HSAs for state employees: empower patients, trim budgets

by Brian Schwartz | 1:30 am, May 6, 2010 | Comments Off

High-deductible insurance policies combined with health savings accounts have been a success story in terms of keeping premiums in check, encouraging prudent consumption of health care, and allowing patients to save for future medical expenses. The Texas Policy Foundation reports that

States with the HDHP/HSA option currently in place include: Arkansas, Florida, Georgia, Indiana, Kansas, Nebraska, Pennsylvania, South Carolina, South Dakota, Utah, Virginia, and Wyoming.

Note: Colorado should be on this list, as it offers an HSA-qualified plan.

In March the Wall Street Journal published Indiana Governor Mitch Daniels’ summary of Indiana’s success with HSAs. Some excerpts:

In Indiana’s HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all his health bills. Indiana covers the premium for the plan. The intent is that participants will become more cost-conscious and careful about overpayment or overutilization.

Unused funds in the account—to date some $30 million or about $2,000 per employee and growing fast—are the worker’s permanent property. …

The HSA option has proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it, by far the highest in public-sector America.

…In the second straight year in which we’ve been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.

The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state’s total costs are being reduced by 11% solely due to the HSA option. …

… There is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.

…It turns out that, when someone is spending his own money alone for routine expenses, he is far more likely to ask the questions he would ask if purchasing any other good or service: “Is there a generic version of that drug?” “Didn’t I take that same test just recently?” “Where can I get the colonoscopy at the best price?”

See also this report by the Texas Policy Foundation: Health Savings Accounts for State Employees and Retirees.

(Via State House Call)

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