Proponents See Promise; Opponents Cite Flaws

Proposed solutions to the problem of covering the uninsured have abounded since the number of individuals without insurance in the United States began spiraling upward. Proposals ranging from using tax credits to creating association health plans to move the nation toward universal coverage have come before Congress. But one solution -- consumer-directed health plans that encompass health savings accounts -- has been a consistent focus of debate since entering the scene in 2003.

Consumer-directed health plans combine a high-deductible health plan, or HDHP, with a health savings account, or HSA. Both individuals and their employers can make contributions to HSAs, but those contributions are limited. Currently, employee contributions to HSAs are limited to $2,700 for individuals and $5,450 for families.

Will expanding such consumer-directed plans help the uninsured? Yes and no, depending on the person answering the question. Here are the arguments:

Proponents say that by making patients more aware of health care costs, consumer-directed plans can cut health care spending. They point to a recent analysis of RAND Corporation research, (PDF file: 18 pages / 240 KB. More about PDFs.) which indicates that when asked to take greater fiscal responsibility for personal health care, the average American tends to use fewer services and spend less with very little negative impact on overall health.

Proponents also say HSAs could redirect spending away from subspecialists and toward primary care as patients realize a family physician can address several health issues in one office visit at significant cost savings to the patient. Finally, proponents contend that the lower premiums that accompany high-deductible plans would encourage employers and individuals to buy coverage. In addition, the tax protections afforded HSAs could enable businesses and employees to set aside money for health care.

Opponents point to Employee Benefit Research Institute research, (PDF file: 12 pages / 163 KB. More about PDFs.) which concludes that patients with HSAs and high-deductible health plans “were significantly more likely to avoid, skip or delay health care because of costs" than were those with comprehensive insurance, with this behavior particularly pronounced among those with health problems or incomes under $50,000.

Other research from the Kaiser Family Foundation reached the same conclusion. An October report, "Health Savings Accounts and High Deductible Health Plans: Are They An Option for Low-Income Families?" (PDF file: 23 pages / 934 KB. More about PDFs.) says "For low-income families in particular, HSAs and HDHPs may exacerbate, rather than alleviate, the problems they currently face in affording and accessing needed health care."

In fact, according to testimony by Sara Collins, Ph.D., assistant vice president of the Commonwealth Fund, before the House Ways and Means Committee, Massachusetts Institute of Technology economics professor Jonathan Gruber, Ph.D., who prepared the RAND research analysis for the Kaiser foundation, has estimated that tax credits to businesses offering HSAs might actually increase the number of uninsured Americans by 600,000. Although 3.8 million previously uninsured people would become newly insured through HSA-eligible HDHPs in the individual market, many employers could drop coverage, according to the testimony. Some 8.9 million people could lose their employer-based health insurance.

The impact of such plans on family physicians also could be negative. High-deductible plans have a potential for increased bad debt, higher billing and collection costs and increased cash flow lag for FPs, says a discussion paper (PDF file: 20 pages / 140 KB. More about PDFs.) approved last year by the AAFP Board of Directors.