MarketWatch: How much more cost sharing will health savings accounts bring?

Health Affairs

Volumn 25, Issue 4, 2006, Pages 1070-1078

  Remler, Dahlia K ^a   Glied, Sherry A ^b  

^a CITY UNIVERSITY OF NEW YORK   (United States)

^b Columbia University ^*  (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; CONSUMER; COST; ECONOMICS; HEALTH CARE COST; HEALTH SERVICES RESEARCH; HUMAN; LEGAL ASPECT; UNITED STATES;

CONSUMER SATISFACTION; COST SHARING; DEDUCTIBLES AND COINSURANCE; HEALTH EXPENDITURES; HEALTH SERVICES RESEARCH; HUMANS; MEDICAL SAVINGS ACCOUNTS; UNITED STATES;

EID: 33746920306     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.25.4.1070     Document Type: Review

References (49)

1. For Bush administration proposals, see, for example, White House, "Fact Sheet: Guidance Released on Health Savings Accounts (HSAs)," 22 December 2003, http://www.whitehouse.gov/news/releases/2003/12/20031222-1.html (accessed 10 April 2006).
2. For policy analysts' proposals, see, for example, J.F. Cogan, R.G. Hubbard, and D.P. Kessler, "Healthy, Wealthy, and Wise," Hoover Digest, no. 3 (2004): 161-167;
3. M. Feldstein, "Health and Taxes," Wall Street Journal, 19 January 2004;
4. and D. Gratzer, "HSA Man vs. Healthzilla," Wall Street Journal, 12 October 2004.
5. Current proponents include Gratzer, "HSA Man vs. Healthzilla."
6. Original proponents include J.C. Goodman and G.L. Musgrave, Patient Power: The Free-Enterprise Alternative to Clinton's Health Plan (Washington: Cato Institute, 1994).
7. J.P. Newhouse, "Consumer-Directed Health Plans and the RAND Health Insurance Experiment," Health Affairs 23, no. 6 (2004): 107-113.
8. See, for example, American Academy of Actuaries, Medical Savings Accounts: Cost Implications and Design Issues (Washington: AAA, May 1995);
9. E.B. Keeler et al., "Can Medical Savings Accounts for the Nonelderly Reduce Health Care Costs?" Journal of the American Medical Association 275, no. 21 (1996): 1666-1671;
10. L. Ozanne, "How Will Medical Savings Accounts Affect Medical Spending?" Inquiry 33, no. 3 (1996): 225-236;
11. D. Zabinski et al., "Medical Savings Accounts: Microsimulation Results from a Model with Adverse Selection," Journal of Health Economics 18, no. 2 (1999): 195-218;
12. and L.M. Nichols, M. Moon, and S. Wall, Tax-Preferred Medical Savings Accounts and Catastrophic Health Insurance Plans: A Numerical Analysis of Winners and Losers, Research Report no. 406690 (Washington: Urban Institute, 1996).
13. Further details are available in S.A. Glied and D.K. Remler, The Effect of Health Savings Accounts on Health Insurance Coverage, Pub. no. 811 (New York: Commonwealth Fund, 2005).
14. J.P. Newhouse and the Insurance Experiment Group, Free for All? Lessons from the RAND Health Insurance Experiment (Cambridge, Mass.: Harvard University Press, 1993).
15. C.A. Baker, "Cost Sharing in Medical Insurance Plans," 31 March 2004, http://www.bls.gov/opub/cwc/content/cm20040326ar01p1.stm (accessed 17 May 2006);
16. Bureau of Labor Statistics, National Compensation Survey: Employee Benefits in Private Industry in the United States, 2000, January 2003, http://www.bls.gov/ncs/ebs/sp/ebbl0019.pdf (accessed 5 June 2006);
17. Henry J. Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits: 2004 Annual Survey, Section 7: Employee Cost Sharing, 9 September 2004, http://www.kff.org/insurance/7148/sections/index.cfm (accessed 10 April 2006);
18. and V. Goff, Consumer Cost Sharing in Private Health Insurance: On the Threshold of Change, Issue Brief no. 798 (Washington: National Health Policy Forum, 2004).
19. The 1992-93 value is $251, adjusted to 2000 dollars using the gross domestic product (GDP) deflator. Baker, "Cost-Sharing in Medical Insurance Plans."
20. The 1992-93 value is $1,627 in 2000 dollars. The out-of-pocket maximums in the BLS tables, Baker, "Cost-Sharing in Medical Insurance Plans." ibid., do not include the deductible. We added the mean deductible to the total out-of-pocket maximum. The deductibles and out-of-pocket maximums are the averages among those with such provisions.
21. BLS, National Compensation Survey: Employee Benefits in Private Industry in theUnited States, 2002-2003, January 2005, http://www.bls.gov/ncs/ebs/sp/ ebbl0020.pdf (accessed 20 February 2005).
22. These results include HMOs,which often do not have coinsurance that would expose members to very large out-of-pocket spending. However, 17 percent of those in conventional plans, 23 percent of those in POS plans, and 11 percent of those in PPOs have no out-of-pocket maximum.
