When Bill Sonn’s health insurance premiums jumped by 30 percent, the Denver freelance writer and marketing consultant found cheaper insurance, with a $2,000 deductible, and opened a health savings account.
On paper, the switch looked like a good idea. Instead of paying each month for insurance he would rarely use, Sonn could invest in a tax-free, interest-bearing account, known as an HSA.
A few months later, however, when he needed a doctor, Sonn shared the same emotions common among the 3 million Americans now paying for medical care with health accounts: frustration and sticker shock.
“It turned out to be something of a disaster – not that I didn’t get care – but it was hard,” said Sonn.
President Bush, in his State of the Union address Tuesday, called for expanding health savings accounts – tax-sheltered accounts linked with high-deductible health insurance – as a way of dealing with the nation’s health care crisis.
But the experiences of Sonn and others in Colorado – one of the states where a large number have already been opened – are raising cautions and concerns.
The accounts are praised by those who see them as a solution to skyrocketing costs and growing numbers of people without health insurance. To critics, they are complicated, do little to empower consumers and mostly benefit the healthy and wealthy.
Both sides, however, say the accounts are growing and are here to stay – though wrinkles must be ironed out.
And Colorado – where about one out of four residents, 1.3 million people, is uninsured and the economy is dominated by small and midsize businesses – is seen as prime HSA territory.
“Colorado is one of about five states that have the right ingredients that make us want to be there quickly,” said Scott Spiker, chief executive of Chicago- based Destiny Health, which has sold 70,000 health savings accounts primarily in seven Midwestern states.
Spiker said that despite the accounts’ reputation for appealing to the wealthy, “the fact is our members are equally blue collar as white collar.”
But even HSAs’ biggest fans see the need for fixes before the plans gain mass appeal.
In Sonn’s case, switching to high-deductible insurance and a health account cut his monthly premium increase to $40 from a projected $75. But when Sonn discovered a growth, he says, he found out the drawbacks.
“I wanted to see a doctor … very quickly,” he said
Sonn called several doctors’ offices but was told his insurance wasn’t accepted. He tried to explain he’d be paying with cash, but that caused only more confusion, he said.
He turned to an urgent-care clinic, where he was diagnosed with a harmless “skin tag.”
“I was very happy, very much relieved,” Sonn said. “But then the woman behind the desk says, ‘That will be $264.”‘
Sonn refused to pay the whole amount. He was offered a $150 discount, which he took. “By then I was exhausted,” he said.
The health savings accounts differ from pretax flex accounts offered by many employers in that the money spent from the HSA can be taken as a tax deduction and the unused portion can be rolled over from year to year.
A key of the accounts, supporters say, is that they will push patients to be cost-conscious.
President Bush will soon “start talking about the importance of providers making information available to their customers about … both quality and price, so people can become good consumers,” Allan Hubbard, Bush’s assistant for economic policy, said Wednesday.
Putting price tags on medical care, however, is a challenge. Providers guard their prices, negotiating exclusive discounts with health insurers, said Terry Peltes, chief executive of Englewood-based hospital consulting firm Certus Corp.
So when a potential patient asks how much a test or procedure will cost, Peltes said, “there are very few hospitals or doctors that can answer that question.”
Staff writer Karen Augé can be reached at 303-820-1733 or kauge@denverpost.com.
Health savings accounts
Contributors to HSAs
policy that carries a deductible
of at least $1,050 for an individual
or $2,100 for families
Contributions
income
cannot exceed $2,700 for individuals
or $5,450 for families
How they work
used for care not covered by
insurance. Balances can carry
over from year to year
at banks, credit unions,
insurance companies or an
employer.
be taxed.
More information is available at www.treasury.gov/offices/public-affairs/hsa/ Source: U.S. Treasury Department
