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Policy: Another take on HSAs by Jib

The Los Angeles Times has an excellent piece on Health Savings Accounts (HSAs) this week, which almost sounds as though whoever wrote it read some of the comments in the threads here! No surprises in the conclusions :  employers kind of like HSAs (go figure), employees are kind of confused (ditto) and some people are ending up paying a little bit more for their medical bills than they had reckoned on. BusinessWeek also has an article on the topic this week, which has a more positive take on HSAs, including some interesting wrinkles in place at one plan.  Hat tip Ezra Klein.

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  1. Ron,
    My post didn’t call you a Nazi, it just pointed out that insurance industry underwriting practices which excluded “rated” individuals weren’t all that much different from the Nazi practices of herding their perceived undesirables (including the sick and handicapped) into extermination camps–death through inability to afford health care just takes longer. Long-term our current system actually denies healthcare to a portion of our population through the current underwriting practices. Your company’s initiative in three states may be a positive market driver. It would be interesting to understand what motivated them to select the states they’ve chosen (market analysis, state legislation or incentives, or competitive considerations)? I’m not being sarcastic with that question. I’m actually interested in understanding what factors motivate insurance companies to modify products to better serve the market, because obviously we need more of them. I’m not going to apologize for the Nazi analogy because until we really illustrate to society what the long-term effects of limiting health care options to the middle-class, middle-aged are, consumer-friendly options will stay limited.

  2. Ron, your behavior is malicious and disgraceful, and your lack of professionalism only serves to further discredit the insurance industry. I didn’t even think that was possible.
    From now on I will skip over any threads related to HSA’s because I know you will be there trolling. Don’t bother with one of your loathsome replies. I won’t be returning.

  3. Gadfly,
    Good I’m glad she is helping too.
    Now this makes more sense. Gadfly you were so confused and attacked me from every angle with stuff that was not true. So KP is your friend, ha ha.

  4. I’m uninsured, and KP Hawaii personally pointed me to resources and helped me navigate the system for filing an HMO grievance. She puts unbelievable amounts of time into free support for uninsured people.

  5. Sue,
    You’re first post to me on 5/6/05 at 4:29 discribed me enrolling people into individual insurance to be like NAZIs. Now you say I’m not nice, go figure.
    The new options instead of exclusionary riders is a done deal too. It’s currently available in 3 states and will be expanded to the rest of the country.
    The example on your association group plan was $20,000 a year for a 35 year old male and family in Montana. The 60 year old couple was a lot more.
    Thanks for sharing your state’s uninsurable pool cost is $740 a month for single coverage.

  6. The rates you quoted were for family coverage in Beverly Hills. I pay $6500/year currently with a $5K deductible and no pre-existing exclusions. That premium is about $200 a month less than my state’s high risk pool coverage. My issue is the same as KP Hawaii–this isn’t about whether the insurance choices we have made are best. It is about the fact that our choices are limited by underwriting practices that quite frankly aren’t justified. I’ve never had major health expense, but the way questionnaires are worded I trigger ratings that drive pre-existing condition exclusions. The fact that your plan may eventually provide a more rational option is fine, but your post said it was under consideration, not in place currently and you’ve been so obnoxious in some of your posts that I wouldn’t consider purchasing insurance from any company you are affiliated with. KP watched the last thread. How many other people who are frustrated with their range of options are also watching and passing judgment without comment? Change your tactics, Ron. Sharing information is helpful–but arguing and insulting people who question or disagree with your overly optimistic generalizations is bad business. If you really want to “help” people, soften your tone and recognize that you don’t have all the answers. You might start getting some serious inquiries that way.

  7. Kaiser Permanente Hawaii,
    You said I don’t care about uninsurable people. I said I do and help them for free. You said you do too. So I asked what you do for uninsurable people.

  8. I was wrong about one thing, Ron. You do realize how nasty you come across in your posts, and you just don’t care. Sorry, I’m not going to play.
    //HSAs and insurance are two separate things. When you said “HSAs are not the solution because only healthy people can get them” that is wrong. You’re beef is with individual health insurance not HSAs.//
    HSA accounts must be used in conjunction with a high deductible health plan. If you can’t get the health plan, you can’t get the account. All of my prior points apply, so I won’t repeat them.

