President Donald Trump’s executive order to make hospital pricing more transparent could also have another unexpected benefit for consumers, experts say.
The order could make insurance plans linked with a tax-advantaged savings account a better deal for people with chronic health conditions such as heart disease and depression.
It expands the conditions eligible under the high-deductible health plan, said Bill Sweetnam, legislative and technical director at the Employers Council on Flexible Compensation, an organization focusing on worker benefit plans. “You would have more HSA dollars remaining in your account at the end of the year.”
Chatrane Birbal, director of policy engagement at SHRM, said the recent executive order was a welcome development because right now, “employees with chronic conditions who enroll in HSA-qualified plans, particularly those whose employers offer only one plan, face substantial barriers to care if they want to manage their chronic conditions.”
“More flexibility for HSAs would allow consumers greater opportunities to save for current and future medical expenses, and in some cases save for retirement,” she said.
How HSAs work
There’s no tax on HSA contributions, and the money’s not taxed when used for qualified medical expenses. That can make these interest-bearing investment vehicles attractive options for some people as they set aside money for future health care expenses. Saving is no small task; one estimate said a 2016 couple would need to save upwards of $350,000 for their health expenses in retirement.
But certain rules mean the accounts aren’t right for everyone.
HSA account holders must have high-deductible health plans. These plans have lower monthly premiums, but most of the insurance coverage doesn’t kick in until that high deductible is paid. Deductibles on these plans are at least $1,350 for self-only coverage and $2,700 for family coverage.The plans can cover certain types of “preventive care” — like a yearly check-up or routine vaccinations — before the deductible is paid.
But right now, people managing chronic conditions — such as diabetes, depression, kidney disease or heart disease — need to pay their high-priced deductibles before the insurance company starts paying for routine care to manage their condition.
Trump’s order would expand coverage for people with chronic conditions
Trump’s executive order could change that. The order tells the Treasury Department to come up with new rules letting insurers cover certain chronic conditions in the same way insurers already cover preventive care before the deductible. The Treasury Department did not respond to a request for comment.
There were an estimated 25 million health savings accounts in America with $53.8 billion in assets by December 2018, according to Devenir, a Minneapolis, Minn.-based investment provider for health savings accounts.
High-deductible health plans are increasingly prevalent in the workplace, according to the Society for Human Resource Management. Fifty-nine percent of employers said in a recent benefits survey they offered the option of high-deductible health plans linked to an HSA. A year earlier, 56% of employers in the survey said they offered an HSA.
People with chronic conditions face ‘barriers to care’
Lawmakers on both sides of the aisle have previously tried making fixes that would address pre-deductible costs for those with chronic conditions, Birbal noted. The Bipartisan HSA Improvement Act, introduced last year in the House of Representatives but never going to a vote, would have allowed pre-deductible coverage for chronic conditions. Other bills have also tried to address the issue, like the Chronic Disease Management Act.
Caitlin Donovan, a spokeswoman for the National Patient Advocate Foundation, said HSAs did have advantages — so long as account holders could even afford the high deductible health plan to begin with. “A lot of people can’t afford to set aside any money” into the accounts, she said, later adding, “for Americans living paycheck to paycheck, they are not going to be the savior of the health care system.”
Donovan said potential changes on HSA rules or transparency on hospital prices didn’t address core problems in American health care, where prices were “too high, too unpredictable” and patients had too little power.