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HEALTH PLANS/POLICY: HSAs Triple in 10 Months, or is AHIP just blowing more smoke?

Anyone who reads THCB knows that I’ve never exactly been impressed by the scholarly worthiness of AHIP’s research, or the veracity of its leader Karen Ignani.

So I remain just the teeny-ist bit suspicious about their take on the study that they released this morning.  Their headline is “HSAs Triple in 10 Months

Over 3 Million Enrolled in High-Deductible/HSA PlansWASHINGTON — At least three million consumers currently receive health coverage through high-deductible health insurance plans offered in conjunction with health saving accounts (HSAs), according to preliminary results of a new study by America’s Health Insurance Plans (AHIP).According to the study, enrollment in the new insurance policies eligible for HSAs has roughly tripled since last March when a similar AHIP survey found that 1,031,000 people were covered by HSA-compatible insurance policies.“HSAs are a remarkable success story and they are proving to be especially attractive to many who might not otherwise be able to afford coverage,” said AHIP president and CEO Karen Ignagni. “Consumers and employers have quickly embraced HSAs as a valued option in the suite of products offered by health insurance plans.”

What’s wrong with this picture? Well first there is the recent snippet that half the 650,000 people who’ve got HSAs at America’s second biggest insurer haven’t put any money in them yet (and as far as I can tell unlike IRAs you have to do that by the end of the calendar year to get the tax credit, you can’t wait til April). So you can argue that if AHIP says there are really 3 million Americans with HSAs, there are only 1.5m with HSAs which have any money in them.

But more importantly, if you read the release closely, they are talking about a tripling in the number of insurance policies that are HSA-eligible.  In other words a high-deductible insurance policy. Now when you go to buy insurance, there have been slight changes in the high-deductible products offered making them HSA-compatible, but they are still basically the same old major-medical plans, with deductibles of $1500–3000 and max out of pocket costs of $2500 to $7500, that have been around for years.

I’ve had one of these types of plans off and on since 1998 when I left cushy full time employment at IFTF. More to the point, there is roughly 7% of the under 65 population buying in the individual health insurance market—some 15 million people. I don’t have the data and I’ve asked AHIP to call me about it, but I have a very very strong hunch that the vast majority of those people were already been buying high-deductible plans, just like me.

So it stands to reason that as the HSA came online, a huge chunk of those buying HSA-compatible high deductible health plans have simply been switching from other high-deductible health plans which were not HSA compatible because the category didn’t exist. (You can in fact still buy high-deductible plans that are non-HSA compatible if their benefits don’t mesh with what the legislation says qualifies).

I will await more information from AHIP about their study, but calling that a tripling of the market is misleading at best.

And the other thing one should consider is why, given that the HSA is such a good tax deal for the self-employed who make up the bulk of the individual insurance market, and it’s been sold so aggressively for the last 18 months, have these plans being growing so slowly?

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15 replies »

  1. We had an HSA and I have to say it was the worst possible vehicle for dealing our health care needs. Totally didn’t work for us, for the doctors. The only people it seemed to work for was my employer and the fund manager. However, the last time I checked health care wasn’t measured that way!
    They are a rip off and a bad idea!

  2. I have an HSA– our family made less than $52 K last year (2 adults, 2 kids). At tax time, I figured out that if we put $800 into our HSA account, we could make back $300 more on our tax return. Given that the tax return was $1200, it was easy to put in that $800. And it helped a lot… we got to visit the dentist (something traditional plans don’t help you out with), eye doctor (ditto), and several other things with some money still in there if need be.
    Can’t help but cheer for them. Nothing else is helping us out… and universal health care doesn’t seem to work anywhere else. Let’s face it: the only thing that’s not a free market in our free market society is health care! HSA’s help us get there. Example: my doctor tried a breathing treatment on my son b/c I suspected asthma. I thought “trying it out” meant it was free (silly me). Got the bill and it was $80. Will I ever not ask again? No. That $80 was money well spent– taught me a very good lesson.

  3. If HSAs will destroy ESI then by all means please continue to move them forward. Also, the research isn’t shoddy, just intentionally misleading.

  4. As far as for fox….then they are suffers from a thing called hallucination.But more importantly, if you read the release closely, they are talking about a tripling in the number of insurance policies that are HSA-eligible.

  5. Exactly Matthew. I blame our good buddy Ben Cutler. Ben is an MBA. Frank Zappa said “The 2 biggest problems we have is LSD and MBA.” LSD turned hippies into yuppies and MBAs distroy our culture. I trust nothing from the AHIP. Bunch of bozos.
    I trust you Matthew when you aren’t lying and spewing your Socialistic propaganda. There is no money in that crap in the future. I bet Chriss Wallace will ask Screaming Howard Dean a tax free HSA question today on Fox News Sunday. Email Howard and tell him to bone up on the HSAs before he does that show Matthew.

  6. Hang on gang. This post isnt about HSAs. It’s about shoddy research from AHIP, which makes me far more mad!!

  7. Matthew,
    I believe you are mistaken when you say there is a tax credit associated with HSAs. I believe there is a tax deduction associated with them. This is a signficant difference.

  8. I’m not a tax guy but, in reading the the IRS Form 8889 for HSA contributions, it seems as though you can make contributions until April 17th.
    from Line 2 “HSA contributions you made for 2005 (or those made on your behalf), including those made from January 1, 2006, through April 17, 2006, that were for 2005. Do not include employer contributions or rollovers (see page 2 of the instructions.”
    I have enjoyed the dialogue. Keep it coming.
    Eric

  9. I’m trying to digest the anti-HSA deluge coming from the same few bloggers who seem to share health policy opinions (Ezra Klein at Ezra Klein, Joe Paduda at Managed Care Matters, Kate Steadman at Healthy Policy, and Matthew Holt at THCB). And I’m confused.
    One common theme is that HSAs are a waste of time to talk about right now because they represent such a small, or “non-existent”, part of the insurance market. [See 1 & 2 below]
    But another is that HSAs will become so influential as to induce “unprecedented restructuring” of the insurance market that would completely “destroy” (not change or alter but absolutely, entirely destroy) health insurance as we know it today. [3 & 4]
    Obviously this is more than a minor inconsistency in the anti-HSA logic. Which view do most HSA critics hold? Or do they hold both in dissonance for the sake of killing an idea before it gets going because they dislike it?
    Trapier K. Michael
    http://www.marketplace.md
    [1] “HSAs Triple in 10 Months, or is AHIP just blowing more smoke?”, The Health Care Blog, 27 Jan 2006, https://thehealthcareblog.com/the_health_care_blog/2006/01/health_planspol.html.
    [2] “HSAs. CDHPS, and FOOLs,” Managed Care Matters, 23 Jan 2006, http://www.joepaduda.com/archives/000389.html.
    [3] “South Africa, or what we could become,” Healthy Policy, 3 Nov 2005, http://healthypolicy.typepad.com/blog/2005/11/south_africa_or.html.
    [4] “HSA’s: A Comment,” Ezra Klein, 27 Jan 2006, http://ezraklein.typepad.com/blog/2006/01/hsas.html.

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