The Importance of the Definition of "Sufficient"

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14 May 2009
Anyone who has even remotely paid attention is aware that there is a major debate looming over healthcare reform. More than any time in the past, it appears that there is a serious possibility that the U.S. healthcare system will be overhauled. I am often asked about the potential impact of healthcare reform on the healthcare banking industry. This is a very hard question to answer, as it is still quite early in the reform process and the positions of the Obama administration, key members of Congress and healthcare industry players are still somewhat fluid -- they're all trying to figure things out in unchartered waters. During the course of the healthcare debate, there has been a lot of attention placed on some of the more controversial components. These include universal coverage, "individual mandates" (requiring health insurance), taxation of insurance benefits, depletion of the Medicare trust fund and the biggie -- a "public option" (government-sponsored health plans). My view is that none of these heated subjects will necessarily have a negative impact on healthcare banking. This is because they all have the potential to increase the insured population and make comprehensive (no or low deductible) plans relatively unattractive. Rather, what keeps me up at night is another healthcare reform component, the government's definition of "sufficient coverage". To be more specific, the goverment at some point is going to examine health plan design and determine what is "sufficient" health insurance coverage. This determination will almost certainly contain patient pay elements such as maximum deductibles and co-pays. The higher the patient pay amounts, the more likely that HSAs, HRAs and FSAs will occupy an ongoing space in healthcare. So what will sufficient coverage look like? Good question. Given the early stage of the healthcare reform debate, the specifics haven't been worked out yet. However, the Massachusetts public health care model may provide some clues. Looking at the Massachusetts "CommonwealthConnect" on-line health insurance exchange, many plans have deductibles of $2,000 for individual coverage, but with "carve-outs'" (e.g., routine doctors visits, which are subject to co-pays). Such a plan doesn't meet the requirements of an HSA-qualified plan, but plans designs are bound to change and co-pays can add up. Because of this, it wouldn't surprise me if the plan design requirements for an HSA are loosened -- the idea of a "Universal Health Account" untethered to plan design has been floated around DC in the past, and may be revisited. Just another example of seemingly daily twists in the health care reform discussion. Stay tuned.

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