NCPA - National Center for Policy Analysis


April 5, 2007

A new report shows consumer-directed health care gaining ground, but it's still far from meeting its promise as a serious restraint on medical costs, says Investor's Business Daily (IBD).

Measured against the past couple of years, the latest news on health savings accounts (HSAs) looks pretty good:

  • According to a survey of insurers issued this week by America's Health Insurance Plans, 4.5 million Americans were covered under HSA-eligible high-deductible plans as of January.
  • That's up 40 percent from the 3.2 million covered in the last AHIP survey a year earlier.

By most standards, that's a healthy gain, says IBD.  But measured against expectations, it's not good enough:

  • Their 4.5 million covered lives represent 1.5 percent of the U.S. population, not big enough to affect overall health care costs.
  • The Treasury Department projects coverage of 25 million to 30 million by 2010, just three years from now, assuming no changes in current law.
  • It has set a target of 40 million to 45 million if Congress enacts the president's new health care proposals; however, at the current rate of enrollment growth, HSAs will cover fewer than 10 million by 2010.

American health care needs consumer-directed plans like the HSA more than ever, says IBD.  There's a perfect storm brewing as an aging baby boom generation nears its maximum health care consuming years in a system with few controls on spending.

What HSA's need now is more room to work.  They have already evolved to include reimbursement for preventative care and some prescription drugs.  Further improvements especially in areas for treatment of chronic disease and better rewards for choosing the most cost-effective health plan will help ensure a health care system driven by greater efficiency through choice and competition, says IBD.

Source: Editorial, "Improving Health Savings Accounts," Investor's Business Daily, April 5, 2007. 


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