Comments on: Health Affairs Study: No News; No HSA Flaw http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/ Insights on Health Care Reform | NCPA Thu, 29 Jul 2010 18:27:25 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Benjamin Cutler http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/comment-page-1/#comment-44 Benjamin Cutler Thu, 17 Aug 2006 15:57:58 +0000 /blog/?p=52#comment-44 Prior to installing a high deductible/HSA plan our group's loss ratio was 113%, and we were facing a high double digit rate increase from our carrier, United Health Group. By converting to the high deductible plan we cut our premium by 37% AND freed up enough money that the company could almost fully fund our employee's HSA accounts. When we got our renewal notice from United in March (the plan is on a 5/1 anniversary), they were estimating that our loss ratio would end up at around 67%, now that the year is completed, our actual loss ratio is 48%!!! We saved 37% on our plan's premium to United, fully funded our employee's accounts and cut our health plan expenses by over 60%!! Pretty good result don't you think. CONSUMER CHOICE PLANS WORK- I remain amazed that more companies aren't taking the plunge. Benjamin Cutler, USHEALTH Group Prior to installing a high deductible/HSA plan our group's loss ratio was 113%, and we were facing a high double digit rate increase from our carrier, United Health Group. By converting to the high deductible plan we cut our premium by 37% AND freed up enough money that the company could almost fully fund our employee's HSA accounts. When we got our renewal notice from United in March (the plan is on a 5/1 anniversary), they were estimating that our loss ratio would end up at around 67%, now that the year is completed, our actual loss ratio is 48%!!! We saved 37% on our plan's premium to United, fully funded our employee's accounts and cut our health plan expenses by over 60%!! Pretty good result don't you think. CONSUMER CHOICE PLANS WORK- I remain amazed that more companies aren't taking the plunge. Benjamin Cutler, USHEALTH Group

]]> By: Anonymous http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/comment-page-1/#comment-42 Anonymous Wed, 16 Aug 2006 18:34:29 +0000 /blog/?p=52#comment-42 We are focusing on deductibles because Congress has decided it knows more about how to design insurance than the market and it has designed a plan with an across-the-board deductible. Absent the interference of the tax law, I believe insurers would avoid both deductibles and co-payments whenever possible and sort procedures into those totally paid by the patient and totally paid by the insurer. For example, when testing for cancer, the patient should pay (because people's attitudes toward risk and diagnostic procures is different), but once cancer is discovered, the plan would pay all costs from first dollar and be very involved in decisions (because the plan has a self-interest in efficient care). John Goodman NCPA We are focusing on deductibles because Congress has decided it knows more about how to design insurance than the market and it has designed a plan with an across-the-board deductible.

Absent the interference of the tax law, I believe insurers would avoid both deductibles and co-payments whenever possible and sort procedures into those totally paid by the patient and totally paid by the insurer.
For example, when testing for cancer, the patient should pay (because people’s attitudes toward risk and diagnostic procures is different), but once cancer is discovered, the plan would pay all costs from first dollar and be very involved in decisions (because the plan has a self-interest in efficient care).

John Goodman
NCPA

]]> By: Anonymous http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/comment-page-1/#comment-41 Anonymous Wed, 16 Aug 2006 18:34:00 +0000 /blog/?p=52#comment-41 An interesting question, though is, why one would have deductibles at all in a health insurance plan, if one had the dual objective of (1) making patients have a financial interest in the cost of their health care and yet (2) protecting patients fiscally through an upper limit on annual total out of pocket spending for health care. If that be one's dual objectives, would it not be more effective to dispense with deductibles altogether and simply have 50% cost sharing, up to the maximum out-of-pocket limit? What is the obsession with deductibles all about? Uwe Reinhardt Professor of Economics and Public Affairs Princeton University An interesting question, though is, why one would have deductibles at all in a health insurance plan, if one had the dual objective of (1) making patients have a financial interest in the cost of their health care and yet (2) protecting patients fiscally through an upper limit on annual total out of pocket spending for health care. If that be one’s dual objectives, would it not be more effective to dispense with deductibles altogether and simply have 50% cost sharing, up to the maximum out-of-pocket limit?

