Transcripts For CSPAN2 American Enterprise Institute Discussion On Health Savings Accounts 20170711

The effort in the senate for repeal and replace ended up in delay and depart for recess week and perhaps more to come. Let me just tell you todays forum is called unbundling the benefit for Better Health from a broader role Health Savings accounts. More on that in just a moment. In light of the senate efforts, what i was thinking of this in older competition that used to be held for Young Athletes between the ages of six to 15 to show their skills in the nfl. It was called the front kick competition. It appears that its actually been discontinued after more than 56 years of it. It looks like the senate is up to the task in terms of the kicking approach and how much more the competition remiss in the senate is back next week and i have to be a little careful with this. The nfl is rather aggressive on the trade name protection. This is a news shot besides, they are leaving it behind because they want to get everybody a certificate for being out in the field i guess, kind of like soccer or elongated scales. We are starting today a different series of Health Policy events. Everybody has been caught up in the politics of what has been going on and i thought i would try something different, which is fleshed out and people are doing in Real Research as opposed to always one place to another. Interesting articles appeared in some of the policy journals. What we want to do is talk about giving no matter what you are spending, we could do a better job in the health care and the health we deliver by perhaps taking apart what is conventionally considered current benefit and maybe reassembling it in a somewhat more creative way. Pay attention to the people receiving those benefits is saying what works for them. Todays version of unbundling the benefit talks about how Health Savings accounts can be used. Well have other events later on the spot which talk about how to reengineer and restructure primary care, which would combine using a different mix of services, but in some cases for certain types of patients or individuals with high cost, high risk divisions, more of an intensive care unit type approach in things that might go one further. That is probably coming up on september 5th. We will also take a look at how to move around the dollars including the medicaid benefit and and prioritize to make a different way in order to ideally get some better results and also maybe look at the distinction between what is said to be equal benefits, everything the same for everybody is supposed to what might be apple benefits for people get what they need in different amounts in different situations. I think about what it produces. Today we are looking at some new ways to deal with Health Savings accounts. At the end of the day, Health Savings accounts have a long history and we will hear from us because im not are essentially tax Advantage Health benefits. You can move data around. Some people have talked about using hsa is in so many ways you could say its almost like a Swiss Army Knife. It doesnt just do this. It does five or six other things. If you dont have any money in your Health Savings account, its a good hypothetical tool but it might be a little bull in terms of a working part. I think that victor e. Nor is the only manufactured Swiss Army Knife. Unless i missed that. Or macgyver, perhaps a chewing gum that takes care of our entire health care system. So, the idea of the Health Benefits is to move around tax advantage dollars so they produce more bang for their bucks in one form or another with Health Insurance. You will hear from our speakers the current proposals as to how to change the contours of hsa, but also some more creative and thoughtful ways to reach beyond even tweeting here and there on the margins. We had three speakers today, our first well talk about how to have a more Precision Approach to hsas. An early way to think about it. Warren roth, has just begun a new appointment Teaching Health and law and legal writing at st. Johns University School of law, what is know as the redmond because now they are adjusted on the campuses. Warren is also served as associate or the program and assistant professor at nyu school of law, earned phd in Political Science from columbia university. Previously law degree from harvard, dan Legal Research and writing work. Seton hall and as a hometown connection i suppose because she graduated from George Washington university. I ran across a fascinating article by warren thinking about a different way to think about health. Had some of those thoughts in the past. Its a combination of how we can produce Better Health with a broader array of tools including investments in some of the social services and ways to improve in order to get the results we want as opposed to just paint the people along the way who have health care bills. Appearing in the cornell journal of law and public policy, basically determined as they always say. Lets talk about a different way to look at hsa in a number of layered approaches to getting it. Okay, thank you. And thank you for having me here because i will say that typically i am talking on the academics. They have a broader i wrote this article immediately following the election thinking what are some areas where there is potential bipartisan support and hsa seems to me to be an obvious one. I think the conversations were urgently needed right now given what is going on. A little bit of background on the hsa, hopefully not stepping on the toes of the other presentations. I expanded the amount of Background Information is going to give because last night as the dinner at a friend from college and he said to me, you know, i think i might have a Health Savings account. After one question for me, it turned out he did not in fact have a Health Savings account, yet flexible savings account. I think this