  9. Sure Sue,
    You suggested an your association group health plan that the example they used was $20,000 a year for a 35 year old male and family with $8,000 Out-Of-Pocket with 40% Rx Co-insurance forever.
    And Sue did you see that we are introducing new options to eliminate exclusionary riders? That should make you very happy.
    Kaiser Permentente Hawaii,
    HSAs and insurance are two separate things. When you said “HSAs are not the solution because only healthy people can get them” that is wrong. You’re beef is with individual health insurance not HSAs.
    I don’t think we are going to outlaw individual health insurance anytime soon, sorry.
    Good dodge on that “dependent coversion priviledge” question on your son. Let me discuss your motives like you do my motives. The only reason you refuse to have insurance on your child that he can keep at a majority age is because of the cost. I just can’t believe you are such a penny pincher when it comes to the security of your own child. (How does that feel discussing other peoples’ motives like you do in every one of your posts?)
    How do you help sick uninsurable people with health insurance?
    I can hardly wait to hear this.

  10. KP Hawaii,
    I couldn’t have said it better. I just didn’t want to tie up the thread with another circular argument with Ron. We need a solution for middle-class, middle-aged people with “rated” conditions that cost little or no real money. High risk pools throw us in with costly cancer patients and individual insurance writes such broad exclusions we bear a disproportionare share of financial risk. No one is adequately addressing that issue and it is something we should be writing our politicians about because we need new solutions, not thinly disguised cost shifting mechanisms. The system is broken.

  11. //Here again KP I have never got a call for HSA insurance from this discussion. I don’t expect to get one either.//
    I’m glad no one is responding to your advertisements, but that doesn’t make them any less objectionable. I’m not completely without appreciation for the information you have provided, but perhaps you don’t realize how you come across in your posts. I followed the other recent HSA thread, and in addition to the advertising issue I found your responses to people who don’t agree with you to be pretty insulting and devoid of compassion.
    //First KP, HSAs are not medically underwritten.//
    I’m not sure what you are saying here, Ron, because the individual high-decuctible HSA qualified health plans I looked into are most definitely medically underwritten.
    //You on the other hand never help uninsurable people.//
    That’s really funny, Ron, because for the last 7 years I have spent a considerable amount of time helping people with health care and insurance issues of all kinds, and I do it for free. Do I really have to keep saying you don’t know anything about me?
    //Do you have a Dependent Conversion Priviledge on your son?//
    I won’t be answering any more personal questions, but thank you for your concern.

  12. Kaiser Permanente Hawaii,
    //It’s one thing to discuss HSAs in general, but it’s quite another to constantly plug your personal money-making enterprise. I’m surprised and disappointed Matthew allows it because I find your constant “ADVERTISING” to be in *extremely* poor taste//
    Here again KP I have never got a call for HSA insurance from this discussion. I don’t expect to get one either.
    //HSAs are NOT the solution when only healthy people can get one, and I refuse to quietly stand by and watch your attempt to marginalize people in my situation.//
    First KP, HSAs are not medically underwritten. The federal government just gave the HSA option to its employees and no one is denied because of a medical condition.
    Second KP, uninsurable people call me on my dime and I help them understand their options. Then I mail them applications to the uninsurable pool and have never got a penny, ever. I suggested contacting your Congressman and inform them to extend federal funds to the states for their High Risk Pools. You on the other hand never help uninsurable people.
    //You don’t know anything about me Ron, and the only thing making me mad right now is your boorish lack of compassion for your fellow human being//
    Here again, I help uninsurable people and I’m asking you what exactly are you doing?
    Third and most important — Do you have a Dependent Conversion Priviledge on your son?

  13. //Hawaii is a basket case…. Hawaii is a perfect example of government regulation that makes insurance companies leave. Im sure that was the goal, no competition for a couple of “special” insurance companies.//
    Hey Ron, we agree about something!

  14. //If you are uninsurable that’s no excuse not to cover your son and husband. You are the child’s guardian. So yes, I am suggesting you get coverage on them.//
    I have said more than once that we have other options besides an individual plan, and I never said they are not insured, or we won’t insure them. I said we had to drop our Kaiser group plan, and we cannot get an individual plan including the HSAs that you keep insisting are the solution to everybody’s problem. Again, OUR problem isn’t solved until every member of our family has coverage. HSAs are NOT the solution when only healthy people can get one, and I refuse to quietly stand by and watch your attempt to marginalize people in my situation.
    //People like you suggest that I can’t discuss the HSA because its like “advertising.”//
    It’s one thing to discuss HSAs in general, but it is quite another to constantly plug your personal money-making enterprise. I’m surprised and disappointed Matthew allows it because I find your constant advertising to be in *extremely* poor taste.
    //So if you move to Oregon, just to get insurance, are you going to put your son on the uninsurable pool too.//
    We are not considering a move to Oregon “just to get insurance.” That is one consideration, and the high-risk pool still won’t be our only option for insurance if and when we get there. I don’t wish to explain this to you any further, Ron, so please don’t ask.
    //Why don’t you say, “Ron you are correct. My family was hurt because of a group employee plan. Keep up the good work and warn other people before it happens to them.”//
    Because you continue to push HSAs as the answer to this country’s health care crisis. The problem isn’t solved until everyone has access.
    //KP would be really mad if she moved to Oregon for their uninsurable pool and then it closed down. She says I don’t care about her but I don’t know why she says that.//
    You don’t know anything about me Ron, and the only thing making me mad right now is your boorish lack of compassion for your fellow human beings.

