A Bright Future for HSAs

Posted by David Edman in Blog, Health Benefit Strategies, May 2010 on May 7th, 2010 | No Comments »

Yesterday, I participated in a webinar on health reform sponsored by one of the major national health insurance companies.  There is plenty being discussed and written about the impact of health reform, and all these discussions sound pretty much the same—there are some underwriting reforms, tax credits, and other changes that will take place in 2010.  Most of the other changes are down the road.  The government is writing regulations and there will be refinements to the law over time, so we don’t really know.  BLAH, BLAH, BLAH.

HSAs and Health Reform

Last summer, as the health reform debate was heating up, I met with a Democrat member of Congress (who happens to sit on the House Ways and Means Committee).  At the time, the big push was still for the “public option”, and I was told by this MOC that Democrats don’t like HSAs.  As the debate proceeded, I would continually make the point that the HSA model was the most successful innovation in health finance of the last decade, and there were success stories everywhere that you turned.  There were numerous success stories in the private sector among employers both large and small, and those with low, middle, and higher income people.  Very importantly, the concept also worked in the public sector (e.g., Indiana).

We all know about the process that lead to the passage of a bill in March of 2010—sausage making at its worst.  As the dust settles and we begin to assess how best to move forward under the new health reform laws, I believe that it is full steam ahead for the HSA model.  There were certain policy changes that may have a slightly negative impact, but they are minor.  The changes are as follows:

• Penalties for the use of HSA funds for “non-qualified” expenses will go up.
• The list of “eligible medical expenses” was pared back somewhat with the removal of over-the-counter (OTC) drugs, unless prescribed by physician.
• Contributions to an HSA will be limited to the level of your high deductible health plan.

Friends, it could have been much worse.  The private sector now has an opportunity to show the government what works, so let’s take advantage of it.

Where Do We Go From Here?

My hope, and expectation, for the future of health reform is that we keep the positive features of Obamacare (e.g., underwriting changes, health exchanges) and repeal the negative aspects (e.g., some new regulation, confusing tax credits).  In addition, we need to keep pushing for other changes that were not, but should have been, part of health reform such as:

• Increased competition (e.g, repeal of health insurer anti-trust exemption, allow competition across state lines)
• Transparency
• Tort reform

In short, we need to GET TO WORK.  The health care system remains an employer-based system, so employers need to roll up their sleeves and manage the heck out of their health benefits.  That means a move away from business as usual—give your employees appropriate incentives and ‘skin in the game’, developing a multi-year plan, promote wellness, and use competition to shift the balance of power away from insurance companies and to you, the purchaser of health benefits.  In most cases, there is a role for HSAs in your health benefits strategy.