Small employers are facing formidable hurdles as they consider self-funding health insurance plans. But self-funding still holds appeal.
Increasing regulation of self-funded health plans is complicating the efforts of some employers as they seek an alternative to plans offered under the Affordable Care Act, one analyst says.
Most of the stiff regulation involves stop-loss, the reinsurance that protects employers from catastrophic losses.
The regulatory hurdles still are not enough to deter many employers who see self-funding as the better option, says Tim Callender, vice president of sales and marketing for The Phia Group, a consulting company that offers healthcare cost containment services.
Self-funded plans are regulated by the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry, but states are increasing their regulation also, he says.
"There is a lot that goes on at the state level to regulate stop-loss re-insurance, which is super important to small employers because even if they are cash-rich they won’t have the same cash as a large employer," Callender says.
"We're seeing a lot of activity at the state level to regulate who can purchase these stop-loss policies and how, and that can make it more difficult for the small to midsize employers–up to about 250 employees–to self-insure."
At the federal level, the dysfunction in Congress regarding healthcare actually is encouraging self-funding, Callender says.
"Under the Affordable Care Act, the state exchanges are failing and the trend on the carrier models is to more expensive products and that is scaring employers away from the traditional health insurance model," he says.
"The result is that a lot of brokers and advisers are telling employers to start looking at self-funding. We're seeing a growth in self-funding over the last few years, a lot of it directly related to how the Affordable Care Act played out with employers seeing their costs go up under the fully insured model."
Why Self-Funding is Growing
The big health plans, including Blue Cross and Aetna, have noticed the increase in self-funding and are getting into the third party administrator (TPA) business, Callender notes.
They want to get their hands on some of that revenue even if the employers opt for self-funding instead of buying plans from them, he says.
"Self-funding is healthy and growing because healthcare costs are skyrocketing and the Affordable Care Act only made them go higher," he says.
"People look at the news with people saying they're going to replace it and do this idea instead or that idea, but we just don't see that happening. Nobody is really sure what's going to happen, or that anything will happen any time soon, so employers are looking for a way out."
Moving to a single-payer model would destroy self-funding, but Callender says that is extremely unlikely.
Overregulation at either the state or federal level also could drive employers away or make the strategy untenable. Tightening restrictions on stop-loss coverage is the most likely way that could happen, he says.
"The beauty of self-funding is that is functioning in a free market environment, allowing employers to self-fund and purchase stop-loss on the back end for a catastrophic spend. That is what allows self-insurance to exist," he says.
"If that were to go away or become very cumbersome for employers to do, it would push certain sizes of employers out of that market. A 300-employee company is not going to take the risk of having an employee with dialysis or a premature baby this year. They have to have that insurance to back them up."
A California physician network is reducing utilization by providing special attention to patients most at risk for readmission after hospitalization.
A physician network in California is addressing one of the biggest challenges in the healthcare community, high utilization that blows up budgets and cost projections, with a program that uses home visits to improve outcomes following hospitalization.
In its second year the program has reduced 30-day hospital readmissions for participating members by 67%, via home visits conducted by non-clinicians.
That is twice the reduction of the first year, with results improving as more data is collected and the program is fine-tuned.
Regal Medical Group, one of the largest physician networks in Southern California and part of the Heritage Provider Network (HPN) managed care organization, is using its Member Advocate program to improve outcome and reduce costs.
It employs non-clinicians who use a patient-centered approach to address the complex healthcare needs of high-risk Medi-Cal and dual-eligible members who experience an acute hospitalization, says Jennifer Dunphy, vice president of population health with Regal Medical Group and Lakeside Community Healthcare.
"We found that a large proportion of our Medi-cal and dual-eligible patients have very complex needs. They have low functionality, a high proportion of behavioral health disorders, and a lack of coordination in terms of all their providers and different aspects of their health," she says.
"We determined that we needed a more supportive infrastructure for these people, who are unlike the rest of the population that we traditionally deliver care to. When you take on these patients, it changes the way you support your patients and look at efficiency, especially from a cost perspective as well as a care perspective."
The program addresses not just the patient's relevant medical needs, but also the social determinants of health with a team-based approach, Dunphy explains.
