WASHINGTON — Health savings accounts and other forms of tax-deferred, consumer-driven health care financing options have captured the fancy of many policy makers, but such options have met with a lukewarm welcome among American employers and the people who work for them.
According to data from Forrester Research Inc., an independent technology and market research company, between 8 million and 9 million Americans were enrolled in a health savings account (HSA) or other tax-deferred plan as of June 2007, with 4.5 million new enrollees in 2007 alone.
But consumer awareness of these options is still very low. A recent study by the Visa Corporation indicated that only 35% of all Americans have even heard of HSAs, and only 14% expressed any interest in starting one.
That is likely to change as HSAs prove their worth, Elizabeth Bierbower, vice president of product innovation for Humana Inc., said at the fifth annual World Health Care Congress. She pointed out that 5 years after the introduction of health maintenance organizations (HMOs), combined enrollment in all existing plans was only 5.5 million. That changed quickly, once major employers became convinced—for better or for worse—that HMOs would save them money. Ms. Bierbower predicted a similar trajectory for HSAs.
Diamond Management & Technology Consultants, an industry consulting company, projects that by 2010 employees and their employers will have put over $75 billion in assets into HSAs. Last year, employer contributions to HSAs already were up over 50% from the previous year.
Some companies are taking a very proactive role in pushing HSAs, especially for lower and middle-income workers. Ms. Bierbower said Humana has been a strong HSA advocate for its employees. For those making under $50,000 annually, Humana will contribute $6 for every $1 an employee contributes to an HSA. “[The ratio is] lower if your salary is higher, but there's still a big incentive to do this. We try to encourage long-term thinking.”
That, she said, is something grossly lacking in this country. People are simply not saving money, especially for health care needs, and they're in for a rude awakening as they reach retirement age. “Most people do not budget for health care, and they don't understand their cost-sharing levels. People do not understand that Medicare does not cover everything.”
Many baby boomers and Gen Xers will not be able to retire comfortably because they have not saved any money to do so. According to research from the Employee Benefit Research Institute, a majority of near retirees has already spent 95% of their preretirement income. The majority of workers aged 45–55 years have less than $50,000 in savings.
With copayments, pharmacy costs, and out-of-pocket expenses on the rise, even people with relatively generous health plans are finding that they still come up short. A Kaiser Family Foundation survey in 2006 showed that 29% of families reported that one or more members had difficulty paying medical bills.
Doctors often bear the brunt of Americans' lack of planning for health care expenses, Ms. Bierbower said. In a Humana survey of consumer attitudes, researchers found that many Americans are quite willing to leave their physicians holding the bag, in the form of unpaid bills. “They tell us that health care providers are the last ones they will pay. They say things like, 'We know the doctor will take $10 a month.' They perceive that doctors are rich and don't really need the money.”
She added that people are much more inclined to ignore a doctor's bills than a hospital's, for the simple reason that hospitals tend to pursue their payments more aggressively and they can hurt peoples' credit ratings, something they perceive that individual doctors don't do.
“We have to work with our employees and consumers to change this attitude. Doctors need to get paid,” Ms. Bierbower stressed.
She said Humana, and many other insurance carriers like Aetna, WellChoice/WellPoint, UnitedHealth Group, Kaiser Permanente, and Great-West have begun offering health care lines of credit to help people cover their out of pocket expenses, copayments, or gaps in existing coverage. The line of credit strategy is also a good option in conjunction with HSAs, to help cover sudden large expenses or as a stopgap in cases in which patients have exhausted their HSA savings.
Humana's line-of-credit card is activated at the time of need, and can only be used to pay credentialed health care providers. The charges are interest free for 6 months. “We're not trying to encourage more credit card debt,” Ms. Bierbower said.
Advocates of HSAs and other forms of consumer-driven coverage say that one of the primary virtues of these plans is that they push the end-user of health care services to become more cost conscious, and presumably more judicious, in their health care choices. In practice, this seems to be borne out.