Thursday, July 23, 2009

Reform Bill to Slow Consumer Driven Care

The financial institutions and advisors that administer health savings accounts (HSAs) have relied upon an exemption from ERISA to streamline deployment of HSA-based consumer driven plans. Ironically, it may be the demise of ERISA itself that causes the greatest regulatory burdens to these firms. ERISA lets employers with self-funded health plans avoid costly federal and state regulations on covered treatments, pricing, rate setting and so on. According to a recent article in the WSJ, roughly 75% of employer-based coverage is governed by ERISA’s “freedom of purchase” rules.

The House health bill would override ERISA’s exemption of self-funded plans. The “health choices commissioner” created by the bill has authority to determine what constitutes a plan that satisfies the individual/employer mandate for coverage. The current Administration’s ambition for regulatory agencies to play an expansive role suggests that unless expressly barred by law, the Commissioner will elect include HSA features in the scope of any such examination. From my experience trying to explain HSAs to federal regulatory agencies (IRS, OCC, NCUA), no leaf of the HSA program will be exempt from the examination. So long, streamlined deployment of HSA-based plans.

1 comment:

  1. Not so much the demise of ERISA as total administrative control of coverage standards. A big battle right now in the Senate Finance Committee centers around the idea of "actuarial equivalence." My conversations with a couple of actuaries leaves me with the conclusion that "actuarial equivalence" will be the weasel words that enable the "health choices commissioner" (don't you love the Orwellian irony of that title?) to not only effectively kill consumer-directed care, but provide Congress with the loophole to add special interest benefits to the plan to garner votes. Over time, this will drive up the cost of a public plan rather than reduce it. This will of course be followed by tax increases and the eventual government control of 1/5 of our nation's economy.