Transcript 2004_SCI_Summer_Meeting_kofman

The New Consumerism in Health
Care: Why States Should Care
June 29, 2004
State Coverage Initiative
"Pressing Forward: Cuts, Coverage and
Creativity."
Mila Kofman, J.D., Assistant Professor
Health Policy Institute, Georgetown University
2233 Wisconsin Avenue, NW, #525, Wash., DC 20007
202-784-4580 direct; 202-687-0880 main
[email protected] * www.healthinsuranceinfo.net
HSAs
• Tax free in/tax free out - $$$
• “Above the line” tax deduction: $2600 individual/
$5150 families
• Account used to pay for:
– Annual deductibles
– COBRA premium and health insurance while
unemployed
– Medicare-related expenses
• 10% penalty if used for other purposes
• High deductible health plans (HDHP)
High Deductible Health Plan
• HSAs can only be used with HDHP
• Qualifying:
– Minimum annual deductible $1000/individuals,
$2000/family
– Out of pocket expenses (deductibles, copayments, and coinsurance) not more than
$5000/individuals and $10,000/family
Qualifying HDHP
• Preventive care allowed but not required
(pre-deductible)
– Annual physicals, immunizations and screening
services, routine prenatal and well-child care,
tobacco cessation and obesity weight-loss
programs
• Prescription drug coverage (pre-deductible)
– transitional rule: rider or separate plan allowed
2004 and 2005
Will HSAs help the health care
crisis?
CRISIS:
• nearly 44 million Americans uninsured
– nearly 20,000 deaths/year (IOM)
– at least $65 billion/year to U.S. economy (IOM)
• millions underinsured
– personal bankruptcy - 50% and 80% had health
insurance (Warren)
• double-digit premium increases
HSA Proponents argue:
•
•
•
•
Equality with job-based coverage
Greater control over health care
Cost containment
Help uninsured
HSA Opponents
argue:
• Reduced access to medical
care (through cost shifting
to patients)
• Won’t help uninsured
• Erode comprehensive coverage
• Erode job-based coverage
• Won’t address reasons for high premiums
Issues & Implications for States to
Consider
• State budgets -- loss of revenue
– Lower revenue from personal
income taxes
– Lower revenue from premium taxes
• Risk segmentation issues
Policy Issues and Implications
Financial security?
Personal Bankruptcy (Warren, Harvard University)
Healthy communities?
• Cost shifting: less care/delays in necessary care
(RAND 2004)
• Higher long-term spending
• Individual consumers - better
health care customers?
• Provider reimbursement – new trend
Use of limited $$?
Policy issues cont.
• Tax relief for people with
HDHP now
• Higher income people biggest
tax advantage
• Many unanswered questions
Will HSAs be a step forward
(in an era of incremental
reform)????
State Implementation Issues
Are HDHP allowed?
– Regulatory approval for new policies or state
laws prohibiting HDHP
– Benefit mandates (pre-deductible) not
considered “preventive” and therefore not
allowed by IRS for HDHP
– HMOs – “reasonable deductibles”
State defined programs: high-risk pools,
small business programs, state employees
HDHP
HDHP:
– Minimum deductibles ($1000/$2000)
– Maximum out of pocket expenses
($5000/$10,000)
– NO Prescription drug coverage pre-deductible
– Preventive care only pre-deductible
Future?
• more cost shifting?
• tax breaks to help?
• adequate health care and coverage for all?