Download PPACA - Healthcare Visions

VHA Georgia 2010 Trustee
Institute:
Health Care Reform – The Good,
The Bad, & The Ugly
Ronald E. Bachman
President & CEO
Healthcare Visions, Inc.
[email protected]
404-697-7376
Megatrends, and Consumerism
Megatrends represent major movements so
powerful that the direction of change cannot
be stopped. Federal laws can speed up or slow
down megatrend forces.
But, like dammed rivers megatrends will
redirect themselves to achieve the inevitable
result. Healthcare consumerism is such a
force.
Healthcare Consumerism
Healthcare Consumerism is about transforming a
health benefit plan into one that puts economic
purchasing power—and decision-making—in the
hands of participants.
It’s about supplying the information and decision
support tools they need, along with financial
incentives, rewards, and other benefits that
encourage personal involvement in altering
health and healthcare purchasing behaviors.
Healthcare Consumerism
Healthcare consumerism is independent of plan
design.
Healthcare consumerism is a compelling force
because it embraces lowering costs, improving
quality, enhancing choice, and expanding access
by empowering individuals and reinforcing
personal responsibility.
It is the force operating throughout our economy
and is just beginning to be structured into
healthcare and insurance.
AAA Consumerism Study
The 2009 American Academy of Actuaries multi-year
study of healthcare consumerism concluded that first
year claims could be lowered by 12-20% with future
cost trends decreased by 3-5%.
More than fifty percent (50%) of employers now offer
consumer-driven options. In 2010, nearly 18 million
lives will be covered by consumer-driven plans.
While HSA are disfavored in PPACA, employers and
insurers would be wise to consider healthcare
consumerism as allowed.
Consumerism Megatrend
• Americans who:
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bank electronically at ATMs,
purchase stocks over the internet,
buy and sell goods through eBay,
maintain their music with iTunes,
keep personal videos on facebook,
seek employment through LinkedIn, and
control television programming with Tivo,
will not tolerate the government controlling their
health, their most personal asset.
Patient Protection and Affordability
Care Act (PPACA)
• PPACA deals with limited plan choices,
mandated benefits, and premium controls.
• PPACA is fighting healthcare consumerism and
broad cultural movements to personal
responsibility, individual ownership, selfreliance, convenience, choice, and
transparency.
PPACA Fighting
Consumerism Megatrend
•The health mandates violate the growth of
personal responsibility and self-reliance.
• Government required plan designs violate the
cultural movement to choice.
PPACA Fighting
Consumerism Megatrends
• Added bureaucracies create barriers to
responsive plan designs and convenient
medical services.
• Federal subsidies violate the concept of
individual ownership.
• Backroom dealing between big government
and lobbying interests violate transparency.
PPACA Restricts Consumerism
Value of HSAs
• PPACA restricts HSA options in insidious ways that will
delay, deny, defeat and will ultimately kill HSAs.
Senate Favors Premiums over Savings
• In 2010, HSA eligible plans for singles can have a maximum
deductible of $5,950 with offsets using health savings.
PPACA includes a maximum deductible for small group
plans of $2,000 for a singles, thus eliminating lower cost
plans with the option of putting the difference into an HSA.
• PPACA limits out-of-pocket costs to the same amount as
applicable to HSAs. With the same out of pocket exposure,
citizens are forced to pay for medical services through
insurance premiums rather than health savings.
PPACA Restricts Consumerism
Value of HSAs
Excise Tax Limits Potential of HSAs
• Lost in the reform debate is the fact that regulations
will determine actual benefits and coverage
requirements for all plans, including HSAs.
• A 40% excise benefits tax applies if health plan costs
exceed $8,500 for an individual. If one puts the
maximum $4,050 into an HSA (including a $1,000
catch- up provision for ages 55 and older), that leaves
$4,450 regardless of age to purchase medical, dental
coverage, vision, and any other federally designated
health coverage.
PPACA Restricts Consumerism
Value of HSAs
Regulations May Stifle HSAs
• In the proposal, broad categories of healthcare are
listed without any specifics on treatment or financial
limits that may apply.
• Regulations are to ensure that coverage is “equal to the
benefits provided under a typical employer plan.”
• By definition, HSA eligible plans are not “typical.” A one
size fits all government approach that regulates,
restricts, and approves only a narrow range of “typical”
products will stifle creative solutions.
PPACA Restricts Consumerism
Value of HSAs
Regulatory Powers Can Make HSAs Illegal
• Broad regulatory powers can easily outlaw HSA
eligible plans by requiring essential health
benefits to include coverages that violate HSA
eligibility.
• For example, in the proposed bill a special low
cost non-group catastrophic plan is allowed for
individuals under age 30. Rather than
designating an HSA eligible plan, the proposal
requires three primary care visits that disqualify
the plan from being HSA eligible.
