Thursday, April 10, 2008

Mis-Guided HSA Users Experience Disillusionment

HSAs do offer some long-term potential for helping restrain runaway health-care costs. But as the linked story shows, the empahsis here is long-term. In the short-term, if employees have a chance of HSA or traditional indemnity, they are going to self-select. HSAs will be selected mostly by low-utilizers. Furthermore, in some circumstances, HSAs may be cheaper for very high utilizers as well (because once the deductible is met, typically 100% of costs are covered, no co-pays, including drugs). The middle-to-medium-high users will stick with traditional plans.

So in the short-term, employees and individuals will optimize, by selecting HSAs if they think there is a direct savings to them, so that if anything, upon introduction of HSAs, employers will actually see their costs increase.

The strategic value of HSAs to the system only is realized over time, if they truly work
to cause individuals to be wiser, more efficient consumers of healthcare.

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