The New Republican Health Plan is HSA Centric
by Daniel Perrin, founder of the HSA Coalition and with J. Patrick Rooney, the co-author of America’s Health Care Crisis Solved
Republicans have changed their tune on health care reform.
“Protect and personalize” is in.
“Repeal and replace” is out.
The new Republican Study Committee health plan is backed by 150 House Republicans and took months of discussions and policy input from their entire membership.
The result is a complete and wholesale message change, with new and refined policies to boot.
The first principle and priority of the health plan is to protect those who have pre-existing conditions. The RSC Plan calls for extending and strengthening protections for those with pre-existing conditions and increasing the assistance to those with truly chronic health conditions who are not receiving the help they need.
Secondly, the RSC want to make health care more affordable for the many, many Americans struggling with high deductibles and high out-of-pocket cost.
One of the undisputed results of the Affordable Care Act is the higher premiums and deductibles that employees have experienced in their health care costs. Those in the individual health insurance market have been hit with even higher costs. Health Savings Accounts are a big part of controlling health care costs.
According to the 2019 Kaiser Family Foundation Employee Benefit Survey (KFF), over the past five years, the average annual deductible amongst all covered workers has increased 36%, yet in that same time frame, the average High Deductible Health Plan (HDHP) which you need to open or contribute to a Health Savings Account, that deductible rose only 12%.
To reiterate, in the last five years, HSA-qualified HDHP deductibles have risen 12%, while for family plans the average deductible has risen only 6%. No other type of health insurance can make this claim, and certainly not validated by the KFF.
Modernization of Health Savings Account design is also a big part of the RSC health plan (you can find the 66-page plan here.)
Current law binds HSA-qualified health plans to an inflexible and unyielding plan design that forbids individuals and corporations to modernize their benefit basket by offering retail health clinics, direct primary care membership, tele-medicine and any other benefit that falls below the deductible. For example, New York state is considering a state-mandate fertility treatment as a mandatory health plan benefit, which would not be allowed under current HSA qualified health plan design.
Regardless of what benefit an individual wants in their plan or a company wants to offer to their employees, Health Savings Accounts cannot and should not have to go to Congress and ask for every new benefit to be allowed.
That right, under current law, any of the benefits listed above will take an Act of Congress for them to be allowed.
The whole point of an HSA-qualified health plan is to change the behavior of the beneficiary by spending their own money, which they spend differently than when insurance covers your health care services. This was accomplished by having a prescribed minimum deductible.
However, for the past five years, the average deductible has exceeded the minimum deductible to have a Health Savings Account. In other words, the raison d’etre of a high deductible health plan has gone out the window because the average plans already have the necessary deductible to have a Health Savings Account.
The RSC ends this government interference and prescriptively restrictive HDHP link in current HSA law by first, allowing many benefits below the deductible to be compatible with a Health Savings Account, and secondly, by de-linking the problem at the source, by breaking the dependence of having a Health Savings Account on having a HDHP.
In other words, the RSC plan removes the requirement for a HDHP to open or contribute to a Health Savings Account.
This greatly simplifies HSAs and allows for benefit modernization of the health plans associated with an HSA.
Delinking HSAs from a HDHP solves many compliance problems insurers are having now with the definition of preventative care. Insurers would also be able to include Direct Primary Care, retail health clinics, telemedicine and other benefits without jeopardizing the ability for you or your employer to contribute to your Health Savings Account.
This also removes the restrictions of being able to have a Health Savings Account if you are a beneficiary of Medicare, Medicaid, TriCare, the Indiana Health Service or the VA. Delinking the HDHP from HSA eligibility turns all of these situations which, under current law are NO YOU CANNOT HAVE AN HSA, to YES! Welcome aboard to Health Savings Accounts where your health care dollar goes much farther.
Again, the RSC plan proactively allows you to have a Health Savings Account with Medicare, Medicaid, TriCare, the Indiana Health Service and the VA, by changing the HSA statue to write in these kinds of government health plans as HSA-qualified, but also by delinking HSAs from HDHPs.
The other significant part of the RSC plan is that it has been endorsed and embraced by a wide swath of the Republican House Caucus, but also by many outside groups and stakeholders.
It has not been lost on the Republicans that the rise of Medicare for All is partly their fault for not passing health care reform when they had the chance. In the face of that loss, Medicare for All, in all its forms like the “public option,” or “Buy-in for 50 and above,” sky-rocketed in support immediately after it became clear the Republicans could not pass any legislation to help Americans with unaffordable health care.
The RSC plan also is more politically attuned, unlike the entire “repeal and replace” fiasco. For HSA legislation to pass, this is essential.
