BREAKING: Regulations Threaten HSAs
A new report by Milliman Inc. says that high-deductible health plans, including those with health savings accounts (HSAs), will likely be more adversely impacted by the medical loss ratio requirements under the Patient Protection and Affordable Care Act (PPACA) than other types of comprehensive medical plans.
“HSAs were widely anticipated to be the low-cost bronze plans for consumers under the Patient
Protection and Affordable Care Act,” said Kevin McKechnie, executive director of [the American Bankers Association] HSA Council. “The medical loss ratio requirements make this very difficult…”
Press release. Previous post on Roy Ramthun’s white paper.
Anything that threatens the liberal march to the single payer must be crushed. One more threat destroyed. In the gulag of Obamacare we’ll rue for these days of anything that smacks of a market. When Obamacare fails, a market may emerge, but medicine maybe destroyed by then.
What is the MLR on a plan that is paid-up?
Don Levit
I’ve been saying this for some time. Most people who purchase a high-deductible health plan never expect to file a claim against the policy. By contrast, people with comprehensive plans are essentially paying for pre-paid medical services. It would be much easier for pre-paid medical plans to meet the MLR regulations than high-deductible plans where the owner never expects to file a claim.
Devon:
You are correct.
But, let’s think this through.
Let us assume that a person has a $10,000 deductible (not an HSA plan), and a corresponding primary policy with $10,000 of benefits that is paid-up, with benefits building monthly. Depending on contributions, it may take a year to accrue $10,000 of benefits.
The paid-up policy is backed by reserves completely owned by the insurer, including a “nominal” cash value.
I would argue that the MLR is irrelevant, for every benefit claimed on this paid-up portion is a 100% return.
Don Levit
And it gets worse: As banks (which sponsored the study) build low expectations into their business plans, administrative fees for HSAs will go up and convenience will go down.
It took years for banks to buy in to Health Savings Accounts. (One problem was that they struggled to decide whether it was a retail product or an institutional product. That is: Should it be offered to the individual or the employer?)
If banks start flaking away from HSAs, the product’s reputation will suffer and, when the advocates of consumer-driven health care seize the initiative once again, the struggle for acceptance will be harder than ever.
Further proof that ObamaCare is set to destroy consumer driven health care.