NCPA - National Center for Policy Analysis

HSA PLANS GAIN POPULARITY AS PREMIUM COSTS RISE

September 27, 2007

About half of all employers are expected to soon offer Health Savings Account (HSA) plans to their employees.  This projection offers the best hope for restraining runaway health care costs, according to John Goodman, president of the National Center for Policy Analysis (NCPA). 

A major factor in the movement towards consumer-directed health care plans is the ever-increasing premium rates:

  • Premiums for traditional indemnity plans increased 9.1 percent in 2007 and are expected to increase 9 percent in 2008.
  • Premiums for health maintenance organizations (HMOs) increased 8.7 percent in 2007 and are expected to increase 9.0 in 2008.
  • Premiums for point-of-service (POS) plans increased 3.9 percent in 2007 and are expected to increase 8.5 percent in 2008.
  • Premiums for preferred provider organizations (PPOs) increased 2.4 percent in 2007 and are expected to increase 8.5 percent in 2008.

As a result, interest in account-based plans is predicted to rise.  According to a report released by Hewitt and Associates:

  • More than 20 percent of companies offer, or plan to offer, a high-deductible health plan with an HSA by the end of this year and almost half are considering offering one at a future date. 
  • Only 3 percent of employees elected these plans last year, but most companies anticipate that enrollment will grow to 20 percent in 5 years.

"The best way to control health care costs is to put patients in control of more of their health care dollars," said Goodman.  "The increasing popularity of HSAs is a result of managed care's failure."

Source: "HSA Plans Gain Popularity as Premium Costs Rise" National Center for Policy Analysis, September 26, 2007.

 

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