California Individual And Group Health Insurance Plans

BestWire Services - Jun. 5: Prompted by rising health-care costs, enrollees in consumer-directed health plans nearly doubled in a year, increasing to between 5 million and 6 million in January, up from about 3 million in January 2005, the Government Accountability Office said in a report.GAO, Congress's nonpartisan investigatory body, was told to find out how widespread CDHPs are, how they are funded and used, and the factors that could strengthen or weaken their appeal. In the report, GAO found that such plans the most common of which are health savings accounts and health reimbursement arrangements, both of which allow for tax-free withdrawals for medical expenses grew from about 1.6% of all U.S. private health insurance enrollees to 2.8% to 3.4% in only a year. That, the GAO said, means those plans, while still relatively few in number, are becoming a fast-growing segment of the private health insurance market.Citing health insurance industry officials and experts, GAO said, "the primary factor responsible for the growth of CDHPs is the rising cost of health care coverage." Officials interviewed for the report said the growth in enrollment was prompted by a "desire to lower premiums" and to earn a tax advantage. Employers are more likely to offer CDHPs, the GAO found, if those plans show that they can rein in costs, and employees are more likely to enroll in them if employers offer "more comprehensive CDHP benefits" as well as more education about the plans. GAO also found the proportion of employers offering CDHPs to their workers quadrupled in about a year, rising from about 1% in 2004 to 4% in 2005. Large employers were more likely than small ones to offer such plans, with larger companies more likely to offer HRAs and smaller companies more likely to offer HSAs. Where employers offered multiple plans, employees were more likely to enroll in traditional health plans than in CDHPs, GAO said. The GAO also found specific data about usage and contributions in the plans; data from three multistate insurance carriers, which GAO didn't name, showed that the most common employer HRA contribution in 2004 ranged from about $500 to $750 for an individual and from $1,500 to $2,000 for two or more people.Employers are required to contributed to the accounts associated with HRA-based health plans. GAO also found that usage within the HRA plans was high: Nearly 75% of single HRA-based enrollees and more than 95% of family enrollees used some or all of their HRA funds in 2004. Among HSA plans, about two-thirds of employers contributed to their workers' accounts, with an average 2005 employer contribution of $553 for individuals and $1,185 for families, GAO said. GAO also said "employers would be more likely to offer a CDHP if the cost of health-care coverage continues rising significantly or if CDHPs demonstrate the ability to reduce these costs." According to the report, premiums in the group health insurance market since 2000 have increased nearly five times faster than the overall rate of inflation and the rate of increase in workers' wages. In collecting its data, GAO said it interviewed officials from America's Health Insurance Plans; the Blue Cross Blue Shield Association; HSA Insider, a service that helps individuals and businesses to find and purchase CDHPs; "a nationwide health insurance broker;" and "health insurance carriers" that GAO didn't name. GAO also interviewed officials at the Treasury Department and the Internal Revenue Service, as well as employers that offered CDHPs and financial institutions that administer HSAs.
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