HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Monday, January 31, 2005

Health Savings Accounts Are on Their Way

According to an article in today's LATimes, the administration is planning to move swiftly to approve more Health Savings Accounts (HSAs) and put an end to the current employer-provider health insurance model.  The LATimes reports,

"Emboldened by their success at the polls, the Bush administration and Republican leaders in Congress believe they have a new opportunity to move the nation away from the system of employer-provided health insurance that has covered most working Americans for the last half-century.

In its place, they want to erect a system in which workers — instead of looking to employers for health insurance — would take personal responsibility for protecting themselves and their families: They would buy high-deductible "catastrophic" insurance policies to cover major medical needs, then pay routine costs with money set aside in tax-sheltered health savings accounts."

The article provides a good introductory overview to HSAs and some of the pros and cons of the growing push to switch to this form of insurance for all Americans.  I am not a fan of the accounts and wasn't aware that they had become so popular with certain segments of society.  The LATimes states that the adminstration is farther along in its planning for HSAs than it is on social security reform so we may be seeing proposals for change in the near future.  [bm]

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I'm not surprised by the popularity of HSA's. They are a significant improvement in healthcare for people who change jobs frequently, e.g. the high tech and entertainment industries. When typical job tenure is 2yrs and under, you must constantly change doctors, change plans, change rules, etc. This is highly disruptive and prevents establishing any continuity in medical care. It also introduces constant hassles regarding "pre-existing conditions" by making any problem that lasts more than a couple years "pre-existing." The HSA when combined with corresponding adjustments to salary structure, provides equivalent financial benefits without the constant disruption in personal healthcare relationships. The HSA also deals with the moderately frequent brief periods of un-employment or self-employment in these fields.

There is a segment of the workforce that changes jobs often but is reasonably well paid while employed. So I am not surprised that these people want to switch from employer paid to HSA. They will push to ensure that the resulting system is financially similar, and employers will not fight this. The financially equivalent HSA yields happier employees, much less administrative burden, and lower overhead for the same costs as the employer paid insurance. So the employer wins even with otherwise financially equal terms.

The HSA system lacks the quantity discount negotiation aspect of employer paid insurance, but these employees have the skills to negotiate and form cooperative buying relationships. The prospect of customers who pay their bills on time without months of nit-picking and obstruction is attractive to healthcare providers. The HSA buying cooperatives are likely to emerge once there are enough HSA users in any particular area. I anticipate healthcare providers offering terms similar to those offered to regular insurers. It is in their interest to attract patients who pay promptly and with a minimum of administrative headaches.

Posted by: rjh | Feb 1, 2005 10:20:56 AM

I hope this administration does something to regain the trust that people have lost in the republicans.

Posted by: Hartford Medical Malpractice Lawyer | Jul 24, 2008 1:06:52 PM

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