According to a recent Health Beat blog entry, special “high deductible health plans” (HDHPs) that are tied to health savings accounts (HSAs) are gaining popularity in the US. The number of Americans enrolled in these health plans doubled in the last 2 years, to 6 million. Even more alarming is the fact that some see these plans as the way to expand health care coverage. As Maggie Mahar’s blog points out, however, this is far from the truth. The average HDHP deductible for a family in 2005 was $4000 – a huge barrier to access to care. People with high deductibles are more likely to delay or skip care due to cost, leading to greater health needs and higher health care costs in the long run. And, just like for other insurance coverage, premiums for HDHPs are rising quickly.
HDHPs are not a solution to expanding coverage to the low or moderate income. According to Mahar, the only beneficiaries of the advent of HDHPs are the wealthy who can use HSAs as tax shelters. And, as HDHPs gain popularity, Mahar worries that they’re becoming a barrier to system-wide health care reform, by creating a rift between the rich (who benefit from the plans often touted as an alternative to reform) and poor (who need real reform):
“As a gift from the government (actually a remarkably generous present from other,less fortunate taxpayers), the HSA can’t be beat. A family that tucks $5,800 into an HSA for 30 years, and earns 7 percent a year on their investments, will wind up with a nest egg worth well over half a million dollars—tax free. You can then leave the HSA to a spouse, again without paying taxes…. HDHP/HSA plans are a sweet deal for the rich. They pay for care only when they need it—a risk that they can afford thanks to their deep pockets—and they have a new tax shelter to boot.”
In MA, the Connector Board last year decided to exempt HDHPs from the Minimum Creditable Coverage standards. This is a huge loophole to the guarantee that everyone has adequate insurance coverage and one that can’t be readdressed too soon.
Lisa Kaplan Howe
First, your link to Health Beat Blog is broken.
Second, the criticism from that Health Beat Blog is that HSAs type structures and high deductible plan are inappropriate for the poor simply because of the high deductible.
Possibly true, but no reason to reject them as being simply boondoggles for the rich.
A benefit for the rich isn’t in this case a detriment to the uninsured. Certainly, the high deductible plans are beneficial to the young “I never get sick” uninsured rich or poor adult.
Back to the HSA. An HSA simply makes direct health expenditures deductible. i.e. health insurance premiums provided by an employer are already deductible, so with an HSA, the direct health payments are also deductible.
And since the wealthy have more money than the poor, it makes sense that they’ll get the larger benefit. It’s not unfair, nor does it harm the poor, unless of course you’re of the mind that the wealthy should pay more tax. At that point, it’s a wealth-redistribution argument, not an policy argument about health insurance.
To gbridgman,
RE “At that point, it’s a wealth-redistribution argument, not an policy argument about health insurance.”
It never was an argument about health insurance because HSA’s are not health insurance.
Improved Medicare-For-All Single Payer Health Care is the only way to do health reform if the actual goal is to provide comprehensive health insurance for all that covers quality affordable care in the most cost effective way.
HSA’s, nor the MA Individual Mandate Law disaster, never were about health insurance reform. What they’re about is keeping the insurance industry, the drug companies, and the rest of the medical industrial complex in control of our obscenely expensive and grossly inequitable health care system.
Gee, I thought that the mandate was to prevent one from dumping a $100,000 bill on the public’s lap. A high deductable plan would do just that. But even that’s not enough to satisfy MA politics.
Proof positive that the mandate is designed to rob from the healthy uninsured and pay the bill of others. Case closed.
“The average HDHP deductible for a family in 2005 was $4000 – a huge barrier to access to care.”
Pretty funny (as in ‘funny -irnoic’) comment from an organization that seems to to think the $4000 deductible on a Commonwealth Choice plan is just spiffy.
I forgot to add that if, because of the $4000 deductible in a fmaily that this is true
“In MA, the Connector Board last year decided to exempt HDHPs from the Minimum Creditable Coverage standards. This is a huge loophole to the guarantee that everyone has adequate insurance coverage and one that can’t be readdressed too soon.”
Then the Commonwealth Choice palns are NOT adequate either!