To wit, a recent Luntz poll, 86% of Trump voters and 79% of Clinton voters support seniors on Medicare to be able to keep contributing to a Health Savings Account if they already have one, for a total of 82% in favor and only 2% opposed. In the same poll, 83% of voters– 85% who voted for Trump and 82% who voted for Clinton – said seniors should have the option to purchase a Health Savings Account if they want one, with only 2% opposed.
A Bi-Partisan Sweetener
In recent health care reform, Health Savings Accounts have been added to legislation to attract political support from Members of Congress, a “sweetener,” as they are called on Capitol Hill. Health Savings Accounts were credited with passing Part D for Medicare under President Bush, when then Speaker Hastert rolled them into the Part D bill, which passed only after the longest recorded vote in recent history on the House floor.
And Republicans again included Health Savings Account legislation as a sweetener to attract support for their “repeal and replace” legislation.
Now, the Democrats are playing the bi-partisan Health Savings Account sweetener card in the form of rolling HSA legislation into the Dem Prescription Drug Re-pricing Bill.
The HSA sweetener tactic to move health care legislation continues under Democratic control of the U.S. House.
Over the course of several days at the end of October, Mark Ups (voting on proposed amendments to bills that are then voted out of Committee) more than a half dozen bills were reported out of the U.S. House Ways and Means Committee by voice vote (meaning without a recorded vote). These bills added a 80/20 hearing and vision benefit to Medicare and a 80/20 routine dental procedure benefit and a 50/50 major procedure dental benefit to Medicare. These bills are now on their way to the House floor to be rolled into the Democratic Prescription Pricing bill that raises $345 billion over ten years in revenue to pay for these new Medicare benefits. The entire package will be voted on the U.S. House floor in November.
With the Rx bill on the House floor next week, will be another revenue bill that creates a tax on nicotine used in vaping pods that raises $9.9 billion over ten years. That bill paid for three other bills passed out of the Ways and Means Committee last month. First, a bill to provide a “safe harbor” for those suffering from asthma to be treated as if it were a preventive care expense, paid for by insurance below the deductible, at a cost of to the U.S. Treasury in lost tax revenue of $1.4 billion over 10 years. Second, a bill to make feminine hygiene products and over-the-counter drugs a qualified medical expense and exempt from taxes, at cost of $8.5 billion over ten years. Third, the same Direct Primary Care (DPC) bill that passed the Ways and Means Committee and the House floor last August was also passed in Committee this week. All of these bills will be rolled into the Prescription Drug Pricing bill (H.R. 3) in Rules Committee, before it goes to the U.S. House floor.
There is no question that this package of bills will pass the House floor. The only question is how many Republicans want to vote against lowering Rx prices, so Americans pay no more than foreigners for the same drug, combined in the same bill with voting against adding Dental, Vision and Hearing benefits to Medicare. Tough vote.
The prescription drug lobby is counting on Sen. McConnell to never allow the Speaker’s Rx bill to come to the floor of the Senate. That is likely to be true, but whether the Senate will turn to Senator Grassley’s Rx bill is an open question.
How these HSA Provisions Could Become Law: If Sen. Grassley’s bill passes the Senate floor (he needs 13 Republicans to get to 60 votes to overcome the filibuster) then Senator Grassley’s bill and the House bill would go to a House and Senate Conference Committee to work out the differences. Should the Senate pass a bill and the House and Senate come to an agreement on bill text in Conference, then the DPC and other HSA related bills could pass if “the Senate recedes to the House” on those provisions.
Of course, the end of the year legislation to fund the government may be another opportunity for any of these bills to become law. Now that they have a pay-for and have been voted out of the Ways and Means Committee (and by that time passed by the full House) it’s much more likely they could be included in an end-of-year package and signed into law.
Here are some links to one to two-minute video highlights of the Ways and Means Committee HSA bill markup.
Once you click on the links below, you have to click on the link on the webpage below my name that is in red, and then the video will automatically download to your computer:
Short Video of Joint Committee on Taxation Staff Director Barthold Responds to Rep. Doggett’s Questions about HSAs and the Wealthy
Video of a short description of the HSA Inhaler and Chronic Asthma Bill
Video of a short description of the HSA Feminine Hygiene and Over-the-Counter Rx Bill
Video of a short description of the Direct Primary Care HSA Bill
Short Video of Rep. Blumenauer and Rep. Nunes Discussing Direct Primary Care
Short Video of Rep. Sewell discussing improving HSAs
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Daniel Perrin is the founder of the HSA Coalition and with J. Patrick Rooney is the co-author of America’s Health Care Crisis Solved, published by Wiley.