The HHS secretary-designee’s ACA replacement plan was one of a growing number that feature HSAs.

Jan. 25—Although recent Republican proposals to replace the Affordable Care Act (ACA) differ in numerous ways, health savings accounts (HSAs) have emerged as a common feature.

HSAs, used by about 20 million Americans, according to House Speaker Paul Ryan (R-Wis.), allow those with high-deductible health plans (HDHPs) to deposit up to $3,400 for self-only plans and $6,750 for family plans in tax-advantaged savings accounts to cover their out-of-pocket expenses.

According to Rep. Michael Burgess (R-Texas) chairman of the House Energy and Commerce Committee’s Health Subcommittee, the ACA replacement bill will be based on Ryan’s plan, known as “A Better Way.”

“These are the building blocks for the policy the subcommittee is going to take up,” Burgess said at a recent briefing.

The plan would roll back HSA limitations included in the ACA and expand their use in several areas:

  • Allow spouses to make catch-up contributions to the same HSA account
  • Allow use of HSA funds for qualified medical expenses incurred up to 60 days before an HSA is launched 
  • Increase the maximum HSA contribution to a combination of the maximum allowed annual deductible and out-of-pocket expenses
  • Expand accessibility for HSAs to include those in the military healthcare system

Clay Alspach, principal at Leavitt Partners, noted that HSAs were included not only in “A Better Way” but also in the replacement bills previously sponsored by Rep. Tom Price (R-Ga.), who President Trump has nominated to lead the U.S. Department of Health and Human Services.

“Health savings accounts are something Republicans have been talking about for a long time in policy circles,” said Alspach, who was previously a Republican congressional staffer. “What they’re going to do is look to foster the continued expansion and make it easier for folks—whether it’s veterans or others—to continue with health savings accounts.”

Various Options

A growing number of other Republican ACA replacement proposals also feature HSAs in various ways. For instance, the American Health Care Reform Act of 2017 would allow states to provide HSA-style accounts for Medicaid beneficiaries.

Research has found mixed results for HSAs. A Rand Corporation study indicated that cost sharing reduces the use of healthcare services without significantly affecting the quality of care and without adverse effects on health. Meanwhile, a September 2015 study in Health Affairs found the rapid growth in HSA use was concentrated among high-income households and large employers.

Concerns that the use of HDHPs and HSAs may lead enrollees to put off needed care could give Democrats pause. So Avik Roy, a founder of the Foundation for Research on Equal Opportunity, offered a plan that includes HSAs and that he thinks can get bipartisan support.

The Transcending Obamacare plan replaces the ACA’s Medicaid expansion by giving the same beneficiaries refundable tax credits that they can deposit in HSAs and use to buy commercial insurance coverage.

“I’m personally very concerned that a lot of Republicans, while they have criticized the ACA for being passed on a party-line vote, are either resigned or eager to do the same thing in reverse,” Roy said. “As opposed to doing a durable health reform that has the support of at least 60 senators.”

He said his approach could achieve the Democratic objectives of coverage expansion and the Republican goals of less government and more cost control.

A Private-Sector Model

The specific HSA components in the ACA replacement bill have yet to be determined, but policy advisers said previous private-sector approaches could serve as a model.

“With Republicans and Democrats as well, they want to hear about what is happening in the private sector,” Alspach said.

One such model may be Wells Fargo, where about 40 percent of the 274,000 employees utilize HSAs with an HDHP. The company provides up to $1,600 to fund an employee’s HSA—if the employee participates in a wellness program—and 70 percent of workers contribute their own money as well.

As employee use of HSAs has doubled in the last six years, Wells Fargo has not seen people with HSAs avoiding getting the care they need—a common concern about HDHPs—according to Elli Dai, a senior vice president at the company.

Instead HSA users have obtained “significantly more” preventive care and “far more” preventive screenings while decreasing their use of the emergency department (ED), getting fewer prescriptions, and lowering overall costs, Dai said.

“So we are seeing very good behaviors in this space through the use of better consumerism,” Dai said at a Washington, D.C., briefing.

Among the requirements for optimizing the use of HSAs and HDHPs, according to Dai, is greater price transparency.

“That’s been really hard to do in this country, but there’s been great strides in that in the last few years and a lot of innovation in this space,” Dai said.

Wells Fargo utilizes a price transparency tool that allows employees to compare costs for elective tests and procedures.

“We’ve seen great variations between facilities for very similar procedures being done,” Dai said. “Now, our team members can see that and make that decision for themselves about how much they want to pay for that similar care.”

In response to concerns that HDHPs can lead enrollees to delay needed care and exacerbate health conditions, Dai countered that the most significant change the company saw in its HSA population was a 20 percent increase in primary care utilization.

“That, we believe, is really the enabler for everything else,” Dai said. “If you have that ongoing relationship with your primary care physician, then that allows you to say, ‘Am I on the right drugs?’ So the drug difference was not [seen] as [that] significant of a decrease. And a lot of times we found people might be on the wrong drug regimen.”

A key difference between HSA enrollees and those in a plan with a health reimbursement arrangement (HRA) was that HSA enrollees had a 5 percent decrease in their ED use. Dai credited that to the greater financial responsibility of HSA account holders compared with HRA users, who receive an additional $700 per person in income-based assistance.

“What we’re seeing is if someone is in an HSA and they’re not feeling well, they’re going to stop and say, ‘Do I need to go to the ER or might I go to urgent care instead?’” Dai said. “And that’s a positive thing when it is coupled with the improved relationship with the primary care physicians.”

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


Publication Date: Thursday, January 26, 2017