The representative of the Member Advocate program begins by visiting the patient in the hospital and then in the home after discharge, connecting patients with their nurse case managers, facilitating medication reconciliation, and identifying unmet needs and circumstances that place members at higher risk for acute utilization.
The advocates use assessment forms which standardize how data is collected and communicated to the interdisciplinary care team, Dunphy says.
The home visit assessments collect information regarding health status, clinical needs, social determinants of health, and other factors which may increase the risk of future hospitalization.
These are essential clues into the mental and physical well-being of members, she says.
"The person who visits the patient in the home speaks the same language and is culturally trained to interact with that member. We also try to match the community they're from," Dunphy says.
"They do not have a clinical degree, but have been trained in motivational interviewing, how to coordinate care, crisis intervention, and other skills that help them serve that member's needs."
For selected complex members deemed to be at high risk for readmission, Member Advocates offer continued follow-up and assistance through a more intensive intervention called the Multi-Visit Program (MVP).
These members are followed through 90 days post-discharge to ensure continuous support is provided to reduce subsequent hospitalizations and emergency department utilization.
The MVP treatment includes up to four in-home visits and additional telephonic check-ins with the HPN member to ensure coordinated and appropriate receipt of medical and support services.
Member Advocates accompany these members to primary and specialty care appointments and furnish pertinent information regarding the member's hospitalization and health status.
Additional information is collected for members in MVP during the 90 days they are followed, including contact with the Member Advocate, medical appointments, emergency department visits, hospitalizations, identified needs by type and domain and their resolution.
"The Member Advocate and the patient cultivate a relationship, building trust over time," Dunphy says. "We don't rely solely on phone calls or technology to monitor the patient. We find that a relationship grows and that positively affects health behavior and outcomes, which also works to bring down costs."
A healthcare reform proposal from two governors could improve the Affordable Care Act, but it won't cure what ails the insurance market. It might, however, be the best option for now.
All eyes are on theGraham-Cassidy proposal to dismantle the Affordable Care Act, but a healthcare fix proposed by two of the nation's highest-profile governors is also in the offing.
While the joint plan includes solid proposals it isn't enough to save the floundering Affordable Care Act, one analyst says. Still, the proposal might be enough to keep the ACA alive until a cure comes along.
Colorado Governor John Hickenlooper, a democrat, and Ohio Governor John Kasich, a republican, hope their proposal will get bipartisan support in Congress.
They propose keeping the ACA's individual mandate, which fines Americans who go without insurance the greater of 2.5% of income or $695, calling the mandate a "major factor in encouraging healthy young people to get coverage and avoiding a collapse in the marketplace."
Kasich and Hickenlooper are also calling for President Trump to continue funding the cost-sharing reduction (CSR) subsidies that reimburse insurers for covering certain out-of-pocket costs for low-income people. They also propose allowing states greater flexibility in "pursuing innovative strategies to preserve coverage" by seeking waivers from ACA rules.
Some parts of the proposal are necessary to prop up the ACA while other improvements are contemplated, notes Michael Abrams, managing partner with Numerof & Associates, a strategy development and implementation consulting firm.
Real reform will require tackling the deeper issue of why healthcare is so expensive and reworking how providers are reimbursed for value and quality, he says.
"People are talking in terms of stabilizing the insurance market for the next two years. It's the 11th hour and we're just looking for ways to keep this thing alive a little longer."
"It's disappointing that we've come to this point and only now are we talking about meaningful changes. But better late than never, and maybe this will keep the thing alive long enough for Congress to get its act together and come up with something else."
Make it a 'Broadly Attractive' Product
Some components of the bill, such as the governors' call for more federal and state outreach efforts to encourage younger, healthier people to enroll, are no-brainers, he says.
"If you want to keep this individual market alive even for another year or two, you need to have more than just the sickest of the sick trying to join," Abrams says.
"It only makes sense to renew efforts to make this product more broadly attractive beyond those people who find this their last best hope."
Abrams also sees value in the proposal to fix the tax code so that families eligible for tax credits under the ACA can still obtain those tax credits when purchasing an employer-sponsored health plan.
