Icon (Close Menu)

Logout

Unintended Consequences (Gwen Moritz Editor’s Note)

3 min read

Jerry Jackson of Heber Springs has taken Arkansas Business to task – see the letter to the editor here – because our May 5 special section on health issues

for employers didn’t directly address health savings accounts. The HSA, Mr. Jackson says, is "the best idea in 40 years," and he speculates that its conspicuous absence from the section called "Benefiting Arkansas" might be politically motivated.

"Benefiting Arkansas" was the program for a symposium that Arkansas Business presented with the University of Central Arkansas on May 7. If Mr. Jackson had attended, he would have heard some discussion of health savings accounts. But not much, mainly because tax-deferred HSAs and the high-deductible policies with which they go hand-in-hand simply haven’t caught on the way many of us expected they would.

As noted in the letter to the editor, I am familiar with this "common sense" proposal. That’s because I serve on the benefits committee at Arkansas Business Publishing Group, and we have offered our employees the option of a high-deductible, HSA insurance plan for the past three calendar years.

When we first offered it in 2005, ABPG employees who accepted a deductible of $1,100 rather than $500 – a $600 gamble – were guaranteed to save more than $1,000 a year in premiums. Twenty of our employees chose the HSA option in 2005, and I wrote in this space, "I think more and more ABPG employees will choose the HSA option in the future and more and more companies will offer it. Eventually, a high deductible will be all any of us can afford."

Two enrollment years later, only four ABPG employees are still taking the gamble. Why? Because, despite Jackson’s assurance that high-deductible policies offer "insurance premiums at a fractional cost of other policies," our experience has been quite the opposite. The premium for the $1,100 deductible is very nearly as high as the $500 deductible, and the gamble of taking on more financial responsibility simply isn’t worth it anymore. What Jackson describes is how the HSAs were supposed to work; what’s happening at ABPG is the real-world experience.

The fact that HSAs were a "Bush administration proposal," as Jackson notes, didn’t bother me in 2005 and it doesn’t bother me now. What bothers me is that the HSA plans that the insurance carriers have offered Arkansas Business Publishing Group – and, believe me, we shop them all – are prohibitively expensive even for employees who agree to take on much more risk.

(Shifting more risk to patients is supposed to make us savvier consumers who carefully seek out the most cost-efficient treatment. But you know that’s bunkum. It’s almost impossible to find out what a procedure will cost on the front end.)

In his presentation at the symposium, Dr. Joe Thompson, our state’s Surgeon General, said health insurance premiums are increasing by "only" 6 or 7 percent per year, rather than 12 or 13 percent, because more risk is being shifted to the employee in the form of higher deductibles and co-pays. But Peter Banko, CEO of St. Vincent Health System in Little Rock, said that risk is actually being borne by providers who are having a hard time collecting those deductibles and co-pays. That bad debt, of course, gets reflected in the prices charged to paying patients and their insurance carriers, which must increase premiums, deductibles and co-pays, leading to more uninsured patients and bad debt. It’s a vicious cycle that HSAs contribute to rather than cure because Americans simply do not save.

The only thing that will end the churn will be a workable plan to insure all Americans. That won’t control the cost of health care, but it will stop the creative financing that keeps shifting that cost from one party to the next.

***

One symposium speaker, Dr. Guy Clifton of the New America Foundation, suggested a way to truly reducing the amount of money spent on health care: Stop paying health care providers like pieceworkers. The fee-for-service model rewards providers for spending as much as possible on each patient, and Clifton believes that more than 30 percent of all medical spending is pure waste. A better model, he said, would let providers share in the savings they achieve when they provide the best outcomes at the lowest cost.

(E-mail Gwen Moritz, editor of Arkansas Business, at gmoritz@abpg.com.)

Send this to a friend