13 November 2015
As ObamaCare struggles with skyrocketing premiums and flat enrollment, failing co-ops, doctor shortages, delays and a host of other problems, there's one health reform that is — quietly — doing exactly what it promised.
There are now nearly 19.7 million people enrolled in Health Savings Account plans, an increase of more than 2 million — or 13% — over the past year, according to the latest report from America's Health Insurance Plans.
HSA enrollment has climbed at double-digit rates since Congress allowed them on the market starting in 2005. For the past five years, it's averaged more than 16%.
HSAs combine high-deductible insurance with a tax-free savings account to pay for out-of-pocket costs. Any money left over in an HSA rolls into the next year.
The idea is to get consumers more directly involved in their health care decisions by making them more aware of the cost of care. At the same time, HSAs mitigate a tax distortion that penalizes out-of-pocket spending. The Employee Benefits Research Institute estimates that consumers have more than $24 billion saved in HSAs.
Unlike ObamaCare, HSAs actually have a record of success, with various studies pointing out that they are effective at holding down insurance costs. The Kaiser Family Foundation, for one, has estimated that the growth in HSAs contributed to a quarter of the recent slowdown in health spending.
In addition, the government's Center for Medicare and Medicaid Services credits the growth of these "consumer directed" health plans for slowing down national health spending.
Unfortunately, as we've pointed out in this space, ObamaCare does nothing to boost HSAs, and may hamper its growth. The individual HSA market was growing steadily until ObamaCare took effect. And it's dropped slightly in the small group market.
While HSAs have exploded in the large group market, ObamaCare could harm this as well, if the so-called "Cadillac tax" remains in effect.