HSAs In The News

Dear Friends and Colleagues:
Attached an interesting article from todays Wall Street Journal reviewing the obstacles regarding the implementation of Health Savings Accounts.
These are the facts:

* Only about 8-10 Million Americans are enrolled in Health Savings Accounts and that number increased among US workers only slightly, to 2.7 million in 2006 from 2.4 million in 2005.
* Few employers are focusing on the costly measures -- such as offering better coverage or more consumer education, and instead shifting healthcare costs to the employees.
* Where employees do have a choice, only 19% choose the newfangled plans, the Kaiser study estimates. In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006. Guess, our elected officials prefer to use traditional plans ,whereas us common folk should swallow the bait.
* Employers are often HSAs as the cheapest and only insurance alternative forcing employees to use them, even though those plans are not suitable for them.40% of employees in a consumer-directed plan say it was the only choice available from their employer!!!

HSAs may be ONE solution among the many insurance options available for US consumers, but should not marketed as THE solution.
Personally, I would like our government to spend as much energy and money promoting existing and traditional solutions as they do with HSAs.
If cost shifting is the goal, then the common folk will loose.
Yours
Bernd



Health Savings Plans Start to Falter
Despite Employer Enthusiasm for Consumer-Directed Approach, Patients Express Dissatisfaction With How the Accounts Work
By VANESSA FUHRMANS
Wall Street Journal June 12, 2007; Page D1

President Bush and many big employers have hailed "consumer-directed" health plans and savings accounts as an effective weapon in the battle against runaway medical costs. But several years after the plans got off to a fast start, the approach appears to be stumbling -- largely because of consumers' unease in using them.

Eight million to 10 million Americans are enrolled in consumer-directed plans, which involve a high-deductible insurance policy that can be combined with a savings account to help pay for out-of-pocket health costs. The plans, which have lower premiums but shift more of the responsibility for health-care spending onto consumers, got a big boost in late 2003 after Congress created portable health-savings accounts that participants can use to sock away pretax dollars and let them grow tax-free. Employers often put money in the accounts to subsidize the higher deductibles.
SPEED BUMP

[Speed Bump]
Enrollment in consumer-driven health plans
• Number of U.S. workers (excluding dependents) enrolled in such plans through work was 2.7 million in 2006, vs. 2.4 million in 2005.

• 40% of employees in a consumer-directed plan say it was the only choice available from their employer.

• Where employees have a choice of health-plan options, only 19% choose consumer-driven plans.

Source: The Kaiser Family Foundation

The plans are accomplishing some of what they intended: A raft of data show that people enrolled in the plans do tend to spend less on care than others. That is encouraging more employers to introduce such plans to their workers over the next two years.

But low enrollment and low satisfaction among workers who are offered them raise the question of whether consumer-directed plans will stall before they ever hit the mainstream. Few employers are focusing on the costly measures -- such as offering better coverage or more consumer education -- that may be needed to accelerate these plans.

The numbers of U.S. workers enrolled in such plans through their jobs (excluding dependents and those in firms with fewer than three workers) grew only slightly, to 2.7 million in 2006 from 2.4 million in 2005, according to the Kaiser Family Foundation. Most do it because either their companies give them no choice or the premiums are the cheapest. Enrollment is growing faster on the individual market and among sole proprietors, but that may be because the plans are often the only affordable option.

Where employees do have a choice, only 19% choose the newfangled plans, the Kaiser study estimates. In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006, according to industry estimates. At lightbulb-maker Osram Sylvania, just 5% of employees enrolled in the plans in 2006, their first year.

In addition, those who are in consumer-directed health plans often report lower satisfaction and confusion about how the plans are supposed to work. The general idea is for patients to conserve money in their savings accounts, which are meant to pay for care until they reach their high insurance deductible. In theory, patients who shop carefully could have money left over, which they can keep and let build into savings for bigger health-care costs down the line.
[Consumer-Directed Plans]

In a survey published last month by Towers Perrin, an employee-benefits firm, employees enrolled in them said they felt less capable of finding a quality doctor or hospital, though they often were in the same network as colleagues in other plans. Only 29% said they tried to save money in their accounts for future medical expenses.

Though the consulting firm says consumer-directed plans have much potential, its executives were surprised consumer responses were so negative.

"If I were a product manager in any other industry and saw scores this low in customer satisfaction and understanding, I'd be thinking of pulling that product from the shelves or retooling it," says David Guilmette, managing director of Towers Perrin's health-care consulting practice.

One reason for the frustration is the uphill battle many consumers describe in trying to shop for their health care. Six years ago, Howard Katz, an industrial-design research consultant in rural eastern Pennsylvania, bought a family health plan with a savings account and a deductible that is now $5,650. But getting specific price information on which to base purchase decisions for MRIs, doctor visits and blood work has been difficult, he says.

And the money in the health savings account gets spent; only once has enough remained to roll over to the next year.

Now, he says, he has rejoined a company as an employee after working on his own, and one of the perks is regaining traditional health coverage. "Now I don't have to act like a medical examiner anymore," he says.

Proponents of consumer-directed plans point out that their overall enrollment continues to grow at a faster clip than enrollment in HMOs did when they were introduced in the 1970s. Among those who enroll, the vast majority stay in and don't switch back to another type of plan.

In cases where employers spend months informing workers about how the plans work and offer them more financial incentives than just cheaper premiums, workers report higher satisfaction and often get more preventive care than people in other plans. "But the vast majority of companies still do not have the time, effort or resources to prime the pump," says Larry Boress, president of the Midwest Business Group on Health, a coalition of large employers.

A growing number of industry experts believe that for consumer-directed plans to succeed, they have to offer coverage that is at least as rich as traditional plans. That means providing upfront coverage of most preventive services and treatments and a generous contribution to employees' accounts.

"If you're just trying to cost shift, and you only get 10% of your employees in, they are the youngest and healthiest, and you haven't accomplished anything in terms of health-care costs," says Bill Sharon, a senior vice president at Aon Consulting, the human-resources consulting arm of insurance broker Aon Corp.

Osram Sylvania introduced a consumer-directed health plan with a health savings account with premiums 15% to 20% cheaper than its traditional plans, but employees were responsible for the entire deductible. Just 5% of employees enrolled. In preparation for 2007, it introduced another similar plan alongside it, but with 100% preventive-care coverage and a $600 contribution into the health reimbursement account, and older generation of the health savings account.

"We'd heard concerns from employees that they weren't going to get the right care," says Julie Thibodeau, co-director of human resources at Osram Sylvania. This year enrollment between the two consumer-directed plans rose to 15%.

Aon has offered its own employees two consumer-directed options since 2002, with deductibles between $2,500 and $6,250. Nearly 20% of employees are enrolled in one, and the majority of them have money left to roll over from the $500 to $2,500 that Aon contributes to their account each year. Employee premiums are about 30% lower than in the more-traditional plans Aon offers, says John Reschke, Aon Corp.'s vice president of benefits. Considering that the coverage is at least as rich for most employees as in the traditional plans, "we should have a lot more people enrolled," he says. "But this is a different kind of insurance, and it can be scary at first until people understand."

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com1