The Elimination of Consumer-Directed Health Plans is Real.

During this week’s healthcare Town Hall Meeting in Portsmouth, NH, President Obama said, “Where we do disagree, let’s disagree over things that are real, not these wild misrepresentations.”

After hearing some of the wild misrepresentations – even some of which that have come from political pros who should know better – I agree. Let’s keep the debate real.

So for starters, let’s talk about the promise that we keep hearing about keeping our current plan if we like it. President Obama has repeatedly told the American public, “If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”

That sounds good. It is suppose it is to make us feel secure in the fact that we will not all be forced to join some public plan that would make us change doctors and wait in line for treatment. It just is not true.

Take for instance Health Saving Accounts. According to America’s Health Insurance Plans (AHIP), there are at least 8 million people enrolled in these types of health plans which couple a lower premium with a higher deductible and a tax-advantaged Health Savings Account (HSA) that can be used to pay for a large number of health care needs.

These HSA plans are in jeopardy of going away under the health reform legislation that has come out of three House committees and one Senate panel that have drafted the  legislation as it stands today.

Why? Let’s look at Section 122 of HR 3200, the House version of the bill. This section is intended to set standards for all health plans guaranteeing that Americans will have access to essential benefits – as defined by the federal government.

One test of whether a plan meets the minimum benefits standards is something called Minimum Actuarial Value. Here is how this is defined in the bill:

Section 122 (3) MINIMUM ACTUARIAL VALUE-IN GENERAL- The cost-sharing under the essential benefits package shall be designed to provide a level of coverage that is designed to provide benefits that are actuarially equivalent to approximately 70 percent of the full actuarial value of the benefits provided under the reference benefits package described in subparagraph (B).

Depending upon the method used to calculate this 70 percent of the full actuarial value the benefits provided consumer-directed health plans as we know them today could go away. So much for keeping the plan that you have and that you like. Without overtly being singled out in the legislation, HSAs would effectively be rendered illegal under this bill because they would not meet the government’s definition of minimum benefits.

This is despite the fact that in a report dated May 2009, the American Academy of Actuaries, says that, with respect to consumer-directed health care plans:

“Generally, all of the studies indicated that cost savings did not result from avoidance of appropriate care and that necessary care was received in equal or greater degrees relative to traditional plans.  All of the studies reviewed reported a significant increase in preventive services for CDH [consumer directed healthcare] participants. Three of the studies found that CDH plan participants received recommended care for chronic conditions at the same or higher level than traditional (non-CDH) plan participants. Two studies reported a higher incidence of physicians following evidence-based care protocols.”

Does it make sense to effectively kill a health insurance approach that has proven its ability to reduce costs while placing increased emphasis on preventive care? I thought that these were major goals for the reform package. Eight million people are going to be very disappointed to learn that they were not told the truth by their President and their Congressional delegates.

But hold on, there is still some hope that Congress will correct this situation before a final bill is rendered for a vote. One of the final amendments to HR 3200 offered up during the House Education and Labor Committee mark-up of the bill may help you hang onto your HSA at least a little longer – IF you are part of a group plan.

Submitted by Rep. Petri (R- WI), and accepted by unanimous consent of the committee, was an amendment that placed at the end of subsection 102 of HR 3200 language to provide an exception to consumer-directed health plans and arrangements. In part the amendment says, “…in the case of a group health plan which consists of a consumer-directed health plan or arrangement (including a high deductible health plan within the meaning of section 223 (c) (2) of the Internal Revenue Code of 1986), such group plan shall be treated as acceptable coverage under a current group health plan for purposes of this division.”

Section 102 of HR 3200 (in case you have lost track) is the part of the House bill that says it will protect your choice to keep your current coverage. It grandfathers existing group health plans for five years before they will have to comply with the government’s idea of what a health plan should consist. If you have an individual plan today, you will not be guaranteed that you can keep you current plan as the bill stands now.

The Petri amendment is a start to protecting consumer-directed health plans and HSAs, but even it has a long way to go to make it into the final bill. When Congress reconvenes in September the three House bills on healthcare reform will need to be merged to produce a final consolidated version that can be voted on by the entire House.

Meanwhile, two committees in the Senate have also taken up healthcare reform. The Committee on Health, Education, Labor, and Pensions (HELP), chaired by Sen. Ted Kennedy (D-MA), and the Senate Finance Committee chaired by Sen. Max Baucus (D-MT).

Of these two committees, the Finance Committee is attempting to develop the most bi-partisan bill and has yet to present a final draft for mark-up.

The committee has reached out to many sectors for input on the legislation they are drafting. One group they consulted was the HSA Council which has proposed language to the committee that would allow for HSA-type plans to meet the actuarial minimal requirement that no doubt will be in the bill they are now writing.

In a memo to a committee staffer dated July 30, 2009, Kevin McKechnie, staff director of the HSA Council, acknowledged that “…considerable confusion can exist on how to establish the actuarial value of HSAs.” He suggested the following definition be adopted by the committee:

“In determining the actuarial value of an HSA qualified HDHP, this amount must recognize both the value of the HSA qualified contribution to the Health Savings Account from any source and the health insurance benefits.”

By making the contributions made to HSAs by employees and their employers count towards actuarial minimum requirement HSAs could continue to be a viable and useful plan option well into the future.

If you have an HSA and you want to keep it now is the time to act. Help President Obama and this Congress keep the promise they have been making to us. Contact a member of the Senate Finance Committee and ask them to endorse the adoption of the above language in their bill. While you’re at it let your representatives know that you would like to see similar language in the House version of the bill.

This certainly isn’t as much fun as showing up at a town hall meeting and telling your elected representative where you think he/she should spend their after-life. Nor, is it as entertaining as speculating about some eerie death panel that would convene to tell us when to pull the plug on grandma. For eight million Americans this is real, and now, according to the President, is the time to disagree about the things in healthcare reform legislation that are real.

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