WSJ claimed Health Savings Accounts yield "high customer satisfaction"; studies show otherwise
SUMMARY: Without offering any supporting evidence, a Wall Street Journal editorial claimed that "plenty of data" indicate "high customer satisfaction" with Health Savings Accounts (HSAs), the focal point of President Bush's healthcare plan. But the Employee Benefit Research Institute has found significant levels of dissatisfaction among people covered by the high-deductible, HSA-style plans.
A February 21 Wall Street Journal editorial (subscription required) claimed that "plenty of data" indicate "high customer satisfaction" with Health Savings Accounts (HSAs), the focal point of President Bush's health care plan. The Journal did not provide any such data. But contrary to the Journal's claim, the Employee Benefit Research Institute (EBRI) has found significant levels of dissatisfaction among people covered by the high-deductible, HSA-style plans -- also known as "consumer-driven" health plans -- that form the basis of Bush's health care proposal.
The Bush administration claims that "HSAs allow Americans to save tax-free dollars in accounts to pay for their health care expenses" and are "accompanied by high-deductible comprehensive insurance policies that cover preventive care and larger medical bills." The Journal editorial stated that the plan "combines an insurance policy with a deductible of $1,050 or more with a tax-free savings account to help people pay pre-deductible expenses." The EBRI survey focused on such policies, comparing two categories of health management -- high-deductible health plans (HDHPs), which "have a deductible of at least $1,000 for personal coverage or $2,000 for family coverage" (emphasis added), and consumer-driven health plans (CDHPs), which "had to meet these threshold deductible levels and have a tax-preferred savings account, such as a health savings account or health reimbursement arrangement" -- with comprehensive health plans "with no deductible or a deductible of up to $1,000 for personal coverage or up to $2,000 for family coverage" (emphasis added). The Bush plan is essentially what EBRI describes as a CDHP, requiring a deductible of more than $1,050 and offering tax-free accounts to cover medical expenses.
The EBRI study found that, among those covered by comprehensive health plans, 63 percent were "extremely or very satisfied," while only 42 percent of those covered by CDHPs expressed the same level of satisfaction. Dissatisfaction ranked much higher among those with the Bush-style plan than those enrolled in more traditional, comprehensive plans. Of those enrolled in CDHPs, 26 percent said they were "not satisfied," whereas only 8 percent covered by comprehensive plans were dissatisfied. EBRI also reported that 61 percent of respondents with comprehensive care said they were "extremely or very likely to stay" with their plan if offered the option to change, but only 46 percent of those with CDHPs said they were likely to stay with their plans. Thirty-three percent of those with CDHPs said they were "not likely to stay" with their plans if given the opportunity to switch, compared with only 11 percent of respondents with comprehensive coverage who said they were not likely to stay given the chance to change plans.
The survey also revealed that those with CDHPs were less likely than those in comprehensive plans to seek health care due to cost, especially respondents with an income below $50,000 per year. Of adults with health problems, 40 percent of those in CDHPs said they "have delayed or avoided getting health care due to cost." People enrolled in comprehensive plans were far less likely to delay or avoid seeking care for reasons of cost; only 21 percent with comprehensive coverage said that they had done so. Among those polled with annual incomes below $50,000, the percentages of those delaying or avoiding care for reasons of cost rise to 48 percent of those enrolled in CDHPs and 26 percent with comprehensive care. Overall, 35 percent of people with CDHPs say they have avoided obtaining care because of cost, compared with only 17 percent of those enrolled in a comprehensive plan.
From the February 21 Wall Street Journal editorial:
The centerpiece of his [President Bush's] strategy is the Health Savings Account, which combines an insurance policy with a deductible of $1,050 or more with a tax-free savings account to help people pay pre-deductible expenses. Critics say the relatively high deductible makes HSAs work only for the "healthy and wealthy."
But in fact HSAs are what health insurance would have looked like all along if the employer-insurance tax exemption never existed. That is, insurance for catastrophic illness to prevent destitution but not for routine care. (Think of it this way: What's the deductible on your car insurance?) And with more than three million HSA policies already in existence, there is plenty of data showing high customer satisfaction among policy holders of all ages and incomes.
I can see MMFA's point that the wording of the editorial can be questioned considering a 42% satisfaction rating is far from "high customer satisfaction" as the editorial states.
On the other hand, according to the EBRI study, only 26% were dissatisfied with the plan which MMFA claims is "significant". That is a very subjective determination as well.
