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October 13, 2009
Health Savings Accounts Are Helping To Lower Healthcare Costs
Two business executives have suggested what we have been saying all along, that Health Savings Accounts along with High Deductible Health Plans would help reduce the effects of rising health care costs.
Tom Kennedy from J.F. Brennan Co. marine construction and Tom Brock from Altra Federal Credit Union said their firms have seen positive results with Health Savings Accounts. The two spoke at a forum sponsored by the Coulee Area Regional Employers, or CARE, Health Action Cooperative.
About 20 percent of companies nationally had switched to Health Savings Accounts by 2005, up from only 5 percent in 2003, according to the Kaiser Family Foundation.
Brock said Altra made the switch in 2007. Under Altra's HSA plan, the company contributes $292 a month to each participating employee's Health Savings Account.
Unlike the current flexible spending plans, Brock said, there is no "use it or lose it" characteristic with a Health Savings Account, in which all the employee-contributed money must be spent by year's end.
Instead, employees can amass up to $5,950 a year.
Altra has a $6,000 family plan deductible. Once the deductible is reached, those in the plan then pay 20 percent of care costs up to a total of $10,000, after which the plan pays the full cost of care.
While the high deductible can be a shock for those not used to such plans, it's "not enough to create financial hardship for the family," Brock said.
And the Health Savings Account gives employees more flexibility, he said.
Healthy employees who do not have any costs for the year "are rewarded with a growing Health Savings Account," Brock said.
Altra has 240 employees locally, and 134 use the Altra health benefits. Of those, 74 percent have more than $1,000 in their accounts, 44 percent have more than $2,000, and 11 percent have more than $5,000, Brock said.
Claims for the first six months of 2009 are 40 percent less than the first six months of 2008, he said, adding that Altra's 2008 costs were virtually the same as in 2005, despite 10 more employees in the plan.
Kennedy noted similar experience at Brennan.
Critics of HSA plans point to the high costs, along with sometimes more paperwork.
High deductible health insurance plans might encourage consumers to skip basic and preventive care if companies don't offer incentives for those services, said Larry McNeely, federal health care advocate for the U.S. Public Interest Research Group, in a telephone interview from Washington, D.C.
"It's great that companies are doing wellness and having incentives to get preventive health care," he said. "But that doesn't mean HSA plans don't create an obstacle for going to the doctor when you need to go to the doctor."
Posted by Wiley Long at October 13, 2009 10:35 AM