High HSA Deductibles Could Lead to Medical Bad Debt: Kaiser Study

High deductible health plans, such as Health Savings Accounts, have been touted as a way to provide health care coverage for uninsured consumers. But a recent study by the Kaiser Foundation shows that HSA subscribers could face more medical bad debt even when premiums are affordable.

That’s because few uninsured households have enough financial assets to cover the high deductibles associated with the plans, according to the study’s authors, Paul D. Jacobs and Gary Claxton, both with the Kaiser Family Foundation. According to the study, the average deductible for an HSA was $4,800 in 2004, though federal law allows deductibles to be as high as $10,000 for a family. 

Jacobs and Claxton contrasted the HSA statistics with household and wealth income from the 2004 Survey of Consumer Finances, a nationally representative household survey conducted by the Federal Reserve Board every three years.

“Financial assets are relevant when one is assessing whether high-deductible plans, which require greater up-front cost sharing, are worthwhile for the uninsured,” according to the report Comparing The Assets of Uninsured Households to Cost Sharing Under High Deductible Plans. “We show that uninsured households have less financial assets compared to the insured; at lower income levels, their net financial assets may even be negative.”

According to the Kaiser study, about 33 percent of households with at least two uninsured members had gross financial assets of least $2,000, the minimum deductible for a 2004 HSA qualified plan. Only 9 percent had enough financial assets to cover the maximum $10,000 deductible allowed by law.

Because high deductible health plans generally require policy holders to meet other cost-sharing obligations, such as coinsurance, there is potential for holders to rack up more medical expenses.

The Fed’s Survey of Consumer Finance found that the typical insured household had about $4,000 in liquid assets in 2004. In contrast, the typical uninsured household had about $510 in liquid assets. 

“The impact of consumer debt on the net financial position of these households was noticeable. Median net financial assets were positive only for insured households,” according to the Kaiser researchers. “Most uninsured households had zero net financial worth.”