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Health Savings Accounts and their impact on the cost of care–is there one?

2009-08-26 by Colleen King

Health insurance is on everyone’s mind these days–either you don’t have it, can’t get it and want it, you’re upset about what you are paying for it, or you turned on the daily news and there it is, the topic is right in your face again.


A Health Savings Account (HSA) is an account that you are eligible to open if you have a specific type of health plan, also known as a qualified high deductible health plan. Generally the only benefits you have prior to meeting the deductible are preventive, but check the benefits before you buy–some plans now are not offering preventive coverage prior to meeting the deductible. I think they should, but they didn’t ask me.  These types of plans are available in both the individual health insurance market and the group health insurance market.


Anyway, I’ve included in this article an excerpt from a study that United Healthcare relating to ‘transparency’ of health care costs when people have what’s referred to as consumer driven health plans.  What it boils down to is if you you see how much things cost, you are more prone to looking at less expensive alternatives, just like any other area you might spend  money:


“Study Reveals HSA Plan Effects on Cost and Utilization


The latest UnitedHealthcare study is among the first to examine the impact of plans eligible for health savings accounts (HSAs) on health care costs and utilization among both large and small employers. Some highlights of the study:


The positive impact of HSA plans continued through the second year of enrollment.

This is meaningful because some first year differences in cost and use may have been attributable to a redistribution of elective care services as employees rushed to get care in the baseline year before an anticipated change in their benefits. This dynamic typically levels out in year two, providing a better view of consumer decision-making.

Employers who implemented HSAs showed greater declines in hospital admissions and emergency room visits. At the same time, the number of prescriptions increased over time in the HSA. However, pharmacy costs decreased in the HSA population. This suggests that HSA members are making more prudent health care choices, such as using lower-cost drugs.

Full replacement strategies appear to deepen the impact of HSA plans. When comparing cost and use across employers’ full populations (including traditional plan enrollees when the HSA was offered as an option), employers adopting a full replacement HSA had better cost results for both medical and pharmacy than employers offering an HSA option.

The utilization analysis suggests that large full replacement employers realize lower costs due to a decrease in emergency room visits and lab usage. This highlights the possibility that full replacement members are making more appropriate use of emergency room and lab services.

The study results are consistent with other cross-sectional studies done by UnitedHealthcare on CDH plans. HSAs, especially those with a full replacement strategy, have great potential to slow the growth in health care costs compared to more traditional plans, even after adjusting for the better health found among those with an HSA. The study also confirms that we see a favorable impact for smaller companies.


Consumerism in Health: Insights from Experience

The positive impact of CDH plans has been widely documented, largely based on the experience of health reimbursement account (HRA) and HSA programs. Over the last nine years, UnitedHealthcare has compiled a body of work that measures if and how CDH strategies deliver on their promise – to provide lower costs through better consumer decisions – when compared to more traditional plans. Similarly, UnitedHealthcare has investigated market concerns that threaten to slow the adoption of CDH plans.”


So doesn’t it make sense? How can you save money on your health care, if appropriate, if you think a $5 co-pay is all it costs to see a doctor?  Be well!

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