The Patient Protection and Affordable Care Act was signed intolaw by President Obama on March 23, 2010, but the vast changes thelaw intended to bring about—many of which impact consumer-driven health plans—are to be phased in gradually over aperiod of eight years ending in 2018.

|

Last year ushered in a total of 20 new of the new provisions (17are effective), and some of these will impact CDHPs. One change hasalready had an effect on the benefits that can be offered byaccount-based consumer-driven health plans. Effective Jan. 1, 2011,a health reimbursement account, a health flexible spending account,a health savings account or an Archer medical savings account couldno longer be used to cover the costs for over-the-counter drugs notprescribed by a doctor. At the same time, the law also increasedthe tax on distributions from a HSA or an Archer MSA that are notused for qualified medical expenses from 10 percent to 20 percentof the amount used.

|

Some good news for the future of CDHPs came in 2011 with thefunding of state health insurance exchanges. These exchanges golive in 2014 and promise to facilitate the purchase of insurance byindividuals and small employers. An HHS Internal Memo from February2011 spelled out that CDHPs and HSAs would be available on thestate exchanges. According to the document, “The new State-basedExchanges will offer individuals, families and small businesses awide range of plans from lower-cost consumer-driven health plansand those coupled with (HSAs) that tend to have a higherdeductibles and higher cost sharing to more comprehensive planswith lower out-of-pocket costs.”

|

However, the 2011 provision that sets minimum medical lossratios may not be so friendly to CDHPs. This provision says healthinsurance issuers offering fully-insured group or individual healthinsurance coverage (including grandfathered health plans) mustprovide consumer rebates if they spend less for direct medical carethan the standards set by PPACA. This requirement has generatedconcern among some industry experts that the rule may actuallydampen the growth of consumer-driven health plans at least amongindividuals and small businesses that are most likely to purchasefully-insured plans.

|

In a white paper on how the final MLR regulation createschallenges for high deductible plans, Roy Ramthun, president of HSAConsulting Services, writes that the MLR regulations create severalchallenges for fully-insured high-deductible health plans sincethey are designed to pay out fewer claims due to upfrontdeductibles while they still have all of the administrative costsassociated with adjudicating and tracking these claims.

|

Ramthun wonders if insurance companies will still be sellinginsured high deductible plans in 2014. “Insurance companies(especially the current market leaders) may be encouraged to sellmore expensive plan designs with more first-dollar coverage (e.g.,HMOs and traditional PPOs) because it will be easier to meet theMLR requirements,” he said.

|

The pace of health care reform change will slow somewhat in 2012with only 11 new provisions set to become effective, and with theexception of Uniform Coverage Summaries for Consumers, most of themimpact Medicare.

|

However, 2012 will deal two wild cards that have the biggestpotential yet to change both health care reform and the future ofCDHPs: The Supreme Court challenge and the presidential election.All of the declared candidates opposing President Obama have saidthey would push to repeal PPACA and replace it with a moreCDHP-friendly law if elected.

|

Where does that leave CDHPs? Regardless of what happens in thecourts or at the polls, it appears employers have already decidedthat they are going to continue to shift their health benefitprograms to CDHPs. This trend has shown up in the latest data fromthe Employee Benefit Research Institute which indicates the numberof Americans enrolled in CDHPs increased again last year and nowinclude 21 million individuals covered by private insurancerepresenting about 12 percent of the market.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.