If Media Matters had only pointed out the 26% dissatisfaction rate with CDHPs, their claim that this rate represents "significant levels of dissatisfaction" would have been been as subjective as WSJ's claim that a 42% satisfaction rate represents "high customer satisfaction."
But the article in Media Matters does not primarily point out and characterize CDHP statistics; their purpose is to compare those statistics with those of "traditional, comprehensive" health plans. What they find is that there is more customer satisfaction and less customer dissatisfaction with "traditional, comprehensive" health plans than with CDHPs. Quick review: 63% vs. 43% satisfaction; 8% vs 26% dissatisfaction; 61% vs 46% likely to stay if offered a new plan; 11% vs 33% not likely to stay if offered a new plan; 17% vs 35% likely to delay or avoid seeking care for reasons of cost.
Now these differences are significant and by no means subjective.
The problem with the WSJ editorial is that they cite "high customer satisfaction" in HSAs without comparing that level of satisfaction (whatever it is, however one characterizes it) with that of traditional plans. Based on the EBRI study, of course, one would have to say that while high-deductible health plans offering tax-free accounts have (in the words of the WSJ) “high customer satisfaction,” traditional plans have much higher customer satisfaction, as measured in five categories.
Some reflections: If the purpose of the editorial page of the WSJ was to present considered policy recommendations, one could at least expect some supporting evidence. But everyone knows that the writers on the WSJ editorial page are some of the most conservative in the United States, perhaps in the Western world. Is there anyone who reads them expecting to get balanced opinions based on careful weighing of the pros and cons? This is less a case of misinformation than an elision of information, one that you find in all cases of extreme bias. I am glad we have Media Matters, but maybe they should expand their mission statement to go beyond “correcting conservative misinformation.” It seems that a good deal of their articles address instances where conservative politicians and commentators leave out relevant information rather than provide wrong information. I know Media Matters studiously avoids using the word “bias,” but I think their most important service is to provide information that allows us readers to recognize how deep the bias is.
Bruce, I think you're incorrectly equating "high" with "significiant." They don't mean the same thing.
Describing 42% "very satisfied" as "high" satisfaction is simply wrong, as we all seem to agree. But 26% "unsatisfied" can indeed be a "significant" - worthy of special note - figure both because it is such a large part of 42% and it is more than triple the comparable figure for a comprehensive plan. Put another way, according to the survey the ratio of "very satisfied":"unsatisfied" for comprehensive plans is 7.88:1. For the CDHPs it's merely 1.62:1. That is a big difference.
I work for a small startup company that cannot afford to provide a PPO plan. My wife and I both work for the company, and we have a $4950 deductible, and an HSA. We're among the lucky ones - we don't have any health problems, we're both fairly athletic, and my normal out of pocket expenses to the doctor probably average less than $200 a year for the occasional sinus infection or minor injury. However, our premiums run us $216/month, and if we DID have a plan with a low deductible/copay, it would cost us close to $600/month. I'm firmly of the opinion that many individuals abuse their coverage by going to the doctor every time their nose runs - that accounts for about 20% of individuals with that type of insurance.
But, I'll tell you, with the savings rate in this country at -.5%, I really don't know how anyone could be satisfied with this as an alternative to traditional health care plans. I don't know if you've taken a good look at it, but it basically allows those with the money to do so to save up to $5k per person of pre tax m0ney, and you can add to it each year, even if you don't spend the prior years' savings. It's basically a tax shelter for those that have it to spare, which, I'm afraid, aren't very many right now.
I wasn't making a judgment on the Bush plan, merely responding to the study and MMFA's interpretation.
My employer offers a health savings plan as a supplement to the health insurance coverage. It is a pre-tax withholding, the kicker is you must sign up for a certain amount to be withheld at the beginning of the year and the amount cannot be carried over to the following year. It is a use it or lose it scenario. But you can use it for anything, co-pays on your doctor visits, prescription drugs, even over-the counter medication. You just have to figure out a ballpark amount (minimum $500 I believe) that you are sure to spend over the course of the year and then you get the tax savings. I think it's a good plan if you are going to spend at least $500 on health care in a year, which isn't much.
Your rates and deductibles and those that my wife and I have as a two-person law firm are pretty similar, but as one of the first baby-boomers hitting 60 in January, I have health problems and so does she. We cannot get a health savings plan ... our carrier and most others view that as a "new" insurance policy that requires our being able to go through the entire application process and have a different policy written. Of course that excludes the health problems, if a policy is written at all. This comes, of course, after paying premiums for many decades in which we were fortunate enough to enjoy very good health, while our premiums were supporting the older folks during 'our day.'
