Have HSAs been a success?

Have HSAs been a success?

Well, for people who have them, yes they are often a success and do what they were intended to do. Many people love this new program.

But not as many people have signed up for HSAs as originally planned. The boosters had bigger hopes and some are wondering why the accounts are not more popular.

Part of it could be inertia. People are used to conventional health insurance plans, and they find these new plans confusing. Nobody they know has them, so they regard HSAs as something for other people, not people like them. If this is true, the tide should eventually turn and HSAs will become more popular. At the same time, there are drumbeats in Congress for universal health care. Even if a national health insurance plan of some sort is passed, this won’t necessarily kill HSAs. On the contrary, it could make them more popular.

Another reason is that people don’t like to think like consumers when faced with medical decisions. They want more of a paternalistic system in this area of their lives, and insurance companies, no matter how people like to complain about them, offer them such a system. Health concerns can be scary.

Here’s a summary of an earlystudy done on consumer satisfaction with HSAs:

http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3606

The industry association America's Health Insurance Plans said in April 2007 that 4.4 million people has HSA, and that they accounted for 25% of new policies in the individual market. They estimated that as of January 2007, most accounts were less than a year old and had under $2500 in assets.

The Treasury Department projects coverage of 25 million to 30 million by 2010, but at current growth rates the number will be under 10 million by 2010.

Oct 2007: A recent survey by the money management company Fidelity Investments found that 56% of respondents could not identify an HSA. In general, those surveyed appear to have confusion about health program options.

A paper by two members of the Wake Forest University Medical School points out that HSAs and managed care can be integrated so as to point out payment responsibilities of the insured and the insurers.