PPACA Restricts Consumerism
Value of HSAs
Restrictions on Use of HSAs
• New HSA restrictions limit paying for over-thecounter medications.
• The penalty for non-medical HSA withdrawals
is increased from 10 to 20 percent.
PPACA Restricts Consumerism
Value of HSAs
HSA Rewards Left Out
• New generation consumer-driven plans include
rewards and incentives for healthy behaviors.
• PPACA outlaws health status rewards and
incentives in determining premium rates. The
proposal does include certain “wellness program”
rewards based on health status.
• However, employer and insurer HSA
contributions are not listed in the allowable uses
of rewards.
PPACA Restricts Consumerism
Value of HSAs
Price Controls
• The PPACA proposal limits young adult
premiums to 33% of older adult premiums.
• Actuarially, young adult claims are about 20%
of older adults.
• This restrictive price control will substantially
raise the cost of premiums by 50 to100
percent or more for younger population a key
market for HSAs.
You Can’t Fight Megatrends
The Power of The Consumerism
Megatrend
• Insurance with personal savings accounts (HSAs
and FSAs), while not killed, are seriously limited
in PPACA.
• But these are not the only forms of healthcare
consumerism.
• In 2002, health reimbursement arrangements
(HRAs) were established by the Treasury
Department.
• HRAs can be used with any plan that the
Secretary mandates. Congress either forgot about
or ignored the many uses and flexibility of HRAs.
PPACA , Consumerism & Good News
Under PPACA, financial rewards based health
status are increased from 20% to 30%. The
Secretary of Health and Human Services has
the authority to increase that limit to 50%.
PPACA still allows unlimited rewards and
incentives for participation and engagement.
The New Direction of Consumerism
• The real world has moved to next generation
healthcare consumerism with member
engagement, rewarding healthy behaviors, and
promoting personal responsibility.
• Plans are now focusing on rewards and
incentives. Health Incentive Accounts (HIAs) are
a special form of HRA that builds value only from
rewards and incentives. There are many other
special use HRAs that may become the channels
for healthcare consumerism.
Rewards & Incentives
Rewards can include activities such as:
• Participation in a wellness assessment,
• Compliance with a condition management
program (e.g. taking medications, diet, exercise,
office visits), and
•Maintenance of good health characteristics (e.g.
blood pressure, cholesterol, nicotine use, body
mass index) using bio-metrics.
The Future
• Government and the quest for political power is a
strong force in and of itself.
• Cynics will point to increasing demands for federal
support and government dependency by large parts of
our population.
• That may be a current political direction, but growing
welfare and expanding entitlements is not a financially
sustainable path and therefore cannot be a megatrend.
• The future is not the opiate of government welfare, but
the citizen empowerment of “Healthcare
Consumerism.”
PPACA Next Steps
•GET OVER IT!
•IT’S THE LAW
Four Phases
• Legislation
• Regulation
• Compliance
• Litigation
Legislation
• PPACAwill likely require a large “technical
corrections” bill.
• Politicians and special interests can use a
technical corrections bill to pass new provisions
and mandates.
• A technical corrections bill could include entirely
new provisions not a part of the original law.
• For example, the public option could return as a
“technical correction
Regulation
• The regulatory process is likely to be a nightmare of delays,
missed deadlines, and confusing interpretations.
• In the bill there are scores of references to decisions to be
made by the Secretary of H.H.S.
• Major areas of implementation and coverage
determinations for “essential benefits” are left to the
discretion of the Secretary.
• Lobbyists from every provider and self-interest group will
converge on the bureaucracies to have their services
included through regulation.
• Ultimate coverage mandates are likely to go beyond what
employer plans typically consider as medical/surgical
benefits.
Compliance
• Consultants and lawyers will find expanded needs for their
services.
• Insurers will need to determine if they are in compliance.
• Employers not in compliance will be subject to large
penalties and fines.
• Self-insured employers will require compliance audits to
assure required essential coverages and mandates are
included.
• Each employee contribution will need to be measured
against the government affordability standard.
• Each year will likely produce new regulations and changes
that must meet with compliance standards or employers
will suffer penalties and fines.
Litigation
• Courts will decide what the language of the laws
2700+ pages mean.
• New laws require a period of adjustment that can
take decades to sort out the meanings and
conflicts of legal interpretations.
• Given the national impact and financial
consequence of any single coverage requirement,
every self-interest group wanting to be included
in the essential benefits package will push
litigation to add or solidify their coverage
demands.
The Circle of Life
The never ending cycle will then
repeat itself, as new laws will be
passed to respond to court decisions
and off it goes again to repeat the
four phases of legislation, regulation,
compliance and litigation.