Health Savings Accounts: What’s right with American Health Care

In Sunday’s Albuquerque Journal, Winthrop Quigley wrote a reasonably positive piece about health savings accounts. As Quigley notes:

HSAs allow you to accumulate funds while avoiding or deferring some taxes. They are used in conjunction with high-deductible health-insurance policies, which come with lower premiums than other types of health insurance.

And, while I have an HSA and wouldn’t call them particularly complicated — they are indeed a bit more complex to set up, but are simpler in terms of allowing consumers to actually understand their health care expenses — health savings accounts are one of the very best things to happen to US health care in recent years. That’s because unlike traditional health policies and government programs, they put individuals in charge of their health care spending and give them very real financial incentives to control health care costs.

In fact, such plans are “bending the health care cost-curve,” which is supposedly the point of ObamaCare:

Companies with at least half of their workers enrolled in an account-based health plan report that their per-employee costs are over $1,000 lower than companies without an account-based health plan, according to Towers Watson and the National Business Group on Health.

Similarly, Aetna reported late last year that employers who switched to account-based health plans as their only plan option had saved $21.8 million per 10,000 members over the past five years. Earlier this year, Cigna published a study concluding that employers can save an average of $9,700 per employee over five years by switching to account-based health plans. This is hard evidence for “bending the cost curve” that is so elusive for the rest of our nation’s health care system.

This potential for reducing health care spending was recently confirmed when researchers at the RAND Corporation concluded that if enrollment in account-based health plans grows to represent half of all employer-sponsored insurance, U.S. health care spending could drop by $57 billion annually. If all of these people enroll in HSA plans, the annual savings would be as high as $73.6 billion.

Health savings accounts not only work for individuals who use them, but they work for the employers who provide them and for the nation as a whole which could see major costs savings in terms of health care if they are implemented in Medicaid and Medicare for example. The only problem is that as ObamaCare (inadvertently) pushes people to adopt consumer-driven plans, health care expenses will decline with Obama taking credit for the result due to ObamaCare which is the polar opposite of HSAs.