Expand the health savings account 'safe harbor' to reduce health costs
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As the health reform debate continues, partisans in both parties should adhere to a simple, overarching principle: help people who were hurt by ObamaCare, but don't hurt those who were helped by the law.  

In other words, policymakers ought to focus on reducing the rising premiums and deductibles that have harmed millions while still preserving the coverage that's now guaranteed to people with pre-existing conditions.  

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Fortunately, the Trump administration is considering an executive order that would accomplish both goals. Specifically, the administration may allow high-deductible health insurance plans to cover services used to manage chronic diseases before customers have reached their deductibles. The plan already has broad, bipartisan support.

 

High-deductible health insurance plans surged in popularity in the early aughts after health savings accounts, or HSAs, were established in the tax code. HSAs offer a triple tax advantage. Deposits are made with pre-tax income. Savings grow tax-free. And people can withdraw from their accounts without paying any taxes, so long as they're using the money to pay for a qualified medical expense.

The kicker? HSAs are only available to consumers who enroll high-deductible health plans. This year, individual consumers with such plans are on the hook for the first $1,350 in healthcare expenses. These high out-of-pocket costs typically mean lower premiums than traditional insurance plans.

The sole exception to this mandatory out-of-pocket spending is for preventive care services, such as screenings and vaccinations. A "safe harbor" provision in the tax code requires insurers to cover these services, even if individuals or families have not reached their deductibles.

The administration's efforts to improve the nation's health insurance offerings would expand this "safe harbor."

Right now, medical services used to treat any "existing illness, injury or condition" are excluded from the safe harbor. So the 133 million Americans with diabetes, HIV, depression, and other pre-existing conditions must pay the entire cost of their doctor visits, tests, and prescriptions until they reach their plan's deductible. This lack of pre-deductible coverage discourages people with pre-existing conditions from opening HSAs.

When Americans are asked to pay more for medical care, they buy fewer services. About one in three Americans with a high-deductible plan admits to delaying or avoiding care for chronic conditions. Nearly 50 percent of enrollees with a chronically ill family member report problems paying for medical care or other bills.

It's senseless to prohibit high-deductible health plans from covering services that prevent the chronically ill from growing even sicker. That's why expanding the safe harbor to give plans the option to include high-value clinical services and medications for chronic conditions makes so much sense.

This new generation of high-value health plans would offer lower premiums than most existing health plans, bringing relief to those burdened by rising premiums, and more generous coverage for pre-existing conditions than current high-deductible plans.

Leaders in both parties support this reform.

In 2016, Reps. Diane BlackDiane Lynn BlackThe Hill Interview: Budget Chair Black sticks around for now House to vote on budget next week Blackburn says she's interested in Corker's seat MORE (R-Tenn) and Earl BlumenauerEarl BlumenauerCongress should stand with the majority of Americans and support Rohrabacher-Blumenauer amendment Dem to join mental health group advocating Trump's removal House votes to block aircraft sales to Iran MORE (D-Ore.) came together to introduce the Access to Better Care Act, which would direct the IRS to expand the safe harbor. And Sens. Thomas R. Carper (D-Del) and John ThuneJohn Randolph ThuneGun proposal picks up GOP support Overnight Regulation: Senate panel approves driverless car bill | House bill to change joint-employer rule advances | Treasury to withdraw proposed estate tax rule | Feds delaying Obama methane leak rule Dems see Trump as potential ally on gun reform MORE (R-S.D.) sent a letter to the Secretary of the Treasury urging the IRS to modify the safe harbor provision to ensure patients "have full access to adequate preventive care and chronic care management services."

By giving insurers the flexibility to expand the safe harbor, the Trump administration would make HSAs more attractive — and boost the medical effectiveness of high-deductible plans. As a result, millions more Americans could find insurance that matches their financial and medical needs.

Mark Fendrick, M.D., is a professor at the University of Michigan School of Public Health and the director of the University of Michigan Center for Value-Based Insurance Design.


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