Opinion: Trend provides silver lining within health care clouds

As more employers jettison health coverage due to rising costs – the Kaiser Family Foundation reports the percentage of companies offering coverage is down to just 61 percent – individuals are increasingly turning to HSAs for themselves and their families.

How HSAs work

An HSA in conjunction with a high-deductible health insurance policy places money into a tax-free health account , where it grows tax-free and can be withdrawn tax-free as long as the money is used for medical purposes.

Any money left in the account at the end of the year can be rolled over to the next year.

As the money in the HSA grows, it builds up resources a patient can use for routine and future medical care. And since the money belongs to the individual from Day 1, HSA users choose their doctors and hospitals – no referrals necessary. Likewise, when individuals have more control over health care spending decisions they become better consumers and health care costs are driven downward.

Growing use of HSAs

Several surveys indicate the market is going the HSA route. Evidence is the recent ventures into the HSA market by insurance giants Aetna, Cigna and Blue Cross/Blue Shield.

One company, Golden Rule Insurance Co. (a subsidiary of UnitedHealth Group), reports that 42 percent of its entire customer base is now covered by an HSA policy.

Incredibly, these HSA customers already have accumulated an astounding $141 million in their savings accounts.

This is proof that HSAs are actually working the way Congress intended when it passed a bipartisan bill making HSAs available in December 2003.

The $141 million is money that Golden Rule consumers now control to meet health care or retirement savings needs. These are dollars that, in the more traditional third-party payment system, would have either gone to insurance companies or been lost in the maze of the health care system – where so many untold billions of dollars already have gone.

Lower premiums

There’s even more good news about HSAs: According to ehealthinsurance.com, an online broker, the average premium for an individual HSA health insurance policy went down by 19 percent in the first half of 2005.

The monthly premium dropped from $137.94 to $111.57, which over a year will save consumers more than $300.

Given the annual bad news about rising health insurance costs, which leaves approximately 45 million Americans without coverage, this data helps to explain why the market is increasingly heading in the HSA direction.

According to the Kaiser Family Foundation, those people insured by employer-provided HMO, PPO and POS policies are paying an average of $308 in monthly premiums – almost $200 more than those insured by HSAs.

Option for low-income consumers

The impact on consumers, especially low-income consumers who were previously uninsured, has been substantial. Just under half of the HSA customers who purchased their policies through ehealthinsurance.com and with incomes of less than $15,000 were previously uninsured for at least six months.

Of those with incomes between $15,001 and $35,000, 43.4 percent were previously uninsured for at least half a year before obtaining an HSA policy.

As more Americans discover the advantages of HSAs, and as more companies begin to offer them, consumers will be able to affordably insure themselves.

Because HSAs are portable – meaning the consumer owns the account – individuals won’t necessarily have to worry about losing coverage if they change jobs, lose a job or want to start a business.

Karen Kerrigan is president of the Small Business and Entrepreneurship Council, a trade association in Washington, D.C., representing more than 70,000 member businesses.