HSAs are not an option for low-income families
Health Savings Accounts and High Deductible Health Plans: Are They An Option for Low-Income Families?
By Catherine Hoffman and Jennifer Tolbert
Kaiser Commission on Medicaid and the Uninsured
October 2006
Key Findings:
- Premiums for HSA-qualified health plans may be lower than for traditional insurance, but these plans shift more of the financial risk to individuals and families through higher deductibles.
- Premiums and out-of-pocket costs for HSA-qualified health plans would consume a substantial portion of a low-income family’s budget.
- Most low-income individuals and families do not face high enough tax liability to benefit in a significant way from tax deductions associated with HSAs.
- People with chronic conditions, disabilities, and others with high-cost medical needs may face even greater out-of-pocket costs under HSA-qualified health plans.
- Cost-sharing reduces the use of health care, especially primary and preventive services, and low-income individuals and those who are sicker are particularly sensitive to cost-sharing increases.
- Health savings accounts and high deductible plans are unlikely to substantially increase health insurance coverage among the uninsured.
For low-income families in particular, HSAs and HDHPs may exacerbate, rather than alleviate, the problems they currently face in affording and accessing needed health care.
http://www.kff.org/uninsured/upload/7568.pdf
Comment:
By Don McCanne, MD
Any student of health policy already fully understands the message in this report: Health savings accounts and high-deductible health plans do not work for lower-income individuals with significant health problems. So why belabor this point? Why shouldn’t we support current legislation that would expand the HSA/HDHP benefits for healthy, higher-income individuals, for whom they work well, and find other solutions for those with lower incomes and greater needs?
The problem is that HSAs remove funds from the risk pools that pay for health care, and convert them into tax-subsidized retirement funds for wealthier individuals. Social insurance programs depend on the healthy to help fund the care of the sick, and the wealthy to help fund the care of the poor. HSAs allow the healthy and wealthy to avoid sharing risk with the sick and poor who are already facing affordability issues. Not very egalitarian, but that seems to be the American way.