A few weeks ago, Mike reported on California�s bold new health insurance initiative. Part of the Governator�s plan requires employers with at least 10 employees to offer health cover, or face a potentially substantial fine.
One may argue about the �fairness� (or even efficacy) of such an arrangement, but some folks have decided that this is a great opportunity for some lemonade:
The idea�s pretty simple (and hence, elegant): since the premium for a typical HDHP is likely to be (significantly) less than the payroll tax/fine, such plans may become very popular, very fast, at least in the Golden State. And if that�s the case, then the folks who handle the cash accounts are going to be taking a good look at this new market, as well:
�Since assets in HSAs are managed much in the manner of those in individual retirement accounts, advisers increasingly are taking an interest in HSAs.�
No kidding.
This assumes, of course, that folks fund their accounts. Whether or not they�ll do so is, of course, a mystery at this point; they�ve been gaining ground, albeit slowly, but will this potential groundswell really come about? We�ll have to wait and see.
At 4%, the payroll tax is about a third of what California employers currently spend on health care cover. So in theory, they could trade in higher priced PPO plans for HDHP�s, fund some (or most, or maybe even all) of the deductible, and still be ahead. Kind of intriguing, no?
As we�ve maintained here at IB, it�s preferable that these experiments take place at the state level. Why's that, you ask? Simple: federal experimentation could have devastating national effects on health care and its funding. By encouraging the states to �test-drive� different configurations, any potential damage is much more limited, which is desirable.
Interesting times.
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