HSA Plans Gain Popularity as Premium Costs Rise

Friday, October 5, 2007 General News
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Hewitt Data Good News for Future Cost Controls, Says NCPA's Goodman



DALLAS, Sept. 26 /PRNewswire-USNewswire/ -- About half of all employers are expected to soon offer Health Savings Account (HSA) plans to their employees. This projection offers the best hope for restraining runaway health care costs, according to John Goodman, president of the National Center for Policy Analysis (NCPA).



"The best way to control health care costs is to put patients in control of more of their health care dollars," said Goodman. "The increasing popularity of HSAs is a result of managed care's failure."



According to a report released this week by Hewitt and Associates, a global human resources company, "account-based plans are gaining traction by employers as a way to control costs." Hewitt's research found that more than 20 percent of companies offer, or plan to offer, a high-deductible health plan with an HSA by the end of this year and almost half are considering offering one at a future date. While just 3 percent of employees elected these plans last year, most companies anticipate that enrollment will grow to 20 percent in 5 years.



A major factor in the movement towards consumer-directed health care plans is the ever-increasing premium rates. While employers enjoyed a nine-year low in health care cost rate increases this year -- a 5.3 percent average increase, down from 7.9 percent in 2006 -- that is expected to change in 2008. Premiums are expected to rise by an average of 8.7 percent in 2008. For example:



"While the movement towards HSA plans is encouraging, the real issue is much deeper than putting patients in the driver's seat," said Goodman. "We are suffering today because we systematically suppressed the market in every aspect of medical care for more than 100 years. The solution is long overdue: bring the market back to life."



-- Premiums for traditional indemnity plans increased 9.1 percent in 2007 and are expected to increase 9.0 percent in 2008; -- Premiums for HMOs increased 8.7 percent in 2007 and are expected to increase 9.0 in 2008; -- Premiums for point-of-service (POS) plans increased 3.9 percent in 2007 and are expected to increase 8.5 percent in 2008; -- Premiums for preferred provider organizations (PPOs) increased 2.4 percent in 2007 and are expected to increase 8.5 percent in 2008.

SOURCE National Center for Policy Analysis


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