  15. Jib,
    Thanks.
    President Bush’s tax credits for the poor to purchase HSA insurance would help millions of uninsured Americans get insurance on their families.
    The President would pay $2,000 a year for the purchase of HSA insurance. In Michagan and Iowa and in many other states a family of 4 can get HSA unsurance for less than $2,000 a year (30 year old couple and 2 children). So the President’s plan would pay 100% of the poor family’s insurance.
    Plus, the President would deposit $1,000 annually into the family’s HSA for first dollar coverage for dental, vision and medical expenses.
    The media suggests that no one would get coverage. Of course that’s pure propaganda. The truth is its like telling poor people: Will you let the government purchase your family insurance if they pay you $1,000 a year tax free? I’m sure millions would take the President up on that offer.
    I don’t know why Dr. John Goodman or other Presidential advisors don’t correct the media and make it simple.

  16. Ron,
    BTW: Thanks for the info on HSAs and FSAs.
    To be fair, I should have said yesterday that you’ve contributed a lot more to the discussion here than just “plugging” your company’s services…
    Jib

  17. Jib,
    //what do you say when people tell you that thy’ve had this sort of problem. Because this is happening every day, Ron. To hundreds of thousands of people all over the country//
    I would say that tens of millions, not hundreds of thousands, of sick employees have lost their insurance because they were on a group employee plan. It’s a huge problem and nobody would ever write an article about it in the media. The media’s propaganda machine is in gear on censorship.
    I got this email yesterday: TAKE ACTION — Urge your Congressman to support legislation authorizing the extension of federal high risk pool grants to the states. The original legislation expired in 2004 and Congress has not yet reached consensus on legislation extending the program.
    KP would be really mad if she moved to Oregon for their uninsurable pool and then it closed down. She says I don’t care about her but I don’t know why she says that. For all the people like KP, write your Congressman and tell them to support the states’ “High Risk Pools” with federal grants.

  18. Kaiser Permanente Hawaii
    //We can’t get a family plan. You can’t possibly be suggesting that WE should just cover my husband and son and hope I don’t die. There is that minority thing again.//
    If you are uninsurable that’s no excuse not to cover your son and husband. You are the child’s guardian. So yes, I am suggesting you get coverage on them.
    Hawaii is a basket case. We are in 43 states but we don’t make coverage available in Hawaii. Hawaii is a perfect example of government regulation that makes insurance companies leave. Im sure that was the goal, no competition for a couple of “special” insurance companies. Competition is manditory in free and open markets. Now the other states’ uninsurable pools are less expensive than Hawaii’s cost for a “typical” group plan, figures.
    //Just keep advertising your business in all your posts, Ron, I’m sure you will do fine. People like me aren’t your problem.//
    People like you suggest that I can’t discuss the HSA because its like “advertising.” Sure a couple of people here have said they have gotten HSAs because of my posts but it was not from me and I didn’t make a dime, as usual. But for you to suggest I only care about the money is of poor taste.
    Why don’t you say, “Ron you are correct. My family was hurt because of a group employee plan. Keep up the good work and warn other people before it happens to them.”
    So if you move to Oregon, just to get insurance, are you going to put your son on the uninsurable pool too. Are you going to make sure your son has a “Dependent Conversion Privilege” in case he becomes uninsurable too, like my son. I can’t imagine a parent who is insurance savvy that wouldn’t demand a “Dependent Conversion Priviledge” on their children’s health insurance. Did Kaiser have a “Dependent Conversion Priviledge” on that employee group plan?
    All the children I insure have a “Dependent Conversion Privilege” and a bunch of them have needed it, including my own son. And never has one of my clients lost their health insurance after they have become sick like you. So I guess it does make a difference who you choose to insure your family.

  19. //I would think that Hawaii would be an ideal place to try for a single-payer system.//
    Hi Abby,
    The legislature mulled it over for about five minutes a year or two ago, and the biggest opposition came from the two prevailing health plans, HMSA and Kaiser. Go figure! =)
    Even with mandated employer healthcare we have about 10% uninsured in Hawaii and rising…mostly self-employed folks like me, and part-time workers.

  20. KP Hawaii,
    I would think that Hawaii would be an ideal place to try for a single-payer system. Of course that doesn’t help you now.

