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Tuesday, June 12, 2007

Health Savings Accounts Are Unpopular

Bad news for consumer-directed health plans such as Health Savings Accounts:

Health Savings Plans Start to Falter, by Vanessa Fuhrmans, WSJ: President Bush and many big employers have hailed "consumer-directed" health plans and savings accounts as an effective weapon in the battle against runaway medical costs. But several years after the plans got off to a fast start, the approach appears to be stumbling -- largely because of consumers' unease in using them. ...

[C]onsumer-directed plans, which involve a high-deductible insurance policy that can be combined with a savings account to help pay for out-of-pocket health costs. The plans ... have lower premiums but shift more of the responsibility for health-care spending onto consumers... Employers often put money in the accounts to subsidize the higher deductibles. ...

But low enrollment and low satisfaction among workers who are offered them raise the question of whether consumer-directed plans will stall before they ever hit the mainstream...

Where employees ... have a choice, only 19% choose the newfangled plans, [a] Kaiser study estimates. In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006...

In addition, those who are in consumer-directed health plans often report lower satisfaction and confusion about how the plans are supposed to work. ...

Towers Perrin, an employee-benefits ... consulting firm says consumer-directed plans have much potential, [but] its executives were surprised consumer responses were so negative.

"If I were a product manager in any other industry and saw scores this low in customer satisfaction and understanding, I'd be thinking of pulling that product from the shelves...," says David Guilmette, managing director of Towers Perrin's health-care consulting practice. ...

A growing number of industry experts believe that for consumer-directed plans to succeed, they have to offer coverage that is at least as rich as traditional plans. That means providing upfront coverage of most preventive services and treatments and a generous contribution to employees' accounts.

"If you're just trying to cost shift, and you only get 10% of your employees in, they are the youngest and healthiest, and you haven't accomplished anything in terms of health-care costs," says Bill Sharon, a senior vice president at Aon Consulting...

    Posted by on Tuesday, June 12, 2007 at 02:16 AM in Economics, Health Care, Market Failure | Permalink  TrackBack (0)  Comments (58)

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