Schwitzer health news blog

Closer look at HSAs: rationing by income class

Princeton economist Uwe Reinhardt, on the Health Affairs blog, counters claims made in an earlier Health Affairs article about what high-deductible "consumer driven health plans" (coupled with health savings accounts or HSAs) will be able to accomplish. Excerpt:

“…the very high degree of out-of-pocket spending visited on individuals and families by many of the HSA products now on the market guarantees that especially low-income Americans are very likely to tighten their belts und forego health care they would have wanted under the more comprehensive, conventional insurance products. This self-rationing by price is doubly guaranteed, because the tax-preference accorded to HSAs effectively makes health care more expensive for low-income persons than for high-income persons.

On the other hand…the HSA/high-deductible construct is not likely to alter significantly the health-care behavior of high income people …. For one, high-income individuals and families will be able to absorb high deductibles with relative ease into their higher incomes. Furthermore, as noted, the tax code actually makes health care cheaper for high-income families, relative to Americans with lower incomes. With the government picking up close to half of the health care cost of high income people under HSAs, it can be doubted that self-rationing of health care by price will play any significant role among such families if they were forced to switch from the comprehensive baseline policy to an HSA product. It is fair to wonder whether the advocates of HSAs, who usually live in high income brackets, are aware of this asymmetric impact of HSAs on the rationing of health care by price and ability to pay.

These are ethical policy issues that economists can identify but on which they cannot offer normative dicta. Policy makers, on the other hand, might wish to explore these issues further, before shifting the nation wholesale toward the HSA/high-deductible health insurance, as this product is currently designed.