Health Savings Accounts: Two Interesting Articles on Their Effectiveness

Recently I’ve read two good recent articles on Health Savings Accounts and their usefulness reducing health care costs, increasing health care quality, and helping employees take home more cash.

When I was on the management team at a former company, we agonized about employees’ health care. Not just how (or whether) to absorb the astonishing annual increases in their health insurance premiums, but what we could do to help them get better care, not to mention even to let them actually take home the money we were willing to pay on their behalf (as opposed to having it vanish into those insurance premiums). Seems HSAs, if implemented properly (that is, the employer not trying to hold on to too much of the savings), are a good technique.

A non-ideological, results-driven report on how even public sector employees are choosing Health Savings Accounts when HSAs are offered. Be sure to read the reader comments – quite a useful discussion going on there. I like Daniels’ summary paragraph, too.

The Indiana experience confirms what common sense already tells us: A system built on “cost-plus” reimbursement (i.e., the more a physician does, the more he or she gets paid) coupled with “free” to the purchaser consumption, is a machine perfectly designed to overconsume and overspend. It will never be controlled by top-down balloon-squeezing by insurance companies or the government. There will be no meaningful cost control until we are all cost controllers in our own right.

I’ve no idea what this blog is – this is the first I’ve run across it. Has the sort of scary vibe of a libertarian polemic, but this article, at least, is almost entirely reasonable. Emphasizes how the structure of the HSA can reduce the distortions in the US health care market. Makes good sense to me. And I like how the author links HSAs to health insurance portability.

True portability.   As stated earlier, typically health insurance for an employee and perhaps their family disappears with the loss of the job.   It is common to hear of people staying with jobs they don’t like, “just to have the health insurance”.   What does the employer gain from that?   What do the employer’s customers gain from that?   Note that the savings account of the HSA is owned by the employee, not the company.   So over time, this pool of money can grow and provide financing for medical expenditures regardless of employment. Furthermore, since the accompanying catastrophic policy would be dramatically cheaper than a “traditional” plan, it would be inherently more affordable during an period of unemployment.

As I mentioned in an earlier post touting David Goldhill’s cover story in The Atlantic (September 2009), I think the structure of health care financing in the US is the primary cause of both rising health care costs and poor health care outcomes. Would be nice to see HSAs in wider use, see if they help address the problems.

An Indiana experiment that is reducing costs for the state and its employees.

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