The Kasich-Hickenlooper plan also calls for cracking down on those who game the system, through methods such as shortened grace periods for non-payment and better verification of special enrollment eligibility.
Help Needed for States
The governors also call for Congress to create a fund that states can use to create reinsurance programs or similar efforts to reduce premiums and limit losses for providing coverage. Abrams doubts that would significantly improve the insurance market.
"When the federal government steps in to take some of the risk off the plate of the insurance company, sure that lowers the premium, but it's just another way to spread the cost of premiums around to the taxpayer," he says.
"That's almost an open checkbook, an invitation to push the costs of health insurance plans off on the public without it being particularly visible. That won't encourage lower premiums."
The Kasich-Hickenlooper proposal calls for allowing states to pursue alternatives to the ACA's essential health benefits, as long as they don't reduce competitiveness or affordability of coverage, and Abrams expects that to gain support from some legislators.
"There is an appetite out there among the states to try innovative approaches and streamlining the state innovation waiver procedure is entirely appropriate," Abrams says. "The federal level has not been successful with coming up with a one-size-fits-all model."
The loss of cost sharing reductions could force health plans to raise premiums so much that silver plan customers opt instead for bronze.
Governors from five states are calling on President Donald Trump to continue the cost sharing reductions (CSRs) to help stabilize the health insurance market, while analysts are determining how the loss of the subsidies would affect the market.
One expected result: Health plans will suffer more if the individual mandate is not enforced.
Losing the subsidies would exacerbate existing challenges to health plans by pushing some consumers to buy down to bronze plans, one analyst says, and the problems for health plans worsen if the government stops enforcing the individual mandate.
On top of that, higher employment could further reduce the population of the individual market.
Governor Bill Haslam (R-TN) told the Senate Health, Education, Labor and Pensions Committee recently that he and other governors have not given up on the idea of saving the current insurance structure.
But the subsidies are necessary to keep the insurance market stable, especially if wider reform is not coming any time soon.
"Some may say the only way to ensure legislative action on cost and realize real reform is total collapse," Haslam said.
"I don't subscribe to that line of thinking. I think every governor here and those back at home believe we can move to stabilize the market now while we work to take on the issue of health care costs."
Waiting for the White House
Insurers must file their 2018 rates by Sept. 20, and the Trump administration has not committed to any long term continuation of the CSRS, which help health plans offer lower cost coverage to low income consumers.
Uncertainty over the CSRs, and the possibility of losing them for good, is leading some insurers to hedge their bets by raising premiums even more than they might otherwise.
The government will end up paying higher tax credits to eligible consumers when silver plan premiums increase, partially negating any possible savings, notes Ken Wood, senior vice president of health plan development for Evolent Health, which works with health plans and health systems to promote value-based care.
"The unfortunate consequence is that people who don't have that tax credit will just have to pay the higher premium for the silver plan, and that means many of them will have to decide whether to buy down to bronze," Wood says.
Prediction: Healthcare Coverage Will Drop
"Healthier people will buy down to bronze, and if the individual mandate is not enforced some of them will leave the pool. That will mean further pressure on health plans because they will be left with a smaller, sicker population in the market."
Wood says health plans should be as worried about the individual mandate as CSRs, because he expects many people to drop coverage if the mandate is not enforced. Families may decide to insure a sick child but not the parents, for instance, or individuals may wait until they need care before purchasing coverage.
The improvement in unemployment figures also could have a detrimental effect on health plans, compounding the problem further. The individual health insurance market has always been counter-cyclical to employment, Wood explains, so when employment is high there are fewer people looking for individual coverage.
"We're getting closer to full employment at the peak of the cycle, where fewer people are left in the individual market. This lower enrollment comes at a time when higher premiums are giving people an incentive to buy down or drop of the market entirely," Wood says.
"It puts a bit more pressure on the pools, at a time when they don't need any more challenges."
Congress is likely to pursue tax reform in the coming session. In the meantime, health plans are focusing on employer and consumer education.
Health plans are increasingly portrayed as villains for raising premiums and deductibles, and pulling out of markets where they can't succeed, but they are mostly staying above the political fray and focusing on education of employers and consumers, industry insiders say.
