‘Perfect Storm’ on Horizon for Consumer-Directed Health Care

Published December 1, 2008

Will 2009 see a surge in health savings account enrollment among federal employees?

Premium increases in federal employee health plans, combined with the current economic downturn, seem to point to the answer being “yes.”

The most popular offering of the Federal Employees Health Benefits Plan, the Blue Cross Blue Shield Standard Option, is increasing premium costs to employees by 13.4 percent for families, and by 12.9 percent for singles, next year.

Meanwhile, premiums for Aetna’s HSA option have increased by only 7 percent, to $146.75 for families and $67.01 for singles. The Postal Workers Union Health Retirement Account plan premium is unchanged at $189.37 for families and $84.17 for singles.

‘Perfect Storm’ for CDHP

The increase in federal health plan premiums has combined with the current economic turmoil to create what Aetna’s Tom Bernatavitz has called a “perfect storm” for consumer-directed health plans. The premium savings and the federal HSA contribution more than make up for the higher deductible of the HSA plan, which is $1,500 for singles and $3,000 for families.

When compared to the BCBS Standard Option, Aetna HSA enrollees will save $1,020.60 a year on premiums for singles and $2,518.08 for families. When the federal government’s contribution of $750 for individuals and $1,500 for families is taken into account, individuals will save $270.60 on the annual cost of coverage and families will save $1,018.08.

Both the unhealthy and the unwealthy would benefit from that deal.

The Joy of Mandating

As part of the Wall Street bailout, Congress enacted a new mandate requiring “mental health parity” in insurance coverage. The mandate requires employers to provide the same level of insurance for mental health that they do for physical health, if they provide mental health coverage at all.

This is not the first blanket mandate Congress has enacted, but it is the biggest since the Pregnancy Discrimination Act of 1978, which amended the Civil Rights Act to prohibit an employer from “refusing to hire a pregnant woman because of her pregnancy, because of a pregnancy-related condition, or because of the prejudices of co-workers, clients, or customers.”

Proponents say millions of people will be helped by the new mandate and that it will cost only pennies even though 90 percent of employers will have to change their current coverage. These two claims contradict each other—certainly expanded coverage won’t occur without increased costs.

It’s easy to underestimate the costs when you are talking about someone else’s money. Members of Congress are already talking about additional mandates, which would require coverage for conditions such as autism and for “children” up to the age of 25 or higher.

Maybe there should be a mandate on advocates and bureaucrats that they put their own money at risk when they make these projections. Perhaps they should lose a month’s pay for every percentage point they are off?

Long Overdue Challenge

Speaking of mandates, a long-overdue legal challenge is being brought against the Social Security Administration and the Department of Health and Human Services. The suit challenges the current rule that if an eligible person declines to accept Medicare Part A, he or she will forfeit Social Security benefits.

The suit alleges the rule was put into place without being published beforehand in the Federal Register, a violation of the Administrative Procedures Act.

The suit’s three plaintiffs are already well-insured and able to pay their medical bills without the help of Medicare. They also have well-established relationships with their doctors, which they argue could be jeopardized if they participated in Medicare.

Greg Scandlen ([email protected]) is director of Consumers for Health Care Choices at The Heartland Institute.

For more information …

“Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey, January-March 2008,” Centers for Disease Control and Prevention, September 2008: http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur200809.htm