Health-Care Accounts Touted for Obamacare Exchanges

Aug. 27, 2018, 8:07 PM

Consumers will be able to easily find low-cost health plans that they can use with savings accounts to pay health-care costs on the federal Obamacare exchange, the Trump administration says.

The Department of Health and Human Services is promoting high-deductible health plans (HDHPs) that can be used in conjunction with tax-favored health savings accounts (HSAs) on the HealthCare.gov exchange. “HSAs have grown in popularity within the group market, and they remain an area that has a lot of opportunity for growth on the Exchanges and the individual market,” Randy Pate, director of the HHS’s Center for Consumer Information and Insurance Oversight, said in a recent blog posting.

The Trump administration is touting HSA health plans to move consumers toward making more cost-efficient health-care decisions. But Democrats and Affordable Care Act supporters argue that HSAs primarily benefit wealthier consumers.

HealthCare.gov Enrollment

An HSA is a tax-favored savings vehicle to used help cover the cost of health-care expenses.

In 2017 almost 500,000 consumers in the 39 states using the federal HealthCare.gov exchange enrolled in HSA-eligible HDHPs, which made up 6 percent of federal exchange enrollment that year, Pate said in the blog posting. In 2018, 9 percent of federal exchange enrollment was in HSA-eligible accounts, he said.

The HHS didn’t respond to Bloomberg Law’s request for comments, saying it needed more time to provide information on its plans for promoting health savings accounts on HealthCare.gov.

Enrollment in HSA-eligible plans has grown significantly since HSAs first became available in 2004, but there has been “very little growth” in enrollment from 2014 to 2017, when estimates ranged from 21.4 million to 33.7 million individuals, according to the Employee Benefit Research Institute.

Catastrophic Plans

The ACA exchanges opened in 2014. The exchanges include high-deductible catastrophic plans, which usually have lower premiums. But only people under the age of 30 can enroll in them, they aren’t eligible for ACA premium tax credit subsidies, and they can’t be paired with HSAs. In 2017 less than 1 percent of all exchange enrollees nationwide enrolled in the catastrophic plans, according to Louise Norris, a health insurance broker who writes articles on health insurance topics.

“They’ve made it easier for you to identify those plans that are HSA-eligible,” Joel White, president and chief executive officer of the Council for Affordable Health Coverage, told Bloomberg Law Aug. 24. In the past “it was very difficult to tell whether the plan itself was HSA-eligible,” he said. The CAHC, a group that represents employers, health insurers, and other health-care groups, favors HSAs.

The House July 25 passed two bills that would expand the use of tax-advantaged health savings accounts, increasing contribution limits for HSAs and broadening the types of health plans that can be used with them. Similar legislation hasn’t been introduced in the Senate.

Opposition to HSAs

Analysts who oppose emphasis on HSAs say they don’t help people who need the most help.

“We know that they do not provide help to people who are moderate or low income,” JoAnn Volk, a research professor at Georgetown University’s Center on Health Insurance Reforms, told Bloomberg Law Aug. 27.

The blog posting lists the number of enrollees in HSA-eligible health plans, “but that doesn’t tell you how many have an HSA,” Volk said.

Volk said it is “potentially misleading” that the blog posting didn’t include information on cost-sharing reductions (CSRs) for low-income people. People between 100 percent and 250 percent of the federal poverty level who enroll in silver-tier ACA plans are eligible for CSRs that have lower out-of-pocket costs, she said.

Administration Strategy

Encouraging use of HSAs is a way to help people pay high deductibles, Chris Sloan, a director at Washington consultant Avalere Health, told Bloomberg Law Aug. 27.

“That has been part of this administration’s strategy,” he said. Pate’s blog posting “is making sure people know HSAs are available.” The administration is trying to notify people that “HSAs are not just for the employer market. They’re also available on the individual market.”

New rules that will make it easier for consumers to enroll in ACA plans directly through private exchanges and health insurers may boost enrollment in HSA health plans. In the upcoming 2019 open enrollment Nov. 1-Dec. 15, HealthCare.gov for the first time will allow consumers to enroll directly through private exchanges and carriers.

Some web brokers that sell HSA-eligible plans are eager to see them promoted. Health insurance web broker eHealth Inc., headquartered in Mountain View, Calif., includes links for HSA-eligible plans, John Desser, senior vice president of government affairs, told Bloomberg Law Aug. 27.

“We support as many additional options for consumers as possible,” Desser said.

The Trump administration is also expected to issue a proposal shortly that would boost the use of health reimbursement arrangements.

HRAs, which are used with employer-sponsored plans, are similar to HSAs. They are tax-advantaged, account-based arrangements that employers can establish to give employees money to pay for health care.

President Donald Trump included HRAs in his 2017 executive order outlining plans to promote more free market initiatives to help reduce premiums and expand consumer choices.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

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