person is one of the smartest people i know. Hes a lawyer. I think people i can dont understand in my guess is a lot of other people have no idea and dont really understand how to use them if they do have them. So, theres been a lot of talk about hsas in the media, you know, following politicians. Health savings accounts are part of the movement for Consumer Directed Health plans, a whole lot of acronyms involved in the movement, fsa, hma, maybe thats why people have trouble distinguishing between them because they get lost a little bit in the alphabet soup. It is all part of the generalship that started with tensions from a defined benefit paradigm for Employee Benefits to a defined contribution paradigm. What do i mean by that . With the definedbenefit paradigm, your employer basically promises you a benefit now or in the future. Youll get 2000 a month for retirement income. I will pay for all your Health Care Expenses and maybe some copayments. To a shift where the employer will pay some amount of money if youre lucky into account and youll really have the control and freedom to figure out what to do with that. What are your benefit priorities now of course the problem we talk about is if theres not enough money in the account, which ill return again throughout my presentation and its not all that much help to you. If you dont have the money to purchase benefits and provide Means Committee accounts which have a lot of potential are not that useful. So there is a big divide, a political divide about the individual accounts. Republicans, including president bush who enacted the legislation for hsas tend to really love the individual account. It goes along with the american ibos of individuality and control and ownership. The idea that people can decide for themselves what their needs are and act on those neat that you dont have this paternalistic employer telling you what to do in providing benefits in the way they think is appropriate. Democrats on the other hand tend to think that individual accounts shift the risk to people who are least able to parent a democrats are focused on the fact theres not enough money in the accounts. Maybe in. Good idea if they were fully funded, but they are not. Democrats see it as a way of cutting back on businesses. So talking a little bit about the basics of hsas. The way it works is that hsas must be combined with a High Deductible Health plan, not to add. Instead of traditional private Health Insurance that covers all of your medical care needs with an exception for some copayments , that covers your medical needs starting from day one with your traditional Health Insurance coverage doesnt start until you reach a pretty high threshold. Before that time come either responsible for paying outofpocket or you can use your hsa that has money in it to cover the costs. I remember when i graduated from law school in 2004 he spent my whole first year working with employers to put in place these hsas. At the time, people were up in arms, you know, about the hsas and thinking this wont be good enough. People wont have enough other expenses covered. Today people are lucky if they have the hsas. But if they want to or not, most people have been shifted towards higher deductible Health Insurance plans and frequently they would love to have an hsa that has money in it. So i will talk about the High Deductible Health plans dont kick in except for an exception for Preventive Care. They require some Preventive Care. But beyond that, there is this whole before your insurance kicks in where you have to pay for the expenses. On the next flight i will talk about the numbers. The professor is going to talk a little bit about the Tax Advantages of hsas and mention in her article, it isnt writable Savings Vehicle, triple tax savings. Your contribution to the hsa are deductible from income. Earnings grow taxfree and with ross from the account are not taxed if they are used for qualified medical expenses. That is the focus of the article ive written is what our account holder is allowed to spend their money on and how i think it should be different. Money can only be used for medical care is defined under section 213 d. Of the Internal Revenue code. This is a definition that originally applied to a deduction in the tax code for people who have excessively high Health Care Expenses. Right now the threshold of 10 of income, which is an extraordinary high amount before the deduction kicked in. But no ocd hp movement kickstand, the definition was expanded to apply to the whole alphabet soup. Individual accounts are using the definition which is pretty out of date and will talk about how scholars beyond traditional medical care. What you see now, these are the 2017 numbers for hses comment hps hehp must have 3600 for family coverage and there is a new outofpocket expense of deductibles, copayments. But its a pretty high maximum. 13,000 for a family is for most people, you know, they list are rationing their health care far before they got to that point. Employers and employees can contribute up to the maximum aggregate limit, which is the congressional proposal work on expanding right now 3400 for singles, 6750 for families and a contribution for people 55 and over. So, right now roughly 19 of employees are enrolled in an hsa qualified trained for. Thats very qualified language. That doesnt necessarily mean theres any money in the hsa if they have opened it up. So, it makes it, you know, you can see from the numbers below that 25 receive no employer contributions at all. The average employer contribution of 1200 per family is to be balanced against the current average annual deductibles for a family of over 4300. Theres about a 3000 gap between what the average employer is contributing to the hsa and the specific deductible where the insurance really kicks in. As people have discussed and continue discussing, theres a lot of drawbacks. Obviously i