Very few of the current middle-aged to older generation who are presently or who are rapidly becoming uninsured are going to find HSP's a viable alternative to a national health plan. The question remaining is whether ignorance or the prevailing lack of selflessness that used to make unions functional, welfare help children, and insurance a valuable servant of the public will result in Bush's proposal being accepted, and statistics like those reported by WSJ are problematic in that regard, accurately characterized or not.
I know a number of physicians who now wish they could revisit Hillary's health plan that Dole and Moynihan and others killed, making room for Frist's hospital megagroups, HMO's, enriched insurance carriers, and corporate employer's savings at the expense of uninsured millions who can't pay their doctor bills.
"The performance data shown represent past performance, which is not a guarantee of future results.
Investment returns and principal value will fluctuate, so that investors' shares, when sold, may be worth more or less than their original cost."
....and it is on every citizen of this country who is not rich and I mean extremely rich. In 2002 the U.S. spent about $5300 per capita on healthcare which is the most in the world, of course, and the next highest in the world was Switzerland which spends 40% less than we do. Life expectancy, infant mortality and any other measurement of the health of people are much higher. This private health insurance is a scandal and it is costing us physically and economically an unbelievable cost. What is needed is quite obvious but it is not spoken about. Want to get the U.S. competitive with the rest of the world? The answer is quite simple. Do what the rest of the world does.
The propaganda put out by free market radicals who want to privatize everything including water, social security, national parks and anything they can get their hands on don't want the solution to this problem to happen in this country. They are philosophically opposed to it. The people want it as a recent pew survey showed.
You keep using that word. I do not think it means what you think it means. :-) Employer-sponsored insurance is already "privatized", whether it is zero-deductible or high-deductible.
I can certainly understand why someone might be more pleased with "my employer pays for everything, and I never have to consider costs" than with "my employer pays for everything after some ammount; below that ammount, I need to take costs into consideration". Indeed, my own employer offers both options and I choose the former. But that doesn't mean that the former model makes more sense as the basis of a health-care system. Indeed, it's rather easy to imagine that the former model contributes to the massive overspending on health care by insured Americans (when compared to other first-world countries with comperable health statistics).
In fact, the government encourages such overspending by allowing employers to deduct the full cost of employee health care. That means we subsidize so-called "cadillac health plans" for rich Americans. A reasonable correction, indeed one suggested by the recent tax reform panel, would be to limit the deduction, say to $5k per employee. But it's easier for politicians to add a new carrot instead of taking an old one away, so now we subsidize both cadillac health plans and HSAs.
Ichbin said it's rather easy to imagine that the former model [i.e., comprehensive, employer-paid insurance] contributes to the massive overspending on health care by insured Americans.
It is easy to imagine, yes. But the facts don't bear it out. From the very same EBRI report being discussed here:
Despite similar rates of health care use, individuals with CDHPs and HDHPs are more likely to spend a larger share of their income on out-of-pocket health care expenses than those in comprehensive health plans. [emphasis added]
Those greater out-of-pocket expenses impel people concerned with immediate problems of rent, food, utility bills, and so on to delay getting needed health care and even eschew preventive care altogether - until a condition becomes serious or even an emergency. And that will indeed drive up health care costs.
So-called "Health Savings Accounts" may be useful for some people - if and only if they actually have the money they can put away to take advantage of them - but logic says that overall they will raise costs by increasing the demand for emergency care through reducing the availability of preventive care.
That is a very interesting statistic. Thank you for point it out.
By the way, the HSA plan offered by my employer covers preventative care costs with no deductible. Is that not typical?
which would include taking care of our health a little better in the beginning. We have eaten ourselves into a lot of our problems (and I speak as one on that side of the scales). If we would take more responsibility for what we eat, do, etc, there is a good chance health care would come down. The problem with getting government involved in this in a big way, is the cost. Not everyone will be able to afford the premiums (which I believe is a cause of many of the uninsured/underinsured in this country, they decide to take a chance rather than shell out $600 or more per month), therefore some revenue stream will have to be created. Once the stream is created, it will continue to have to get bigger and bigger, until we decide to take some personal responsibility.
