Consumer-Driven Health Care Round Up
Lots going on in the Consumer-Driven space these days.
AHIP released its latest version of the annual HSA enrollment census. The results are impressive, though still understated since they only received responses from 71% of the companies. It finds enrollment growth of about 15% every year, now reaching 17.4 million. Perhaps the most interesting aspect is the state-by-state breakdown of market penetration. The old Red State/Blue State divide does not hold up when it comes to market behavior. Some of the states with low enrollment include Mississippi, Alabama, and South Carolina, while some of the highest enrollments are found in Minnesota, Illinois, and Maine.
AHIP also released, along with the American Bankers’ Association, a report on HSA account activity. One notable tidbit from this report is the size of the contributions, both personal and from employers. The average personal contribution in 2012 was $2,337, and the average employer contribution was $1,142. Also interesting is that only 19% of all the accounts had $0 balances at the end of the year, indicating that most people are retaining funds in their accounts at least for future use, if not for long-term savings.
Dr. Ben Carson has become a passionate advocate for HSAs, seeing them as a viable alternative to much of Obamacare. An op-ed he wrote has been widely circulated.
The Institute for Health Care Consumerism (IHCC) has published a series of articles on consumer driven health care alternatives. One is by the president of the American Association of Preferred Provider Organizations (AAPPO), Karen Greenrose. Her organization commissioned a Mercer survey of employer health plans and found that 45 million people were enrolled in Consumer Driven Plans in 2013, up 15% from 39 million in 2012.
IHCC published another article calling the switch to Defined contribution “inevitable.” Frank Mangert, Partner and Director of Private Exchange Technology, ebenefit Marketplace,writes –
The health care industry has been through the biggest change in history, with an impact some say is even greater than ERISA, Medicare and Medicaid. The current trends in the business and regulatory environment are leading to more creative ways to continue offering employee benefits. One of those methods has taken the industry by storm with the reinvention of the defined contribution plan.
And Christine Riedl with Aetna writes about the latest study of Aetna’s HealthFund experience. She reports that employers who have done total replacement have saved an average of $208 per member per year.
National Public Radio reports on states using HSAs in their Medicaid programs. Michelle Andrews looks particularly at what Indiana, Michigan, and Arkansas are doing.
Not everything is milk and honey in HSA Land. InsuranceNewsNet published an article by K.C. Mehaffey, who switched to an HSA and got hit with a bunch of expenses before she had a chance to build-up any funds in her account. She writes –
So here’s my real issue with Health Savings Account: The extra time I now have to spend tracking all my medical bills, figuring out how much to take out of my pay so there will be enough in my health savings account to cover everything, and working through a very unclear website to get reimbursed. It all feels like just another hoop to make it more difficult. I have to wonder, what if I were truly sick, and didn’t have the time or energy to do all this?
And BenefitsPro magazine reports that too many HSA account holders don’t really understand their HSAs. It urges employers to do a lot more employee education about how the plans work, and not just at open enrollment time.
Finally, Reno County, Nevada expects to save $327,000 in insurance costs next year, the third year in a row its costs have actually gone down as a result of switching to HSA coverage combined with a wellness program.
The old Red State/Blue State divide does not hold up… Some of the states with low enrollment include Mississippi, Alabama, and South Carolina, while some of the highest enrollments are found in Minnesota, Illinois, and Maine.
The Democrats and left-of-center public health advocates fought HSAs. Conservatives (many of which would not actually want an HSA) fought for them. Why is something as sensible as a personal health account to cover expensive below the deductible even political?
“Also interesting is that only 19% of all the accounts had $0 balances at the end of the year, indicating that most people are retaining funds in their accounts at least for future use, if not for long-term savings”
That is a major benefit of HSAs. Most people will not use up all of their funds, especially if they are putting in a $1000-2000 per year. They are very beneficial when accounting for high cost health emergencies.
When I spoke at conferences I always told audiences that it’s like the lifecycle theory of investing for retirement. Young people should put a greater proportion of their premiums dollars in an HSA (as opposed to insurance) while they are young so they funds accumulate until needed when they are old. That way, they can afford the high cost of paying risk-rated premiums when old. It’s a way to pool your own health risk over your working life rather than rely on others to help make health coverage affordable in middle age.
This is a really great way to curb big health costs. Its a way of saving now for future health care expenditures and having returns on money, rather than sinking it into insurance premiums.
“…who switched to an HSA and got hit with a bunch of expenses before she had a chance to build-up any funds in her account.”
This sounds more like a series of unfortunate events than a problem with HSAs in general.
“Sure, as evidenced by the growing numbers, consumers love their health savings accounts. Problem is, they just don’t really know much about them.”
Here is a big issue, as much as consumers love HSAs, they likely aren’t using them to their full advantage. There should be a larger presence in educating beneficiaries on the full scale of how they can use their HSAs.
Why not have an HSA that grows at 8% a month, increasing 8% every month, until it caps out at 3?
Eventually, one can earn 300% per month on his HSA.
The only thing he gives up is cash in lieu of paid for benefits.
It is called HMI – Health Matching Insurance, and it is offered exclusively through National Prosperity Life and Health.
Don Levit,CLU,ChFC
Treasurer of NPLH
Don Levit
Consumer Driven healthcare is definitely the way to go. Devon Herrick gives great advice as to the life-cycle theory of retirement. HSAs, as the brilliant Ben Carson explains, are making common sense to more and more people as they realize how bad and inefficient insurance is.
Here is my take. CDH plans will continue to grow. Most insurance offerings are already high deductible. CDH plan design is the “end state” for Plan Design as they are the most financially efficient….ie…you are not going to get any further savings out of other types of design. Therefore…the only thing left to help sponsors moderate cost escalation is Wellness and Engagement…the promise of a population health management approach at the sponsor level for better outcomes and lower costs….and a personalization approach at the member level offering something of value to ME and MY conditions.