  21. Hi Jib,
    Our situation is not really dire, it’s just complicated, expensive, and damned inconvenient. As I mentioned before, we do still have a few options in addition to individual insurance, we’re just not happy with any of them. We haven’t made our final decision but we’re leaning toward a move to Portland, Oregon in the fall. Oregon has a high-risk pool, and ironically the high-risk premium is lower than the typical group plan in Hawaii.
    Hawaii’s bizarre insurance laws that are supposed to enable more people to have coverage, but just make everything more complicated and expensive for everyone, are a big factor in our situation.
    I really appreciate your concern, Jib. Thank you.

  22. KP Hawaii:
    Of all the flaws in our health care system, the pre-existing condition issue, is one of the most glaring problems.
    Having been in a similar (although probably not anywhere as dire) situation, my heart goes out to you. I hope everything works out.
    I’m frankly curious Ron, what you have to say when people tell you that they’ve had this sort of problem. Because this is happening every day, Ron. To hundreds of thousands of people all over the country.
    From the insurers point of view, what do we do?
    And better still – what does she do?
    Move to Vancouver?

  23. //She says that “we” cannot get insurance because a problem she has had. I wonder why the rest of the family can’t get coverage because of her problem.//
    WE can’t get a family plan. You can’t possibly be suggesting that WE should just cover my husband and son and hope I don’t die. There’s that minority thing again.
    //Underwriting would not care if it’s HSA insurance or normal PPO insurance.//
    Different companies, different plans. The PPO is not a high-deductible HSA plan. I said we can’t get any individual insurance of any kind, and I meant it.
    //This might cause them to have tougher underwriting for the more comprehensive HSA coverage.//
    There are only two plans that offer HSA coverage here, and they both have the same requirements.
    I even agreed to accept a permanent exclusion for asthma coverage, but the other past health issue is apparently more problematic, and can’t be worked around until I have received no treatment for ten years.
    There are a few solutions to our problem (OUR problem because we’re a family), but all of them involve a substantial change in our lifestyle. It’s not really a free country if I can’t choose how and where I want to earn my living, or where I want to live, in order to have medical care.
    Just keep advertising your business in all your posts, Ron, I’m sure you’ll do fine. People like me aren’t your problem.

  24. Jib,
    A Flex Spending Account (FSA) can not have interest, where an HSA can, tax free I might add, or invested in mutual funds.
    FSA funds not spent, are lost. With an HSA all unspent funds the owner keeps.
    With an FSA you can’t take out this year’s expense out of your FSA next year. With an HSA you can.
    With an HSA young people can reach Medicare with six figure HSA balances dedicated to retirement health care expenses. With an FSA your balance can’t grow.
    Same with the popular Health Reimbursment Arrangement (HRA). The employee never owns the account but balances do roll over from year to year without interest. But when you retire the employee doesn’t own the funds. HRA enrollers are calling themselves Consumer Directed health plans. Then they say the HSA is Consumer Directed too. But if fact, they are using the HSA popularity to market non HSA plans. I always say that those who say they support the HSA, usually don’t. It’s just a marketing thing that large group plans are using yet today. Soon the public will become informed and then the HRA looks like crap compared to the HSA.
    As far as KP Hawaii: I think employee plans that you lose after you are diagnosed are dangerous. She says that “we” cannot get insurance because a problem she has had. I wonder why the rest of the family can’t get coverage because of her problem.
    Also, our HSA insurance is a PPO plan usually. Underwriting would not care if it’s HSA insurance or normal PPO insurance. That is not to say that her experience is not true. Maybe their normal PPO insurance does not pay 100% on drugs where the HSA insurance would. This might cause them to have tougher underwriting for the more comprehensive HSA coverage.
    Jib you are the first I’ve told: New underwriting guidelines are coming online. A new type of exclusionary rider has been developed and is going into the first 3 states. The example that is used is asthma. In most states the old way was to have an exclusionary rider on the asthma but all other covered expenses are covered. The new way that we have is to just have a higher deductible on the asthma. Say the higher deductible is an extra $2,000 on asthma claims. So if there is a $20,000 asthma hospitalization we would cover the expense with the insured paying an extra $2,000. I know of no other insurance company with this feature. This way clients will give us a second look as opposed to just taking a normal rider from the competition. Now other companies will follow our lead or be left behind.
    Everything is always changing.

  25. Ron,
    “I’m sorry but that is not HSA health insurance. The company has health insurance that only pays 90% after the deductible. HSA insurance must pay 100% after a maximum out-of-pocket chosen by the client. His bloggers can’t tell the difference. All of Ezra’s bloggers are against the HSA and can’t tell the diffence between an HSA and a FSA …”
    I think the destinction may be clear to an insurance industry professional, but perhaps a bit arcane for everybody else. Most people I’m guessing think of a FSA as a variant of the HSA. You may well have covered this in earlier posts, but can you run the distinction by me again?
    Point B.
    So what would advice would you offer to KP Hawaii?

