Yesterday the Washington Post featured an article examining whether HSAs are working for employers adopting them and employees trying them. The most interesting tidbit was this:
Last year, Wendy's eliminated its old insurance plan for about 9,000 managers and administrators and offered them only an HSA instead. The company has not offered such a plan to its hamburger cooks and the rest of its front-line crew, most of whom do not work enough hours or are not in the right parts of the country to qualify for health insurance -- and tend not to buy it, even if they qualify.
Jeffrey Cava, Wendy's executive vice president of human resources and administration, said the company now insures about one-third of its U.S. workforce, the same as it did before. And although insurance premiums for its HSAs rose much less than the company's old insurance would have done, Wendy's still spent more money overall on health benefits during its first year with health savings accounts than the year before.
First, Wendy's switch to HSAs obviously isn't insuring more workers. This is something to keep in mind, because if HSAs aren't going to lead to more people being covered, that should really be the key argument against them. What good is a revolutionary new type of insurance if it's only covering the same people?
Next, it's quite shocking that Wendy's ended up spending more this year than before. If premiums are lower and it's insuring the same amount of people, where is that discrepancy from? It's important to look at these actual cases, rather than the theories of HSAs, to see how they're working. In Wendy's experience, they most likely had a ton of employees dip into their deductibles, costing the company money beyond the former higher premium.