HSA – Pursuit of Liberty

The Costs of Health Insurance

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Maybe this is related to being under a dentists drill this morning, but today’s topic is the cost of health care. A story over at The Health Insurance Myth detailing how much more a visit to the eye doctor costs for insurance companies was very revealing. Add to that the fact that we are entering the Open Enrollment period at Intermountain Healthcare where I get to reassess my health insurance situation and make any changes necessary and you can see why I would be thinking about this today.

I’ve never done this before since I’ve never had a year where I was not in a new job, had just enrolled immediately prior to the Open Enrollment period, or had the company completely changing their benefits package. This year we get a mild rate increase over last year and there are a couple of new benefits available, but nothing truly drastic. Open Enrollment doesn’t mean too much to me since I don’t foresee making any significant changes, but I was pleasantly surprised to see Intermountain subtly encouraging employees to choose their High Deductible plan. There was nothing really overt about it, but while rates are increasing for all the plans they still pay the entire premium for full time employees on the HD plan and on top of that they reduced the annual out of pocket maximum by almost half so those using these plans have lower financial risk than before.

To give some perspective – their no-deductible plan costs more in premiums than the deductible of the high deductible plan – that’s before you set aside any money in a Flexible Spending Account (FSA) to cover for the copays (money that disappears if you don’t use it). The lower deductible plans cost less than the deductible on th HD plan until you factor in their deductibles and copays. For anyone who expects to pay the full deductible they can contribute their premium and FSA money to a Health Savings Account (HSA) and easily cover the out of pocket maximum. Any money they don’t spend in the HSA rolls over to the next year and earns interest. For those of us who don’t expect to even meet the full deductible we can build up an HSA that earns interest and is almost perpetually funded very quickly so that we can devote the extra cash to other needs.

All of this deals with the insurance/health care issue at a personal level, but it should illustrate the need to step outside the mindset of traditional health insurance as we try to tackle this public challenge – the last thing we need to do with this monster is limit our options at the outset. (Unfortunately Medicaid, CHIP, and UPP serve as good examples of programs where we artificially limit our options.)

Health Care Assistance

When I wrote about declining enrollment for CHIP in Utah I did some research on the requirements for CHIP. I learned that even though I am fully employed – meaning I make a comfortable living – my kids would be eligible for CHIP if I did not have the option of insurance through my job. More interestingly I learned that there is another program, Utah’s Premium Partnership for Health Insurance (UPP), which my family would qualify for if I chose a traditional insurance plan. (Actually, my company just switched insurance and I could have enrolled in a traditional plan that would have allowed me to have my full premiums paid – partially by my company and the remainder by the state.) This program helps pay the costs of health insurance premiums for working families.

As I looked at the requirements for UPP it shows some interesting biases that are not good for our health care system. The one that makes the least sense is that they explicitly will not cover High Deductible (HD) plans that qualify for Health Savings Accounts. This essentially discourages people from using the best vehicle we currently have for becoming cost conscious and driving down the real costs of health care. If they wanted to encourage people to get the kind of insurance that is better for the whole system they would give the same amount of money – deposited directly into an HSA – for those who have an HD insurance plan as they give for comparable coverage under a traditional insurance policy. Of course the rules would be the same for qualifying plans whether they were HD or traditional.