  26. After my child was nearly killed, and I was defrauded by Kaiser Permanente Hawaii, we were forced to drop our Kaiser group plan through my husband’s employer. We are now unable to get any individual insurance due to a past medical problem I had that will never require treatment again, and mild asthma that costs about $30 *PER YEAR* for the medication I need.
    I found the underwriting process for the two high-deductible HSA qualified health plans in our state to be much more rigorous than for an individual PPO. They wanted to pour through 10 years of our medical records as opposed to 5 with the PPO. Even with a $5000 deductible I’m not worthy.
    I am not an unhealthy person, I was just mislead into believing that I could actually use the health insurance we were paying thousands of dollars per year for.
    HSAs are not the answer when only perfectly healthy people can get one. I’m tired of hearing how it doesn’t matter if I live or die because I’m in the minority.

  27. Spike,
    If it makes you feel any better Spike employers can not purchase low cost individual HSA health insurance on an employee, it’s the law in many states. I remember when that law was passed and I didn’t hear you say, “Wait that’s not fair on individual health insurance. This way group health plans need not be competitive with individual insurance. This just creates a regulatory monopoly.”
    Tax payers are paying $1,000 a month for Michigan state employees family health insurance. In Lansing a 30 year old couple and 2 children can get HSA health insurance for $150 a month in the free market. But it is illegal for an employer to purchase the low cost insurance so many small businesses are uninsured. I get around it by having the employee pay 100% of the premiums.
    If you are so worried about the government I would think you would consider a low cost option like the President and his advisors.
    From your accounting standpoint, which is easier for the uninsured to afford, $1,000 a month or $150 a month? Of course both premiums will double in about 7 years. Which premium do you want doubling, $1,000 a month or $150 a month?

  28. Jib,
    I went to Ezra Klein’s blog and he says, “I have found an HSA plan I like.” Then he uses the Oshkosh Truck Corp. example from the BusinessWeek article that you posted. I’m sorry but that is not HSA health insurance. The company has health insurance that only pays 90% after the deductible. HSA insurance must pay 100% after a maximum out-of-pocket chosen by the client. His bloggers can’t tell the difference. All of Ezra’s bloggers are against the HSA and can’t tell the diffence between an HSA and a FSA.
    Ezra’s blogger mrgumby2u says, “The drawback, of course, is that you have to be able to calculate when you sign up how much you expect to spend on these items over the coming year. In the plans I’ve used and been exposed to, you lose what you don’t spend.” Of course Ezra didn’t correct him and explain that he is talking abount a Flex Spending Account (FSA) and not a HSA.
    I’ll go to Ezra’s blog and correct all the disinformation on HSAs. What can you expect from a college student, UCLA isn’t it?

  29. What I’m saying is that HSAs reduce the amount of money going IN to the system, but not the amount coming OUT. The total medical costs paid to physicians stays the same. Employees/patients/members are paying less of it thanks to HSAs. Where is that difference coming from?
    It sounds like you’re saying the difference is coming out of managed care profits?
    And… we ARE the government, so we can’t exactly expect the government to continually fund something it has no money for. I’m not looking at this from an ideological perspective saying that I like or dislike government or managed care. I’m looking at it from an accounting standpoint, saying that if HSAs really do reduce pain for somebody, they must be increasing pain for somebody else, because HSAs do not reduce total costs. And whoever’s pain is increased will either fight back with something else, or will just implode under the pressure. This has happened so many times in just the past 15 years in the healthcare industry that I’m kind of surprised you don’t know what I mean.

