Federal Employees Health Benefits Program First-Year Experience with High-Deductible Health Plans and Health Savings Accounts
GAO
January 2006
Like many large employers, the FEHBP has expanded enrollee health plan choices by offering HDHPs combined with HSAs.
Forty-three percent of actively employed HDHP enrollees earned federal salaries of $75,000 or more compared to 14 percent of the other new plan enrollees and 23 percent of all FEHBP plan enrollees.
http://www.gao.gov/new.items/d06271.pdf
Comment: By Don McCanne, M.D.
Proponents of HDHPs (high deductible health plans) and HSAs (health savings accounts) have contended that these products are not only for the healthy and wealthy, but work well for everyone. As proof, they cite statistics showing that many enrollees were previously uninsured. They fail to mention that these plans with very high deductibles were the only ones with premiums that the uninsured could afford. Many enrollees have not been able to put any funds in their HSAs, and there is a much lower level of satisfaction with this coverage. Although the previously uninsured recognize that this coverage is better than nothing at all, they do understand their financial vulnerability if they were to develop significant health care needs.
Federal employees have a large number of health care coverage options available through FEHBP (Federal Employees Health Benefits Program). It is instructive to see who chooses HDHPs with HSAs when a range of options is available. This study by the GAO (Government Accountability Office) confirms that higher income individuals are much more likely to select these plans.
That should come as no surprise since these plans, by design, are particularly well suited for higher income individuals to benefit from the tax and pension benefits of these plans.
The policy lesson: It is not who is buying these plans, but rather it is who is benefiting from theses plans that is important. High income individuals who can easily afford the out-of-pocket costs benefit from the regressive tax policies that these plans represent. Modest and low income individuals are on the losing end of these regressive policies, and they lose even more when they can’t afford the out-of-pocket expenses to which the HDHPs leave them exposed.
So why don’t we simply let the wealthy have these plans, and the rest of us can look for other solutions? Lower income individuals will never be able to fund their share of health care. That means that funding of a health care system that covers everyone must be progressive. Perpetuating a regressive system exclusively for the benefit of the wealthy only magnifies the affordability issues for the rest of us.