High Deductible Health Care Plans Off to Slow Start with Small Businesses

Health care plans with high deductibles that can offer Health Savings Accounts (HSAs) grew only 2 percent among small businesses this year, according to a survey by Mercer Health and Benefits consultants reported on by USA Today. The high deductible plans are more popular among employers of more than 20,000, 22 percent of whom will offer some form of the plan this year. Eight percent of workers in these companies enroll in the plans, according to the Mercer survey.

Savings to employers associated with high deductible plans come from increasing deductibles from $250 or $500 to $1,000 or more, USA Today reports. But according to the Mercer report, quoted by USA Today, 34 percent of small employers already have deductibles of $1,000 or more.

One bright spot is in New Jersey, where Horizon Blue Cross and Blue Shield reported 450 small business clients signing up for high deductible plans in the past month. One quarter of these companies had previously offered no health care benefits, according to a report in NorthJersey.com

HSAs allow members and employers to deposit pretax dollars to an account that can be used only for legitimate health expenses. There are ceilings indexed to inflation on contributions to these accounts, according to a report in the New York Times. In 2005 it is the lower of the deductible or $2,650 for individuals, and $5,250 for families.

The plans cover preventive care, defined by federal regulations, outside of the deductible, and provide incentives to use doctors, hospitals and labs within the network, NorthJersey.com says.

Gary McLaughlin, a benefits consultant and owner of Preferred Benefits Group told NorthJersey.com that companies are paying 25 to 35 percent less in premiums for the high deductible plans. For a medium-sized business, the cost of health care for employees could drop from $100,000 to $60,000 he said.

Critics say that since most people do not spend their deductibles, the burden falls on the chronically ill, people with diabetes or asthma. Yet proponents of the plans point out that chronically ill people are attracted to these plans because they reach their deductibles more quickly, and are then covered at 100 percent, NorthJersey.com says.

Enrollees said they were very satisfied with the plans, according to a survey conducted by Blue Cross Blue Shield Association (BSBSA). According to the survey, 68 percent of HAS-eligible enrollees were satisfied with the performance of their insurer and 71 percent were satisfied with access to preventive care and wellness services. Sixty-five percent of enrollees who purchase coverage directly and 61 percent with employer-sponsored coverage said they were likely to recommend the plans, the BCBSA said.