Karen Kerrigan
is president of the Small Business and Entrepreneurship Council
(
Small Business and Entrepreneurship Council)
In most American homes, the rising cost of good health care - like the
rising costs of gasoline and home heating - remains a perpetual
kitchen-table discussion. It is especially front and center now as we
are in the annual "open enrollment season," when employees decide
which of their company's health plans they will choose for the coming
year.
This year, two underlying trends are catching the attention of
consumers and industry alike, and it appears they will continue to
shape the health-coverage market.
The Kaiser Family Foundation reports that the share of companies with
fewer than 200 workers that offer health benefits is down to 59
percent and falling. Two out of every five of these workers are now
without coverage and have to find health insurance for themselves -
and their families - some other way, and their numbers are expected to
grow.
As more Americans search for alternative, affordable ways to find
coverage for health care, they are increasingly being drawn to Health
Savings Accounts. The Treasury Department forecasts that, by 2010, 25
million to 30 million Americans will be covered by HSAs.
How it works: With an HSA (in conjunction with a high-deductible
health insurance policy), money is placed into a tax-deferred health
account. That money can be withdrawn without any tax penalty as long
as it is used for medical purposes - including vision and dental care.
As the money in the HSA grows, it builds financial resources a patient
can use for routine or future medical care. Any money left in the
account at the end of the year rolls over to the next year. The
leftover funds are the individual's to keep, and more money is added
in the new year.
HSAs are a smart option for the self-employed, owners of small
businesses, and employees and people whose companies are dropping
health benefits.
Initially a boutique health-coverage product, HSAs are now being
offered by virtually all of the top insurance companies, such as Aetna
Inc., Cigna Corp., and Blue Cross and Blue Shield. The company that
pioneered the HSA concept, UnitedHealth Group Inc.'s Golden Rule
Insurance Co., reports that more than 40 percent of its customer base
is now covered by HSAs.
Both consumers and employers are driving this trend in the market. The
share of all companies - not just those with fewer than 200 workers -
now offering HSA plans is up to 40 percent. The 75,000 people who work
for Eastman Kodak Co. will be offered three health plans this open
enrollment season, including a plan in which they would not have to
pay any premiums but have a higher deductible – and that plan will
include a Health Savings Account.
Small and self-employed businesses - where the overwhelming majority
of American jobs are being created - continue to turn to HSAs as a
cost-effective way to cover workers. Tom Terrill, a suburban Chicago
insurance broker, recently told the Chicago Tribune that small
businesses are turning to HSAs in greater numbers in the Chicago area
because "data is mounting to demonstrate their merits."
Government is part of the trend as well. In their new contract with
Orange County, Calif., the county's 1,600 sheriff's deputies have a
provision that phases in HSAs as a substitute for what the county
traditionally grants to retirees.
Even some labor unions are proposing HSAs be put in their next
contract. In Tiverton, R.I., the teachers union proposed moving from
traditional health insurance to a high-deductible plan that would
include a Health Savings Account. The city and the union eventually
agreed on a contract without HSAs, but the union's proposal is
noteworthy. Past congressional debates over HSAs once featured
organized labor's opposition; the Tiverton teachers union is an
affiliate of the National Education Association, proof that minds and
hearts change over time.
The growing popularity is rooted in the product's middle name:
savings. A consumer will typically save up to 50 percent on an HSA
plan premium over traditional health plans.
Further, an HSA policyholder has more control over his or her
health-care budget; you make the decision when to spend and when to
save. And the money you don't spend accumulates year after year
earning interest - reserves that can help meet the increased health
costs of later life and retirement.
Some of the working population is lucky enough to have a traditional
health-insurance plan that works for them, but for the rapidly growing
number of people who are swiftly losing their benefits, HSAs are not
only a cost-effective alternative, but one that allows them a lot of
freedom.
The market is changing. Employers, self-employed people, workers,
consumers and governments are adjusting. But in this cost-conscious
environment, it is virtually certain these trends will continue and
many consumers can still benefit from what have been positive changes
in health coverage options.
E-mail Karen Kerrigan at
kkerrigan@att.net.
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