by Chris Byrd
On Monday, the White House issued an Executive Order (EO), directing the Departments of Health and Human Services (HHS), Treasury, and Labor to issue regulations intended to increase price and quality transparency and to lower costs for healthcare consumers. The bulk of the order is directed toward arming American consumers with more information to make wise decisions with their healthcare dollars. This is particularly relevant to consumers who face deductibles in Consumer Directed Health (CDH) plan designs and, if enacted in regulation, would be an important step forward in consumer engagement and empowerment.
In addition to the transparency provisions, the order includes the following directives that are also highly relevant to CDH:
Health Tax-Related Changes
The EO directs Treasury to issue guidance allowing high deductible health plans (HDHPs) to pay first-dollar for certain chronic care and primary care services while preserving an HDHP policyholder’s eligibility to contribute to a Health Savings Account. Treasury is also directed to propose regulations expanding the definition of a Code section 213(d) “medical expense” to potentially include direct primary care arrangements and healthcare sharing ministries. Lastly, Treasury is directed to issue guidance allowing more than $500 of unused Flexible Spending Arrangement (FSA) dollars to be rolled over to the following plan year.
- These tax changes could be quite beneficial to insurers, employers, and consumers by increasing flexibility and making consumer accounts more valuable and useful. Taken together, they also represent an effort to make changes administratively where possible in the absence of meaningful legislative progress.
- Enabling HSA-qualified plans to cover chronic care services by defining them as preventive care, for example, would greatly increase employer and insurer flexibility in plan design. As well, it recognizes that treating chronic conditions like diabetes is good health policy because effective treatment avoids even bigger costs down the road. Employers have been advocating for this change for some time.
- Direct primary care, or “concierge medicine” arrangements are growing in popularity, and-given that the fees paid for these services are used to cover the provision of medical services-defining those fees as eligible medical expenses makes logical sense. The same logic would seem to apply to healthcare sharing ministries, in which members agree to pool their resources to cover their members’ medical expenses.
- Finally, increasing the amount of unused FSA funds that may be rolled over would greatly increase the attractiveness of these accounts and further reduce the biggest barrier to consumer adoption.
The EO directs the agencies to issue guidance or propose regulations within 120-180 days depending on the specific issue being addressed. As a practical matter, while the EO clearly states the White House’s policy asks, the agencies are free to do as they see fit (or not). The primary consideration in these matters is the agencies’ comfort with their ability to make changes within the scope of existing legislation. The industry expects that action (or not) on the chronic care question will come more quickly than on the other issues. Keep in mind that any proposed regulations will be subject to a review and comment period before final regulations are issued.
We will continue to closely watch reaction to and action on the directives in this EO, and share new learning and recommendations as appropriate.