  30. Spike,
    You say//If I could qualify, of course I’d get an HSA, based on everything I’ve read, but there still seem to be great holes in the funding system for this type of plan.//
    Group employee plans that qualify for HSAs cost more but they don’t have medical underwriting. Maybe that’s how you will open your HSA. If not, that’s ok too. I’m not saying everybody should like the same thing. I know that low cost individual HSA insurance works for a great deal of people who are trying to find affordable health insurance for their families.
    I would say that insurance is meant to cover unforeseen medical expenses. Covering expected expenses, like an oil change on your car, you wouldn’t expect your auto insurance to cover. You pay for that out of pocket.
    People who run employer group plans have been trying to put us (individual insurance) out of business for quite some time and can’t figure out how to do it. They say we will splinter their so-called pools. That’s a fancy way of saying they will lose market share. Who cares?
    When you say Spike, “great holes in the funding system,” I don’t understand what that means. Are you suggesting an underwriting problem?
    I’m saying the uninsurable state programs cost more, a lot more. Plus, funds come from a tax on insurance premiums. Your statement//wow, they’re really getting killed here// I don’t understand that comment either. Are you suggesting that the tax on premiums used to fund these pools be eliminated? Then the uninsurable pools in the state would cost more and I don’t think that’s in anybody’s interest.
    I also suggest to people like rdg who are paying $815 a month on COBRA with a cancerous wife to take a look at their options. Maybe if they drop the family COBRA to a single, just on the wife, the COBRA may drop to $300 a month. The rest of the family can get low cost individual HSA insurance for just $100 a month. Maybe the family can’t afford $815 a month but they can afford $400. I have done that hundreds of times.
    And there is another comment you said Spike,//and the government(they’re getting killed, too, losing tons of tax revenue).// If I was showing rdg how to lower his premiums from $815 a month down to $170 a month with HSA health insurance I don’t say, “Oh you should pay $815 a month to be fair to the government.” rdg would throw me out of his house.
    Besides, the $800 a month going to group health plans is 100% a write off and the government is currently not collecting taxes on the money. If HSA health insurance premiums are $150 a month and the HSA deposit is $425 a month, that’s combined only $575 a month, which is $225 more in income that the government can tax. So I think Spike you aught to work on that “poor” government arguement some more. Maybe you could restate it to help me understand.

  31. OK, so the cost savings you’re expecting is that you’re removing the middle man insurance agent? And some bigtime execs at healthplans will get laid off, too. That’s where overall costs are driven down? And the rest of the gap is being covered by taxes on the healthplan (wow, they’re really getting killed here) and the government (they’re getting killed, too, losing tons of tax revenue).
    I don’t feel you’ve convinced me that HSAs are going to accomplish anything except shift cost burden around. It sounds like a great deal for healthy people, but it’s also striking at the heart of what insurance means (pooling risk). It seems like this could only make the problems for most Americans worse.
    If I could qualify, of course I’d get an HSA, based on everything I’ve read, but there still seem to be great holes in the funding system for this type of plan.

  32. Spike,
    You say//So it seems that the logical end result of HSAs is either no sick people can get covered or healthplans go out of business.//
    I don’t think that is correct Spike. Currently many states have an uninsuranble pool for citizens paid for by (1) tax dollars, (2)a tax on insurance companies and (3) the individual insured. These plans should also switch to HSA qualifying coverage as an option because sick people would like to pay for their deductibles with pre taxed dollars too.
    Sure the uninsurable pools cost more. That’s why I suggest putting low cost individual HSA qualifying insurance on everybody in the family that qualifies. Only pay extra for the uninsuranbles in the family.
    I laugh at employers that have 10 employees paying through the nose for group health plans with 2 uninsurables on the payroll. I tell them, “When the uninsurable pool is less than what you are paying for everyone you have a problem. Even on your sick people you save money by dumping this dangerous group plan. On your health people all of your money goes to your own employee instead of your golf playing agent. Who are trying to please here, your employees or your old insurance agent?”

  33. Spike,
    You say//That’s the main problem I see with your argument. You’re saying members and employers save money, you’re not demonstrating how overall costs are going to decline, and you’re not explaining who is going to make up the difference. If healthplans implode with the weight of HSAs, then who is going to fund them?//
    Individuals or employers may fund the HSA.
    Let’s just say that the top 10 people, making $6 million per year at a group health plan I know about, might find themselves beating the pavement looking for a new job in the near future. So there is $6 million saved at just one company. That’s just the tip of the iceburg. All those group health plan agents who are currently playing golf making $300,000 a year may find themselves with less recreational time because they will have to go to work again.
    Incentives do play an important roll. Don’t expect everything to be obvious at first glance. New clients that are 55 years old, I show them the cost for HSA Qualifying insurance with a $5,200 family deductible. Then I show them that they can drop their deductible to $3,200 per year but the cost is $2,200 extra a year in premiums. Then I explain that if they lower their deductible their maximum annual HSA deposit will decline as well. Then I say, “Nobody pays extra just to lower the size of their tax dodge, that’s insane.”
    Older clients are very concerned how large they can make their HSA balance before they become eligible for Medicare in just 10 short years. I say, “They should of passed this when you were 20 years old.” They usually say, “Ya, well at least it’s good for my kids.”

  34. OK, I am not being clear.
    Ron’s argument is that HSAs save healthy members money.
    Currently, overcharging healthy members is how healthplans stay in business.
    If HSAs save healthy members that much money, then there’s no extra cash to subsidize the sicker patients.
    How do healthplans stay in business (other than only covering healthy people) if they’re no longer allowed to overcharge healthy people?
    So it seems that the logical end result of HSAs is either no sick people can get covered or healthplans go out of business.
    Where’s the flaw in my logic?