dont think are insurmountable or it would have written the paper i wrote. The biggest drawbacks which we mentioned before as you need to have money to fund them. Sarah rosenbaum is a professor, nonstarter for people with low income. I think that is true right now in terms of the amount of money going into hsas. I dont think it needs to be true. Just another vehicle for getting money allocated for health care to people. That is really all these accounts are. So it has Great Potential in my view. The great risk shift which i talked about before, done a lot of research on that, you know, employees now if they could switch from a traditional Health Insurance plan to in hehp, they are paid more of their medical expenses than they used to. This is where professor yoos work will come in. Not everyone is being switched. Some are gaining new coverage. But obviously, employees are bearing the cost they were before. The idea is it may not be such a bad thing. Health care expenditures are pretty tremendous. We want to limit them and people to think more carefully. Are they using the Necessary Services . Are there ways this could force people to think more carefully about their medical needs. The problem with is studies have shown consumers are not rational when it comes to health expenditures. Theres a lot of reasons for this. First of all, unlike other goods, you may do some shopping around, its pretty hard to shop around and look for competitive prices when you are sick. Obviously if you are in a hospital in need of Emergency Services this is difficult. The idea of calling five pharmacies to find the best price on a medication is pretty unappealing to most people and you can imagine this would add virgins to the system that are not currently they are in the Insurance Company severn had to be there answering individual questions. Services may not be comfortable. How do you value cancer treatments versus the same treatment at a local hospital. How do you deal with the fact that people have a very subjective attachment to their doctors and may be willing to pay more than irrationally shed to see a particular doctor. A couple other reasons, hard to know if the services are even necessary. Forgetting that it may be hard to compare prices, people are relying on experts and doctors to know more about medical care than they do to understand if they even need these treatments. So it is a little bit hard for individuals about a medical degree to second guess the doctors and health to ration their own health care. The final point i wanted to make is studies are showing and they list a couple here that people are rationing their own health care and avoiding needed medical treatment because they dont have enough money in their account. The idea is that you want people to feel traditional Health Insurance. People have no skin in the game. They have no incentive at all to limit their services that they consume. Maybe there is a little too much skin in the game and people are choosing to spend the money on other things, which is where my research comes in and been complicated, this comes back to my friend if youre not even sure you have an hsa, the learning curve with making contributions, making sure you have enough money to meet your needs and then getting reimbursed. Its all pretty difficult. Current legislative proposals and i wont say too much here because it is in such a state of flux. Beyond the most recent proposal i heard from senator cruz, the hca and the senate will that i knew about were really focused on doubling the contribution limit to hsas to 5000 for single coverage and 10,000 for family coverage. Again, this is a nice idea, but if a lot of people dont have money in the account, upping the contribution limit which people are not getting any way doesnt help that much. Focus on more flexibility. Some other things i mentioned, the most important one when money is not used for qualified medical care. The reason for that is you may have some people avoiding money in the savings accounts because of them predict bull. They see figures in retirement you need 200,000 for medical care, but you dont know that. If people are going to have a really large penalties if they pull the money out and use it for Something Else, they may be reluctant to say that. Now to my proposal which ill spend the rest of my presentation talking about. My proposal is for something im calling precision and hsas. These are funded by employers, employees, but also the government. In making these for a broader array of goods and services, depending on the account holders family income. Ill go back in detail in a minute, but i list the steps in the notice that step one is to fund the accounts because its hard to experiment in years the money for interesting things that only the wealthiest americans can afford to fund their account. Step two is allow physicians or other Health Workers because they are huge cost to the system from having better housing for a broader good of the race and services. This is where they catch phrase social determinants of health comes in and ill explain more about that in a minute. Step three i really dont believe my proposal requires under the tax code. I think it is more about having agencies reinterpret what the medical care and the impact of the social determinants of health. Com. The medical care is that you are allowed to use your hsa for the diagnosis cure medication treatment of disease or for the purpose of effect to any structuring of the body. Its a broad definition. The definition is the same for everyone and is focused on traditional medical treatments and that of other things that might improve health. We are thinking about things that are being linked being done to help outcomes and better Population Health. The u. S. Spends an enormous amount of money on health care. Even though we spend most of our money on medical care and ill explain the difference. We