Until they get a better idea of how Congress might change the healthcare laws that control their business, health plans and employers are focusing on the consumer side of things by trying to educate employers and individuals about their health and healthcare costs, says Chris Byrd.
Byrd is executive vice president of WEX Health, a payments technology company that serves 225,000 employer groups and 24 million consumers through its customers, which include Cigna, Blue Cross Blue Shield, and Anthem.
Congress is likely to focus on tax reform in the coming months rather than tilting at the healthcare windmill again, Byrd says. Health plans may still see incremental changes from tax reform, though.
"There is a lot of healthcare in tax reform because of a lot of healthcare and health benefits have tax aspects to them," Byrd says.
"There's a whole underlying tax structure for employee health insurance where employees are not taxed on the benefits and employers can deduct the amount of the benefits they're paying for, so employer-provided health insurance is intractably bound up in tax law. There will be opportunities to move on some elements of a healthcare reform bill if it had passed, such as raising the contribution levels allowed in HSAs and reform of the medical device tax."
In the meantime, health plans are trying to cut costs and increase quality of care for consumers despite the challenges they're facing, he says.
WEX Health uses data analytics to help employers and consumers better understand how they are spending their healthcare dollars.
"Employers can see how employees are spending the money in their health savings accounts or flexible spending accounts, to help reimbursement arrangements," Byrd explains.
"With consumers, we are giving them more actionable prompts, such as alerting them that they've reached the point with the HSA when they can invest, explaining why they should do that and how it helps them save for retirement. Employers and those who service them in the health plan industry are focused on that because the trend is inexorable, with more and more employers moving to higher deductibles and more consumer engagement."
Paying for Value
To help be proactive in actually addressing the cost of care, health plans are focusing their efforts on paying for performance or outcomes versus volume, says Theresa Stenger, an employee benefits consultant with Trion Group.
"The market is shifting from fee-for-service models with the goal of having provider contracts that incent adherence and improved overall health of attributed members," she says.
"This is not just limited to the medical care provided by a doctor or facility. More and more medical carriers and pharmacy benefit managers are entering into value-based contracting for the prescription drug spend, where contract value is dictated by specific measures like lower hospital admission rates. "
Carriers are also looking for creative ways to address emerging cost drivers like increased behavioral health spend by leveraging telemedicine to deliver a cost effective solution that also helps address the overall lack of access issue, Stenger says.
"In addition, Medical carriers have to always be vigilant in understanding and identifying potential wastage or fraud to help eliminate or reduce the exposure for their entire book of business," she says.
The insurer no longer allows outpatient imaging in hospitals. Hospitals may feel the financial loss.
In a bid to cut costs, Anthem is now informing consumers that it must pre-approve any hospital-based MRIs and CT-scans, and that approval won't come easily.
The insurer's new policy forbids hospital imaging services on an outpatient basis and requires proof that inpatient imaging is medically necessary.
The Anthem change in policy is likely to be a financial blow to hospitals, which have seen outpatient imaging as a profit center in recent years.
Anthem announced recently that outpatient MRIs and CT scans must be performed at lower-priced facilities, citing its commitment to the Institute for Healthcare Improvement (IHI) Triple Aim Initiative, which calls for improving the patient experience, improving population health, and reducing costs.
The insurer says clinical research has shown the safety of imaging services in free-standing facilities, so the additional cost of a hospital setting is unnecessary.
"Anthem's primary concern is to provide access to quality and safe healthcare for our members. We are also committed to reducing overall medical cost where possible when the safety of the member is not put at risk," the company says.
Anthem notes that imaging costs can vary widely without any effect on quality of care, with scans costing as little as $350 and as much as $2,000.
The company also notified providers of the change in policy, explaining that physicians must obtain pre-certification approval for inpatient hospital imaging. Anthem told consumers that it will provide assistance in finding imaging facilities other than hospitals.
The change in policy could reduce a member's out-of-pocket costs, Anthem notes.
