For high out-of-pocket costs in employer plans, 3 shock absorbers

The Kaiser Family Foundation's annual Employer Health Benefits Survey was released this week. There are no big surprises. Premium growth remains relatively modest compared to the immediate pre-ACA era - 3% for single coverage and 5% for family -- though still outstripping wage growth. The percentage of workers covered by employer insurance is stable, as is total ESI enrollment, at 152 million. 79% of workers are offered coverage, and 76% take it up -- similar to last year.

Kaiser does emphasize continued rapid growth in deductibles: the average annual deductible has increased 53% in five years. That's a proxy for out-of-pocket costs continuing to rise. Here I want to quickly point out three partially mitigating factors.

1. Increase in HSAs and HRAs (Section 8) - the percentage of workers who hold these accounts dedicated to paying medical expenses, which are linked to high deductible health plans (HDHPs), spiked from 20% in 2014 to 29% in 2016 and has stayed at that higher level. Since employers generally fund these accounts, they partly offset high deductibles while also shrinking the employee's premium. In 2018, the average employer contribution to an HRA for a single person plan, $1149, outstripped the average employee share of the premium, $1142, and covered about half the average deductible, $2245. The average contribution to an HSA, $603, covered more than half the employee's average premium share, $1024, and about a quarter of the deductible. For family coverage, the average HRA employer contribution was $2288, and the average HSA contribution was $1073. HRA contributions are bigger because these accounts are "use it or lose it" for the employee -- whereas an employee owns an HSA, and contributions are tax-sheltered.

We already have the high deductibles...so would adding HSAs hurt?

In my last post I suggested that among the destructive White House demands to alter the Alexander-Murray ACA stabilization bill, one concept -- encouraging takeup of High Deductible Health Plans linked to HSAs -- might be a reasonable concession for Democrats to consider.

My reasoning boiled down to this: Once you have a deductible higher than the HDHP threshold of $1350 individual/$2700 family  -- as well over half of individual market enrollees do -- it doesn't hurt to add the tax-free HSA to help people cope with the expense.

Today I asked Yevgeniy Feyman, a Manhattan Institute adjunct fellow and senior research assistant at the Harvard School of Public Health, for ways to encourage HDHP/HSA takeup in the ACA marketplace. His suggestions:

• Create a seamless process for establishing an HSA -- so that once you sign up for an HSA eligible HDHP, you would be redirected into a pipeline for creating an HSA.


• Simplify the rules by which a high deductible plan can be eligible for linkage to an HSA. At present, no services except the ACA-mandated free preventive services can be covered until the medical deductible is reached. In a family plan, the full family deductible has to be reached before coverage kicks in. These rules could be loosened. At the far end of easing, "you might end up permitting anyone to have an HSA, and just cap contributions at their deductible or max OOP."

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: