575,000 Illinoisans Covered by Health Savings Account Plans
Ten million Americans are covered by Health Savings Account-eligible insurance plans, an increase of 25 percent since last year, a new census released today by America
A new report from America’s Health Insurance Plans finds that over ten million Americans are covered by Health Savings Account (HSA)-eligible insurance plans. This is an increase of 25 percent since last year.
In Illinois, 575,000 individuals now are enrolled in HSA-eligible plans.
As you can read in our 2010 Legislators’ Guide to the Issues entry on Health Savings Accounts, essentially, an HSA combines high deductible health insurance with an interest-bearing, tax-free account that handles routine health care expenditures through withdrawals. Once the insurance deductible is reached, private insurance pays for 100 percent of health care.
HSAs empower individuals to monitor their health care costs and create incentives for individuals to use only those services that are necessary. HSAs rest on a patient-centered approach to health care reform that empowers the patient and the doctor to make effective and economical choices.
HSAs are being increasingly utilized in the public sector. According to the Texas Public Policy Foundation:
The Federal Employee Health Benefits Plan began offering federal employees the option of a high deductible health plan (HDHP) coupled with a Health Savings Account (HSA) in January 2005; federal employees choosing the HDHP/HSA option had more than a dozen different plans from which to choose.
A survey of state health benefits in May 2007 found that state employees in Arkansas, Colorado, Florida, Georgia, Indiana, Kansas, Mississippi, South Carolina, South Dakota, and Utah all had an HDHP/HSA option for state employees.
In many states, the state employees receive a considerable contribution from the state to the employee’s HSA. For instance, for certain HSA enrollees, Indiana may contribute as much as $1,400 annually on the state employee’s behalf.
According to Indiana Governor Mitch Daniels, HSAs have been a smashing success for their state employees, with over 70 percent of 30,000 Indiana state workers choosing it. And there are satisfaction and savings perks, as well:
State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we’ve been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.
The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state’s total costs are being reduced by 11% solely due to the HSA option.
Illinois state government has the opportunity to provide employees with more health care insurance choices and to save on public employee benefit costs by offering HSAs.