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Are HSAs Ready to Battle a Public Plan?

Les Masterson, for HealthLeaders Media, May 20, 2009

Once trumpeted as the best hope to control spiraling healthcare costs, consumer-driven health plans have been largely pushed aside during healthcare reform talks in Washington. In fact, you're as likely to hear lawmakers use the phrase "capitation" as CDHPs.

In an attempt to resurrect CDHPs' standing and make them part of the healthcare reform debate, two reports released over the past week from the health insurance industry promote the idea of health savings accounts. But health insurers need more than just surveys given the heightened interest of a public health plan in Washington. The industry must improve on CDHP tools, such as cost and quality Web sites, real-time claims adjudication, and member outreach, in preparation of competition from a public health plan.

CDHPs may not be part of the current healthcare reform lexicon, but the interest is obviously there. Enrollment numbers have skyrocketed in the last four years. America's Health Insurance Plans announced that 8 million Americans are now covered by HSA-eligible plans, about 2 million more than at the start of 2008. Previous AHIP census reports show steady enrollment growth in HSAs from 1 million in March 2005 to 6.1 million members in January 2008.

HSAs are the more popular sibling in the HSA/Health reimbursement arrangement (HRA) family. HSAs allow both the employee and employer to fund the account and workers can take it with them when they change jobs. This combination, supporters say, leads individuals to view HSAs as their own money. The end result is people become better healthcare consumers.

Critics, on the other hand, charge that HSAs benefit only wealthy people, who use them as savings accounts. A Government Accountability Office report last year found average adjusted gross income of taxpayers with HSAs was $139,000 in 2005, compared with an average of $57,000 for all other filers.

AHIP, however, dismissed that argument, claiming that HSA holders have a broad range of incomes. AHIP's study, Estimated Income Characteristics of HSA Accountholders in 2008, claims that 49% of accountholders live in neighborhoods with median incomes under $50,000, and that the average total deposits for all HSA accounts were $1,634, while the average total withdrawals were $1,063.

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