The key thing in a health savings account is you actually put a patient in charge of his or her decisions, which we think is a vital aspect of making sure the health care system is not only modern but a health care system in which costs are not running out of control. When you go buy a car, you know, you’re able to shop and compare. And yet in health care that’s just not happening in America today.
President George W. Bush, February 16, 2006
In 2003, President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act into law. Along with the many provisions of the law directly related to Medicare (most notably the creation of the Medicare Part D prescription drug program), the law also affected people using private health insurance by creating new rules for health savings accounts and high-deductible health plans.
Without going into all of the ins and outs of how health savings accounts work, the promise behind them was to make health insurance behave more like other forms of insurance — that is, for major costs only as reflected by a high deductible. The ordinary medical expenses would be funded through a tax-deductible savings account that rolled over from year to year. This would supposedly create more rational markets and price transparency for routine health services.
Employers jumped at these new high-deductible health plans because they were relatively inexpensive to provide for their employees.
In 2012, in order for a health plan to qualify as a high-deductible health plan (and thus be eligible for the tax benefits of a health savings account), individual coverage required a deductible of at least $1,200 and an out-of-pocket limit of no more than $6,050. Family coverage required a deductible of at least $2,400 and an out-of-pocket limit of no more than $12,100. HDHPs could and did often have deductible amounts considerably higher than the minimum.
Employers funded employees’ health savings accounts with varying degrees of richness, if at all. Individuals bought many of these health plans as well but were inconsistent about funding their health savings accounts.
More than half (55%) of all accounts received personal contributions during 2012 and 44 percent of the accounts received employer contributions. Of those accounts, the average personal contribution was $2,337 and the average contribution from employers was $1,142.
America’s Health Insurance Plans and American Bankers Association. “An Analysis of Health Savings Account Balances, Contributions, and Withdrawals in 2012.” Produced July 2014.
Obviously with less than half of HSAs receiving any employer contribution, just over half receiving any personal contribution, and those contributions typically being less than the deductible amount, these high deductibles became barriers to accessing health care services for many people. Even emergency services, especially for men. None of this should have been a surprise.
But then a funny thing happened. With such high deductibles, patients became more and more cognizant of when they were met and when they rolled over. If an expensive non-emergency medical procedure covered by health insurance could be postponed until the end of the calendar year when the deductible was closer to being met (or fully met), those procedures were postponed. But those procedures weren’t eliminated — they just piled up in December when it made the most financial sense for the patients given the rules of their health insurance plans.
As the growth of the high-deductible insurance plans comes into play, we see more seasonality in elective surgery. People with high deductible plans want to have less done at the beginning of the year.
Dr. Peter Knapp, urologist, quoted in The Indianapolis Star
And those end-of-year appointments start filling up months in advance. In other words, there are those much-maligned “waiting lists” driven not by the government officially rationing care, but by patients, employers and health insurance companies.
We still have health care rationing in the United States, but it’s based on price, income and arbitrary benefit periods instead of clinical concerns. Even in the new world of the Patient Protection and Affordable Care Act, many of these issues remain.