Lowering Out-of-Pocket Costs for Millions of Americans with Chronic Conditions

By Katy Spangler, Co-Director of the Smarter Health Care Coalition

Despite what you might think or read on Twitter, bipartisanship is alive in Washington.  Two important things happened this week (and it’s only Wednesday!). First, the president issued an Executive Order to improve price and quality transparency in American healthcare, and second, Senators Thune (R-SD) and Carper (D-DE) introduced S. 1948, the Chronic Disease Management Act of 2019.  Great, but how is this relevant for Health Savings Accounts?

A provision in the Executive Order directs the Secretary of Treasury to issue guidance that would allow Health Savings Account-eligible health plans to cover low-cost preventive care for individuals with chronic conditions on a pre-deductible basis.  As I’ve posted before, current law includes a preventive care safe harbor that allows HSA-eligible health plans to offer preventive services pre-deductible (yay!), but existing Internal Revenue Service guidance prohibits employers and health plans from offering any services to treat an existing illness or condition pre-deductible (boo!). The President has now tasked Treasury with updating that guidance to essentially define prevention to include low-cost chronic disease prevention. This is great news for the millions of Americans in high-deductible health plans that have chronic conditions since employers and plans will now be able to cover insulin or inhalers for enrollees that need them without first forcing patients to fork over their entire deductible. Increasing out-of-pocket costs are a growing problem and this policy change could help millions of Americans. Here’s hoping Treasury moves quickly to publish and finalize guidance complying with this Executive Order.   

Meanwhile, on the other end of Pennsylvania Avenue, Senators Thune and Carper bipartisanly introduced the Chronic Disease Management Act, which recognizes the existing authority the Secretary of Treasury has to update the current HSA safe harbor to include chronic disease prevention. The bill authors also recognize that in the 15+ years HSAs have existed, the Secretary hasn’t utilized that authority. So they are stepping in to create a new safe-harbor specific to chronic conditions. The safe harbor tasks the Assistant Secretary for Health of the Department of Health and Human Services with creating a list of chronic conditions that would qualify for this new flexibility. The Office of the Assistant Secretary for Health has a track record of working collaboratively to develop similar lists (check out Table 3 of this article). Helpfully, recent research shows this policy could provide millions of Americans with plans that better meet their clinical and financial needs and will likely reduce federal expenditures.

A very diverse group of stakeholders that support value-based care as well as some usual suspects that support HSAs have been working on these issues for a long time. Granted, there’s a lot more work to do, but these are helpful steps on the path to lowering out-of-pocket costs for millions of Americans with chronic conditions.     

Katy Spangler is a Co-Director of the Smarter Health Care Coalition.  She also serves on the Advisory Board to the University of Michigan Center for Value-Based Insurance Design