"If the member has a benefit plan where he or she pays a percentage of the cost, it is possible that his or her percentage of out-of-pocket cost may be reduced," Anthem says. "This is because the cost to undergo a CT or MRI scan administered in a freestanding imaging facility may be less than what a hospital-based facility would charge. If the member has a facility copay, there may not be a reduction in a member's out of pocket cost."
However, the policy still stands even if using a freestanding facility would not reduce the consumer's out-of-pocket cost, the insurer explains. The approval or denial of the site of service is based only on medical necessity.
In the unlikely event that the physician ignores the policy and the patient receives imaging services in a hospital outpatient setting, the hospital would be responsible for the cost, Anthem says. The patient would not be held responsible unless he or she signed a statement acknowledging the deviation from Anthem policy and agreed to be financially responsible.
Value-based reimbursement is now less of a focus for Medicare and Medicaid, but health plans will continue to carry the torch. The impact of their efforts may be diminished, however.
Health plans are committed to moving toward more of a value-based strategy even though the Centers for Medicare & Medicaid Services is backing away from some key programs intended to encourage that approach, says an industry insider.
The government's retreat from those programs will make it more difficult for health plans to have significant impact on how care is delivered in the country, says Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions (formerly the National Business Coalition on Health), a DC-based nonprofit that represents more than 12,000 purchasers employers and 41 million Americans.
CMS announced recently that it will abandon two bundled-payment models and cut down the number of providers required to participate in a third, saying providers wanted more input in the models' designs. Bundled-payment models are meant to incentivize quality care by paying hospitals essentially a lump sum for a particular type or episode of care, with the hospital taking the financial hit for cost overruns due to poor outcomes, readmissions, and errors.
CMS plans to cancel the Episode Payment Models and the Cardiac Rehabilitation incentive payment model, which were scheduled to begin on Jan. 1, 2018. In addition, the geographic mandatory participation areas for the Comprehensive Care for Joint Replacement, or CJR, model will be cut from 67 to 34 under the proposed rule.
In the remaining mandatory participation areas, hospitals with fewer than 20 joint replacements over three years will be excluded starting in February 2018, but they can voluntarily participate in the model if they so choose. Up to 470 hospitals are expected to continue to operate under the model, down from 800 if no changes were made.
"Medicare backing away from some of that is a step backwards, and hopefully a temporary one," Thompson says. "HHS, through Medicare and Medicaid, is one of the largest players in the system, accounting for more than half of all payments, and when they adopt this value-based approach it quickly sets a tone for the entire industry. With them backing away, we're back to where we were with many health plans trying to adopt a value-based approach but not having as much impact."
Each health plan can only impact a relatively small population of providers when compared to the influence of Medicare, Thompson notes.
"Health plans are moving away from the old silos of disease management to more of a total health approach that understands the multiple factors affecting an individual's health and guiding them in the right direction. Medicare's payment reform supported that and gave providers the right incentives, so now it will be up to health plans to carry that effort forward," Thompson says.
"I don't expect health plans to back down at all. Health plans will continue down that path but they won't have the same impact on changing the industry as we would see if everyone, including the biggest player in the market, was doing the same thing."
The loss of HHS dedication to value-based reimbursement will lead health plans to put even more emphasis on engaging consumers in optimal use of resources and achieving better outcomes, Thompson says.
"We're finding that some of the traditional approaches, those that were more passive in making resources and tools available and letting the consumer use them if they wanted to, are being replaced with more proactive services that engage consumers at the point of service," Thompson says.
"Some of those are being integrated into their call center activities because the plans are realizing that when people engage with their health plan they can be more effective if they understand these resources better, and then the health plan can guide them more effectively."
Health plans are likely to raise premiums if cost-sharing reduction subsidies are halted. That would hurt many consumers, but some could actually benefit.
The Trump administration's recent concession on cost-sharing reduction (CSR) subsidies will not be enough to keep healthcare insurers from raising rates significantly for 2018, one analyst concludes.
That's because it would be way too to assume that the payments will continue. But it is possible some consumers could actually benefit from the dispute.
An effect called "silver-gapping" could result in some consumers receiving higher tax credits because of premium increases, which they could use to reduce expenditures for a basic health plan or help them splurge on a better plan.
