A bipartisan U.S. Senate bill would allow health insurers to provide first-dollar coverage of chronic disease treatments.
The Chronic Disease Management Act of 2023 (S.655), introduced by Sens. Tom Carper (D-DE) and John Thune (R-SD), would let high-deductible health plans (HDHPs) linked to health savings accounts (HSAs) cover low-cost drugs and treatments shown to delay or reduce the onset of more serious or secondary conditions arising from chronic illness with no deductible.
The bill codifies and expands a 2019 guidance from the Internal Revenue Service (IRS) and U.S. Treasury in response to an executive order by then-President Trump that sought to permit certain treatments as “preventive” and not subject to a deductible.
The guidance listed 14 specific items and services falling into that category, including insulin, beta-blockers, and statins. Treatments would have to be “low-cost,” backed by “medical evidence” supporting “high-cost efficiency,” and have a “strong likelihood” of cost-saving.
‘Gives Consumers … Greater Flexibility’
The Carper-Thune bill addresses many pertinent issues, says Daniel Perrin, president of the HSA Coalition, a group that defends HSAs against legislative, judicial, and regulatory attacks.
“In general, any bill that gives consumers and employers greater flexibility in HSA-qualified plan design will expand the number of people who can take advantage of the triple-tax break the HSA provides,” said Perrin.
Payroll deductions or employer contributions to qualified HSAs are tax-free, as is any interest earned by the accounts (balances accumulate year to year), and withdrawals for medical expenses are tax-free, says Perrin.
“(It is) the best tax break on the books (because) they can use tax-free funds to cut their out-of-pocket costs when spending to meet their health plan deductibles,” said Perrin. “The Carper/Thune bill does just that by allowing more medical goods and services to be covered below the deductible while still being an HSA-qualified health plan.”
‘Once Existed in South Africa’
The HSA bill closely parallels a model used to great success in South Africa before it was compromised by government meddling, says John C. Goodman, president of the Goodman Institute for Public Policy Research and co-publisher of Health Care News.
“In South Africa, under Mandela, Medical Savings Accounts (MSAs) emerged in a virtually free health insurance marketplace,” said Goodman. “Discovery Health, the largest South African insurer at the time, sold plans that had no deductible for hospital care on the theory that patients exercise little (spending) discretion within hospitals. Patients did have a deductible for outpatient care, where discretion is often both possible and desirable.”
There was a deductible for most drugs, but first-dollar coverage for maintenance drugs, such as insulin, says Goodman.
“It makes no sense to discourage patients from taking drugs that prevent emergency room visits, hospital admissions, and more expensive care when there is non-compliance,” said Goodman. “It looks to me like the Carper/Thune legislation builds on Trump’s executive order and gives employers the kind of flexibility that once existed in South Africa,” said Goodman. “Employers aren’t going to make benefits below the deductible gratis unless that satisfies a cost/benefit test.”
‘Ideologues Will Push’
The bill doesn’t have enough specifics to deter mission creep, says Linda Gorman, director of the Health Care Policy Center at the Independence Institute.
“People who favor limited government tend to analyze policy and proposed laws under the presumption that once a law or policy is enacted people will try to abide by the law and carry out the law in the spirit in which it was written,” said Gorman. “If we have learned anything from the last decade, it should be that this is not the case at all. Ideologues will push laws and policies to the absolute limit and beyond if they think such actions will help them achieve their ends.”
Gorman says HSAs have never been a favorite of promoters of big-government health care.
“The Left has long disliked HSAs because they remove government from health care decisions,” said Gorman. “One of the arguments it uses to push expanding coverage and ending individual payment is that individuals make poor health care choices and therefore ‘experts’ should control the amount and direction of health spending.”
What Do Words Mean?
The bill’s poorly defined terms could lead to the inclusion of ongoing medical care for a chronic disease, a huge chunk of modern medical practice, under the umbrella of preventive care, allowing expansion and abuse of coverage without deductibles, says Gorman.
“I have no idea what ‘low-cost’ means,” said Gorman. “Some of the drugs apparently allowed under the current rules cost thousands of dollars a year. Is that ‘low-cost?’ Where’s the dollar figure for reference? I have absolutely no idea what ‘high-cost efficiency’ means. If it is something along the lines of ‘bang for the buck,’ the average sick person is going to have very different views of high-cost efficiency than the average university public health professor. I have no idea what ‘strong likelihood’ means: 65/35 chance of success? 70/30? 95/100?”
Furthermore, the clinical basis for deciding which chronic treatments are covered is vague, says Gorman.
“I’m not even sure what ‘medical evidence’ means,” said Gorman. “Rat studies? Theoretical COVID incidence models? One questionable paper? A likelihood function value of X for an unknown parameter? Randomized controlled trials, clinical observation? I guess we’ll know what it is when a hand-picked group tells us what it is.”
Kevin Stone (firstname.lastname@example.org) writes from Arlington, Texas.
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