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

Last year ushered in a total of 20 new of the new provisions (17 are effective), and some of these will impact CDHPs. One change has already had an effect on the benefits that can be offered by account-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 could no longer be used to cover the costs for over-the-counter drugs not prescribed by a doctor. At the same time, the law also increased the tax on distributions from a HSA or an Archer MSA that are not used for qualified medical expenses from 10 percent to 20 percent of the amount used.

Some good news for the future of CDHPs came in 2011 with the funding of state health insurance exchanges. These exchanges go live in 2014 and promise to facilitate the purchase of insurance by individuals and small employers. An HHS Internal Memo from February 2011 spelled out that CDHPs and HSAs would be available on the state exchanges. According to the document, “The new State-based Exchanges will offer individuals, families and small businesses a wide range of plans from lower-cost consumer-driven health plans and those coupled with (HSAs) that tend to have a higher deductibles and higher cost sharing to more comprehensive plans with lower out-of-pocket costs.”

However, the 2011 provision that sets minimum medical loss ratios may not be so friendly to CDHPs. This provision says health insurance issuers offering fully-insured group or individual health insurance coverage (including grandfathered health plans) must provide consumer rebates if they spend less for direct medical care than the standards set by PPACA. This requirement has generated concern among some industry experts that the rule may actually dampen the growth of consumer-driven health plans at least among individuals and small businesses that are most likely to purchase fully-insured plans.

In a white paper on how the final MLR regulation creates challenges for high deductible plans, Roy Ramthun, president of HSA Consulting Services, writes that the MLR regulations create several challenges for fully-insured high-deductible health plans since they are designed to pay out fewer claims due to upfront deductibles while they still have all of the administrative costs associated with adjudicating and tracking these claims.

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

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

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

Where does that leave CDHPs? Regardless of what happens in the courts or at the polls, it appears employers have already decided that they are going to continue to shift their health benefit programs to CDHPs. This trend has shown up in the latest data from the Employee Benefit Research Institute which indicates the number of Americans enrolled in CDHPs increased again last year and now include 21 million individuals covered by private insurance representing about 12 percent of the market.

Instant Insights /

How 2012 will impact CDHPs

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