HSAs – Another Way to Boost Insurers’ Bottom Line

As a panelist at a forum yesterday entitled The Health Care Rip-off: What Every Business Person Needs to Know”, I had the opportunity to speak with small business owners about some of the challenges they face trying to secure insurance for themselves and their employees. More than one member of the audience asked about the growing trend of cost-shifting, and whether or not we will see widespread adoption of HSA/CDHP/HDHP- type plans. All seemed to think that HSAs are not good for their businesses or their employees. Why? Because the out-of-pocket costs are beyond the ability of most people to pay, except for those in the higher income brackets.

Still, when I got back to my office I was surprised to find a story sitting in my inbox stating that Georgia’s governor signed a bill that will give high-deductible insurance plan companies million of dollars in tax breaks for selling these plans, which are tied to HSAs.

Many of the insurers offering these plans are large national corporations, several of which own and operate the banking fuctions associated with HSAs. But the logic in Georgia goes that this new move ‘will drive improvements in efficiency and quality by bringing market forces to health care’ and make patients better shoppers for care.

According to the WSJ Health Blog story, the Georgia bill ‘will exempt insurers from paying tax on premiums for high-deductible plans’. Let’s say that again – insurers will be EXEMPT from paying taxes on the revenue coming in from these plans. ‘That could mean $146 million in tax savings for insurers over five years’, according to figures from the Georgia Budget and Policy Institute. Why this tax break?

According to the politicians, it is being done to encourage more choice for consumers and to make quality, affordable health care available to all. How does giving already flush insurance companies tax breaks translate to cash-strapped families being able to afford care? I just don’t get it.

Let’s look at the reality. According to a Kaiser Health Tracking Poll, 28% of us are having difficulty paying for health care. Meanwhile, a 26,419-person survey sponsored by the AFL-CIO and Working America, released in April, reports that one in three skip medical care because of cost. That correlates pretty closely with the 28% having difficulty paying for it, don’t you think? Most of the respondents are insured and employed. Most are college graduates. More than half are union members. (You can read more about the results at www.healthcaresurvey.aflcio.org.) So how does adding a high deductible plan to the mix change any of that? Quite frankly, it doesn’t.

So let’s think this through – there are currently 6 million people enrolled in HSA-type plans. In addition to receiving the premium dollars, the insurers control many of these HSA accounts and so make plenty off of banking fees and the use of that money while it’s sitting in accounts. And now they don’t even have to pay taxes on the profits? It’s about time we told our poicy-makers that we simply will not allow insurers to continue to plunder the health care system at all cost for their profit.



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