spent 17 of gdp on health care and yet we have much worse Health Outcomes than country spending much less. So i think the time has come to spend on Different Things. A few examples of what the current definition does. The current definition of medical care includes what you might expect. Doctors visits, Hospital Services, lab services, and transportation to and from medical treatment. And the cost of some improvements in your home that are made for medical reasons but is fairly limited. It excludes things in the regulations, not in the statue coming merely beneficial to the health of the individual. I have a few slides with a few examples. So what is an example of something thats okay to use your funds for . An air conditioner which is purchased only for the use of the sick person. What is not okay, purchasing an air conditioner that prevents everyone in the house from overheating during a heat wave including members in their 90s, lets say. This is again from the regulations. Dr. Suggested installing an elevator in his residence at the taxpayers wife is afflicted with Heart Disease will not be required to climb stairs. Also deductible or you can use your individual accounts. Thats not okay, to prevent roaches from making the asthma of children worse. This is another extreme one from the case. Taxpayers were allowed to deduct the cost of enrolling their son in a school, a College Prep School as a result of drug and behavioral problems and the cost they were allowed to direct included room and board, airfare from the school for therapy and an allowance account. You cant use those for ordinary education expenses for the port that are strongly correlated with improving incomes and also improved future health. One of the things that got me started thinking about changing the definition in personalizing the definition of medical care are recent changes to medical care itself. The movement for precision data center but which is also called personalized medicine is focused on using an individual genetic code to predict future illness and tailored treatments. There are many presentations i give for Angelina Jolies name appears on the site, but this is one. Now everyone will find their talk and be more interested. The people who are testing positive for certain genes related to increased risk for having a surgery. Cancer drugs are targeted to particular genetic mutations using immunotherapy. These are some ways in which medical care is becoming more personalized. It made me think of where personalizing medical care, why hasnt the interpretation of the term medical care changed at all and why should the definition be the same for everyone . What if people need different treatments to prevent the disease and what if Different Things are affecting their bodies under the definition . So, what i think we should be spending more on are focused on is the social determinants of health. Scott burris Health Professor at the context in which people live, learn, work and play. The basic ideas those with higher levels of income live longer. A causal relationship for this is not entirely understood yet. But then again, a lot of medical treatments we pay for also have no scientific studies that prove they are effective. Why are we not spending money on things they clearly seem to be showing improving Population Health and an extra sensei put in there, in a more unequal society, apparently the rich dont live as long as they do in a more equal society. It not just affect you and the people who can afford the services. There is something affecting Population Health overall. Okay, fast forward a little just to make sure i stick to my time. My proposed definition is that we spend more on health care which i define as any attempt to improve the health of a person, including those increasing longevity and quality of life and i think of medical care is something that takes place more often in the hospital or physicians office, even though that is changing a little bit nowadays. Ooscar frequently stays at home with the change in lifestyle. Small changes can have a big impact. Examples that we are thinking of here included babysitters to help you recover more quickly from surgery if you cant otherwise afford one. Afterschool programs for your children so they can get exercise and not become obese, not have diabetes, fresh fruit, vegetables. So the idea for me is if there are things that are as important or more important than medical care, then we should be paying for those things are allowing people to do so. Through grants to the states where they are funding the accounts, you know, more and more at the middle class and working poor have access to hsa and hehp, but its very important that government tax expenditures focused on improving health care, not cater only to the middle class and the upper class. The people who can argue for it to put money in these accounts. To me, this could be about sort of changing the default rules. People in different income brackets can spend on Different Things. So maybe people in the higher levels of income would pay for these things regardless. A lot of people cant afford to. Its also a way for the government to incentivize certain types of spending. And i think i will stop there. Thank you very much, lauren. You can think about this is sourcing the welfare state and the people who benefit from it or they make decisions rather than what is on the card and limited categories. Thats just a moment in terms of a different way to think about how to extend or restructure Tax Advantages for health care and Better Health. We are going to now look at the possible coverage affects in surprising results that are next beaker found with regard to the combination of these hsas and the higher deductible policies related to it and some portions as whether or not it makes it more accessible to them. Our speaker is the assistant professor of economics i was on university. I