That could mean that the predictions of millions of more uninsured Americans are overblown, says Dennis Deruelle, MD, FHM, national medical director for acute services with IPC Healthcare/TeamHealth. The company provides healthcare professional staff and integrated care providers in Tampa, FL.
Silver-gapping could even end up strengthening the insurance marketplaces, he says.
The administration agreed to pay the CSRs for August, but future payments will be decided on a monthly basis. Health plans can still change their rates up until Sept. 6, which means they must decide between now and then whether they can count on the CSRs continuing.
The Trump administration has threatened to withhold the subsidies as a way to put leverage on both Congress and insurers over healthcare reform, pointing out that Congress never appropriated money to fund the payments, which help compensate insurers for providing reduced premiums to low income people.
The monthly payment is welcome, but health plans need a long term commitment, says CEO John Baackes of L.A. Care, which covers more than 2 million Medi-Cal members.
"The ambiguity from Washington does not enable insurers to plan appropriately to ensure value and access to the quality health care that consumers deserve," he says.
"CSRs are a critical part of the exchanges that help to stabilize the markets, and without the CSR payments, millions of Americans will suffer from higher costs, reduced access to care, and many will simply have no choice but to go without coverage."
Just before the administration released payments for August, a report from the Congressional Budget Office (CBO) said premiums for silver plans offered through the Affordable Care Act marketplaces would be 20% higher in 2018 and 25% higher by 2020 if the CSRs are discontinued.
"They have to make a decision about hedging their bets for 2018, and some are just baking in a 20% increase because the CBO said that would be the impact of losing the CSRs," Deruelle says.
"Some are filing two rates, one for if the CSRs continue and one for if they don't, but eventually they will have to commit to one or the other. Overall, companies are increasing their rates."
Oddly enough, though, some people could benefit.
The subsidies are based on the cost of second-highest silver plan, and if discontinuing the CSRs leads insurers to raise premiums on only those silver plans, there could be unintended consequences.
The government could end up paying more through the premium tax credit, a refundable credit that helps eligible individuals and families cover the premiums for their health insurance.
"You're actually going to create some strange phenomena in which people could actually get a bigger subsidy and almost get a bronze plan for free or even afford a gold plan with the extra money they're going to get," Deruelle says.
"Believe it or not, this could be advantageous for some people. The CBO idea that all these people will lose insurance–that's not going to happen. In fact, the exchanges gain more people and overall there is no increase in uninsured."
That does not meant that no one will suffer when health plans increase premiums, Deruelle notes, and those potential benefits vanish if insurers raise premiums across the board instead of just on the silver plans affected by CSRs. Some states are likely to prohibit increasing premiums on just silver plans, Deruelle says.
"This is a complicated law with consequences that build on one another, and the effects are sometimes hard to predict," he says.
"This is a perverse situation in which there could be one group of people who benefit when premiums are raised, but there is still a lot of uncertainty."
More employers offer health savings accounts as part of their benefit packages, aiming to lower costs for themselves and employees alike. Changes that make the accounts more consumer-friendly are likely to be part of any future healthcare reform.
Health savings accounts (HSAs) are gaining in popularity and could play a major role in any upcoming healthcare reform efforts, one analyst says, as some consumers demand more control over how they spend their own money on healthcare needs, and as employers urge the rest to get more involved.
Some employers offer HSAs as part of a health benefits package. They are similar to personal savings accounts, but the funds are deposited into the account on a pre-tax basis, so employees reduce their tax liability, and they can only be used for qualifying medical expenses.
The number of HSA accounts rose to 20 million in 2016, according to a year-end report, with almost $37 billion in assets. That is a year-over-year increase of 20% for the number of accounts and 22% for HSA assets for the period of December 31, 2015, to December 31, 2016.
The Affordable Care Act changed how consumers could use HSAs and the recent bills in the Senate tried to reverse some of those rules to give consumers more freedom with those funds, notes Brandon Wood, president of client experience with Maestro Health, a company providing support for employee health benefits to employers.
The most recent Senate bill expanded the amount of money people could set aside in HSAs and rolled back some restrictions imposed by the ACA.
