HSAs are not HDHPs!—HSAs are the antidote to HDHPs!

by Steve Neeleman

With the changing political tides in Washington DC and throughout the US, there is a new drum beat against the current private health care system and the evils of high deductible health plans (HDHPs) and some lawmakers and pundits have included HSAs in their rants.  I believe people are making a mistake by confusing the challenges of an HDHP with the benefits of an HSA. 

Deductibles are definitely getting higher.  In fact, according to the Kaiser Family Foundation annual survey (http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2018) published in October of 2018, over the last 5 years the percentage of single workers with deductibles greater than $1,000 has increased from 38% to 58%.  Additionally, by 2018, 26% of single workers had deductibles greater than $2,000 and 11% had deductibles greater than $3,000.  Among all employers in the Kaiser study, the average deductible for single coverage is $1,573.  For single workers with HSA-qualified health plans, Kaiser reports that their average deductibles increased by 17% from $2,003 to $2,349 over 5 years while PPO single deductibles increased by 51% from $799 to $1,204 during the same time.  That is real money that consumers need to pay when they are seeking non-preventative care (which is typically covered by their employers), especially when they don’t have an HSA to help offset their costs.  

So what is the answer?  Deductibles are increasing, independent of plan type, and that doesn’t appear to be changing anytime soon.  We are all getting older as well and typically medical costs increase with age.  Most Americans also don’t fund adequately fund their retirement plans.  HSAs are the only option that allow workers to avoid taxes on their health care spending and save long term for retirement.  Employers, government entities, and consumers need to better understand the urgent need to grow HSA balances to be prepared for the increasing deductibles that we now and in the future.