New Law Encourages Use of Health Savings Accounts

By News Staff
1/4/2007

More of your patients may enroll in health plans that carry a high deductible as a result of legislation signed into law last month by President Bush. According to some analysts, that could mean they won't be coming to you for many preventive services.

The legislation encourages enrollment in consumer-driven health plans, or CDHPs, by allowing Americans to invest as much as $5,650 tax-free in health savings accounts, or HSAs. In addition, employees can make a one-time, tax-free transfer from a flexible spending account, a health reimbursement account or an individual retirement account to their HSAs.

Patients use funds from the HSAs to pay their health plan deductibles and other health care costs until their insurance plan coverage kicks in. High-deductible plans that incorporate HSAs are called CDHPs; plans without HSAs are known simply as high-deductible health plans, or HDHPs. Both are thought to increase patient awareness of health care costs and quality.

The effort to encourage participation in HDHPs and CDHPs comes at a time when enrollment in the plans has reached a plateau, according to research by the Employee Benefit Research Institute, or EBRI. (PDF file: 48 pages / 737 KB. More about PDFs.) Participation in HDHPs, CDHPs and HSAs in 2006 was virtually unchanged from 2005 participation levels, according to EBRI. Currently, 1.3 million Americans have high-deductible plans, and another 8.5 million have health plans with deductibles high enough to qualify for HSA contributions.

Whether the attractiveness of high-deductible plans and HSAs will increase as a result of the new legislation remains to be seen. The EBRI research shows the following.

The plans do not significantly affect the number of uninsured Americans. Adults enrolled in the plans are no more likely to have been uninsured before enrolling than are their counterparts in comprehensive health plans.
Generally, high-deductible plans fail to cover preventive or primary care services; 57 percent of all people with CDHPs and 68 percent of people with individually purchased CDHPs must pay for all of their medical care, including preventive and primary care, until they reach their deductible.
About two-thirds of individuals with employer-based CDHPs receive employer contributions to an HSA that could be used to cover deductible costs. People with HDHPs and CDHPs are more likely than those with comprehensive health insurance to report they have delayed or avoided needed medical care because of cost.
People enrolled in most HDHPs and CDHPs are less likely than those in comprehensive plans to have received a colon cancer screen or blood pressure check during the past five years than those in more comprehensive plans. However, when HDHPs and CDHPs pay for preventive care, these differences disappear.
Adults in HDHPs and CDHPs are equally as likely to report that they adhere to their treatment regimens as are adults in more comprehensive plans.

The health insurance industry disputes some EBRI findings. Karen Ignagni, president and CEO of America's Health Insurance Plans, pointed to Kaiser Family Foundation data released in the 2006 Employer Health Benefits Survey (PDF file: 156 pages / 3 MB. More about PDFs.) and noted "82 percent of workers enrolled in HSA-eligible plans are in a plan that offers preventive benefits prior to any deductible."

AAFP Offers Guidelines on HSAs

High-deductible health plans and health savings accounts could pose cash flow challenges to family physicians, FPs should scrutinize their patients' high-deductible plans' contracts and, perhaps, adjust their own practice's collections system, according to an AAFP discussion paper (PDF file: 20 pages / 140 KB. More about PDFs.) on HSAs. The Academy offers several tips for ensuring timely payment for care provided to patients with HSAs. For example, verify the high-deductible plan's rules on collections, negotiate payer contracts that allow you to collect any out-of-pocket money due at the time of service, and ask patients for their HSA debit card and credit card numbers at check-in or checkout.

Moreover, according to Ignagni, research in the July/August 2006 Health Affairs "concluded that HSA-eligible plans will not raise out-of-pocket costs for most users." The plans, she said, "may, in fact, result in significantly lower out-of-pocket costs for many consumers with serious medical conditions as a direct result of the out-of-pocket maximums in the legislation that led to their creation in 2003."

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