Though that bill didn't pass the Senate, Wood says HSAs are increasingly popular with employers and any ongoing effort to reform the ACA is likely to include similar provisions.
"The Senate Republicans tried to restore some of the facets of HSAs that are most popular with Americans. The most significant was how the ACA disallowed the use of HSAs to pay for over-the-counter medications, stuff like allergy treatments," Wood explains.
"When the ACA took effect consumers could still use the accounts for that but they essentially had to get their physicians to write a prescription for it, which is not exactly consumer friendly."
Pharmacy and over-the-counter medications account for about 60% of the spending from HSAs and FSAs, Wood says.
Lawmakers also may revise efforts to expand the availability of HSAs, Wood says.
"If something passes, it is likely to include some changes to HSAs. Today you need to be in an HSA-qualified health plan, with a certain level of deductible, an certain out-of-pocket maximum attached to it, and some other requirements," he says.
"The latest proposal wanted to provide the ability for just about everybody to have an HSA whether they participated in an HSA-qualified health plan or not. It also increased significantly the amount of money you could put in those accounts, and those are changes that are popular with consumers."
Though HSAs are popular with savvy consumers, any increased availability will mean employers need to educate people and encourage them to participate. When employers offer HSA-compatible health plans, about 20% of people enroll in them, Wood says. So that's already a relatively small percentage of people familiar with how to use the tax advantage account, he says.
Even without HSA-related changes to the ACA, employers are increasing the availability of the accounts, sometimes with seed money to get them started, Wood notes.
"We believe the employer marketplace will continue to go in this direction, in part to drive down their own costs but also to encourage some level of consumer responsibility. The employer's chief challenge is how to get people to use the accounts right," he says.
"HSAs are getting more attention now, so employers can expect more employees walking in and asking when they're going to get one and how it works."
Health plans are announcing their proposed premium increases for 2018 and some are quite high. The uncertainty over cost sharing reductions is driving some of the increases.
Uncertainty over the fate of cost sharing reductions (CSRs) and the rest of the Affordable Care Act is prompting health plans to hedge their bets by raising premiums for 2018, sometimes drastically. Some residents of Idaho could face an 81% increase.
President Donald Trump's threat to halt the CSR payments as a way to put pressure on Congress to repeal and replace the ACA could mean the loss of about $7 billion a year to health plans. Losing the CSR payments would be such a big hit that some health plans are saying huge premium increases are the only way they could remain viable in the market.
Health insurance premiums in Idaho could increase as much as 81%, according to data submitted to the state's insurance department. Five health plans offer products on the individual market in Idaho: Blue Cross of Idaho Health Service, Mountain Health Co-Op, PacificSource Health Plans, Regence BlueShield of Idaho, and SelectHealth.
For the popular silver plan, the average rate increase among all insurers in Idaho was 50%. The proposed average overall statewide rate increase is 38%.
Florida consumers also are looking at double-digit rate hikes for 2018, after state regulators asked insurers to submit backup plans to raise premiums even higher than what they had already proposed. Uncertainty about the CSR funding had the regulators worried that the previously submitted rates would not be sufficient.
Two insurers in Illinois also are seeking double-digit rate increases for next year, and one, Health Alliance Medical Plans, wants increases of 30% to 40% for two individual coverage plans.
In California, individual health insurance plans will cost on average 12.5% percent more in 2018, the state insurance exchange announced.
Los Angeles County can expect an average rate increase of 13.4 %. The exchange said all 11 insurance carriers currently on the exchange, Covered California, will continue to do business in the state for 2018, but Anthem Blue Cross of California said it will no longer do business on the individual market in Southern California.
It will continue to offer employer-sponsored plans but will discontinue offering individual plans in 16 of the 19 regions where it currently sells them.
Covered California Executive Director Peter Lee attributed the rate increases and Anthem's pull back to "unprecedented uncertainty" about the future of the ACA and CSRs. Covered California also announced that it may add an additional surcharge to silver plans if the CSRs are withheld, or if their fate remains unknown for long.
The surcharges would add between 8% to 27% to silver plan premiums, with an average of 12.4%.
