Obama’s War on HSAs
This is the latest from Roy Ramthun:
HHS has consistently tilted the playing field against consumer-driven plans. The first step was via final regulations implementing the ACA’s new minimum medical loss ratio (MLR) standards. As written, these regulations make it impossible for consumer driven plans to qualify as Bronze plans under the ACA’s new state insurance exchanges. If forthcoming final rules on “essential benefits” and “actuarial value” requirements are just as discriminatory, these affordable plans will vanish and insurance costs on state exchanges will skyrocket. Along the way, millions of Americans with policies that could qualify as Bronze plans today will be forced to change or drop their coverage. A minimum MLR sounds like a good idea — ensure that consumers get good value from their insurance policies. But MLR standards (currently set at 80 percent for the individual and small group markets) effectively act as price controls, limiting the cost of insurance by controlling the portion of the premium that is available to be spent on administrative expenses and profit (i.e., the remaining 15 or 20 percent of the premium collected)….
The threat to HSAs was validated by a recent analysis of the MLR rules by Milliman Inc. for the American Bankers Association.
Last year I commented on a post where I said I thought high-deductible plans were at a disadvantage compared to comprehensive plans. Many of my fellow commenters disagreed with me saying there was no reason why a high-deductible plan would have any more difficulty meeting the MLR thresholds than comprehensive plans. Slowly, others are beginning to agree with me. The nature of a high-deductible plan is very different. By design, high-deductible plans were not intended to pay out medical claims for most people who had them. Yet, the sales, marketing, administrative (and some of the other costs) are proportionally larger than the premium when compared to comprehensive plans.
I can see how MLR standards have the same effect as price controls.
Disgusting.
What ever happened to the desire to never collect on a policy?
Typically, those plans were dirt cheap, paid out huge sums under rare circumstances, and did so on a very intermittent basis.
Can someone explain to me how the platinum plan works at 90% actuarial value, if the MLR can be no higher than 80%?
Don Levit
This is a shame. I love my HSA. It’s my money. I treat it as such!
Don – Actuarial value and MLR are different. The actuarial value is calculated a year or so before you buy a policy based on a “standard population”. The 90% is the percent a typical person is expected to pay of their medical expenses (any given person could obviously be different). It is not a % of premium but a % of total medical costs
MLR is a % of premium and limited under the new MLR rules. So 15-20% are allowable for expenses/taxes, etc. The remainder goes to medical expenses, of which you are paying about 10%.
Susan:
Thanks a lot for the explanation.
Don Levit