Republican push to get more Americans on high-deductible health insurance divides Democrats (2023)

"Government should focus on improving care, not burdensome demands on providers who care for patients," said Rep.Brad Wenstrup(R-Ohio), who is working with the progressive Oregon DemocratCount Blumenauerin a bill to extend benefits.

The proposed changes reflect the new state of health care among Republicans, who have turned their backs on efforts to repeal Obamacare but see high-deductible plans as a way to bolster market forces in the system. They are also calling on Democrats like Blumenauer to make access to health care more affordable.

But so did other Democrats, including the senior member of the Ways and Means Health SubcommitteeLloyd Doggett(D-Texas) are concerned that the plans would still create financial and medical risks for low-income workers who can't afford to pay their deductibles and forego care as a result.

Doggett believes the legislation would primarily benefit the wealthy -- the plans include health savings accounts with significant tax benefits -- and would undermine the legislationAffordable Care Actdue to insufficient coverage.

“The idea is to provide ever-larger tax havens,” Doggett told POLITICO.

The changes proposed in the House of Representatives would preserve another benefit favored by Republicans: High-deductible plans aimed at discouraging people from seeking unnecessary care, thus lowering health care costs, which reduces inflation.

To increase the number of people using the plans, the Ways and Means Committee agreedThe Wenstrup and Blumenauer accountin a strong bipartisan vote in June that allowed plans to cover chronic care benefits before patients reach their deductibles.

The committee tooapproved legislationled by two Republicans,Michelle Steelof California andAdrian Smithof Nebraska and two Democrats,Susie Leeof Nevada andBrad Snyderof Illinois, which would allow plans to deduct telemedicine costs.

The full House of Representatives is expected to vote on the bills after Congress returns from its August recess.

Pros and cons
Despite the lopsided votes, tensions boiled over in Ways and Means, and Wenstrup called "absurd" claims by Democratic opponents that the wealthy are using health savings accounts as a second retirement fund.

Blumenauer acknowledged the plans' established position in the insurance market and argued that the legislation would help improve delivery.

"More and more employers are choosing to offer this type of coverage," he said. "We must not turn our backs on expanding prevention options."

For frugal consumers, there are many benefits to high-deductible health insurance. The plans offer low monthly premiums, and these fees fully cover preventive care, including annual exams, vaccinations, mammograms and colonoscopies, with no copayments.

The downside is that plan participants must pay insurers' negotiated rates for visits, drugs, surgeries and other treatments up to a minimum deductible of $1,500 for individuals and $3,000 for families. Sometimes the discounts are much higher.

To help cover these costs, plan members can fund health savings accounts with earnings that are tax-free when used to cover health care costs. You can invest up to $3,850 per year for individuals or $7,750 for families. Many employers also allow participants to contribute an additional $3,050 each year tax-free to limited-use flexible accounts to help pay for dental and vision expenses. All these numbers are adjusted annually for inflation.

People in the plans cannot invest in broader flexible health care spending accounts that cover medical expenses, but members can use funds in health care savings accounts to do so. Most FSA funds expire if not used at the end of the year. HSA funds never expire and owners can invest them in stocks and bonds.

When workers turn 65, an HSA becomes a kind of supercharged 401(k) because the money can be withdrawn for any reason and is subject to income tax on withdrawals, just like a 401(k), while owners continue to own the health their expenses can be covered tax-free.

People who fully fund their tax-deferred accounts year after year while staying healthy enough to keep the money invested can build a large nest egg.

Proponents argue that the proposed changes would expand access to health care and create potential cost savings by promoting preventive care. Skeptics say they put lower-income patients at risk by not providing adequate insurance coverage, making them more vulnerable to large bills.

The American Hospital Association has raised concerns about the plans, arguing they shift the cost burden to patients and, when they can't afford the costs, to hospitals. David Allen, a spokesman for the insurance lobby AHIP, responded that insurers negotiate lower rates with providers such as hospitals to protect consumers from high costs.

The cost of seeing a sick person also discourages doctor visits and potentially puts patients' health at risk, said Cheryl Fish-Parcham, director of private health insurance at Families USA, a left-leaning consumer health advocacy group. doing. "See how people avoid care when they feel they can't afford the cost."

But employers say that's an even more important reason to support bills being considered by the House of Representatives that would expand fully covered benefits before patients reach their deductibles.

"For low-cost, high-quality services, that is, high-quality services, we want to maximize utilization," said James Gelfand, chairman of the ERISA Industry Committee, which represents the performance interests of large employers.

Tax credits and health outcomes
A quarter of employers offer high-deductible plans with HSAs, up from 10 percent in 2009, and the percentage of employees using these plans has increasedhas doubled in the last decade, according to health research group KFF, which included a wide range of large and mid-sized employers in its survey.

An estimate by consulting firm WTW, which focused on large employers, found that 86 percent offer high-deductible plans, and 80 percent of those plans have HSAs.

“We knew the market could be electric. We just didn't know how much current was going to flow through those lines," said Joel White, a health lobbyist and chairman of the Council on Affordable Health Care, who helped craft the language to introduce high-deductible health plans as part of Medicare modernization. Tatt helped in 2003 when he was a consultant to the Republican Way and Media Committee.

He pointed to Indiana as an example of what states should be doing — rewarding people with money if they take preventative measures, such as participating in smoking cessation programs or getting an annual physical.

The growing popularity of high deductible plans is due to many insurers raising premiums. People who lack more expensive plans can switch to high-deductible coverage – and hope they don't get sick.

"Employers continue to offer them because they want these lower premiums as an option," said Adam Beck, senior vice president of employer commercial policy and products at AHIP, the insurer advocacy group.

Studies have shown that only a few participants can take full advantage of the tax benefits.More than half of those who signed upAccording to analysis, they had not made any contribution to their savings account for more than a year.Das Employee Benefit Research Institutefound that the average HSA account balance was about $4,000, although more than a third of enrollees ended the year with less than $500.

There are indications of large differences.

Research from 2015found that higher-income participants were "at least" four times more likely to set up and fully fund their HSAs than lower-income participants. AndResearch 2020found that blacks, Hispanics, and lower-income beneficiaries were significantly less likely to use HSAs than whites and higher-income beneficiaries.

But White argues there's little evidence that this creates disparities in health outcomes, saying lower-income people don't use HSAs as often because many don't have private health insurance. Medicaid plans do not offer HSAs.

But he called for more research into the findings and suggested that other types of plans may also be linked to health savings accounts. Congress should act on this.

On the other hand, Frank Wharam of the Duke Margolis Center for Health Policy points to his research showing worse diabetes outcomes for lower-income people with high-deductible plans, including those with and without health savings accounts. His study of high-deductible HSA plans for people with diabetes found an increase in complications of the disease.

"I believe that high-deductible health insurance plans are potentially harmful to key populations, particularly low-income people with high morbidity ... and do not harm the health outcomes of high-income people in general," Wharam said.

White countered that Wharam's study time did not allow participants to fully fund their HSAs.


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