was told to say that after you couldnt tell whether i pronounce it properly. The university of science and technology in china did receive friends youre accused in 2006. I came across an excellent article of hers in the journal of Health Economics which was december 2015 on the subject. The primary Research Fields are Health Economics and public economics with a particular focus on examining the effects of health care and tax reform and working behaviors. This article, the effect of Health Savings accounts on Health Insurance coverage. She also has another paper, spillover effects on public insurance coverage, evidence from veterans. Okay, good afternoon, everybody. First of all i would like to thank you for inviting me here to discuss my present research and i think i have great pleasure to present my work on this account today. We have a lot of experts on the policy today, so our discussion will help me in prove my field of research in the a fact that the representation today on the insurance coverage. I would like to thank my advisor roses sitting here. Im looking out the specific policies. I have no idea how to start the research products. It definitely helps me to look at the interesting policy. I found this very interesting because it is a combination of Health Care Reform and tax reform. I would like to take time to do research on the specific policy and try and find some empirical evidence on whatever i would like to look. Lauren has rd given us a lot of specific details about the policies and i think can help me a lot to save some time and also, she presents this two years ago, so some of the data members here are like 2010 gain, but i think you guys can observe our can observe are trained to policies and the contribution change or deduct and i think i can start from the motivation of why im looking at the policy coverage. According to my understanding, when we think about the Health Care Market and policy markers will focus on two fundamental issues for the first on is whether the policy or reform can improve the Health Insurance coverage. So to obtain this goal, the government has rd made a lot of efforts. As for the government has rd had a lot of income tax subsidies to the premium part and also asked for the public Health Insurance, we also have a lot of eligibility extensions, especially and also for individual Health Insurance, we also got marketplaces. During the process that we would like to extend, the second issue we would like to concern is about during the process to extend that coverage, how can we improve the efficiency of Health Care Spending . So i think when im doing my research, i would like to have this fundamental issues. I find even though we are to have a lot of income tax subsidies to the premium part of health plans, we dont have any subsidies for the outofpocket amateurs and also the major function for designing the account is to help us to improve the efficiency of spending because it is just a healthy individuals save for the future is and also to help people to be more sensitive. So i find that perfectly fitting and most fundamental issues. I think researching on this project would be worse to do that. As for the definition of Health Savings accounts, it is Health Care Expenditure savings account and it will allow individuals or families to contribute to this account and they are totally taxfree. And of course, it can help them to save for their future outofpocket Health Spending and the criteria for holding the account as the protest High Deductible Health plans. And according to my understanding, as long as the people should purchase the health plans, i think it is the behavior to shape the premium component tax subsidies into the outofpocket component. It is totally interesting tax reform just using the tax subsidies. As mentioned to lauren, lauren also had the total exemptions if you have the tax savings account. The Health Savings account not to suggest to the personal income and if your withdrawals are used for the tax extended, they are totally taxfree. The third Tax Advantages the account can be accumulated and used in the future. That means that you can totally say when youre young and you could use the money when youre old. Also, the interest are totally taxfree. Compared to other taxfree accounts such as iras and 401 k s, i think they have more attacks issues compared to others. Also the same decision with lauren and my friend called me to ask me things like provide and can you expand what are they. At that moment i feel like my research is very useful to make about health plans. Okay, this one is the old members in u. K. And still which can make you qualified for the account. When it was in 2012, the deductible level is a little bit higher or lower. The maximum contribution is also you can either contribute to help adaptable for 3100 for a plan which is lower. For the family, you can have the highest deductible for 6250 for a family plan. We can always lower. Also, one specific rule which i was using in my empirical analysis. Hsa holders can make additional contributions of 702,006 by 100 annually in 2010. So i would use the information to do my evidence later. Also, the important part, in 2003, the state law in the account by providing state Tax Exemptions to parallel tax treatment. So, before i went to the empirical studies, i want to show some facts about people taking up the High Deductible Health plan. So the speakers show the increase in the number of people with hsa health plans from 2004, there are zeropoint for 4 million inclusive to searching in 2012 so they can observe the dramatically increasing number of people who have this kind of plan. The penalty to show there is still increasing trend from firms offering the plan and for employees who are taking up the plans. So we can observe the increasing plan for each side. And under my understanding about policy, i think hsas may extend the coverage