The Texas Way is a uniquely Texan, private market-based health insurance coverage program that will improve the health of low-wage working Texans and strengthen the state’s economy. As proposed, the Texas Way Program:
- Connects uninsured Texans with private insurance
- Requires personal responsibility;
- Promotes appropriate utilization of health care services; and
- Reduces inefficient health care spending.
By requiring covered individuals to pay for a portion of their care and incentivizing the appropriate utilization of health care services, the Texas Way Program avoids the pitfalls of traditional entitlement programs. The Texas Way Program is the fiscally responsible approach to reducing the number of uninsured without adding to the state’s Medicaid rolls. Health savings accounts are a core element of the Texas Way Program. The precise details of Texas Way HSAs will have to be worked out between the state and the Centers for Medicare & Medicaid Services.
However, the intent of HSAs is to:
- encourage consumer engagement in health care decisions;
- promote personal responsibility; and
- reduce overall health care costs.
By requiring HSAs of Texas Way Program enrollees, Texas would be at the forefront of using HSAs and high-deductible health plans in a public insurance program. Only Indiana has experience using HSAs/HDHPs with a publicly insured population.
HSAs: What Are They?
HSAs are used in conjunction with HDHPs. The objectives are to control costs and empower enrollees to be active purchasers of health care
services, rather than just passive consumers.
Since entering the health insurance market in 2004, HSAs/HDHPs have become one of the fastest growing insurance products in the nation. Nearly 18 million Americans are enrolled in an HSA/HDHP, with enrollment increasing at an average annual rate of 15 percent since 2011. Texas has the second highest HSA/ HDHP enrollment, with more than 1 million enrollees.
Typically, enrollees fund the HSA and use the money to pay for all medical expenses up to the deductible amount of their health plan.
After meeting their deductible, enrollees use HSA funds to pay for any medical expenses not covered by their health plan, such as copayments.
HSAs Are Effective at Changing Consumer Behavior and Reducing Health Care Costs
Research from a variety of sources has shown that HSAs are highly effective at helping consumers make value-based health care decisions and at lowering health care costs without sacrificing health care quality:
- An independent evaluation of the Indiana HSA/HDHP for Healthy Indiana Plan enrollees shows high levels of enrollee satisfaction, enrollee funding of the HSA, use of preventive health care services and understanding of how the HSA works as well as declining use of the hospital ER as a primary source of care.
- A five-year Employee Benefit Research Institute study of health care spending after a large Midwest employer replaced its traditional insurance plans with HSA/HDHPs found that total health care spending decreased by 25 percent across all categories in the first year. There were additional declines in pharmacy and lab spending in subsequent years.
- A 2011 Employer and Account Holder survey found that 54 percent of HSA account holders reported having set aside more money than ever before to pay for health care costs, and 28 percent reported the account encouraged them to shop for lower-cost prescription drugs.
- Use of HSA/HDHPs in Indiana’s state employee health insurance program reduced total health care costs by more than 10 percent and encouraged more prudent use of hospital emergency departments and higher use of generic, lower-cost medications.