Opinion: HSAs provide intriguing option for health care

The president mentioned several ways to approach the issue, specifically, tax credits to help low-income workers buy insurance, community health centers in poor counties, better information technology to prevent medical error and related costs, association health plans, expanded health savings accounts and medical liability reform.

While I question the merit of tax credits, since the majority of low-income earners don't end up owing taxes, health savings accounts are an intriguing possibility.

HSAs, coupled with high-deductible insurance policies, allow consumers to place pretax dollars into savings accounts that grow tax-free. The dollars thus saved can go to pay the deductible on the insurance - a minimum of $1,050 for individuals, $2,100 for families - or to pay health-related costs not covered by their plan.

I have to say that when I first heard about the idea, I was skeptical.

After all, I remember when managed care came into this market. A large factor in its adoption was frustration, even outrage, about insurance policies with high deductibles.

The rationale for managed care was that if people got preventive care and received drugs based on a formulary, they'd consume less and, through education, be more likely to live healthier lifestyles.

Managed care failed to control costs long-term, in part because low office copays encouraged higher, not lower, utilization. Consumers had no incentive to consume less.

The idea behind HSAs is consumer control of expenditures. The argument is that if people have to pay for their own health care with their personal HSA savings, they'll consume less - make fewer doctor visits and choose generic drugs - and be more likely to live healthier lifestyles.

But hearing that HSAs relied on high-deductible insurance gave me a bad feeling of déjà vu.

Fortunately, though, the HSA model isn't just about high deductibles. It also recognizes and addresses prevention.

Under an HSA, basic preventive care - such as periodic health evaluations, prenatal and well-child care, immunizations, tobacco cessation, screening services and obesity weight-loss programs - is covered by the policy, not the deductible.

And while the deductible may be high, the covered individual does have a safety net for major or catastrophic costs. HSAs could lead to more people being insured, and make it affordable for more businesses to offer a health benefit.

HSA funds grow year to year, and while those dollars can only be accessed for health expenses, once the account holder turns 65, the funds can be accessed for any purpose, making it a retirement vehicle as well.

HSAs have merit. But we must make sure we consider all the issues. In my opinion, HSAs deserve our support if:

o They actually help control medical costs and do not merely provide a new tax shelter for the wealthy and a fee income bonanza for the banking industry.

o They do not force low-to-moderate earners to choose between their HSAs and 401(k)s. Because HSA dollars are easily accessible for medical costs, those dollars are far less likely to be there come retirement age. We shouldn't trade one funding crisis for another.

o They do not price out of the market the sickest, and those with chronic or pre-existing conditions.

I look forward to seeing the HSA concept develop.

3 million

Number of Americans who have signed up for HSAs, according to industry group America's Health Insurance Plans

15 million

Number of Americans projected to sign upfor HSAs by 2010, according to management consulting firm DiamondClusterInternational

52%

Percentage of HSA users who went to their local bank to open their account, according to Information Strategies Inc.

30%

Percentage of the HSA market projected tobe held by the localbank sector by 2010,according to ISI

Clarissa French is editor of Springfield Business Journal.