23. G. Claxton et al., "What High-Deductible Plans Look Like: Findings from a National Survey of Employers, 2005," Health Affairs 24 (2005): w434-w441 (published online 14 September 2005; 10.1377/hlthaff.w5.434).
24. D.K. Remler et al., "What Do Managed Care Plans Do to Affect Care? Results from a Survey of Physicians," Inquiry 34, no. 3 (1997): 196-204;
25. S.A. Glied, "Managed Care," in Handbook of Health Economics, ed. A.J. Culyer and J.P. Newhouse (Amsterdam: North Holland, 2000), 707-753;
26. and G.P. Mays, G. Claxton, and J. White, "Managed Care Rebound? Recent Changes in Health Plans' Cost Containment Strategies," Health Affairs 23 (2004): w427-w436 (published online 11 August 2004; 10.1377/hlthaff.w4.427).
27. Some people hold flexible spending accounts (FSAs) through their employers,which allow deductibles and other out-of-pocket health care spending to be made with pretax dollars. FSAs have a number of provisions that make them less attractive than HSAs.
28. The spending at which all further out-of-pocket payments cease is [MaxOOP - (1 - coinsurance) (deductible)]/coinsurance.
29. The zero marginal price (and the other marginal prices) refer only to the financial price; medical care also has opportunity costs, particularly travel and time costs.
30. E.B. Keeler and J.E. Rolph, "The Demand for Episodes of Treatment in the Health Insurance Experiment," Journal of Health Economics 7, no. 4 (1988): 337-367;
31. and Newhouse and the Insurance Experiment Group, Free for All?
32. This prototypical policy differs somewhat from the KFF/HRET data but is actually more constraining.
33. See M. Feldstein, "Balancing the Goals of Health Care Provision," Presentation at the International Health Economics Association meeting, 6 January 2006, http://healtheconomics.org/iheanews/06-01-11/index.html (accessed 10 April 2006).
34. We assume that individuals keep their MSAs fully funded, with sufficient funds to cover the maximum out-of-pocket spending. However, depending on the specific terms of the HSA and plan, this probably would not occur in the initial start-up period, and those with high medical spending from the start of an HSA might not be able to reach this point.
35. M.V. Pauly, An Analysis of Medical Savings Accounts: Do Two Wrongs Make a Right? (Washington: AEI Press, 1994).
36. Extending the tax subsidy to out of-pocket health care spending encourages the purchase of health insurance plans with greater cost sharing. Under certain assumptions, the ensuing higher cost sharing will result in lower medical spending. See W. Jack and L. Sheiner, "Welfare-Improving Health Expenditure Subsidies," American Economic Review 87, no. 1 (1997): 206-221;
37. and B.E. Dowd and R. Feldman, "Voluntary Reduction in Health Insurance Coverage: A Theoretical Analysis," Eastern Economic Journal 13, no. 3 (1987): 215-312.
38. W.W. Yu and T.M. Ezzati-Rice, "Concentration of Health Care Expenditures in the U.S. Civilian Noninstitutionalized Population," Statistical Brief no. 81, May 2005, http://www.meps.ahrq.gov/papers/st81/stat81. pdf (accessed 10 April 2006);
39. and M.L. Berk and A.C. Monheit, "The Concentration of Health Care Expenditures, Revisited," Health Affairs 20, no. 2 (2001): 9-18.
40. A.C. Monheit, "Persistence in Health Expenditures in the Short Run: Prevalence and Consequences," Medical Care 41, no. 7 Supp. (2003): III53-III64.
41. See, for example, Keeler et al., "Can Medical Savings Accounts for the Nonelderly Reduce Health Care Costs?";
42. Ozanne, "How Will Medical Savings Accounts Affect Medical Spending?";
43. and Nichols et al., Tax-Preferred Medical Savings Accounts.
44. Keeler et al., "Can Medical Savings Accounts for the Nonelderly Reduce Health Care Costs?
45. "; and Zabinski et al., "Medical Savings Accounts."
46. AAA, Medical Savings Accounts.
47. AAA, The Impact of Consumer-Driven Health Plans on Health Care Costs: A Closer Look at Plans with Health Reimbursement Accounts (Washington: AAA, January 2004).
48. S.T. Parente, R. Feldman, and J.B. Christianson, "Evaluation of the Effect of a Consumer-Driven Health Plan on Medical Care Expenditures and Utilization," Health Services Research 39, no. 4, Part 2 (2004): 1189-1210.
49. J.A. Nyman, "Is 'Moral Hazard' Inefficient? The Policy Implications of a New Theory," Health Affairs 23, no. 5 (2004): 194-199.