What Good Are They?
If HSA funding levels are any indication, we have a lot of work to do before these accounts--coupled as they almost always are with high-deductible health plans--do anything other than make patients poorer. The reason: Neither people nor companies are putting enough money in them, despite their tax-advantaged status.
An Atlantic Information Services survey found that the average HSA account balance was a measly $1,180, while a separate survey conducted by America's Health Insurance Plans found that the average high-deductible health plan deductible was $2,378 for single coverage and $4,760 for family coverage. That means there's tax-advantaged money available for less than 50 percent of the likely deductible patients are going to incur. So if you're an average person with an HDHP, and you or a member of your family does get hospitalized for some reason, you'll get a hospital bill for more than half of the deductible to be paid out of your own pocket.
Not only should those two statistics be a wake-up call for both future patients and proponents of HSAs in particular and consumer-directed healthcare in general, but they should be downright terrifying for hospital CFOs, whose departments will be tasked with collecting those deductibles. Collecting thousands from hundreds of patients makes the old days, when collecting a $10 co-pay was all you had to worry about, look as easy as playing tiddlywinks.
Now, these are all average amounts, so some future patients are doing better while many of them are undoubtedly doing much worse at funding their HSAs. The survey doesn't go into that much detail, but I would bet that many future hospital patients are funding their HSAs to the limit while the vast majority of others are contributing little. That scenario would mirror what's been going on for years with companies' 401(k) programs-some employees contribute little while others contribute a lot. That's why many companies are now forcing contributions to retirement accounts.
And while I'm thinking about it, companies shouldn't get off the hook here either. Why? Because they're saving huge one-time amounts from converting to HDHPs. Many of them seem to be transferring that savings directly to their balance sheets, rather than using those savings to give employees a good head start on funding their HSAs. They're certainly capable, if they're not just blowing smoke about wanting to "transform" healthcare, of contributing seed money to their employees' HSAs. If they can't do that, at least they can mandate some minimum annual HSA contribution amount.
Regardless of what employers do, hospitals will have to bill for the shortfall between what's in a patient's HSA and the total deductible. Hospitals are making great strides in determining a patient's financial responsibility for paying for healthcare services rendered, but only the most advanced are asking for thousands of dollars on the front end. I'm just guessing here, but given the low importance people now give to medical expenses in the stack of bills that get paid first, what rank do you think they'll give to paying off their deductible if the HSA won't cover it?
As much as I would like to believe in personal responsibility, it looks as though some level of paternalism, at least with helping people save money for future health costs and retirement expenses, is going to be necessary if policymakers and employers hope to make consumer-directed care work. How much paternalism is too much? That question has yet to be answered, but it must be--for the future financial health of patients and hospitals.
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at email@example.com.
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