Health Savings Accounts: A Better Model for Health Reform
Five years ago, Indiana Governor Mitch Daniels (R) requested that Health Savings Account (HSA) plans be made available to state employees. This year, over 70 percent of Indiana’s 30,000 state workers have chosen it, saving the state $20 million and reducing total costs by 11 percent as a result.
I don’t understand why state governments have been slow to take advantage of HSA plans. Wherever they are tried, they seem to save money.
Mitch Daniels would probably make a good president.
I agree with Larry.
The reason state governments have been slow to offer HSA-type plans is because public employee unions often oppose them on principle; and because the dominant insurer of state employees often dismisses consumer-driven health care as cost-shifting rather than cost-saving.
I was one of six people invited to testify before a Texas Senate committee on state employee health plans a few years ago. The largest insurer of state employees was also there to argue against HSAs.
I’ve also heard of cases where an insurer (offering both HSA and traditional plans) doesn’t reduce the premiums for HSA-qualifying, high-deductible plans enough to compensate for the reduced risk in order to make HSA plans less appealing.
It’s interesting that so many unions are so opposed to putting control back in the hands of consumers.
But, if the historical union opposition to universal coverage is any guide, eventually the costs will grow enough that unions will run to HSA’s as the last option before throwing in the towel on health insurance for workers.
I noticed that the state saved money, I’d like to see a study that showed the cost effect on the state’s employees. It’s quite possible that their HSAs were simply cost shifting. One serious problem with HSAs I haven’t seen addressed is the perverse effect of giving an effective higher benefit to higher income earners.
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The reason state governments have been slow to offer HSA-type plans is because public employee unions often oppose them on principle; and because the dominant insurer of state employees often dismisses consumer-driven health care as cost-shifting rather than cost-saving.
joseph
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