footing the
bill for the uninsured through federal programs that pay for
uncompensated care at hospitals, as well as through higher Medicaid and
SCHIP costs.
In just one year, from 2004 to 2005, the percentage of people covered by government health insurance
programs rose from 26.6 percent to 27.2 percent. According to a
November study by The Heritage Foundation, over the next five years the
cost of Medicaid is projected to increase by 41 percent.
Hence
it would be wise to divert some of that enormous build-up toward plans
with greater effectiveness and lower cost, such as health care tax
credits. According to Feldman's study, Congress could create a viable
five-year health care tax credit demonstration program helping three
million people per year that would cost $8 million a year, or $40
million for the five-year program.
"The academic community
finally is coming around to see that HSAs, in conjunction with
refundable tax credits, could dramatically reduce the number of
uninsured," said Grace-Marie Turner, president of the Galen Institute.
"It will be very hard for opponents of HSAs to ignore this study in the
top health policy journal. This is an important breakthrough." |
