More on the OPM Legislative Proposal

In today's Washington Post, Steve Barr reports on OPM's legislative proposal to amend the FEHB Act to permit the Service Benefit Plan to offer a third option pairing a high deductible health plan with a health savings account. On a related note, the GAO recently released a report on consumer directed health plans (06-514) finding that enrollment in high deductible plans pairedwith a health savings account or a health reimbursement account grew from 3 million to between 5 and 6 million in 2005. This small but growing share of the market is driven principally by employer interest in controlling their health care expenses and in allowing employees a little skin in the game, as they say. The report indicates that a survey of large employers (over 1000 employees) that offered HSA options along side more traditional plans had 3% average enrollment in the HSA option (Report, p. 14). What's more five states -- Alabama, California, New Jersey, Pennsylvania, and Wisconsin -- still do not allow state income tax deductions for HSA contributions (p. 23). The GAO concludes that further growth in consumer directed plans will depend on many factors, such as changes in laws such as these that diminish interest in these plans, employer savings with these plans, and favorable employee experience with these plans.