Lying on the gurney in the emergency room last May, facing an appendectomy, I should have been focused on my well-being. Instead, all I could think was: What is this going to cost? It was not that I was uninsured. But I had pre-operation financial anxiety about the prospect of dealing with my insurance company in regard to surgery that had not even happened yet.
The state's much-ballyhooed Healthy Indiana Plan for low-income adults is doling out its first insurance cards for roughly 4,500 people who applied for the benefit in the first week of enrollment. The state hopes many more follow in their footsteps. State officials are trying to get out the word through postcards, billboards, television advertisements and community clinics.
Blue Cross and Blue Shield of North Carolina is continuing its strategy to push cheaper drugs. The state's largest health insurer announced Thursday that it will waive co-payments for generic medications used to treat four of the most deadly chronic conditions--congestive heart failure, high blood pressure, high cholesterol and diabetes.
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.
A small clause in most company health plans allows them the right to recoup the medical expenses it paid for someone's treatment if the person also collects damages in an injury suit.
CFOs and the finance organizations they head are under intense pressure from the capital markets and activist investors to keep pace with a rapidly changing global market--to go beyond merely crunching numbers and create value on their own.