Medical savings accounts on the upswing

By David Albertson

As of 2012 there was $17.8 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 11.6 million accounts, according to data from the latest EBRI/MGA Consumer Engagement in Health Care Survey, sponsored by the Employee Benefit Research Institute and Matthew Greenwald & Associates.

That’s up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2011, when 8.5 million accounts held $12.4 billion in assets.

The balances continue to grow as more employers adopt high-deductible, consumer-driven health plans combined with HSAs/HRAs. However, assumptions about these plans are not always proving true. For example, analysts predicted that individuals given more control over funds for health care services would become more cost conscious as they became more educated about the actual prices of those services. However, according to EBRI, no evidence was found to support this, nor was there evidence that healthy behaviors had any real correlation with account balance.

Among other findings from the EBRI/MGA survey:

After leveling off, average account balances increased. After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011 and 2012. In 2006, the   average account balance was $696. It increased to $1,320 in 2007, a 90% increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3% and 5% increases, respectively. In 2010, average account balances fell to $1,355, down 4.5% from the previous year. In 2011, average account balances increased to $1,470, a 9% increase from 2010. It increased to $1,534, or 4%, in 2012.

Total and average rollovers increased. After declining to $1,029 in 2010, average rollover amounts increased to $1,206 in 2011 and remained there in 2012. Total assets being rolled over increased: $9.7 billion was rolled over into HSAs and HRAs in 2012, up from $6.8 billion in 2011. The percentage of individuals without a rollover was 11% in 2012.

Differences in account balances. Men have higher account balances than women, older individuals have higher account balances, account balances increase with household income, and education has a significant impact on account balances, independent of income and other variables.

Individual providers of HSAs likewise report significant growth in account balances over the past year, and bullish expectations for additional increases.

Among the HSA leaders, UMB Healthcare Services, a division of UMB Financial Corporation, announced that account balances for its HSAs grew 55% during the previous 12 months, surpassing $615 million dollars as of Jan. 31, 2013. The number of HSAs also grew to nearly 320,000 individual accounts, up dramatically from the 220,000 following open enrollment last year.

UMB Healthcare Services also saw a 29% increase in the number of debit cards it provides for Flexible Spending Accounts (FSAs), HRAs) and HSAs. Today, the number of cards in circulation has grown to more than 2.8 million.

According to the January 2012 annual census by America’s Health Insurance Plans’ Center for Policy and Research, the number of people with HSA/HDHP coverage rose to more than 13.5 million, up from 11.4 million in January 2011.

“Our HSA growth continues to reflect the trend we are seeing nationwide as more individuals and employers move toward consumer-directed health accounts,” said Dennis Triplett, CEO of UMB Healthcare Services. “We are now challenged with educating the growing number of employers and account holders on all that these accounts can offer toward future financial stability, beyond day-to-day health care expenses.”

Source: https://ebn.benefitnews.com/news/medical-savings-accounts-on-upswing-2731569-1.html

 


Employers Take Another Look at CDHPs

While consumer-driven health plans (CDHPs) have been shown in the past to generate savings for employers and workers alike, the CDHP movement now might be losing some steam, according to a pair of industry studies.

CDHPs -- high-deductible health plans (HDHPs) often paired with health savings accounts -- made up 22.5 percent of all health care plans offered in the U.S. in 2012, according to the latest release from the UBA Health Plan Survey. That figure compares with 22.9 percent in 2011 -- the first decline since 2007.

There's no shortage of research that points to the positives of these types of plans. A recent study by the Kaiser Family Foundation found that HDHPs had average premiums of just under $5,000 for single coverage in 2012 -- about 15 percent less than preferred provider organization (PPO) plans, according to a report in MarketWatch. Another report by the RAND Corp. noted that patients with CDHPs tended to see significantly lower overall medical costs and used fewer brand-name drugs.

Statistics like those -- and a challenging economic outlook -- have moved more employers to offer CDHPs, said Helen Darling, president of the National Business Group on Health, in the MarketWatch report.

"Now that there's been this economic crunch and wages are flat, the increased costs of health care are harder to take," Darling said.

Yet at the same time, employers are starting to see some downsides to consumer-based care, the RAND study notes. Patients with chronic conditions often see much higher out-of-pocket expenses than those without a chronic disease. The plans also may discourage employees from obtaining medical care, which can lead to bigger costs down the road.

"The concern is that [those enrolled in CDHPs are] forgoing care that they need," said Amelia M. Haviland of the Carnegie Mellon University and co-author of the RAND study in MarketWatch.

CDHPs also aren't achieving as much first-year savings for some employers. The 2012 UBA Health Plan Survey found that the savings created by CDHPs in their first year over the plans they were replacing averaged 1.75 percent in 2012, a significant reduction from prior years.

Still, the survey spotted a few bright spots for these types of plans. The negative trend of CDHPs renewing at higher rates compared with other plans did not repeat in 2012, and CDHPs continue to remain popular in particular regions of the U.S. -- especially in the Northeast, where 27.8 percent of all plans were CDHPs.


Most Employees Not Given a Choice of Health Plans

Source: PLANSPONSOR.com

Most Americans get their health insurance coverage from employment-based plans, yet most employers do not offer a choice of health plans, according to the Employee Benefit Research Institute (EBRI).

In 2011, 84% of employers with health benefits offered only one plan; 15% had two choices; and 1% offered three or more options. Large firms were more likely to offer a variety of health plans than small firms; 42% of large firms gave two or more choices, compared with 15% of smaller firms. As a result, nearly one-half (47%) of covered workers had a choice of health plans, and according to the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, 59% of adults ages 21 to 64 with employment-based health coverage had a choice of health plans.

Among individuals covered by an employment-based health plan, those in consumer-driven health plans (CDHPs) were more likely than those with traditional coverage to be given options. In 2011, 68% of CDHP enrollees had a choice of health plans, compared with 59% of individuals in traditional plans, and 48% of those with high-deductible health plans (HDHPs).

The greater variety for CDHP enrollees may be due to the fact that an increasing percentage of the CDHP population works for an employer with 500 or more employees and large employers tend to offer more benefit options, EBRI said in its July Notes.

Asked about the main reasons for enrolling in their plan, 50% of CDHP enrollees reported they chose that offering because of the lower premium, while 45% said the opportunity to save money in the account for future years was a primary concern. Among individuals with traditional health coverage, 39% cited the good network of providers and 32% reported the low out-of-pocket costs as the main reasons for enrolment.

Among individuals with a choice of plans, CDHP and HDHP enrollees were less likely than those with traditional coverage to say they were extremely or very satisfied with the quality of care received.

More information can be found in the July EBRI Notes at https://www.ebri.org.


LIVE BETTER, SPEND LESS

Consumer-driven health plans (CDHPs) can play a major role in persuading employees to adopt healthier lifestyles and save health care dollars, according to a new analysis by the Health Care Service Corp. The study found that CDHP enrollees were four times more likely to take advantage of preventive services and 10 percent more likely to fill their prescriptions with generics.