Modern “health insurance” has become a combination of catastrophic insurance and paying for normal health expenditures. When we confuse the two we get into trouble.
As a consumer of high deductible plans, why would I want to have insurance to pay for my normal visits to the doctor? It’s a whole lot easier just to pay for them myself than to pay an insurance company to pay the bill. Additionally, I don’t have to pay for mandated coverage I neither want or need.
All I want is for someone to cover me in the case of ruinous medical expenses. I don’t buy insurance to pay for oil changes on my car. Why buy it for normal visits to a doctor?
Most of this argument is about wealth transfer to people who cannot pay for health care. This is interesting social policy but it’s about giving a benefit to people who can’t afford a service themselves. It has nothing to do with insurance.
The reason Government is BROKEN is due to this type of intellectual thinking combined with the absence of “common sense”.
The principle of a HDHP is that health care consumers (sick people) will make better decisions when they have to weigh both the costs and benefits. (instead of only weighing the benefits)…
Another principle of a HDHP is that the “health care system” we be more efficient when the intermediaries are removed from the process (i.e. accounts, insurance, legal, brokers)… to the extent that a doctor gets paid up front for the service performed by the patient… then the costs of the brokers, insurance carriers, accountants, and clerks can be reduced or eliminated.
Mark B., IMHO, you hit the nail on the head.
“I don’t buy insurance to pay for oil changes on my car. Why buy it for normal visits to a doctor?”
The argument here, as with socialized medicine, is this is a choice. If you don’t want to make this choice, don’t.
There is oftentimes an uproar over socialized medicine with arguments along the lines of, “why should the government tell me when I can go to the doctor.” That’s actually not the case. All that would happen in socialized medicine is the government would tell you what costs will be covered under the plan — just as with the private sector. Sure, in an effort to control costs, a socialized plan may not be as comprehensive as what is offered from health insurance companies, but it does not prevent a person from purchasing extra coverage on the private market.
As for the argument in the article, “HDHPs are not a solution to expanding coverage to the low or moderate income.” A solution, maybe not. An option, most definitely. As someone who had to find health coverage on my own (I’m an independent contractor), a HDHP was a godsend. Pay about $4800 a year in premiums instead of $14,000. Even if I were to reach the high-deductible, it’s still cheaper.
You see, since I am not low-income, I don’t qualify for Medicaid. In the one time I had to deal with someone who has Medicaid I walked away somewhat jealous of the coverage they are getting. Don’t get me wrong, I wouldn’t take on her other financial problems just to qualify for Medicaid. Still, the coverage is pretty comprehensive compared to what you can find as an individual on the open market.
The thing that is frustrating here is the “wealth redistribution” argument. Just because somebody has worked hard to improve their lot in life doesn’t make them a bad person. My ultra-liberal friends operate on this theory that poor people are poor because of bad luck. While this is often true, there is also a number of people who are poor because they would rather be lazy and collect welfare. Or perhaps with Medicaid and other social programs available to the poor it is more cost-effective to stay poor than move into the lower-middle class. In other words, there isn’t enough incentive to get off of welfare, but I suppose that is another argument for another place.
Sorry for losing the plot there at the end.
When I looked into buying health insurance for my husband and child (I’m ineligible because of a pre-existing) I ran the numbers for HDHP vs. traditional plans in my state and found out that for the very sick a High Deductible Health Care Plan would be the best option.
So although I couldn’t get the best option for me I was able to get it for my son and husband, and if they ever become very ill they are better covered. Also, this plan is Health Savings Account compatible, so we can save for those times when they are truly sick.
You can see the numbers I ran here: http://carolynnmarie.net/health_insurance_blog/?p=248
A Government proposal for Change-Health Care Reform Act
March 2010 may stand out as a monumental month for change with the Obama Administration-Americans can look forward to changes in the current health care system through the passing of the Health Care Reform Act. Though there are many details that need to be ironed out, there are many changes that have been established.
There are two factors that will have the largest impact for Americans and America’s health brokers:
1) The fact that as of 2014, it is required by law for employers to offer affordable health insurance plans to all employees.
