(Nota Bene! HSA plans are not necessarily consumer-driven!)

Paul Howard and Yevgeniy Feyman of the Manhattan Institute have conducted a thorough examination of plans available on Obamacare’s exchanges:

The report finds that, far from becoming obsolete under the ACA, high-deductible plans are widely available — 98 percent of uninsured Americans have access to at least one HSA-eligible plan. Moreover, these plans also make up about 25 percent of total offerings on Obamacare exchanges. We also found that they remain significantly less expensive than traditional plan designs, offering savings of about 14 percent, on average.

Nonetheless, our analysis indicates that it remains difficult for consumers to identify HSA-eligible plans and that much more could be done to simplify their administration and educate exchange consumers on their advantages and limitations.

To improve competition between HSA and non-HSA plans on the exchanges, we suggest a number of reforms for HSA-eligible plans, including:

1. Improve transparency. HSA-eligible plans are often not labeled as such on the exchanges. Mandating identification would go a long way toward making such plans more accessible. Also, exchanges should, like Medicare’s Part D drug plan, contain a simple “cost calculator,” allowing consumers to estimate annual out-of-pocket costs while comparing the latter with the savings associated with a particular HSA-eligible plan. Over time, consumers can accumulate significant funds in such accounts.
2. Standardize and simplify. One easy way to do this would be to allow any plan with a qualifying deductible to be automatically designated HSA-eligible, as opposed to the current thicket of regulations surrounding HSA eligibility. Alternately, policymakers could make any plan with an actuarial value of 70 percent, or less, HSA-eligible — since it is really the full out-of-pocket payment, not merely the deductible, that is relevant when considering a plan’s full expected cost in the event of serious illness.
3. Improve affordability for low-income consumers. Catastrophic plans on public exchanges should be redesigned to be eligible for premium tax credits and cost-sharing subsidies, with savings from picking higher-deductible, lower-premium plans refundable into health savings accounts.

On the face of it, this is good news. In an article on this blog from February 2012, Roy Ramthun described the threat to HSAs from Obamacare regulations.

However, we must also recall that Obamacare exchanges encourage plans to compete by attracting the healthy and deterring the sick form applying for coverage. So, we should be careful about concluding that Obamacare’s HSA-eligible plans are really consumer-driven plans. Health insurers may be offering them as a method of selecting less expensive risks.

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