Well, duh.
My pejorative use of the playgound expression is not directed at Health Affairs or the authors of the excellent study that is the cause of my use of the childish expression, but rather at those who actually think HSAs (health savings accounts, aka health spending accounts) will reduce spending by making consumers, well, better consumers.
The central finding of the study (authored by Dahlia Remler of CUNY and Sherry Gilead of Columbia University) is this “fully half of (health care) spending is for those who face reduced cost sharing on average (under an HSA plan as opposed to a more traditional health benefit design). Thus, when considering the plans in existence today and comparing them with the types of plans associated with the new (HSA) legislation it is not clear that HSAs live up to their advertised increase in cost sharing.”
I’d go further – it is clear that HSAs will have little to no impact on health care spending by the high spenders. This blows a very large hole in HSA advocates’ arguments that consumerism is the solution to our health care crisis.
Here’s the details.
The study referenced by the article in the Hartford Courant (a great local paper) shows that for some beneficiaries, HSAs coupled with high-deductible health plans will actually “reduce cost sharing…in particular, the group responsible for half of all medical spending would see no change or a decline in cost sharing at the margin and on average.” While I’d note that it is likely that for others, their health care expenditures will decrease (over the short term), it may be that the decrease is due to lack of funds in their HSA, and/or their desire to not spend money. In turn, this may well lead to higher future health care expenditures when their failure to take their meds, get preventive care, etc. result in declining health.
I’ve been arguing this point for several months now; a Louisiana physician has posted an excellent ground-level perspective on his blog, and Michael Cannon of Cato has put up a semi-rebuttal on his site. Cannon’s response, while thoughtful, misses the good doctor’s central point – HSAs do nothing to address access to care.
Cannon also fails to refute the central point of Remler and Gilead’s article – HSAs will not reduce spending by the individuals who spend the most.
The Health Affairs article, which is available in abstract at the site referenced above, adds a good bit of clarity to the opinions offered by yours truly and other pundits. It is worth purchasing. I’d like to post my copy, but would rather you send the good folk at Health Affairs a few bucks to support their great work.
I’ll take things a little further, Joe. We’ve heard it before, so this one’s in the “well, duh” category, too, but we spend 80 percent of our $2 trillion in health care on the sickest 20 percent of people. HSAs, even their most ardent supporters agree, do nothing for these people, as these folks blow right through their deductibles and/or their HSA savings, and the risk pool remains on the financial hook for most of their costs.
In all honesty, HSAs likely can shave a fraction of the costs for the healthy folks, who account for the remaining 20 percent of American healthcare spending. But do the math. It will never be more than a fraction of a fraction.
HSAs are a gimmick, not just a healthcare or reimbursement gimmick but an electoral gimmick because for those 80 percent of us who are healthy, they’re actually a pretty good deal. They appeal to a sense of personal responsibility, and they can help many families’ finances. That kind of stuff wins votes. And since the ones who get screwed by it, the 20 percent of unhealthies, will never amount to a majority — perhaps aren’t even healthy enough to get to the polls on election day — well, you can see where this is going.
I hope we can get our eye back on the ball about this issue, but I’m not confident.
While I do agree that HSA’s are not a silver bullet, very few have every made such a claim. HSA’s have their place in a pantheon of solutions. HSA’s are certainly not gimmicks. For reference check out UnitedGroup’s latest study that actually was done on a fairly large sample (50,000 participants) for a decent period of time (3 years). Here are the key findings:
* Preventive Care – In each of the three years, up to 5 percent more of the CDHP members sought preventive care services than did PPO enrollees.
* Acute Care – Individuals enrolled in a CDHP showed an annual reduction in the use of acute care services (22 percent fewer hospital admissions and 14 percent fewer emergency room visits) without adverse health effects or outcomes, while the relative utilization of those services actually increased year-over-year among PPO members.
* Chronically Ill – CDHP enrollees with a chronic illness also used acute services less (8 percent fewer hospital admissions and 12 percent fewer emergency room visits) but continued to visit their primary care physician at the same rate as chronically ill members enrolled in traditional plans.
* Overall Costs – Costs per member decreased 3 percent to 5 percent in the CDH plan over the 2004-2005 period, as compared to their 2003 baseline level, while increasing 8 percent to 10 percent among PPO participants (after adjusting for demographics, health status, plan design impact and geography).[/quote]
So on the high side there is a 15% cost savings due to CDHPs (which include HSAs). I have yet to see a long term, large study that shows zero/negative effects due to CDHPs. If you know of one, kindly point me in the right direction. Judging the merits of an idea without evaluating its results is as irresponsible as blindly believing that HSAs will heroically save the healthcare system.
Not sure how to post a URL – normal tags not working. The UnitedHealth Group study is at http://www.unitedhealthgroup.com/news/rel2006/0712Consumer.htm
Justin – thanks for the thoughtful comment. One of the problems with hosting a blog and having a job is that you can’t make every point nor post on every worthwhile subject instantly. I am working on a post on the UHC study which should shed some light on their PR v. their actual practices.
As to your statement that I am somehow irresponsible for not evaluating HSAs on their results, I’d say that a study authored by the largest HSA/CDHP company is not necessarily worth taking at face value. And there is a wealth of data about similar programs that can be considered, and has been here and in other commentary.
As to your statement that very few have claimed HSAs are a silver bullet, I did not claim that they made that claim. I did say that many HSA advocates see consumerism as the solution to the health care crisis, see Allan Hubbard, for one, at https://www.joepaduda.com/archives/000484.html.
I did point out, have pointed out, and will continue to point out, the many problems inherent in HSAs, chief among them the fact that they will do little to nothing to address the core issues in health care, and thus may help at the margins, but will not have a meaningful impact on health care costs or access.
I hate when companies publish studies like that, but give nothing but the summary. Is the raw data available anywhere? I couldn’t find it. Also, it’s appearing in a press release, it’s not exactly peer-reviewed research.
The first question I have is what happened to the out-of-pocket costs between the two groups. Did HSA members wind up spending more than PPO members? How did they quantify “no adverse health outcomes?” One of the main complaints against HSAs is that patients don’t know when they’re deferring needed care based on costs because they are not doctors. How did UHC determine if that happened or not? All we get is “No adverse health outcomes”.
Justin, if you just compare the rigor between a study that appears in Health Affairs and one that appears in a press release, it’s a pretty stark difference.
Joe – As I have only just recently begun reading your blog, I am not sure on your position on HSA’s. It seems to be skeptical to say the least. I am skeptical of people who speak in absolutes, like Mr. Hubbard for example. That being said, HSA’s are excellent tools for solving SOME healthcare issues. Do you assert that HSA’s have no value?
I do also agree that UHC sponsored study is a far cry from independent scientific research. I brought it up because it was one of the first studies I have seen that at least dealth with a reasonably large pool of participants. I actually have some contacts at United and will try getting my hands on some of the raw data.
On a side note, great blog! We need more quality public discourse on healthcare.