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November 13, 2006
NCPA Health Savings Account Report
A new report provides confirmation of what proponents of Health Savings Accounts have long asserted - putting patients more in touch with the cost of care is essential to controlling those costs, according to Devon Herrick, a senior fellow with the National Center for Policy Analysis (NCPA).
The report, by Massachusetts Institute of Technology's Jon Gruber, was a retrospective analysis of the landmark RAND Health Insurance Experiment (HIE), originally conducted in the 1970s. Gruber found people cut back on their use of health care the more they have to share the costs of that care.
According to Gruber:
- When cost-sharing moved from zero (i.e. free care) to 95 percent, total health care spending fell about 30 percent.
- More telling however, outpatient spending fell 40 percent while face-to-face doctor visits fell by 60 percent.
"The less people are insulated from the costs of health care, they less likely they are to run to the doctor every time they have the sniffles," said Herrick. "When patients are responsible for paying even a small portion of their medical bills, they begin to change their spending behavior."
Public health advocates fret that patients cut back on care, worrying that prevention now will save higher expenditures in the future. Yet, taking the choice away from the patients and putting everyone on free care doesn't substantially improve the overall health of the average person.
"As health care consumes an increasingly large chunk of Americans' budgets, someone will have to decide between medical care and other uses for our money," said Herrick.
"When given a choice, individuals choose the option they feel is best for them. While their choice might not please public health advocates, cutting back on medical usage appears to have little detrimental effect on their health."
Posted by Wiley Long at November 13, 2006 08:31 AM
Comments
My husband's employer will be switching to a high deductible insurance plan with a hsa. The deductible is $3000 for the family. Premiums will continue to be $280 per month. I'm self-employed. My husband has a prescription for his asthma that costs around $400 per month. It has proven to be the difference between a healthy year and a year with recurrent bouts of bronchitis and pnuemonia. Under this new plan, we will now have to pay the prescription until we meet the $3000 deductible. Currently our out-of-pocket costs are around $1500 for rx and doctor's visits. I fail to see how this new plan will save us money. Please give me some insight in how this will benefit me and not just my husband's employer
Posted by: Lori at November 13, 2006 10:53 AM
Most non-HSA plans have individual deductibles, whereas most HSA plans have family deductibles. So if you are looking at $1500 per person on your previous plan, then your total exposure is at least $3000, if not more. You didn't say whether your employer was helping to fund the HSA. But even if they are not, the $3000 you put in your HSA each year is 100% tax deductible, which could save you an additional $1000, depending on your tax bracket. I would also suggest shopping the price of his asthma medication, as you may be able to find a much lower price by perhaps orderinig it mail order.
Regards,
Wiley Long
Posted by: Wiley Long at November 15, 2006 10:16 AM