Abelson and Freudenheim lead off this article with an intriguing question: "What are your chances of staying healthy for the next 12 months? Care to place a bet?" Their question implies, of course, that everyone's health status for the next year is unknowable, and that lack of knowledge should steer people away from health savings accounts and other consumer directed health insurance plans. That is the wrong question to ask, for several reasons.
What is your risk, for instance, of wrecking your car in a traffic accident? Most people couldn't answer that question precisely either, but still go on to purchase auto insurance with relatively high deductibles and low premiums. They know that, the vast majority of the time, taking a high deductible is an excellent bet, and they will only rarely need the catastrophic coverage. Consumers can then take the money they save on insurance premiums and spend it on other things. That is, in fact, a very good bet.
Still, this article is generally even–handed in its presentation and well worth reading:
What are your chances of staying healthy for the next 12 months? Care to place a bet?
Those are the questions for many of the tens of millions of working Americans now engaged in the annual health–benefits enrollment process and who for the first time have the option of signing up for the relatively new kind of coverage known as a consumer–directed health plan.
But because the plans can pose risks and uncertainties, many employers are still not offering them. And even where the plans are available, most experts do not expect more than a small fraction of workers to choose the coverage.
Meant to save employers money—possibly workers, too, if their gambles pay off—the plans dangle the lure of lower monthly premiums than conventional coverage. The trade–off is a higher annual deductible, the money the member must pay to cover medical expenses before the insurance kicks in.
With the new plans, the deductible is at least $1,000 for an individual but can go much higher.
Last year, the Kroger supermarket chain, one of the first large companies to offer a consumer–directed plan linked to an individual health savings account, managed to persuade only 5 percent—or 3,500 of its 70,000 eligible employees—to sign up. To attract more employees in the current sign–up period, Kroger is adding a $500 match to employee contributions to the health savings account.
In an individual health savings account the annual contribution cannot exceed the plan's annual deductible. But it can grow tax–free until the money is withdrawn and can be added to year after year. And employees keep it, even if they change jobs. Nationally, employees have opened about 1.2 million accounts holding about $1.5 billion, according to a survey of 60 administrators of health savings plans by Steve Davis, managing editor of Inside Consumer–Directed Care, a trade newsletter.
"We think health savings accounts give our associates a long–term interest in the economics of health care that wasn't there before," said Mike Stoll, vice president for corporate benefits at Kroger.
So that employees do not skimp on the preventive medicine that can stave off much more expensive health conditions, many of the plans provide 100 percent coverage for such basics as yearly physicals or annual mammograms. The insurer UnitedHealth Group is the leading provider of consumer–directed plans, with 1.8 million members. By combining financial incentives with the help people need to make better health care decisions, UnitedHealth said, its patients with chronic diseases who are enrolled have 12 percent fewer emergency room visits than those in traditional plans.
Even Kaiser Permanente, the health plan best known for its classic H.M.O.'s, plans to offer consumer–directed products in California next year. And Medicare, the federal insurance program, is experimenting with some form of health savings accounts in 39 states.
"We're getting there," said Tracy L. Bahl, a UnitedHealth Group executive who manages health benefits for large employers. While adoption may be slower than anticipated, he said, "the trajectory still remains positive."
No one would argue with the premise that low–cost insurance options, with targeted subsidies (like tax credits), should be available to help low income Americans purchase health insurance. However, by making today's insurance options cover not just catastrophic expenses but routine injuries and minor aches and pains, we drive up the cost of health care for everyone. That, over the long term, is a very bad bet for those least able to afford health care today.