2) As of 2014, all Americans will be required to acquire health insurance.
Employers-For businesses over 100 employees, there may not be many changes. The difference may be that part-time employees will be offered aid with a percentage of hours in relation to full-time employment. This will offer benefits to those who do not have that same opportunity currently as a part-time employee. With businesses under 100 employees, there will be opportunities for credits from the government to offer aid with those employees. A percentage will be paid, based on payroll that will pool to help those who acquire insurance through an exchange, where many of America’s health brokers will provide different affordable insurance plans for all individuals.
What is the incentive for employers to offer insurance?
Employers will face a fine of up to $2000 per employee for not providing insurance coverage to an individual employee. These fines can be diverted if the employer offers an alternative means to acquire insurance (which would require assistance through the exchange).
Individuals-As of 2014, all Americans (with the exception of certain special case individuals) will be required to carry some form of insurance. Insurance will either be offered through employment or affordable insurance can be purchased through the exchange. America’s Health brokers will offer many new plans and opportunities to acquire cheap health insurance.
What is the incentive for individuals to acquire insurance?
According to the law, there will be a penalty assessed to all Americans who fail to acquire health insurance by the year 2014. The fine will be originally set at $695 per person, per year. This will hopefully be enough to encourage those who are not insured to carry some form of low cost health insurance.
America’s health brokers will be seeing some changes that could affect them. Pre-existing conditions will no longer be applicable in denying insurance to children. As of 2014, America’s health brokers cannot deny health insurance to anyone due to a pre-existing condition. There are other factors that will change certain policies and conditions.
The Health Care Reform Bill is an opportunity to reorganize the condition of care that is offered in the United States. There are many issues that riddle the care of many Americans, so hopefully this will provide solutions to some of the larger issues. One key aspect is the fact that all Americans will have the opportunity to have health care. This will be advantageous in many aspects: Prescription medications, preventative care, and treatment.
Health Care Reform Act-intent for Change
For many years, America’s health brokers have been offering health insurance to individuals, small businesses and large businesses for decades, yet the enrollment statistics have revealed a steady decrease on an annual basis. The number of uninsured Americans is estimated to be as high as 30 million, and the Health Care Reform Act offers a solution. Not only will there be a higher enrollment number for America’s health brokers, but as of 2014, it will be required by law for every American to obtain health insurance. Every single American will be impacted by the New Health Reform Bill, making it one of the most important measures of the 21st Century.
Businesses
The main focus will be on businesses of 50 or more employees, in which they will be required to offer individual health plans, as well as family plans to all employees or face some stiff fines from the government. The amount comes to $2000 per uninsured employee, though there are exemptions to this fine. If you as an employer assist an individual with acquiring a personal health insurance plan through an open market called an exchange, then it would result in no fines. This only applies to an individual who makes a certain amount under the Federal Poverty Level, and the premiums are over 8% of his annual income.
America’s health brokers can rest easy in the fact that there will be expanded coverage, though there may be more competition. With the rise in individuals who will have health insurance, there may not be as large of a risk as one may assume. Though the new bill will require America’s health brokers to enroll individuals with pre-existing conditions, there will also be a new population of young individuals who will be insured with fewer health problems.
It is understood that larger companies already provide a group insurance plan (HMO, PPO) that covers all areas of needs for the population of employees. These policies will change very little, but there may be some changes in where the funding for the new health care plan will come. It is proposed that those making a certain amount of money, both individuals and couples, will be taxed at a higher percentage than others. This will provide money that can be used for the exchange and making sure that all individuals will be offered an affordable health plan.
There are still a few years before the plan goes into full effect, though some of the measures will be enforced immediately. There will be plenty of time to sort out the details and iron out the difficulties. As for the plan, anyone who does not have health insurance as of January 1, 2014, will be penalized a certain amount of money, and this amount could become worse if health insurance is continuously neglected. There has never been a better opportunity for America’s health brokers in terms of acquiring a new customer base-a broader customer base. Also, there has never been a better time in history for individuals being provided with the resources for the necessary medical treatment. This is a very unique time, with history in the making. Finally, there will be health care for all.