A sluggish economy hasn’t slowed the nation’s health care consumerism movement, according to a recent analysis by the Employee Benefit Research Institute.

That bodes well for producers who have been steering employer clients toward health savings accounts and health reimbursement arrangements to help ease the sting of high deductible health plans and rising out-of-pocket costs. These accounts covered about 21 million working Americans last year, representing about 12% of the privately insured market.

Account holders with the biggest balances tended to be more educated and affluent, but they also were typically healthier, older and male. What’s also noteworthy is that BRI’s enrollment numbers reflected the same trajectory of growth seen in another leading industry report.

Paul Fronstin, EBRI’s director of the health research program, noted that “the market continues to grow,” describing the $4.2 billion in rolled over funds as “a lot of money in a short period of time.”

Greater savings

The 2010 EBRI/MGA Consumer Engagement in Health Care Survey found a slight increase in total assets rolled over to these accounts to $4.2 billion last year from $4 billion in 2009. Since 2004, HSAs have enabled employees to pay for health care expenses on a pretax basis and roll over unused money from one year to the next, while HRAs consist of employer contributions only were created in 2001 to finance medical expenses below a high-deductible threshold.

The average rollover amount, however, fell slightly to $1,029 last year from $1,295 in 2009 and $592 in 2006, while average account balances decreased to $1,355 in 2010 from $1,419 and $1,356 within the previous two years. Account balances had soared before the recession to $1,320 on average in 2007 from $696 the previous year.

In 2010, there was $7.7 billion in HSAs and HRAs spread across 5.7 million accounts compared with $7.1 billion in assets held in 5 million accounts in 2009 and $835.4 million in assets in 1.2 million accounts dating back to 2006.

Account holders who are saving the most money tend to be well off. For example, balances averaged $1,224 for individuals earning $100,000 or more compared with $860 for those with between $50,000 and $99,999 in household income and $766 for those earning less than $50,000. Also, those with the highest average rollovers tend to be better educated. For example, individuals with a graduate degree had an average rollover of $999 compared with $1,034 for those with a college degree and $799 for those with a high school degree or less.

Fronstin expressed concern that higher rollovers for more educated account holders “raises a question as to whether people with low education will ever be able to amass a significant amount of money in the accounts.”

EBRI also found that the average rollover among men was higher than women ($1,061 vs. $874), while the same was true for older employees ($1,166 for individuals ages 55 to 64 compared with $1,003 for those ages 45 to 54, $927 for those ages 35 to 44 and $777 for those ages 21 to 34). In addition, individuals who exercised, did not smoke and were not obese had higher account balances and rollovers than those who were less healthy.

Roger M. Travis, president of ExperienceLab Inc., which helps employers make the transition from traditional health plans to consumer-directed coverage, says “the fact that total rollover was higher at the end of 2010, but that average rollover was lower, reflects a combination of factors.”

One is that the sluggish economy reduces the amount that working Americans can save while trying to make ends meet. Another is strong growth in the number of plans reflects a movement toward adoption of high-deductible health plans. Perhaps most significant is the fact that there are any rollovers in this economic climate in the face of rising out-of-pocket health means CDHPs are working as they were intended.

“Ultimately,” he adds, the findings suggest that “this approach to health care will own the preponderant market share of employer offerings and individual choice.”

Flawed methodology?

The increased enrollment seen in account-based health plans (ABHPs) is consistent with findings from the 15th Annual National Business Group on Health/Towers Watson Employer Survey on Purchasing Value in Health Care. “Specifically, that study indicates the percentage of companies with at least 20% ABHP enrollment is up to 46% ؅ an increase of more than 70% in the last five years,” notes Jay Savan, a principal with Towers Watson based in St. Louis, Mo.

He reports that the same study indicates median enrollment among companies offering an ABHP is 15% of eligible employees, nearly double the 8% average in 2007 to 2010 data from a separate annual Towers Watson health plan performance benchmarking study. The indication is that employer-sponsored plans in the top quartile of efficiency have more than twice the average ABHP enrollment (11.6%) than those in the lowest quartile (5.7%), suggesting, as Savan explains, that “ABHPs offer employers and employees more bang for the buck.”

But the veracity of EBRI’s report is being questioned. At least one CDHP proponent who’s known for his spirited advocacy of the health care consumerism movement has challenged the research methodology. “This report is complete and utter nonsense,” charges Greg Scandlen, a senior fellow of the Heartland Institute who founded Consumers for Health Care Choices, a non-partisan, non-profit membership organization aimed at empowering consumers in the health care system.

He says EBRI continues to use online surveys that are “notoriously unreliable,” explaining that only a few more survey respondents were added to the mere 94 people with a consumer-driven plan from the original sample. Scandlen calls it “a nonsensical way to measure national data.”

A more accurate representation of HSA deposits, he believes, can be found in a Consumer Driven Market Report from the Consumer-Driven Health Care Institute that found $11.3 billion in HSA account balances only among top 25 administrators as of Jan. 1, 2011, which was up from $8.6 billion in the previous year.

Scandlen also mentions a similar study of 30 administrators from Devenir, which noted that the $10.1 billion in HSA deposits identified represented a 41% increase in assets from a year ago — with the top five holding $4.4 billion of that amount.

Fronstin scoffs at such criticisms, noting that EBRI’s small survey sampling matches other national polls in terms of how the data is weighted and, in fact, the research is over-sampled. “Our numbers on enrollment are in the same ballpark as Bill Boyle’s,” he adds, referencing the editor and publisher of CDMR. “We share our data with each other to make sure we’re on track, which is what you have to do. There’s no way you’re going to get a precise number.”

Fronstin also notes that while American Association of Health Plans surveys estimate the number of HSA-eligible people, EBRI actually separates those who are eligible from those with an account. EBRI also plans to examine differences between individuals in HSAs and HRAs in the future.

— Bruce Shutan is a freelance writer based in Los Angeles.


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