The Kaiser Family Foundation produces regularly updated briefs tracking exchange implementation progress in the various states: click here for more information.

Kaiser Family Foundation also has posted an interesting issue brief on the current state (or lack) of competition in most state small group and individual markets. Click here to view the brief.

Jo Ann Volk and Sabrina Corlette of the Georgetown Health Policy Institute have written a useful paper laying out options for health benefit exchanges to be designed to improve clinical quality in the delivery system. Click here for more information.

The National Association of Insurance Commissioners (NAIC) has statutory and ongoing advisory roles to play in making PPACA implementation workable, their activities can be monitored at this website.

By Caryn Sever

 While attending a gathering this past weekend a friend of mine…we will call her Suzy, mentioned that she had spent a portion of that day walking with a pedometer. I asked her if this was in an effort to maintain health, she replied yes (of course) but the purpose was more than simply living a healthy lifestyle and being more active. It turns out that Suzy is on a Health Reimbursement Arrangement (HRA) through her employer, a large contracting firm in the United States. Suzy is offered a high deductible and about $250 worth of flexible tax free money with which to pay for all medical related issues, appointments, etc. Suzy’s plan offers preventative care incentive programs that pay into her flexible account when she completes and proves a preventative task. In this case, she received $100 for the 4 miles that she walked which will be deposited tax-free into her flex account.

HRAs have grown in popularity over the last few years. According to an article by Ken Alltucker in the Arizona Republic business and money section, high deductible plan enrollment of US employees rose from 3% to 13% in just 5 years. [1] The attraction to this type of plan is clear; at face value it is cheaper. In a survey of large consulting firms in Arizona, the results showed that “the typical Arizona employee paid $39 a month for a high-deductible plan compared with $93 for a PPO plan.”[2] It is less expensive for employers and offered to many employees who work for major United States defense contracting firms.  In an economy like this one, it is important to save money where you can but there are pros and cons to an HRA plan.

HRAs offer medical reimbursements that are tax free for qualified expenses, they can be offered with a flex spending account (such a Suzy’s), and in some cases, employers may cover a percentage of the employees out of pocket medical expenses . However, employees must pay for their care up front and wait to get reimbursed later.  As of January 2011, HRA funds could no longer be used tax-free for over-the-counter medications unless they were prescribed by a doctor.[3] Furthermore, in a study conducted in 2010 by Fidelity Investments, about half of the employees of various companies who opted to receive a high deductible health surveyed said that “they or a family member had chosen not to seek medical care for minor ailments as many as four times in [a year]” to avoid paying out of pocket.[4]

The high-deductible plan does force many of those enrolled to take their preventative and in some cases medical care into their own hands. In an effort to motivate a proactive customer, many insurance providers have implemented online sources that offer cost comparison databases of services as well as tracking modules designed to help maintain both out of pocket costs as well as preventative measures taken (walking, eating right, exercise, etc.) Some larger insurance companies developed online games that offer actual prizes as incentives for consumers to take care of themselves. Anna Wilde Mathews of the Wall Street Journal writes “these moves come as insurers are under pressure to show they can bring down cost by improving consumers’ day-to-day health.” [5] These programs often appeal to the individuals buying their own insurance as well. HRA plans by nature tend to create the savvy patient because “they require a person to spend a certain amount on their treatment costs – the deductible – before insurance coverage kicks in.” [6]This means that a patient must shop around to avoid expensive medical costs out of pocket. However, this also means that the patient may avoid seeking care or regular appointments (annual checkups, pap smears, etc.) due to the expense.

The Kaiser Family Foundation conducted a study in 2010 which found that about 27% of all US employees had an insurance deductible of $1000 or more. Furthermore, some plans do not even cover the full amount after the deductible has been spent, forcing the patient/customer to spend even more out of pocket.

Living a healthier lifestyle certainly help to ward obesity and type II diabetes, however, choosing not to seek medical care could create long term health problems in the future which in turn increase medical spending.  President of the Center for Studying Health System Change (HSC) Paul Ginsburg explained that “there is no doubt that people with high deductibles and copayments delay seeking care, sometimes dangerously, there is a strong probability that this affects overall health costs”.[7] Families USA, director of Health Policy, Kathleen Stoll remarked “small medical problems becoming large medical problems, [is] one of the many high-deductible pitfalls that consumers need to watch out for.”[8]

When weighing the pros and cons of an HRA the questions remains, is it beneficial to choose an HRA over traditional coverage? It is certainly more cost effective for the employer and in many cases the only type of health plan offered, but what about a patient who is newly diagnosed with a chronic disease or ailment? A 2009 study conducted by Rand and Stanford University concludes “that high cost sharing delays the initiation of drug therapy”[9] for such patients. If some HRAs cover a mere 80% after the deductible, what would the out of pocket expenses look for one who has experienced medically catastrophic event?

Suzy explained that she enjoyed her HRA for the same reason that many do, it is affordable. For her sake, I hope that she does not experience a newly diagnosed chronic condition or any type of catastrophic event. In the mean time, she will continue walking and eating right to build of up her flex account for those times where she has out of pocket expenses and hope for the best.