Introduction
Employment-based health benefits are the most common form of health insurance in the United States. Because the cost of health benefits has been increasing faster than inflation and worker earnings, employers have been seeking ways to manage the cost increases. Recently, more workers have been subject to higher deductibles, and there has been growing interest among employers in offering health plans with deductibles that are even higher than those workers are used to seeing. These health plans with high deductibles are often combined with a tax-preferred savings or spending accounts for health care expenses. Employers first started offering account-based health plans in 2001, when a handful of employers began to offer health reimbursement arrangements (HRAs). In 2004, employers were able to start offering health plans with health savings accounts (HSAs). By 2007, 10 percent of employers offering health benefits were offering one or both of these options to their employees, covering an estimated 3.8 million workers.
High-deductible health plans, whether or not linked to a tax-preferred account, are controversial. Proponents of these plans think that they will encourage individuals to become more astute health care consumers, who make decisions about their health care on the basis of cost and quality information. Critics worry that the high out-of-pocket costs will discourage use of needed health care services, especially among people with low incomes and/or chronic conditions. And while most employers are interested in the long-term prospects for improved cost control that high-deductible health plans might provide, they await evidence that the plan will succeed in sustaining cost control, and are concerned about the potential adverse effects on the use of preventive and chronic care conditions and other health care services that some researchers have found. They also fear that employees will consider a move to these plans as a cut in benefits, resulting in increased turnover or low morale.