The Trump administration released a report with over 50 recommendations for increasing competition in healthcare. Reforming America's Healthcare System Through Choice and Competition was a joint effort across the Departments of Health and Human Services, Treasury, Labor, the Federal Trade Commission and the White House. Some are calling it a wish list for the future. The timing is interesting, as some of the recommendations include actions the administration could take, while others would require an act of Congress which could be challenging after this month with the House and Senate controlled by different political parties.
The report is driven by the administration’s position that government regulations have driven up health care cost by limiting competition and consumer choice. Its authors also take aim at open-ended tax exclusions for employer-sponsored coverage, maintaining that subsidies for comprehensive coverage lead to cost inflation. Here are some of the recommendations of particular interest to plan sponsors:
Focus on Health Savings Accounts
Because many employer wish lists include easing HSA rules, I’m going to take a deeper dive into the recommendations affecting HSAs.
Many high deductible plans are not HSA-eligible because of the pharmacy benefit design or because they provide pre-deductible coverage for doctor visits. The report encourages changes that would enable more innovative insurance products. One suggestion is to allow an alternative standard for HSA eligibility such as an actuarial value combined with a cost conscious design. The report recommends that any medical plan with an actuarial value (AV) below 70% would be HSA-eligible. The report also recommends raising the contribution limit for HSAs.
The report also addresses the need to expand the definition of preventive care to include some care for chronic conditions – but not any or all chronic conditions. It recommends a focus on just low cost/high benefit therapies via the regulatory process to expand the definition to include preventive care that slows the progression of chronic conditions.
Other recommendations would allow people to contribute to HSAs who under current rules are ineligible, including those in fixed-fee arrangements such as direct primary care and those in HSA-eligible short-term duration medical plans or Medicare plans.
We will have to wait until January to see how the new Congress will respond to the recommendations, many of which have already been embraced this year in Republican legislation that has drawn support from some Democrats. In the meantime, the administration will continue to explore regulatory action to address some of their recommendations. As always, it is important for employers to keep a close eye on these developments. We will continue to track them and keep you informed.