I used to like reading the WSJ. Now, with ANYTHING I read or hear or see, I have to read between the lines, research other numerous sources, and have just basically adopted an 'I don't trust a thing these people are telling me' attitude. It's like doing those Crime and Puzzlement books whereby failure to 'solve' the scence (or media source) results in very real damage to me and others. If only I were more pyschic...
among the editorial board.
"Physicians for a National Health Program is a not-for-profit organization of physicians, medical students, and other health care professionals that support a national health insurance (NHI) program. Specifically, we believe that a single-payer system (where the government finances health care, but keeps the delivery of health care to mostly private control) is the only solution to solving the United States' many health care problems: 43 million citizens with no health insurance, many more with only limited coverage, skyrocketing health insurance premiums, malpractice costs, long-term care issues, and relatively poor health indicators, when compared to similar industrialized nations."
[link to www.pnhp.org]
Here is a big reason, among many, that we need it:
"Analysts: Health Care Costs to Keep Rising"
[link to news.yahoo.com]
This is one end result of not doing it:
"The physicians’ group pointed out that three-quarters of those bankrupted by illness were insured when they first got sick. While politicians acknowledge the need to cover the uninsured, they have ignored the worsening plight of those with coverage. Rising health care costs, skimpier policies and the cancellation of coverage when illness causes job loss have augmented the financial risk for those with insurance. This heightened risk is reflected in the 2200% increase in medical bankruptcies since 1981 found in the Harvard study."
[link to www.pnhp.org]
Here is what our fellow citizens think:
"Solid majorities of every group, with the sole exception of Enterprisers, favor a government guarantee of health insurance for all Americans, even if it means raising taxes. Across the electorate, support for guaranteed health insurance ranges from 55% among Upbeats and 59% among Social Conservatives to 90% among Liberals. By contrast, Enterprisers strongly oppose guaranteed health insurance for all, if it means higher taxes (76% oppose, 23% favor)."
[link to people-press.org]
What all of this means is quite obvious. Why it isn't being done is as well. The majority of the people want it and with good reason. When you hear conservatives talk about "personal responsibility" when they have given a huge tax cut to the rich while increasing defense spending and cutting social programs, raising interest rates on student loans, cutting veterans benefits among so many other things it should be quite obvious what is really going on.
Is that the number of those insured and able to pay has declined. Last estimate I saw was that we have approximately $46MM Americans who do not have health coverage - mind you - that's those that do not have coverage - that in no way implies that they aren't using healthcare - they just aren't paying for it. So, that cost gets passed on to those that do have coverage. Any business passes the cost of unpaid debt to other customers, and healthcare providers, should they wish to stay in business, are no different than any other business. If you look at the numbers, approximately $1.6 trillion is spent on healthcare annually in this country. That, as opposed to a total GDP of approximately $6.5 trillion. So almost 25% of our GDP is spent on healthcare? That's WAY out of whack. And then we wonder why the economy has slowed? If you consider that most lenders assume that half of your income is spent on housing, what's left after healthcare costs? AND healthcare costs are rising at an annual rate of 13%, while real income has declined by .5% over the last five years. Anyone who thinks things are looking good right now hasn't been paying attention.
I remember in 1962 when my father - midway through his 30 year career as an Air Force officer, who was as fiscally conservative as they come in other areas - said to his very young son, "If we don't socialize medicine now, it will one day break the economy."
Now, the doctors that did not want the government controlling their lives are selling their practices by droves to "medical groups" that take care of all of the insurance paperwork for carriers that control what the doctors can prescribe and what treatment they can provide; the hospitals they work in are bought by chains like commodities; and the pharmacies and hospital organizations wield even greater power over the purse than the carriers can resist (though one wonders to what extent the insurance carriers' treasuries are tied up in the stocks of the hospital conglomerates and pharmaceutical industries...research project for another day).
Who bears the most pain? The person whose deductible makes it too expensive to get the care they need, the poor but not impoverished person who pays more for medical services than the insurance company pays, the impoverished person with pride who lets his health fail rather than take charity, and, as written by another above, all of us who take home less in each paycheck as we foot the bill for ourselves and those who cannot pay their own way.
S word... its time is not just coming, it is long past ... probably too long past. We need to go back and read the history of the first 70 years of the industrial growth following the civil war, as well as the novels written in the 30's again ... Grapes of Wrath, In Dubious Battle. We're rapidly reversing our nation's moral progress, with all the regulatory controls of megalithic corporations that were put in place from the late 30's through the 60's disintegrating rapidly.
...that is very interesting that your father saw this coming all those years ago.