April 26, 2004

PAGING DR. SMITH (via mc):

Out of pocket costs may soar (Julie Appleby, 4/25/2004, USA TODAY)

Sharply higher health insurance deductibles may hit workers in the next two years as employers embrace newly created tax-free Health Savings Accounts.

Nearly three-quarters (73%) of employers asked by Mercer Human Resource Consulting said they were likely to offer the new accounts to their workers by 2006, according to a survey to be released this week.

"We're looking at a major market change," says Linda Havlin, Mercer's Midwest health care practice leader, noting that a 73% interest in adopting a new program within two years "is unprecedented."

The interest reflects employers' frustration with double-digit increases in health care costs and a dearth of new ideas for dealing with those costs.

The accounts, known as HSAs, enable employers to shift some of the cost of health care to workers and may also result in lower insurance premiums. HSAs, approved by Congress last year as part of the Medicare reform legislation, let policyholders set aside money tax free to cover health care costs.

Unspent money earns interest and can be rolled over, but the accounts must be coupled with insurance policies with annual deductibles of at least $1,000 for individuals and $2,000 for families.

Widespread adoption of the plans could drive up the average annual deductible paid by workers, which is now about $300 for single employees and $600 for families, according to data from Mercer and the Kaiser Family Foundation.

Mercer's survey of 991 employers found that 61% would set the individual annual deductible for an HSA plan at $1,000. But 17% chose $1,500, 11% said $2,000 and 10% were above $2,000.

As conservative cry-babies sleep through the revolution their President is winning for them....

Posted by Orrin Judd at April 26, 2004 2:12 PM

Biased reporting again. It's not a maybe. Higher deductibles mean lower premiums - period.

Under our plan, fully funding the HSA account for the next 2 years means we'll be "self insured" with $8k tax free dollars. The max out of pocket (OOP) in any year is $7.5k (God forbid). But, if something catastrophic happens, at least you're paying the OOP w/ pre-tax dollars. If we spend the "average" $1700 on healthcare related costs. We've always had as much profit incentive as the PPO - now we have the means to actually enjoy the fruits of pursuing that notion.

Posted by: John Resnick at April 26, 2004 7:03 PM

(oops. finish the thot)
"If we spend the "average" $1700 on healthcare related costs." so much the better: we're healthy and WE keep the dough.

Posted by: John Resnick at April 26, 2004 7:05 PM