  35. rdg,
    You are correct again, you didn’t say insurance companies fought the HSA. If you would have said it, you would have been correct though. In the first 7 years, 2 companies had just about all the market share of MSAs. Now all insurance companies are coming out with an HSA product because they are being forced into it.
    The good news is a couple of companies are getting into the individual HSA health insurance business. Good luck to them. One of them has a CEO that is a friend of Matthew’s and mine. That company just got their initial AM Best rating of “B”. When I say “friend” both Matthew and I would say “a person we know.”
    The cost in Des Moines for the maternity rider on a $5,200 HSA Qualifying individual insurance is $185.59 a month for any age couple. Your quotes may be cheaper but I suspect our’s is probably more correct. I don’t have one client who as ever purchased the maternity rider because they would still have the HSA base plan deductible. Everybody says they would prefer to put that money in their HSA instead of giving it to the insurance company and pay for the baby with tax free HSA funds.
    Our company also reported that 70% of HSAs are over 40 years old. So that is backwards too in what the media is saying. The media suggests HSAs are good for younger people when our experience shows that older people are the first to enroll.
    Spike,
    I bring up the losers side of getting HSA individual health insurance. I currently have a client with bone cancer and I would call him on the losing side. He is a doctor that can’t practice because of his stroke that he suffered in his initial surgery. I am happy that his maximum out of pocket is $5,200 annually for his family. He is only 50 years old and because he is on individual insurance he can’t be singled out for insurance termination because of his inability to continue to “preform his regular duties at his employer’s regular place of business.” That’s insurance jargon for putting sick employees to COBRA for insurance termination.
    Spike maybe you are considering a different type of loser. Maybe you are talking about the group health insurance plans losing market share.

  36. Spike,
    I’ll offer my 2 cents again. If someone currently has cancer and is covered under a group plan, they will not be switching to an HSA. They would either not be offered a policy or would be offered a policy with a permanent rider excluding coverage for the cancer. Currently healthy people in the group subsidize the cancer patient’s care.
    Based on previous discussions, if someone has an in force HSA qualifying policy and is diagnosed with cancer, the insurance must pay for the care. The cancer patient must continue to pay premiums and meet the deductible every year just as they would on a group plan. But the patient still comes out ahead vs paying the deductible and premium for a group plan.
    For the insurance company to continue as a business it must price its policies so that it can pay all claims and turn a profit. If the insurance company can offer policies that exclude pre existing conditions they can price the policy at a lower premium.
    I knew someone who had to get out of the tree trimming busines and become a truck driver because he could no longer afford insurance when his wife was diagnosed with cancer. He got on the teamsters group plan.

  37. Thanks for the response, Ron. My follow-up question is… where is the money going to come from? You’re presenting HSAs as a way for employers to lower their costs, members/patients to lower their OOP max, no change in utilization to occur, and all of the extra payments to come from… where exactly?
    Is the idea behind HSAs really that people are going to be more careful with their utilization because they’re on the hook for the money? People don’t decide to get cancer because they have insurance.
    That’s the main problem I see with your argument. You’re saying members and employers save money, you’re not demonstrating how overall costs are going to decline, and you’re not explaining who is going to make up the difference. If healthplans implode with the weight of HSAs, then who is going to fund them?
    Am I just totally missing something here? My background is in healthcare quality and healthcare data transactions, not policy, so I freely admit to ignorance on the subject.

  38. Ron,
    I don’t remember saying that insurance companies fought the HSA.
    You have given examples of premiums in the past. Can you provide an example of how much a maternity rider would cost? My memory is that Blue Cross quoted me an extra 100 dollars a month in premium.

  39. Jib,
    you ask, //The question is: do we use them as an option (good idea) or do we expect them to become a core component of our health care system – which might not be such a hot idea?//
    HSAs are an option that can only be stopped by an act of congress, which isn’t going to happen. I have always thought from October of 1996 that MSAs, now HSAs, would become a core component of our health care system.
    I think people saving in tax free savings accounts for retirement health care expenses is a good idea. Our company reported that 43% of our HSAs had no previous insurance. I also don’t like the fact that Donald Trump can say, “You’re fired,” and the employee loses their health insurance after a short over-priced COBRA. Employers should not have that kind of power over an employee’s life.
    rdg,
    Sorry, I should have said, “Qualifying HSA Group Health Insurance and Qualifying HSA Individual Insurance.” Of course you are correct, there is no such thing as a “Group HSA”. I will do better in the future.
    I think you discussed the premium difference between individual insurance and group insurance very well. Propaganda suggests that group insurance is cheaper than individual insurance and that cosmic debris is not supported by the facts that your family’s personal example proves.
    Hi Spike,
    you ask//but the health plan is losing $5,000 per year. Where is the healthplan getting that extra $5,000 from? And if they’re not getting it from anywhere, what makes you think that’s a stable situation?//
    I dont think over-priced group health plans are a stable situation with or without HSAs. rdg is correct that insurance companies fought the HSA, but they lost. The HSA however, does accelerate their demise. I call it the “cataclysmic collapse” of America’s largest industry, health care financing.
    My question is: Should Americans buy HMOs stock or should they get into something a lot safer like GM (its down right now where HMOs are riding high).

