Health Savings Accounts: Bush Band Aids on Health Care Cost Inflation

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Hopes of health care pricing sanity fading as insurers raise rates on HSA plans as much as traditional health insurance plans.

Health Savings Accounts (HSAs) have been high on the Bush domestic agenda. HSAs offer low premiums and tax incentives in exchange for a high deductible no doctor visit or prescription copay benefits. In theory, these plans make individuals "health care shoppers," and cause us to shop for the best care and rates.

Mike Chapman is the president of, a nationwide online health insurance agency and a proponent of health savings accounts. But he sees that the hope and promise of HSAs as a tool to control health care cost inflation is dimming. Health insurance companies are raising the rates on individual HSA plans as much as "copay" health plans.

"I've recommended HSAs to my clients because I believed in them, says Chapman." "A year ago clients loved the health insurance quotes from HSAs. But a year later, many HSA clients have seen as much as a fifteen to thirty per cent increase in their health insurance premiums, even though they have not filed a single insurance claim."

Health insurance companies lump individual policies together when planning their price increases for the next year. The cost of insurance claims are spread across all of their policy holders. So HSA policy holders who paid more out of their own pocket and filed few insurance claims get "rewarded" with the the same increase as the someone who visited their doctor often and only paid a $30 copay.

To make matters worse, many health insurance companies increase their rates to existing individual policy holders faster than the rates they advertise to attract new policy holders. "What looked like a great health insurance quote for my clients when they signed up for a HSA plan doesn't look so good a year later. Now they are looking at basically paying the same rate they paid a year ago, except now they have a huge deductible and no copay," says Chapman.

"Who can afford fifteen to twenty five per cent rate increases?" asks Chapman. "With the numbers of uninsured Americans at an all time high, HSAs could be but a blip in the road to a private health insurance meltdown. All HSA plans may be doing is delaying the inevitable crisis for another Administration to deal with."

Chapman doesn't agree with proposals for tax subsidies for individual HSA health insurance plans. "Extra tax subsidies for HSAs do nothing to control health care costs and health insurance inflation, and could in fact increase rate inflation," says Chapman. "HSAs are a great concept for adding personal accountability to control health care costs. But unless health insurance companies offer the equivalent of a "good driver discount" for no or low claims, then personal accountability cannot be sustained."

Arrange an interview with Michael Chapman for more insights into this topic:

Michael Chapman
Direct Line: (888) 398-6246

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Michael Chapman