High deductible health insurance plans associated with HSAs are saving people money on monthly premiums throughout the United States – to the tune of 16% a month for young singles and a whopping 36% a month for families with children on the policy. In a study completed the first week of September, www.HSAFinder.com compared the monthly premiums for PPOs and high deductible HSA plans throughout the United States and garnered some intriguing results.
Regina Herzlinger, Harvard Business School professor considered one of the leading proponents of CDHC reviewed the study and encouraged its release.
"It is increasingly apparent from this survey and others
that CDHC works as a tool to reduce health care costs and improve patient participation; but competition is just beginning…stay tuned for further results," she said.
JoAnn Laing, President of Information Strategies, Inc., and author of The Consumer’s Guide To Health Savings Accounts and The Small Business Guide To HSAs directed the study.
She points out that since 73% of all Americans spend less than $500 in provider services each year, most individuals and families will pocket much of the savings in healthcare premiums.
The study looked at the capitol city in each state. For each city, four scenarios were evaluated , using the average low cost insurance rates without co-insurance.
- The first scenario compared the costs for a 29-year-old single male between a PPO with a deductible of $500 and an HSA insurance plan with a deductible of $2,000.
- The second compared the costs using the same deductibles for a 45-year-old single female.
- The third scenario looked at the costs for a young family whose father is 35 years old, mother is 32, son is 7 and daughter is 5. The deductible remained at $500 for the PPO, but raised to a $5,000 family deductible for HSAs.
- The fourth scenario looked at costs with the same family deductibles for a married couple where the husband is 54 years old and the wife is 51.
Age, of course, played a factor. The 29-year-old single male had the greatest savings in Helena, MT, where there was a $73.11 monthly savings (-48%), Augusta, ME with a $217.94 difference (-46%), and Topeka, KS, with a $65.59 a month difference (-39%).
The average monthly cost to a 29-year-old single male for a PPO with a $500 deductible was $102.39 versus only $86.04 for a $2,000 deductible HSA. Though the average difference is only $16.35 a month (-16%), some states clearly have larger differences.
Of all four scenarios, the costs for the 45-year-old female were most variable. For the family with small children, however, the results were more static. In all capitol cities, the family with small children saved money by going with an HSA with a family deductible of $5,000 versus a PPO with a deductible of $500. And the savings was significant in some states.
In Topeka, KS, the family saved $367.24 a month (-57%). In Sacramento, CA, the savings was $288.88 (-61%) while in Olympia, WA, the family saved $264 a month (-50%). In both Atlanta, GA and Hartford, CT families could save $193.92 and $194.65 respectively (-49%), Juneau, AK, had a monthly savings of $247.61 (-39%) and in Helena, MT, the savings was $221.42 (-52%).
The average monthly premium cost to the family with small children for a $500 deductible PPO was $354.97 while the average cost for a $5,000 family deductible HSA was $226.12. That equals to an average savings of $128.85 a month or $1,434.12 a year (-36%).
The older family with no children still at home nor under the policy fared relatively well. Their scenario was certainly more diverse with PPOs being cheaper per month in 26 of the 45 states examined. The cities where PPOs with a $500 deductible were significantly cheaper per month than an HSA with a $5,000 family deductible include Augusta, ME with a savings of $580.33 (-49%), Olympia, WA with a savings of $312 (-50%), Helena, MT with a savings of $263.88 (-47%). In Topeka, KS, the older family saved $353.87 a month (-44%) by going with an HSA versus a PPO. In Juneau, AK, had a monthly savings of $241.35 (-31%) and Sacramento, CA, had a monthly savings of $229.66 (-42%).
The average cost to an older family with no children was $390.01 for a $500 deductible PPO. That cost lowered by $73.47 (-19%) on average to $316.54 for a $5,000 family deductible HSA.
In general, the best cities for a significant savings on HSAs versus PPOs are Boise, ID, Topeka, KS, Augusta, ME, Helena, MT, Bismarck, ND, and Salt Lake City, UT. For families, both younger and older with and without kids, Sacramento, CA, Hartford, CT, Honolulu, HI, Topeka, KS, Augusta, ME, Helena, MT, and Olympia, WA, had substantial savings. And for the two singles of varying ages, Boise, ID, Topeka, KS, Augusta, ME, Helena, MT, Bismarck, ND, and Salt Lake City, UT, were good choices.
However, in some instances, like in Topeka, KS, the monthly costs for PPOs were significantly higher than in other cities. For example the monthly cost for a PPO with a $500 deductible for the family with young children was $644.05, well above the average cost of $354.97.
The single female aged 45 had the most disappointing results of all scenarios examined. In 24 of the 45 states, the monthly rate for an HSA plan was higher than for a PPO. The average monthly cost to her for a PPO with a deductible of $500 was $179.58 while the average monthly cost for a $2,000-deductible HSA was $174.19. The HSAs cost, on average, $5.39 less (-3%) than PPOs for a 45-year-old single female.
However, some data in this scenario is rather extreme. The highs are high and the lows are low. The top cities in which HSAs cost significantly more for the 45-year-old female include Salem, OR, with a monthly difference of $100.51 (+78%), Raleigh, NC, with a $71.24 difference (+51%), Dover, DE, with a $61.21 difference (+37%), Cheyenne, WY, with a $58.80 difference (+45%) and Atlanta, GA, with a $58.75 difference (+46%).
On the flip side, there were cities in which the cost of an HSA was much lower than a PPO. In Pierre, SD, for example, an HSA for the 45-year-old female cost $148.46 a month less (-35%) than a PPO. The difference in Topeka, KS, was $108.20 a month (-31%). Helena, MT, had a difference of $103.13 a month (-45%), Boise, ID, a difference of $89.48 a month (-36%) and Salt Lake City, UT, $76.22 a month (-36%).
Overall, the study found HSAs do have a lower monthly premium than their PPO counterparts. To compare rates in your own area, be sure to check with your insurance agent or look at our insurance quote estimator on HSAfinder.com.
About www.hsafinder.com and Information Strategies, Inc.
Information Strategies, Inc. provides serves more than three million small business executives through its various online newsletters. It founded www.hsafinder.com as a result of reader demand for ways of reducing healthcare costs. The Wall Street Journal said it was one of the best information sources for health savings account information. Fortune magazine and Smart Money have utilized its data in feature stories.
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