Thursday, December 14, 2006

Republicans made it clear last week that consumer-driven health care plans are their weapon of choice against rising health care costs.

“I expect very few people will continue to purchase health insurance plans with high co-pays once they understand how easy and inexpensive these plans now are,” said Wiley Long, president of HSA for America, after Congress last week adopted legislation that could expand health savings accounts.

“We weren’t sure it would happen; it is a good thing it did,” he said.

Mr. Long’s hopes for health savings accounts needed the boost the legislation provided.

Consumer-driven health insurance has been slow to take off since coming on the scene only a few years ago with the advent of health savings accounts. Just last week as Congress was deciding to entice more Americans to open an HSA, a survey surfaced showing Americans’ ambivalence toward the arrangements.

Health savings accounts are special, tax-favored savings accounts that anyone with a qualified high-deductible health insurance plans can open. The idea behind the accounts is to give consumers more control over their health care and in turn lower the rising costs for employers. Currently, 3 million people have opened health savings accounts.

The survey, conducted by the Employee Benefit Research Institute and the Commonwealth Fund, found that just 1 percent of privately insured Americans are enrolled in a consumer-driven health plan and the 7 percent that did enroll in a high-deductible plan, did not open a savings account to go with it.

One argument against consumer-directed health care is that the plans offer less protection, leaving people vulnerable to high health care costs.

A Kaiser Family Foundation survey, released in November, found that people with consumer-directed health plans are twice as likely as others with employer-sponsored insurance to say there was time in the past year when they needed medical care but didn’t get it because of costs. And for people with high medical expenses, these plans are not a wise decision.

Perhaps it was the ominous results of these surveys that prompted Congress to loosen the constraints on health savings accounts. Under the bill, individuals with health savings accounts will be able to contribute up to the annual contribution limit immediately regardless of when the health insurance plan was purchased. Under the current policy, contributions are limited or pro-rated to when the policy was purchased.

For instance, a person who bought a health plan in November with a deductible of $5,000, only had two months to make contributions to the account that year, for about $800. Now that person will be able to contribute the full $5,000 right away.

Health savings accounts reforms will cost the government $1 billion in tax revenue over the next decade.

Consumer-directed health plans, though largely opposed by Democrats, are a major component of the government’s plan to ameliorate the number of uninsured Americans, which has reached a high of 46 million.

Health care policy specialists and lawmakers have been befuddled on a policy to get more Americans insured. A recent Urban Institute study found that 44 percent of the uninsured are uninsured by choice. A portion of this group belong to employers who have dropped health coverage because of the runaway costs.

“I think with these new rules small employers will take a second look at offering a health savings account to their employees,” said David Merritt, project director at the Center for Health Transformation.

Large employers seem to be getting the message about consumer-driven health insurance. In 2005, most large employers reduced the number of medical plans offered, but the consumer-driven health plan was the only type of plan to grow, a Mercer Health & Benefits study found.

“We are seeing the larger employers extend open enrollment periods to sign up for a health savings account,” said Steve Wojcik, policy director at the National Business Group on Health. “This legislation means it’s easier for employers to offer them.”

With an aging population driving up health care costs in the coming years, Congress may have to further loosen restraints on the accounts — raise the contribution level, exempt prescription drugs from out-of-pocket spending — or face the prospect of even more uninsured Americans.

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