What is the obsession with deductibles all about?

Uwe Reinhardt
Professor of Economics and Public Affairs
Princeton University

]]> By: Anonymous http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/comment-page-1/#comment-38 Anonymous Tue, 15 Aug 2006 12:23:11 +0000 /blog/?p=52#comment-38 Exactly true! I've promoted these plans for years, and every seminar includes the idea that they contain out-of-pocket costs the best for those individuals who need them the most. The "sicker" you are, the better they look. Leave it to the press to try to paint this as a negative! Brian Liechty Plymouth, Indiana Exactly true! I’ve promoted these plans for years, and every seminar includes the idea that they contain out-of-pocket costs the best for those individuals who need them the most. The “sicker” you are, the better they look. Leave it to the press to try to paint this as a negative!

Brian Liechty
Plymouth, Indiana

]]> By: Anonymous http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/comment-page-1/#comment-36 Anonymous Tue, 15 Aug 2006 02:07:44 +0000 /blog/?p=52#comment-36 Your conclusion is on the mark. I have a chronic condition, Type 1 insulin-dependent diabetes. Due to rising premiums I changed to high-deductible coverage with a Health Savings Account. The HSA plan allows me to save time and money by managing my own health care dollars. If the maximum allowable HSA contribution is increased, the net savings will be far greater. Your conclusion is on the mark. I have a chronic condition, Type 1 insulin-dependent diabetes. Due to rising premiums I changed to high-deductible coverage with a Health Savings Account. The HSA plan allows me to save time and money by managing my own health care dollars. If the maximum allowable HSA contribution is increased, the net savings will be far greater.

]]> By: Anonymous http://www.john-goodman-blog.com/health-affairs-study-no-news-no-hsa-flaw/comment-page-1/#comment-35 Anonymous Mon, 14 Aug 2006 23:12:57 +0000 /blog/?p=52#comment-35 Professors Remler and Glied point out, for example, that maximum out-of-pocket payments (MOOP) for HSA-eligible, high-deductible plans are often not very much higher than they are in traditional health plans. Fair enough, but this is because the federal government has put restrictions on maximum out-of-pocket costs for those plans but not traditional plans. We don't know how patients will respond to a truly high-deductible, high MOOP HSA-qualifying plan (for example, $10,000 deductible and $50,000 MOOP) because the government forbids them. However, we can be sure that they would have very low premiums! The government must loosen its restrictions on these plans. Also, while Professors Remler and Glied know that HSA-qualifying health plans have deductibles between $1,000 and $2,000, and MOOP of $2,000 to $5,000, they model an implausible plan where both the deductible and the MOOP are the same: $2,500. I doubt whether such a plan exists, because it would exhibit the failings that the authors demonstrate. John R. Graham Director, Health Policy Studies Pacific Research Institute San Francisco, CA Professors Remler and Glied point out, for example, that maximum out-of-pocket payments (MOOP) for HSA-eligible, high-deductible plans are often not very much higher than they are in traditional health plans.

Fair enough, but this is because the federal government has put restrictions on maximum out-of-pocket costs for those plans but not traditional plans. We don’t know how patients will respond to a truly high-deductible, high MOOP HSA-qualifying plan (for example, $10,000 deductible and $50,000 MOOP) because the government forbids them. However, we can be sure that they would have very low premiums! The government must loosen its restrictions on these plans.

Also, while Professors Remler and Glied know that HSA-qualifying health plans have deductibles between $1,000 and $2,000, and MOOP of $2,000 to $5,000, they model an implausible plan where both the deductible and the MOOP are the same: $2,500. I doubt whether such a plan exists, because it would exhibit the failings that the authors demonstrate.

John R. Graham
Director, Health Policy Studies
Pacific Research Institute
San Francisco, CA

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