By Thomas P. Miller

The nearly 20-year-old tale of Health Savings Accounts (HSAs) continues to intrigue and annoy ideologues at both poles of the health policy spectrum. However, their arguments about these tax-advantaged spending accounts tied to high deductible insurance have evolved. The only consistency involved centers on whether you are for or against them.

The latest illustration appears in this month’s issue of Health Affairs in the form of a targeted takedown of HSAs, posing as health policy research. “Health Savings Accounts No Longer Promote Consumer Cost-Consciousness” by Sherry Glied, Dahlia Remler, and Mikaela Springsteen concludes that HSAs failed to achieve their primary policy purpose—to increase cost consciousness and health care efficiency—and have no remaining justification.

The authors cobble together scraps of secondary evidence that
other plans in the private insurance market have become similar over time in
cost-sharing levels to high-deductible health plans (HDHPs) with HSAs. The
Internal Revenue Service (IRS) definition of “preventive care” spending
eligible for HSA tax benefits also was liberalized to some degree. Glied, Remler,
and Springsteen then overstate changes in National Health Interview Survey (NHIS)
responses, from 2007 to 2018, to insist that the net effects of expanded HSAs
made access to health care services less financially difficult for enrollees in
HDHPs with HSAs, compared to enrollees in private plans without HSAs.

Was this a problem or a solution? It’s mostly a selective
misreading of the history behind the latest targeted benefit, added to many
others, in our mixed and mixed-up health care system.

First, a closer look at the always amazing health policy
research tricks and motivated reasoning one finds within this latest Health
Affairs study:

These HSA and HDHP changes over time, within a larger context, are far from “catastrophic.” HDHPs, using the IRS definition of coverage levels eligible for HSA tax treatment, still amounted to only 45 percent of all private industry workers participating in medical care plans in 2018, albeit much higher than the 2010 figure of 24 percent of such workers (or 10 percent of all private industry workers), as reported in the National Compensation Survey (NCS). One can find slightly different figures reported from other surveys in nearby years by the Centers for Disease Control and Prevention and the Kaiser Family Foundation, respectively. The primary NCS figure also does not appear to include persons covered in the individual insurance market (a coverage category somewhat more prone to HDHP coverage, but less hospitable to funded HSAs, and complicated further by the complementary effects of cost-sharing reduction subsidies and Silver loading in the Affordable Care Act’s subsidized individual exchange markets). Training too narrow a lens on a fraction of US health care spending misses the forest for the HDHP trees, by omitting the effects of major government coverage programs like Medicare and Medicaid.

Glied, Remler, and Springsteen lament how much non-HSA HDHPs
have closed the average annual deductible (cost sharing) gap with HSA-eligible
ones, but the latter remain more than twice as large —  $2349 in 2018 vs. $1153 for all insured people with a deductible that year. Note the clever omission of the more
relevant average deductible figure for all people with private
employer-sponsored insurance, because that would deliver a lower amount. Hence,
a more selective and stylized set of comparative figures aims to make the
authors’ point appear more pointed.

The Health Affairs authors also fail to make a distinction between HSA-eligible plans and those plans that actually are funded (let alone the size of any remaining balances in them; for better research on that, see Fronstin ). Similarly, they offer little, if any, actual data on the extent to which preventive care spending exempted from cost sharing (besides dental care) actually changed as IRS definitions loosened. The “financial affordability” survey response measure in the NHIS is far more subjective and imprecise than actual overall health spending data might reveal. In fact, the authors make no effort to analyze whether HSA funds actually are spent somewhat differently than health spending under insurance coverage, such as for qualitative (non-network care, non-covered benefits) rather than quantitative reasons.

It’s fairly obvious that Glied, Remler, and Springsteen suffered
from a pre-existing condition—opposition to HSAs. They just decided to round up
whatever suspect evidence they could manufacture to augment their main grievances—that
HSAs are a regressive tax benefit for wealthier individuals and (unstated) that
they get in the way of the health policy reform plans of others, by allowing
too many free-range humans to stray from the main collective herd. For example,
they criticize HSAs for dampening any initially higher cost consciousness, even
while writing “Whether or not such cost-consciousness is desirable is debatable.”

Ironically, the ideological blinders on the authors kept
them instead from (1) understanding and explaining the most powerful sales
pitches for HSAs, which have “evolved” over time and (2) offering some useful
reforms to address remaining substantive concerns. That part of our
retrospective beyond–peer review resumes and concludes in part II.

The post Health Savings Accounts and Health Care Costs: While You Were Sleeping appeared first on American Enterprise Institute – AEI.