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Dems Seize on GAO Findings as Proof of HSA Flaws, But…

FEBRUARY 2, 2006 -- House Democrats said a Government Accountability Office study they released Thursday shows that health savings accounts attract healthier and wealthier employees, proving the plans won't work for sicker people and those with lower incomes. But the GAO data stop somewhat short of reaching those conclusions.

Rep. Pete Stark, D-Calif., said the report "verifies" that the accounts and the high-deductible health plans accompanying them "are designed for healthy, wealthy people. Despite this reality, President Bush is pushing them on low-income workers—not to provide them with better health insurance, but to meet his long-term goal of dismantling employer-provided health care."

The study looked specifically at who signed up for HSAs the first year they were offered in the Federal Employees Health Benefits Program (FEHBP). Enrollees were generally younger and earned federal salaries of $75,000 or more, the study found.

Democrats argue that HSAs are a poor fit for low-income and sicker people because the high deductibles involved will cause them to skip care. They add that healthy people will be drawn to them because they figure they don't need care and like the tax advantages and investment returns of HSAs. As healthier people leave traditional coverage, they will leave behind a sicker risk pool whose premiums will then rise to the point of making comprehensive health benefits unaffordable, Democrats add.

Although the GAO report found that HSA enrollees were younger, it did not say they were healthier. Additional data will be needed to determine the health status of HSA enrollees, the report said.

The average age of enrollees was 46, compared with 59 for all enrollees in the federal employees health program. "The age difference was largely due to a smaller share of retirees enrolling in the high-deductible health plans compared to the other plans," GAO added.

Excluding retirees, the average age in the HSA-related high-deductible plans was 44, compared with 47 for all FEHBP enrollees.

The report also raised the possibility that new plans of any kind may attract younger enrollees. In looking at the age makeup of another type of newly introduced plan in FEHBP unrelated to HSAs, the study also found a similarly young group of enrollees. "Thus it is not clear whether younger individuals were uniquely attracted to high deductible health plans, or if younger enrollees are typical of recently introduced health plans in general," GAO found, adding that more years of enrollment data will be needed to settle such questions.

HSA Enrollees Wealthier
Forty-three percent of enrollees in the health plans accompanying HSAs earned federal salaries of $75,000 or more compared with 23 percent of all FEHBP plan enrollees. Although not necessarily predictive of future enrollment trends, the salary difference may suggest that HSAs "uniquely attract higher-income individuals with the means to pay higher deductibles and the desire to accrue tax-free savings," GAO said.

The study also examined other aspects of HSA-related health plans. The range of services they covered, including preventive care, was generally the same as in traditional plans. HSA enrollees faced deductibles almost three times higher.

Cost-sharing for preventive care was "the same or less than [for] traditional plan enrollees and always covered certain preventive care services before the deductible was met." These same services "were not always covered before the deductible by their traditional plan counterparts."

But traditional coverage was much more likely to pay for prescription drugs before the deductible was met. In reviewing three traditional plans, GAO found that two covered all prescription drugs before the deductible and that the third covered generic drugs before payment of the deductible. In comparison, the high deductibles of HSA-related health plans had to be paid before prescription drug coverage began.

Monthly premiums were lower for the HSA-related plans, averaging $91 for individual coverage and $208 for family coverage, compared with $99 and $243 for the traditional plans studied.

The study found that HSAs are a work in progress when it comes to delivering on other promised advantages. The theory is that HSAs will bring down care costs because they will give enrollees an incentive to shop for better value by comparing the cost and quality of doctor and physician care. But the study found that much of that comparative data are not yet available.

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