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The Case against Health Savings Accounts

Asking employees to pay more for their care can be a plus on balance sheets but a minus on medical charts, say critics.

David M. Katz, | US
March 17, 2006


I see one big employer benfit in HSA's. If the employee is now the partial insurer/self insurer, the employer has just removed from its' payments administration, a bunch of small claims that don't justify a company employees time. Now the employer can whittle down the people needed to administer claims. That is the game managed care plays. One drawback for the employee, what happens to the buildup of funds into the HSA when the money isn't used? Can the employee opt out of a year's funding? Can he access excess funds without a big penalty? What rate of return will he realize on the excess cash? He might do better to allocate more to a 401K, take the higher return, get the tax benefit and fund the HSA with after tax cash especially if he does the long form tax return and can deduct health care.

Posted by Jeff Struve | May 15, 2006 02:25 am

HSA's - The Future Depends On An Informed Consumer

There is nothing magical about HSA's that save money. The fundamental issue is, if spending behavior does not change, you are just shifting cost. I am convinced that placing more control in the hands of the consumer will change spending habits. Special consideration for preventive care and maintenance medications needs to be given in plan designs. Most importantly, if we can not arm the healthcare consumer with the information they need to make good choices, the concept will fail. That is why all the banter that we hear about medical cost transparency needs to become more than banter. Without improved availability of good information on the comparative cost and quality of medical service providers, HSA's will have no future.

Posted by James Buhnerkempe | March 24, 2006 03:27 pm

Responses to First Two Comments

Aren't HSA's too new for significant research to be cited? If so, other than the headline, the article appropriately addresses the HSA situation in my view. Why do employers always have to be the responsible party in reducing health care costs? Well, one obvious reason is that an individual has very little leverage in working out the structure and specifics of an insurance plan. Furthermore, an employee cannot count on other employees to take a course of action (in choosing a plan or how they utilized their chosen plan) in that in consistent with his or her own actions to control healthcare costs. Employees feel that the high costs of drugs, in particular, is someone else's fault/problem. If they are typically included in the initial lump of employee responsibility under an HSA, I can't see people choosing an HSA.

Posted by John Hnatin | March 24, 2006 10:15 am

Who writes your headlines?

I don't think the title of this article suits its content. The author runs through the list of negatives about HSA's that have been repeated by "experts" but have not really been proven by any conclusive set of studies to-date. In the end, the author recognizes the value of HSA's and that they have a market and does not merely provide negative comments about HSA's. A couple other points I would point out. A) While the employee is being asked to contribute more to his healthcare expense, this does not have to be the case. It is always the employer who seems to be seeking ways to improve his bottom line and with HSA's has chosen the employee as the latest pocket to pick in order to do so by requiring employees to contribute greater amounts. B) If HSA's are fully funded (i.e., contributions equal the amount of the deductible) there is no difference in coverage to the participant with significant medical bills. On the other hand, I like very much the idea that people with medical issues that are genetic such as asthma should get a bigger break on coverage. Still, if that is done, then expect the insurer to adjust premiums accordingly. In the end, there is no free lunch for any of us, is there? S.A. Becker

Posted by Scott Becker | March 20, 2006 04:52 pm

Case Against HSAs

Not well supported conclusions due to so few actual sources for research. Not much data available with so few accounts.

Posted by George Volland | March 20, 2006 01:04 pm

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