Bush Seeks to Increase Health Savings Accounts

In his State of the Union speech last week, President Bush gave short shrift -- just 165 words -- to the subject of health care. Still, administration officials say finding an antidote to rising costs will be a priority for the White House this year.

Bush's prescription includes promoting health savings accounts (HSAs) and "consumer-driven" health plans that he says will trim expenses by prodding Americans to assume greater responsibility for their health care choices.

"We will strengthen health savings accounts, making sure individuals and small-business employees can buy insurance with the same advantages that people working for big businesses now get," the president said in his speech.

As Bush seeks to increase the popularity of such plans nationally, his administration already has put federal employees in the vanguard of the effort. Within the past three years, the Office of Personnel Management has established 33 HSAs and other consumer-driven plans as part of the Federal Employees Health Benefits Plan.

So far the results have been modest. The plans have attracted 24,000 enrollees in a population that numbers in the millions, according to OPM. But officials say the numbers are growing.

Consumer-driven plans "provide another way to meet the needs of those 4 million folks who participate in our program," said Nancy Kichak, OPM's associate director for strategic human resource policy.

Consumer-driven plans typically feature higher deductibles and lower premiums than traditional insurance, and they create a tax-free pool of money that consumers can use to pay health bills and sometimes roll over to the following year. The arrangement is supposed to hold down costs by giving consumers an incentive to shop around for the best price for health services and to forgo procedures they do not need. Catastrophic injuries or illnesses are still covered.

Not everyone is a fan. Dan Adcock, assistant legislative director for the National Active and Retired Federal Employees Association, said such plans could drive up costs for some workers. "You are going to have a migration to the consumer-driven plans by people who tend to be lower users of health care, and people who tend to be higher users of health care will remain in the comprehensive plans," Adcock said. "When that happens . . . those plans have to increase premiums or cut benefits, or both of those things, in order to stay in business."

A Government Accountability Office report last week found that enrollees in federal consumer-driven plans were younger and wealthier than those in other plans.

Nationally, enrollment in consumer-driven plans among all Americans tripled to 3 million in the past year, Allan Hubbard, assistant to the president for economic policy, said in a conference call briefing last week. This year the White House will push legislation to allow people to contribute more money to HSAs and for new tax breaks to make it easier for individuals to sign up for them.

"I happen to think that HSAs have grown dramatically," Hubbard said. "Our reports are very positive, in terms of the take-up rate for HSAs, and we're very enthusiastic about it."

A GAO study last year of the oldest and biggest of the federal employee consumer-driven plans, offered by the American Postal Workers Union since 2003, found that employee satisfaction with the plan was mixed. APWU plan participants were satisfied with their access to care and with claims processing, but fewer were satisfied with their ability to find and understand information about the plan.

A big advantage of consumer-driven plans for federal employees, Kichak said, is they tend to be cheaper. For instance, an individual would pay $1,066 a year in premiums to enroll in the APWU plan, compared with $1,508 a year for Blue Cross and Blue Shield's standard option, the most popular plan.

"We're always looking for new options," she said. "We're very interested in the high-deductible [plans], but we're also interested in any other kind of product that provides good ideas for getting the care to our enrollees . . . at a reasonable price."