Healthcare: April 2007 Archives

Last week, a New York Times story highlighted AARP's plan to sell a new Medicare Advantage plan to those over 65 and a new individual insurance plan to those 50 to 64 years old. The products will be available in 2008. The individual insurance plan will be a PPO and have a HSA-compatible option.

Interesting, AARP said that they would not be able to sell the policies to near retirees in all states, due to uncompetitive state regulations. The products will not be available to sick near retirees because "to guarantee issuance of a policy to every applicant in that age group is 'just not economically feasible,' stated Ms. [Dawn] Sweeney [president of AARP Services Inc., the tax-paying business unit of AARP]."

As someone living in one of the five states (MA, ME, NJ, NY & VT) with mandated guarantee-issuance for all individual insurance products, I think that it is too bad AARP members will not have access to these affordable policies. In addition, those in WA and OR with adjusted community rating regulations (but no guarantee issue) will likely not have access either.

Apparantly, AARP thinks near retirees would like an HSA option. I guess HSAs are not just for the young, healthy or weathly.

Who would guess just a week after Easter, AARP would find religion and start believing in the private market and competitive health insurance regulations.

Information Strategies, Inc just released their projections for Health Saving Account growth for the year 2007. These projections show how popular these low-cost, comprehensive benefit health insurance plans are becoming with individuals and employers:

-- The number of Health Savings Accounts will reach 8 million.
-- Deposits in custodial accounts will total $13.6 billion at year-end
-- Average accounts will pass $1,700 mark, with those accounts being in
existence two or more years hovering at $4,400
-- 22% of employers will offer HSAs
-- More than 40% of all companies will fund 50% or more of the first
year's deductible
-- New HSA-covered lives will exceed eight million, bringing the HSA-
insured total to 18 million

To learn more about Health Saving Accounts, read my HSA paper released last year.

According to a recent Medical News Today article, individuals with Health Saving Account (HSA)-type high deductible plans had a 25 percent drop in emergency room use, based on a Harvard Medical School study published in Journal of the American Medical Association. "The study compared approximately 60,000 members enrolled in a traditional health insurance plan in Massachusetts with more than 8,700 members working for employers who switched to offering only a high-deductible plan. The high-deductible plans studied were not federally qualified high-deductible health plans (a.k.a. HSA plans) because office visits and prescription drugs were not subjected to the deductible. The researchers examined patients' emergency department diagnoses to determine the effect on visits for high severity conditions (like asthma or kidney stones) and low severity conditions (like headaches, nausea, or colds). There was a slight decline in first-time emergency visits for members in high deductible plans and a 25 percent reduction in repeat visits, mostly for non-severe conditions. This suggests that when members realize their responsibility for out-of-pocket expenses, they reduce future emergency department visits for less urgent conditions. Patients in the high-deductible plans were also hospitalized less as a result of both reduced emergency visits and fewer admissions once reaching the emergency department."

This is just further evidence of the effectiveness of consumer-directed plans on eliminating unnecessary and overuse of health care, in this case the emergency room. HSAs are an important tool in reducing the cost of health care and health insurance by engaging the consumer in making rational and appropriate decisions about when and how much health care to consume.

Sadly, those on Medicaid use the emergency twice as much as the uninsured or those with private insurance. Maybe if those on Medicaid paid significant copays for unnecessary emergency room use, they would react like those with high deductible private plans do and cut back on unneeded trips. In doing so, the Maine taxpayer would have a more affordable Medicaid program as well.