Estimating Take-Up of Health Savings Accounts

1. Estimating Take-Up of Health Savings Accounts Melinda Beeuwkes Buntin, Ph.D.

2. Why Do We Care About HSA Take-Up? • High-deductible plans plus HSAs might be an efficient form of insurance • Consumers have incentives to use care wisely • New information tools available to health care consumers • 46 million uninsured Americans • Don’t have access to care to keep themselves, their families healthy • Costs of safety-net providers borne in part by taxpayers • Option for insurance expansion in current political climate

3. Valuable Insights from Parente et al. • The size of the deductible and the “doughnut hole” are important as well as the premium • Subsidies aimed at the individual market can affect the group market to a surprising extent • The form of the subsidy determines the target efficiency • Subsidizing low-income provides lowest cost per newly insured • There are diminishing returns to subsidies

4. Important Limitations of Parente et al. • Health status likely an important determinant of HSA take-up • Keeler et al. (1996) found healthy, those exceeding deductible likely to be attracted to account-linked high-deductible plans • Will affect ability to obtain insurance • Will affect premium offered • Model based on behavior at early adopters of HRAs • HRAs, not HSAs • Select set of firms committed to consumer-directed concept • Workers differ from general population, uninsured

5. Why HSA Subsidies? • Moderate cost/newly insured for low-income subsidy • HSA: $2718 (Parente et al.) • Kerry plan: $5495 (Antos) $4956 (Lewin) • Medicaid expansion: $1750 (Gruber) • Increased reliance on the individual market • Value of employer pooling, choice of plans • Need for risk adjustment • Care use inside the doughnut hole

6. How do High-Deductible Plans + HSAs Affect Health? • Limited evidence about effects of CDHC on cost, use • RAND HIE suggests both appropriate and inappropriate care will be reduced • Early work by Parente et al., others finds mixed effects for Rx, preventive care, ER use, admissions • No evidence about effects of CDHC on quality • Increased consumer engagement could spur providers to improve quality • Increased financial exposure could lead to foregone care, increased fragmentation of care, and adverse selection especially for the sick and poor

7. Key Areas for Future Research • Studies that compare a range of consumer-directed designs to traditional HMOs and PPOs in terms of: • Costs and utilization (both initially and over time) • Quality and appropriateness of care • Studies that investigate the effects of consumer-directed designs on the poor and the sick • Investigations of alternative consumer-directed designs • Premiums/Cost-sharing/Accounts that vary with income • HSAs paired with care management, incentives for primary and secondary prevention • Plans that provide comparative information about provider costs and quality • HRAs versus HSAs, and the way that consumers behave with different account balances