Are HSAs the answer? President Bush's proposals make health savings accounts more attractive.

• Author: McKimmie, Kathy
• Position: HEALTH PLANS

IN THE LAST FEW YEARS, employers and health plans have been slowly but steadily moving toward so-called consumer-directed health plans, or CDHPs. They include health savings accounts and health reimbursement accounts, HSAs and HRAs.

Both types are designed around a cheaper-to-buy high-deductible health plan, coupled with an account from which deductibles and first-dollar coverage is paid. And both depend on a more informed consumer making smarter health-care decisions, usually through access to a health plan's Web-site resources.

Expanding HSAs was the main focus of the president's health-care initiative in the January State of the Union address. He reported that 3 million Americans have signed up for HSAs since the legislation was passed in December 2003, with 14 million projected by 2010. Enactment of his new legislative proposals would further increase that amount by 50 percent, to 21 million.

Proposals include eliminating all taxes on out-of-pocket spending through HSAs, not just the deductible amount as in current law, and making them portable. Employees could take the insurance plan with them when they change jobs, move, become self-employed or leave the labor force. "Americans should not have to worry about changing doctors," says the president's plan, "learning a new insurance company bureaucracy, having their premiums go up if a family member is sick, losing their insurance tax advantage when leaving employment-based plans, or being subject to more costly mandates. The lack of portability can lead to job lock' in which workers are hesitant to leave their job if anyone in the family is in less-than-perfect health."

Just how will that work? Insurance is based on an individual company's risk, says Rob Hillman, vice president of large group sales for Anthem Blue Cross and Blue Shield of Indiana. "It would be difficult for an individual to be able to carry the HSA group policy to another company and fold it into another company's policy." It might become similar to COBRA, he says, where you keep your former group coverage, but once you're eligible, you go with the new employer. Current HIPAA law was intended to prevent job lock by waiving preexisting condition requirements, he adds.

Allan Hubbard, Indianapolis businessman and now assistant to the president for economic policy and director of the National Economic Council, fielded questions on the specifics of the president's proposal the day after the State of the Union. Regarding...