Low HSA Use Could Hurt CDHP Movement

The report suggested employers consider contributing more to employee HSA accounts, rather than pocket the savings generated by switching to a high-deductible health plan (HDHP), saying that “the point of CDH[P] is not to avoid spending money on health care, but rather to replace insurance with highly tax advantaged savings accounts that are owned and controlled by individuals.”

According to the report, a survey conducted by America’s Health Insurance Plans indicated almost 3.2 million (3,168,000) high-deductible health plans (HDHPs) existed as of January 2006, while an Inside Consumer-Directed Care survey indicated only 820,000 HSAs existed as of that time.

Further, the average HSA balance based on the Inside Consumer Directed Care survey ($1,180) is less than 50% of the average deductible for single coverage ($2,378) as indicated by the America’s Health Insurance Plans survey. These statistics indicate not only that many of those eligible for HSAs are not opening them, but that employers are choosing not to direct savings realized by switching from traditional benefit plans to employee HSA accounts, the report said.

Vimo indicated that not directing health care savings into HSAs decreases private health insurance spending, which is a significant national asset, and also decreases total compensation realized by employees. Inadequate HSA funding can decrease the value of a person’s benefit program by as much as 60%, according to the report.

Vimo predicted employees’ reaction to this detrimental effect on compensation will hurt the CDHP movement.

The Vimo report is here .