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Health Savings Accounts: The News Keeps Getting Better
Although it is hard to find much good news about American health care in the media these days, consumer-driven plans (high-deductible insurance plans including health savings accounts or HSAs) appear to be one bright spot. Costs for these plans are growing much more slowly—or even falling—and HSAs appear to be gaining momentum among consumers and business firms.
Average premiums for employer-sponsored health insurance have been rising steadily since 1996. They rose 11.2 percent in 2004, a slight decrease from 2003’s 13.9 percent increase but still significantly above inflation. While the data available on HSAs is limited, as they have been available for less than 2 years, the early results are promising.
According to sales data from ehealthinsurance.com, the average premium for an individual HSA-qualified high-deductible plan dropped 19 percent in the first 6 months of 2005 relative to the 2004 price, from $137.94 to $111.57 per month. Total savings from this drop, on average, amount to $316.44 per year.
Those aged 45 to 64 and purchasing HSAs saw the most dramatic price reductions, with average monthly premiums falling from $225.05 in 2004 to $187.07 in the first six months of 2005. That works out to annual average savings of $455.76.
Although it is still much too early to predict whether or not HSAs will ever become a national model, they are setting promising trends and defying conventional wisdom that only single-payer, government-financed health care could slow the rise of U.S. health care costs.
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