HSAs in the real world: Not well liked yet
Given the amount of feedback to Ellen's recent guest post on HSAs, I thought I'd link to this piece on how employer-offered HSAs are mostly being shunned by workers.
"It's got a lot of the right design features, but the HSA model creates some substantial barriers to companies embracing them in a meaningful way," said Gary Laugharn, regional client leader in Houston for Hewitt Associates.
Among the greatest drawbacks, he and others say, are workers' aversion to high-deductible health insurance policies, which by law must be coupled with the savings accounts.
Employers are "dabbling, they're all looking" at HSAs, he said. "But the jury is still out."
Brett Haugh, a principal at Houston-based Employee Benefit Solutions, noted that in a local employer survey conducted by the consulting firm last year, only eight of the 137 respondents said they were offering their workers health savings accounts.
In Houston, interest in HSAs is beginning to emerge, but is still very small, Haugh said. "Employees just don't gravitate toward HSA plans."
[S]ome say getting people to shop around for health care as they would for a television has a major problem: the lack of available, objective information about the cost and quality of health care providers, facilities and procedures.
"Until we have transparency in pricing, until a person knows, for example, what an appendectomy is going to cost at St. Luke's as opposed to Memorial Hermann, it is hard to promote consumerism," Haugh said.
Jim Wilhite, director of compensation and benefits at Baker Hughes, said the oil services giant began offering HSAs to employees for the first time this year, and that 70 of its 12,900 employees signed up.
But company officials didn't "push" the plan because of the lack of good information about health care for consumers.
"A lot of this depends on the medical community providing better information," Wilhite said. "We're not trying to drive people to this yet until we have better information to make available to our employees."
Yeah, well, good luck with that. Tiffany and I both have HSAs through work, which we use simply to supplement our existing low-deductible policies. Basically, we use that to pay for non-covered services like vision care and chiropractic visits with pre-tax dollars. I'm way too risk averse to go with an HSA/high-deductible plan. As long as I've got a viable alternative, that's a choice I won't make.
Posted by Charles Kuffner on February 13, 2006 to Bidness
You and Tiffany don't have HSAs (as defined by the 2003 Medicare reform bill), but FSAs.
The legislation is still so young that it's not a huge surprise some employers have yet to offer HSA plans, but I think more and more will as they see the potential savings in their corporate insurance rates. My employers just offered the option this year, and they did so because it helped them get a much better insurance deal (although they still offer the old "buffet-style" insurance plan for conservative types who are resistant to change).
I don't know how all employers are structuring their plans, but ours is set up so that it makes quite a bit of sense to do it. The savings on the high-deductible plan (versus the other "buffe-style" plan) effectively pays for my annual contribution to the HSA, which is the amount of my deductible ($1200). If I'm healthy and smart, that $1200 (or what is left of it) is mine at the end of the year, and rolls over to the next, like a tax deferred retirement account (the big difference from your FSA). In my case, it's not a matter of risk-aversion, as you suggest, but good economic common sense.
Maybe your employer doesn't offer an HSA plan that makes such good sense, though. Beats me.
If my employer offered an HSA option, with enough of a match into the account that it wasn't a benefits takeaway, I'd be all over it. Right now they offer a similar account through BCBS but the employer owns the account balance if the employee terminates. I've switched to that one to evaluate it and it works pretty well so far; we haven't paid a cent out of pocket (except for prescriptions) since we started with it in January 2005.
In general, I think HSAs are a good concept and potentially *part* of the solution to health care inflation and access. It needs to be recognized that it's not a full solution, particularly to older workers and the infirm...but those hard cases can be addressed separately. If HSAs save enough money and stop enough health care inflation as the administration claims, it should be easier to tackle the problems with the less insurable and the working poor who can't afford to contribute to an HSA if their employer doesn't.
Still, I'd like to see my employer offer one in '07. I thought they might this year, but they stuck with the HCA alternative. Personally I think the ability to put money away now would help make health care more affordable as we age.