Monday, October 23, 2017

Mulvaney's ACA demands: Give him one out of three?

As David Anderson argued in The New York Times on Saturday, at this point Republicans need an ACA stabilization deal more than Democrats do, so Democrats have no real imperative to accede to Trump's ridiculous demands,

In brief: the damage from CSR uncertainty in 2018 is already done; CSR is priced into premiums; most states have adopted a "silver load" strategy to mitigate the damage (concentrating the premium increases in silver plans, the plans with which CSR is available); and pricing in CSR over the longer term actually produces a fiscally wasteful but genuine boost to subsidies for the more affluent among the subsidy-eligible, who really need extra help (making gold plans available for roughly the cost of silver).

The chief motive for Democrats to push for a deal is to win a measure of Republican buy-in and ownership, and therefore stability. That should keep more insurers in. And an appropriation for federal CSR reimbursement in 2019 should drive premiums down, dramatically, i.e. by almost as much as CSR uncertainty (and then stiffing) drove them up this ear. That's potentially a political win for Republicans. But Democrats are inhibited in their political calculations by a desire to, you know, make good insurance affordable for more people.

Given that desire, Democrats would be crazy to yield on repeal of the individual mandate, which would trigger another premium surge and more adverse selection, or on enabling a parallel market in non-comprehensive and medically underwritten insurance, which would also damage the risk pool for comprehensive plans.

There is, however, one White House ask that Democrats might consider addressing in some form. As reported by Axios' Sam Baker, OMB Director Mulvaney made these demands on Fox News Sunday:
Give us more ability on association health plans, give us more ability to sell [across] state lines, give us more ability to expand health saving accounts, give us tools that actually help people and we'll talk about looking at Alexander-Murray.
Health Savings Accounts (HSAs) are a Republican shibboleth, beloved mainly because they provide a lucrative tax shelter for affluent users, and theoretically because they make people better healthcare consumers. Conservative healthcare scholars look back nostalgically to a time when consumers paid about half their healthcare costs out-of-pocket; they believe that if we approach that level again, the cost of care will go down. They hold this belief notwithstanding the prevalence of underinsurance in the U.S. and the fact that about a third of Americans go without needed care because of cost. Republican ACA replacement plans, pre- and post-Trump, include a host of provisions expanding the allowed uses, transferability and tax protections of HSAs.  Never mind, either, that Americans' out-of-pocket healthcare costs are uniquely high among wealthy countries, as are U.S. healthcare costs per capita and per procedure.

The fact is, however, that deductibles and out-of-pocket costs in  U.S. health plans have risen so high, in the individual market and in employer-sponsored insurance as well, that at this point HSAs may help rather than hinder access to care. In the ACA marketplace, 23% of enrollees are in bronze plans, with average single-person deductibles of $6,092, according to HealthPocket.  Another 13% are in silver plans un-enhanced by CSR, which have average deductibles of $3,572.  Roughly 10% more are in silver plans with the weakest level of CSR, where the average medical deductible is $2,627, according to the Kaiser Family Foundation. Among the unsubsidized on- and off-exchange -- a bit less than half of all enrollees -- probably three quarters have deductibles over $3,000 per individual.

Deductibles have also steadily risen in employer-sponsored plans, while premium increases have been relatively moderate. According to the Kaiser Family Foundation's 2017 Employer Health Benefits Survey, the average ESI plan now carries a deductible of $1,505 - $2,120 in small firms, and $1,276 in larger ones.

To cover insured out-of-pocket costs, HSAs must be linked to legally designated High Deductible Health Plans (HDHPs). The deductible threshold for a so-called HDHP has become quaint: it's $1,300 for an individual. That's close to the average deductible for a marketplace gold plan, currently $1,197 according to HealthPocket. The contribution limits in 2018 will be $3,450 for an individual and $6950 for a family [corrected 10/24].

In an HDHP, no services except free preventive care mandated by the ACA can be offered outside the deductible, whereas in increasing numbers of ACA plans, substantial services are not subject to the deductible. Nonetheless, given a high deductible, HSAs can be effective in reducing costs. Kaiser finds that it's so in ESI:
While growing deductibles in PPOs and other plan types generally increase enrollee out-of-pocket liability, the shift in enrollment to HDHP/SOs does not necessarily do so because most HDHP/SO enrollees receive an account contribution from their employers. Twenty-one percent of covered workers in an HDHP with a Health Reimbursement Arrangement (HRA) and 2% of covered workers in a Health Savings Account (HSA)-qualified HDHP receive an account contribution for single coverage at least equal to their deductible, while another 35% of covered workers in an HDHP with an HRA and 30% of covered workers in an HSA-qualified HDHP receive account contributions that, if applied to their deductible, would reduce their cost sharing to less than $1,000.
Of course, the HDHP "works" in these circumstances because the employer is contributing to an HSA or HRA.*  For any enrollee paying income tax, however,  HSA contributions are deducted from Adjusted Gross Income. For a subsidy-eligible ACA enrollee, an HSA contribution will lower Modified Adjusted Gross Income (MAGI) and so raise the subsidy amount.

Moreover, there is nothing in law to prevent an employer who does not offer health insurance from contributing to an HSA that an employee links to an HDHP purchased in the ACA marketplace.  Employers have been wary of doing this, perhaps because the IRS explicitly banned the use of a somewhat different type of employer-funded account, the Health Reimbursement Account (HRA - see note below), for payment of premiums in the ACA marketplace. HRAs, the IRS ruled, must be linked to an employer-sponsored plan, and the specific guidance issued to that effect may have spooked employers from linking any kind of benefit to the individual market. The CURES Act, however, lifted this ban for employers with fewer than 50 employees. Trump's October 12 executive order instructed federal agencies to explore widening access to HRAs.

HSAs are available in the ACA marketplace, but they can be hard to identify, and they're certainly not emphasized. Mulvaney may have been urging that HSAs be available with short-term or other non-ACA-compliant plans, and that should be outside the pale for Democrats. But breaking HSAs out as a separate category in the marketplace, providing easy-to-find explanations, and even encouraging employers to contribute to them, along with expanding use of HRAs, could make marketplace coverage -- and actual healthcare -- more affordable for some.

Update, 10/24/17: See the next post for some concrete suggestions from the Manhattan Institute's Yevgeniy Feyman as to how to promote HSAs within the ACA framework

*HRA funds belong to the employer if they are not used within a calendar year, though the employer can allow some carry-over. HSA accounts belong to the individual.

No comments:

Post a Comment