Employers are using HSAs to shift higher deductibles to employees
USA TODAY
April 26, 2004
Out of pocket costs may soar
By Julie Appleby
Sharply higher health insurance deductibles may hit workers in the next two years as employers embrace newly created tax-free Health Savings Accounts (HSAs).
Nearly three-quarters (73%) of employers asked by Mercer Human Resource Consulting said they were likely to offer the new accounts to their workers by 2006, according to a survey to be released this week.
“We’re looking at a major market change,” says Linda Havlin, Mercer’s Midwest health care practice leader, noting that a 73% interest in adopting a new program within two years “is unprecedented.”
(HSAs) must be coupled with insurance policies with annual deductibles of at least $1,000 for individuals and $2,000 for families. Widespread adoption of the plans could drive up the average annual deductible paid by workers, which is now about $300 for single employees and $600 for families, according to data from Mercer and the Kaiser Family Foundation.
Mercer’s survey of 991 employers found that 61% would set the individual annual deductible for an HSA plan at $1,000. But 17% chose $1,500, 11% said $2,000 and 10% were above $2,000.
Don’t expect employers to pay that deductible: The Mercer study also found that 39% would not put any money into the savings accounts for workers, while 24% would put in $500 a year, leaving it up to the workers to fund the rest.
http://www.usatoday.com/money/industries/health/2004-04-25-hsas_x.htm
Comment: It certainly did not take long to expose the real reason behind the HSA provisions in the Medicare bill. Now that HSAs are here, health care costs are being shifted from insurers and from employers who sponsor plans to the patients who need health care services. The HSAs were merely an excuse to shift to high deductible coverage. The HSAs themselves have very limited benefit for moderate and low income individuals since many do not have the resources to fund these accounts, and they wouldn’t receive nearly the tax benefit, if any, that higher income individuals would.
Health policy analysts should take note of the “unprecedented” interest of employers in adopting HSAs. Although it is understandable why employers want to escape the rising costs, their decision to shift these costs to their employees is a clear signal that it is time to end our national policies that have favored employer-sponsored coverage. Control should no longer be left with employers.
A vastly superior alternative is for all of us to assume control by adopting our own universal program of social insurance. We’ll design our program so that it will ensure financial security for everyone when faced with health care needs. We’re already paying more than enough for such a system. We’re entitled to have it.