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HSAs Fail to Appeal to Employees
According to a recent report, HSAs don't benefit lower-income participants, nor have they led to reduced health-care costs as proponents anticipated. HR needs to better communicate -- and better tailor such plans -- to the varying employee cultures and demographics.
Although participation in HSAs nationwide has increased, the specialized accounts haven't found their target, according to Health Savings Accounts and High-Deductible Health Plans by Blair Woodbury of Denver's Bell Policy Center, a research and advocacy agency. According to the study, there were about 800,000 people nationwide with HSA-eligible plans in 2005. The number jumped to 1.4 million the following year. But that rapid growth has "missed their mark," according to the study, by "attracting enrollees with high incomes who are more likely than low-income people to already have coverage." The report also noted that HSAs "do not appear to be making system-wide changes toward lowering costs, as some proponents expected." Woodbury says that although HSAs "may be useful for some consumers," they are "by no means a solution to the major problems in today's health-care system." Because they are coupled with high-deductible health plans, health-savings accounts lead people to pay out of pocket for more of their health-care costs. As consumer-driven health plans were getting off the ground, "employers tried to accentuate the positive, with participant control, health-care choices, lower premiums and saving money for other purposes," says Ray Werntz, senior consultant for HPN Worldwide in Elmhurst, Ill. "Everybody thought this was going to appeal." Looking back, the anticipated appeal hasn't materialized, Werntz says. "Evidence has shown us that participants really are not happy with [HSAs] because, in many cases, they lead people to avoid necessary care," he says. In addition to finding such plans complicated, Werntz says, participants find "the problem of making financial decisions and spending or saving is exacerbated because of the overall asset situation for most individuals." Tim Elenz, president of Chicago-based Benefits Age, an employee-benefits consultancy, says HSAs can be effective, but that consumer education is required -- and that success "requires a commitment from HR." "HSAs do work for a lot of people," he says. "You have to educate or train people how it works." "The employer has to make a commitment," he says. "They have to realize that this is going to be a big unlearning and relearning process for their employees because this is very unconventional." HR leaders should make sure CDHPs are specially tailored to varying workforce populations, he says. The way plans are structured, communicated and funded "should be related to the varying cultures and demographics in different geographic regions," he says. But, Werntz says, the real problem with adoption of consumer-driven health plans is that "it causes people to decide whether they need a test." And, in putting a price on procedures, "it makes it very difficult for a participant to decide on a test." "With a consumer-driven health plan, you're really expecting people to look at cost effectiveness as the standard of care that they choose," he says. Although HSAs give participants more "control over the money in the front end of the plan," that control isn't enough "to make the architecture appealing to most people." And that includes employers, he says, who have "never really embraced HSAs as a salvation," even though, initially, research indicated HSAs would "sweep the country." Elenz says some employers just didn't want to deal with rising health-care costs any longer "so they've handed the problem to insurance companies and said 'you deal with it.' " "Employers have to take [control] back," he says, noting that "the investment [organizations] make in their employees is the most important investment they can make for the life of their company." "The [insurance] industry needs to be removed out of the decision-making process," Elenz says, adding that patients and doctors need to interact. Higher deductibles "make sense," he says, but should be used only if companies "are going to provide first-dollar benefits for their employees," so patients don't avoid medical care. For some low-income enrollees whose companies have established HSAs, there's no health-care alternative, but "it's better than nothing," Werntz says. "Whether these folks will like [HSAs] and get them to work the way they're supposed to work is doubtful." September 10, 2007 Copyright 2007© LRP Publications |
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