from employers sides and employee sides. Employers they think would be more likely to provide the hehp for better consumer engagements and cost control to hsa legislation, especially for those small employers to havent provided any plans to their employees because they say a high risk to the future of the cost. After we have the account, it is a high deduct the bull health plan may be a good choice. And also for employees, the low premium of hehp paired with the tax break of the accounts may be attracted to those with the Group Insurance but having taken up any of it. So, my question turns to the establishment of hsa, income tax subsidies coverage in my identification strategy is using the policy reservation. Remember that federal law and state law. So i would like to explore this day. Hsa implementation actually. The federal law implemented for contributions and for the same time, State Government can choose to narrow but offering the state income. I would like to use this and state legislation in several years because i think it provides an excellent for learning the causal effect and getting help ensure coverage. So, to do that, usually the policy the estate tax prize the state hoping to measure the actually a fact that the tax subsidy level. This table will show us the legislation between 2003 in 2011. I showed each state has their implementation and also i showed the state without any state, tax subsidies for they have no income tax. So every single empirical specifications using those policies. So it is now just if it is covered by a Group Insurance, i will give them one, otherwise zero. The key variable here is hsa. So the state has the income exemptions and lots of people have the reaction. For this specification i also control a law does individual characteristics, and the education level in occupations, et cetera. It is very common. The document from the 20042011 and two age 55 to occur with no medicaid coverage. So, this table output to show the statistics, maybe the number here, but it may take away to show that compares then at the individual level characteristics for the Health Savings accounts and for each type of state the Older Age Group in the small group and the less educated people. I didnt find in a dramatic differences, but anywhere they controlled for in a characteristics i tell it my model in this table is the first would like to show you guys. So i use the linear model to compare their results. As you can see the common one i just report the facts with the Standard Aero will be easier to interpret. According to the result, i dont think the existence significantly changed our grouping. The reason why i think i got this insignificant effect of coequations is maybe it is due to our population now. So im thinking about to see whether there is a specific cohort that would be more sensitive to be effective. So this table it just shows the result when i separate the age group by a tenure bracket. From column one to column for coming you can observe the pattern for the Youngest Group to the oldest group. So as you can see, column four will give up their results. My interpretation is when you are a worker between 5564, the subsidies will increase the coverage by 2. 6 Percentage Points at 5 significant levels. By hypothesis is that the Younger Group can be very sensitive by the low premium blend, but at the same time, the older group may also be sensitive and have a better idea for states to save for their help. They have this opinion to do this thing. The older people may have higher in time, so theyre tax incentive may be much better than the younger one. So anyways, column four tested my second hypothesis for the age group. Also trying to use the linear result are very consistent. The cohort i would like to check his things i heard you mention in my hypothesis, and the small firm doesnt provide any Insurance Plan to their employees previously may be more sensitive to those major High Deductible Health terms. All walkers will be increasing the trend to 2. 4 more than other employees. And whether they are sensitive to helping the High Deductible Health plans. According to some preview literature looking at the effect of not affect but the choice of consumer driven plans they have different opinions whether the high educational people are low educational people will be more likely to be affected. I am trying to look at what is consistent with theirs. In terms with policy and the last educated indicator. I find they gave me the significant coefficient, housing accounts with lower educational level, 2. 5 points. And after using the policy to identify the housing account, figuring it can only pass the effect of the distance of the policy but if i want to go back to the fact of the level of toxicity i need to find a more accurate variable to identify. So using Health Savings account contribution this, the definition of that is the cost of one dollar of tax favored items in terms of aftertax consumptions. To extend that, if the tax rate is 0. 2, that means the price of the items will be 10. 2 to 0. 8. So the tsa contribution replicates the definition so here is the cost of a dollar of contributions in terms of current aftertax consumption. Because Health Savings accounts will improve the federal tax rate and state tax rates, if i want to whether the tax rate and federal tax rate. Trying to include the federal rate to calculate to each state and the taxing model to remember every state every year so variation in tax laws can be assumed for individual decisions so the maximum price is unbearable to using regression so in minnesota in 2006, marginal federal income tax rate is 32. 9 in 2006 and marginal state income tax rate is 8. 01 so the tax prize will be one or two numbers. For each year calculate the tax prize and the previous using the tax prize to redo all the analysis i just showed you and the cable is organized up here and the tax prize, the variable gives up in consecutive inefficient coefficients and using that, the tech price, already show they have more sensitive behaviors so we find one. 0. 