  40. Spike,
    I don’t think the insurance company is losing anything. When I was looking around I was quoted a premium of 250 a month for a typical ppo type plan. With the high deductible plan, I was quoted a premium of 150 a month. The higher deductible is enought to explain the difference.
    When comparing premiums of 815 a month for my Cobra coverage to the 250 or 150 a month for private insurance, the group plan vs individual plan is enough to explain the difference. On the group plan they cannot exclude pre existing conditions. On the private plan they can. That explains the difference in price between the group and private plans.
    IMO, most people who have employer sponsored plans have no idea the value of this benefit. I.e. what it would cost them if they had to go on COBRA.

  41. Hi Ron, I posted this comment in your article 2 weeks ago about HSAs, but I’m not sure if you’ll ever see it there and I’m really curious to see your answer.
    The thing that makes me skeptical of your analysis of all of these people winning on the HSA is you tell the winner’s side of the story but don’t tell the loser’s side. With the way healthcare works today, everything is a zero-sum game. If one person is winning, another person is losing, because in healthcare, nobody is interested in actually adding value. All of the improvements are about “increasing negotiating power” and “moving risk”.
    So in the scenarios you describe above, the employer is happy and the member is happy, but the healthplan is losing about $5000 per year. Where is the healthplan getting that extra $5000 from? And if they’re not getting it from anywhere, what makes you think that’s a stable situation?
    I ask this with all respect, I really am curious as to why the healthplans are in favor of this idea. Do they think their profits are going to go up when they’re getting so much less guaranteed money?
    thanks.

  42. Ron,
    Actually you’ve already convinced me that HSAs make sense for some people in some situations (like mine). I’m looking into possibly getting one as a direct result of your posts on earlier threads.
    The question is: do we use them as an option (good idea) or do we expect them to become a core component of our health care system – which might not be such a hot idea?

  43. What is a group HSA? An HSA that doesn’t have exclusions for pre existing conditions?
    I thought the best comparison in the LA Times article showed an individual paying more in premiums for a group plan than his total out of pocket would be under an HSA. This has been my experience.
    They missed a chance on the birth expense though. He paid 3600 for the birth of a child. How much would his premiums be for this planned expense if he went with a maternity rider?

  44. Jib,
    //employers kind of like HSAs (go figure), employees are kind of confused (ditto)//
    I have been enrolling employers for over 8 years in MSAs and HSAs. Last year the average price for group employee plans was $800 a month for family coverage. Many times this cost is split between the employer and employee, each paying half or $400 a month. As I have mentioned the full cost of HSA family individual insurance is $150 a month for a family of four in many states (30 year old couple and 2 children). I suggest the employee pay 100% of the insurance cost which drops their monthly cost from $400 a month to $150 a month and the employer is out of the health insurance business. The employer redirects his $400 a month expense to the employees’ HSA, tax free. The employee gets $4,800 a year in their HSA and their maximum out of pocket is $5,200, then HSA insurance, by law, pays 100% including Rx.
    Jib, employees are eager to drop their monthly cost from $400 a month to $150 and then get $4,800 a year, tax free, in their HSA.
    The biggest problem for employers is that those employees who where to cheap to buy the previous over priced traditional employee coverage, and having their families flying naked, are the first in line for the HSA coverage on their families. This of course makes the employers’ total cost go up because their new HSA plan is so appealing.
    Of course the Los Angeles Times is comparing Group traditional coverage and group HSAs, which cost much more and employees’ lose their coverage if they get to sick to work or get fired. They are correct that HRAs are never owned by the employee, unlike HSAs.
    President Bush say, “Become empowered with a tax free HSA.” Would you prefer an HRA that you lose in retirement or an HSA that you can keep?

  45. Doh! Sorry for missing the really obvious “by Jib” at the top of the article, lol. 🙂

  46. Actually, I suspect they probably did given the number of people who read that thread. But I wasn’t serious.
    And this isn’t Matthew. It’s Jib, guest blogging for Matthew today and tomorrow.
    That’ll teach me to leave the exclamation point out!!!

  47. If the journalist did gather opinion from here, it’s a shame they didn’t credit you or reference your blog. 🙁

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