Comparative Performance Data: HSAs vs. Traditional Plans
Originally Published in RMP Advisor, September 2009A wise man says, “In God we trust; everyone else bring data.” The Health Savings Account (HSA) model for health benefits has been available to employers and their employees since January 2004. Health Savings Accounts, when combined with the purchase of a high-deductible health plan (HDHP), offer consumers an alternative to the traditional insurance options such as preferred provider organizations (PPOs) and health maintenance organizations (HMOs). With over 5 years of experience and millions of Americans using HSAs, what does the data tell us?
Is Reliable Performance Data Available?
Yes. United Healthcare (UHC), based in Minneapolis, is the largest U.S. health insurer offering consumer-driven products, including HSAs and Health Reimbursement Accounts (HRAs). Through its subsidiary Definity Health, UHC has been an industry leader in seeking consumers’ greater involvement in their healthcare decision making as the best approach to gaining control over healthcare costs while improving quality.
Recently, UHC completed a study of 689 employer groups representing approximately 38,000 members from 2005 through 2007. The two most recent reports on these issues released by UHC are:
- “Consumerism in Health: Insights From Experience.”
- “Delivering Affordable Health Care: The Impact of Employer Size on HSA Cost and Utilization.”
Do HSAs Save Money?
Yes, again. At Risk Management Partners LLC, we have long argued that HSAs are a more efficient model for purchasing health insurance. The HSAs represent a more appropriate application of insurance principles to the healthcare industry. Results of the UHC studies bear this out, drawing the following conclusions:
- Consumer-driven health members cost between 7% and 9% less than PPO members.
- 82% to 87% of savings were a result of utilization decreases (NOT cost-shifting).
- Cost for the HSA population of members was 16% less compared to the traditional plan members in the first year after their switch into the HSA.
- There was continued growth in the “cost gap” between the two populations in the second year of HSA enrollment, though not as dramatic a decrease as in the first year.
What Happens to Utilization of Healthcare Services?
Again, the data supports an argument that consumerism results in lower utilization, less unnecessary and inappropriate care, and lower costs. The UHC studies conclude the following:
- Over the course of the 2-year study, the HSA population showed significantly higher declines in hospital admissions (22%) and emergency room visits (23%) compared to the traditional population.
- Pharmacy utilization in consumer-driven plans is equivalent or perhaps somewhat higher, but costs were 19% to 23% less due to greater use of lower-cost drugs.
- Office visits were 6% lower, but there is evidence of higher use of preventive services.
- Chronically ill members also fare well in consumer-driven plans (similar rates of hospitalization, higher laboratory and radiology utilization), while costing 7% to 8% less.
Can I Believe This Data?
Others will tell you that “statistics never lie, but liars use statistics.” True, but that means you have to do some work, ask good questions, and draw your own conclusions. At Risk Management Partners, we’ve been doing healthcare purchasing for many years, and the preponderance of evidence indicates that HSAs and consumer-driven healthcare are positive innovations in healthcare finance. However, HSA implementation must be done wisely, with appropriate education of employees and reasonable funding by employers. Join our effort to fix healthcare, from the bottom up and the top down.