Health insurance is about to bear a higher price tag.
Experts at the Kaiser Family Foundation just warned that premiums are likely to jump in 2017 — after increasing an average of more than 12 percent this year.
High-deductible health plans paired with tax-advantaged Health Savings Accounts (HSA) have emerged as a source of a lower-cost refuge for patients, who accept the high deductible in exchange for lower premiums.
Naturally, the Obama administration is trying to restrict access to HSAs.
That’s a mistake. HSAs empower consumers to take control of their health care and reduce overall health spending in the process. Our leaders should be working to expand access to them, not narrow it.
HSA holders can set aside money each year, pre-tax, to help cover routine health costs — everything from co-pays to prescription drugs to elective surgery. Their employers can also contribute money to their accounts. The funds roll over from year to year tax-free and travel with patients from job to job.
Because they control their own health-care dollars, patients tend to spend them more judiciously. They may call around to different pharmacies or clinics, for instance, in search of the best deal on a prescription or a test, such as an MRI.
Such consumerism forces medical providers to compete on both price and quality — just as sellers in any other market have to.
Consequently, it should be no surprise that HSAs reduce costs. Researchers at the Rand Corp. found that families with HSAs spent 21 percent less on health care in the first year after switching from a traditional insurance plan. The nonpartisan National Bureau of Economic Research (NBER) found that employers who offered HSAs saw their costs decline over three years, compared to those that did not.
A Health Affairs study found that health spending could decline by as much as $57 billion if HSA-compatible health plans were able to capture 50 percent of the employer-sponsored insurance market.
Patients with HSAs don’t spend less because they forego needed care. The opposite tends to be true. The NBER study found no difference in the utilization of health-care services between patients with HSA-compatible plans and those with more conventional health insurance. Another study found that HSA patients were actually more likely to seek preventive care and participate in wellness programs.
HSAs’ combination of lower premiums and greater control for patients has made them popular. By the end of last year, nearly 20 million Americans had adopted them — an increase of 13 percent over the 2014 figure.
But the reasons for HSAs’ success are exactly why they’re now in regulators’ crosshairs. Distrustful of health care controlled by consumers rather than bureaucrats, the Obama administration has been subtly erecting barriers to the growth of HSAs.
The administration started small, by banning the use of HSA funds to pay for over-the-counter medications. Then it increased the tax penalty for improper withdrawals. Meanwhile, the maximum individual yearly contribution to an HSA has remained at $3,350 for an individual and $6,750 for a family for the last two years — and will only jump by $50 next year.
Worse, the administration seems content to keep HSA-compatible plans off the exchanges. Right now, four in five Obamacare plans are ineligible for HSAs — even though many have high deductibles.
Exchange shoppers’ options may only decrease further. According to an analysis from Roy Ramthun, who helped lead the U.S. Treasury Department’s initial rollout of HSAs in 2003, newly proposed federal mandates for 2017 exchange plans could severely restrict access to the accounts.
Essentially, the rules require all plans to cover a number of health-care services below any deductible. But a separate set of federal rules forbids plans that cover anything beyond preventive services from being paired with HSAs.
By 2018, Ramthun warns, “HSAs will cease to exist in the marketplace.”
Such a loss can only be stopped by repealing and replacing Obamacare with a market-based health-care alternative.
For more than a decade, HSAs have helped make health care affordable for millions of Americans. They will be even more important next year when premiums spike, as Marilyn Tavenner — the current head of America’s Health Insurance Plans — recently noted. Unfortunately, that fact hasn’t moved the Obama administration, which appears to be committed to regulating them out of existence.