Some of the nation’s leading newspapers are reporting on the soaring costs of small business healthcare. At the same time, they are also beginning to recognize the growing importance of HSAs in stemming the rising price levels.

According to the Pittsburgh Post-Gazette, employers hoping for a break from soaring health insurance premiums that have risen an average of 59 percent in the past four years aren't likely to get any relief in 2005.

The paper projects another round of double-digit increases and in its article says that many companies in the Pittsburgh area are exploring higher-deductible health insurance plans that are coupled with tax-free savings plans for workers.

While essentially neutral about these accounts, the paper does feel they should be explored by small business readers.

The New York Daily News reported on the strange hybrid that is New York State healthcare, which guarantees that any resident will get insurance. According to the paper, many individuals do not apply until they are sick, thereby creating a heavily imbalance in the state’s healthcare enrollments. At the same time, the state sets rates by geographic sector and they vary greatly by location.

New York City, with its high total of teaching hospitals, has differing rates than those in more rural (or less educational-focused) areas.

Speaking of hospital rates: California is forcing hospitals to list rates which vary greatly from procedure to procedure, and from medicine to medicine.

At the same time, patients with healthcare insurance pay differing rates from those who are not insured.

The next few months promise chaos in the state, as advocacy groups examine rates and sue various “non-profit” institutions.

Illinois Program

The Chicago Tribune on Christmas Day also reported on HSAs. Among its conclusions are that HSAs will expand considerably in 2005. More consumers and employers are expected to latch on to the health savings account concept as larger health insurance companies and financial institutions work together to market the plans, analysts say.

Early purchasers of these accounts say they save money because their high-deductible plans typically have lower premiums than traditional managed-care plans.

Bill Erbes, who co-owns Barrington Medical Imaging, bought a health savings account this fall from Oak Brook-based Destiny Health to gain more control over his premiums, which rose 10 to 20 percent each year at his medical equipment firm.

Individuals must have a health plan deductible between $1,000 and $5,000, and families between $2,000 and $10,000, to qualify for a health savings account. Individual participants can contribute up to $2,650 a year and families up to $5,250.

Health insurers say the expertise of financial institutions is needed by health plans, since health savings account funds are like IRAs in that they can be invested in stocks, bonds and mutual funds.

Among those ramping up marketing early next year will be managed-care giant Humana Inc., which uses J.P. Morgan Chase & Co. to administer its HSAs. Illinois's largest health insurer, Blue Cross and Blue Shield of Illinois, will begin selling four different health savings accounts in the first quarter of 2005, in a partnership with Mellon Financial Corp. of Pittsburgh.

Economic Factors Forcing Changes

The reasons for adoptions are many but Erbes sums up what many company managers are reporting to HSAfinder.

"There are already a lot of demands on our cash at our business, so a health savings account allows more flexibility," Erbes said. "We were always having to meet a deductible anyway, so this was attractive. We can set aside money and have tax deductions."

The Twin Cities Pioneer Press also reported in Christmas time year-end summaries that healthcare costs continue to hit firms very hard. It reported that in an effort to further tame costs, employers increasingly put in place health savings accounts and other so-called "consumer-driven" plans.

Like many skeptics, they ended the article by saying "Time will tell whether they'll stop the bleeding.''