On the campaign trail, President Bush emphasized several
potential reforms that he believes could lower premiums and improve
access to care. For one, Bush has pushed for the expansion of
association health plans (AHPs). AHPs would let business trade
groups offer health insurance plans to their members. The
association plans would be exempt from state insurance regulations,
which can add costs to small employers' premiums; many large
employers are already exempt from these state regulations. In
theory, by banding together in AHPs, small employers could
negotiate with insurers for better rates. Congressional staffers
expect an AHP bill to pass Congress this year, since Bush is
expected to push for it.
Bush has also focused on health savings accounts, or HSAs. In
one presidential debate, he said, "Health-care costs are on
the rise because the consumers are not involved in the
decision-making process. It's one of the reasons I'm a
strong believer in health savings accounts." HSAs combine a
high-deductible health plan with a savings account so employees can
save the money allotted if they don't spend it on care. They
first became officially available in 2004. By giving consumers the
ability to judge the costs and benefits of their health coverage,
and to save the unspent money (HSAs can be taken with workers from
job to job), HSAs may prompt consumers to use care more wisely,
thereby cutting costs.
In a March 2004 study by Mercer Human Resource Consulting,
nearly 75 percent of employers said they are very or somewhat
likely to offer their employees a high-deductible health plan with
an HSA by 2006. Employees may not welcome the news. According to a
study by Washington, DC, benefit consulting firm Watson Wyatt
Worldwide released in January, less than one third of workers who
have health insurance know what HSAs are. Once respondents were
given an explanation of the plans, 57 percent said they did not
want to pay higher deductibles.
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Bush plans to expand HSA utilization, partly by offering tax
credits to small companies that contribute to employees' HSAs.
He has also proposed extending tax credits for low-income
health-care purchasers and has suggested capping the amount
employers buying traditional insurance can spend tax-free--a means
of encouraging them to shift to HSAs.
The Net Effect
Will these ideas actually slow spiraling costs? Opinion remains
sharply divided. "Though they were reluctant at first, nearly
every insurance company in the United States now has a health
savings account project on the market," says Greg Scandlen, an
expert on HSAs at the Galen Institute, a health policy research
group based in Alexandria, Virginia. "As the market grows,
you'll see competition among the insurers, and it will start to
build momentum. As more companies use HSAs, you'll begin to see
savings."
Some experts and entrepreneurs, however, think HSAs still have
major flaws. Raymond Arth, president of Avon Lake, Ohio-based
Phoenix
Products, a faucet manufacturer that sells to mobile homes and
RVs, believes the U.S. medical system is not yet set up to allow
consumers this kind of choice. "If you're shopping for a
major purchase, say an automobile, you have access to reliable data
needed to make an informed choice," says Arth, 53. "If
you need to have a [medical procedure], the [doctor] can't
quote a price, you can't check his or her 'performance
ratings,' and there is no meaningful information about the
outcomes produced by the facility where the procedure will be
done."
Others think the savings accounts won't help lower-income
workers. "HSAs are for the healthiest and wealthiest without
chronic problems," says Joel Marks, executive director of the
American Small
Business Alliance, based in Washington, DC. He fears sicker
employees would not choose plans where they had to pay such a high
deductible. Small companies with sicker employees might then find
their premiums rising.
Some evidence supports Marks' claims. In a 2004 Kaiser
Family Foundation study, more than three-quarters of respondents
had an unfavorable opinion of high-deductible health plans, and
many feared such plans would leave them vulnerable to high medical
bills. And a July 2004 study by the Center for Studying Health
System Change, a Washington, DC, nonpartisan policy research
organization, found employers worried about how they could possibly
provide enough health-care education to employees to help them make
educated choices under an HSA.
AHPs have even less support in the health policy community.
"AHPs are something I always shake my head in wonderment at
because they don't seem to have a lot going for them,"
says Paul Ginsburg, president of the Center for Studying Health
System Change.
Gail Wilensky, a senior fellow and health policy expert at
Project HOPE, an international education foundation based in
Millwood, Virginia, says AHPs don't offer the kind of
purchasing power some expect because many small firms grouped
together are a greater risk than one large company. "I
don't think you'll find that 1,000 small groups can operate
like one big company," Wilensky says.
"Large employers have centralized payroll and data systems
that make enrollment and disenrollment [in insurance plans]
simple," agrees Scandlen. "An association of small
employers has none of these advantages."
What's more, says Wilensky, in previous state-by-state
attempts at AHPs, "there have been instability problems--the
groups lose or gain members who jump ship out of the AHP when they
get a better individual policy." Worse, since AHPs would be
run through local business groups, they could be vulnerable to
fraud, already a major problem in the insurance industry.
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