Increasing Plan Flexibility to Expand Coverage in HSA-HDHPs
High-deductible health plans paired with a tax-free health savings account (HSA-HDHP) represent a growing percentage of plans offered on the individual and group market. HDHPs have defined minimum deductibles and maximum out-of-pocket limits. As of 2015, 19.7 million Americans were enrolled in such plans, which represents a 14% increase from 2014. Employers, in particular, are increasingly offering HSA-eligible HDHPs as a way to expand coverage options, lower their health care spending, and promote proactive consumer engagement. President Trump’s and Congressional Republicans’ healthcare reform proposals emphasize HSA-HDHPs.
Guided by the Internal Revenue Service (IRS) safe harbor under section 223(c)(2)(C), HSA-eligible HDHPs may provide select preventive care benefits prior to satisfaction of the plan deductible. Primary prevention, while important, is a small component of overall health spending. By contrast, spending on chronic disease encompasses a substantial majority of total U.S. health care expenditures. Under this guidance, until the deductible is met, coverage does not include “any service or benefit intended to treat an existing illness, injury, or condition, including drugs or medications.” Thus, HSA-HDHP enrollees with existing conditions are required to pay out-of-pocket for necessary services prior to meeting the plan deductible, resulting in lower utilization of care, and potentially resulting in poorer health outcomes and higher costs.
As the market for HSA-eligible HDHPs grows, it is important that these plans maintain the flexibility to allow for effective health management for all beneficiaries. Theoretically, high-deductible plans could adopt a more flexible benefit design offering more protection for certain medical services through a value-based insurance design plan structure. A targeted strategy exploring coverage for certain high-value, clinically-indicated health services prior to meeting the deductible will produce more effective High-Value Health Plan (HVHP) designs,without fundamentally altering the original intent and spirit of these plans.
Expanding the IRS “safe harbor” would increase the attractiveness and clinical effectiveness of HSA-HDHPs and would better align consumer engagement with provider payment reform initiatives. Adoption of this voluntary, clinically-nuanced HVHP has the potential to mitigate cost-related non-adherence, enhance patient-centered outcomes, allow for premiums lower than most PPOs and HMOs, and substantially reduce aggregate health care expenditures. The HVHP would provide millions of Americans a plan option that better meets their clinical and financial needs.
Policymakers are increasingly shifting their focus toward value-based designs. In the summer of 2016, Representatives Diane Black (R-TN) and Earl Blumenauer (D-OR) introduced H.R. 5652 “Access to Better Care Act of 2016.” This bipartisan bill provides high-deductible health plans the flexibility to provide coverage for services that manage chronic disease prior to meeting the plan deductible.
Rising health care spending has created serious fiscal challenges that emphasize the need to better engage consumers in their health care decisions. Smarter deductibles might be a natural evolution of health plans, in that consumer cost-sharing would be reduced for the clinical services that are encouraged under many alternative payment models. As value-based reimbursement promotes the delivery of evidence-based, high-quality care, consumer-facing initiatives must encourage—not create barriers—to these high-value services. Interventions that improve patient-centered outcomes while maintaining affordability are needed. The alignment of clinically nuanced health care provider-facing and consumer engagement initiatives is a necessary and critical step to reduce health care spending, improve quality of care, and enhance patient experience.
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