185 can give us a conclusion when you decrease the tax prize or increase the tax subsidies to those accounts, you can have a two percentage case and that is how you interpret this number and observe significant results using the term of tech price and educate lower at the education level. Most of my empirical results, all the robustness checks after empirical studies, if you are interested in the labor process of this. So you can check that. Finally come to the conclusion and policy, according to empirical evidence, the Expense Group for certain important subgroup of population, Older Workers from 65 to the small firm and less educated workers and the magnitude of the effects around 2 to 3 , according to previous works with Consumer Driven Health plans they have already found some evidence they have the ability to control the Health Spending increase. The positive effect i found in the paper can tell us assuming Health Savings accounts subsidies can help increase coverage of hd hps and increase the total number of groupings Coverage Even though i cannot talk directly about the channel, doesnt allow me to observe specific choice of workers but im still trying to find something to do that project. But the whole subsidies paired with High Deductible Health plans can moderate the Cost Increases and promote the spending cuts through policys and to finish the project i feel i am so lucky when looking at the new roles of the aca, things they are more likely to promote a comprehensive health plan so that im trying to find the evidence that the aspect of the plans can be effective and i find it is qualified for the aca health plan so under the circumstance of the aca the existence of those plans can help the mandatory coverage more achievable for the employers who are increasing healthcare costs in the future but recently the aca wilson be replaced by Something Else and the Health Savings accounts will play more Important Role in the future Health Reform and appreciate giving me a lot of new reforms rules about aca likely increasing the maximum amount of contributions and allows the spouse to catch up the contributions so i think it is consistent with what im finding here but still has some implementation for the future reform and i will be seeing the future impact of those reforms on the choices and cost savings or the Health Outcomes so it will be very interesting. We know Health Policy researchers only need two things, and other data set policy variation. That keeps him in business. To oversimplify that. It is wonderful, we always knew these worked in theory, now youre providing evidence as well which is a total bonus but for the political implications of this i want to run back to something earlier in terms of some of your cohorts. Effect on the less educated. In terms of the real political implications of this you need to go back, got a ways to go. Given who is currently in the white house you might want to recall the nevada caucuses or primaries in february 2016 and comment on the successful candidate at that time right there. There we go. Donald trump loves the poorly educated. So hsa should be a winner on that and if you want, copyright restrictions, you can find that on youtube. We lost a lot of other people but a bit of a correlation and convergence in terms of lets favor this policy because it helps the base. Our final speaker could have given you a five our discussion because he does know everything whether he is mister hsa or other things along the way. The nationally recognized expert on Health Savings accounts and at the time of delivery, he is obstetrician and pediatrician when it came to hsas. Some people think the godfather but he did the hard work in keeping things alive and moving on to maturity. He is at the Treasury Department and implementation of hsas enacted into law. To president george w. Bush as Health Policy advisor, for the implementation of Medicare Prescription Drug benefits, he is doing it again, found originally present again of hsa Consulting Services with all kinds of useful information and advice how they operate, long experience in Health Policy, cut capitol hill, senate, the on finance, working Administrative Agency at the Health Care Financing administration, witness protection, under renewed name, same rap sheet and roy has worked in private industry. To North Carolina but take that outside later on at the university of michigan. I ask you to comment on that, his views on policy and what is evolving on that. Thanks for including me today. To keep the Historical Context of hsas in mind in all of this, they take on and use the existing tax preferences for medical care. To my knowledge we havent changed the definition to health. It is medical care. Lobbying for that. That is quite all right. Hmos were at their heyday when hsas started to be created in the medical savings accounts day, your criticisms of the definitions of medicare and savings accounts, but it has been changed to Health Savings accounts and i would argue that they have made a lot of positive impact on a lot of people. On the coverage side, addressing some of doctor rosss concerns about the uses of healthcare dollars and what they can be done with. We have to recognize insurance is complicated and all the things we say negatively about the name High Deductible Health plan, that usually sends people running to the exits, they are simpler health plans to understand than many traditional plans where you have to know the copay or coinsurance rate for every service in High Deductible Health plan, he is subject to the deductible and whatever your deductible is and the insurance will pay the lions share, how it is designed up to a final limit of out of pocket expenses for that year. Focused on the deductibles, and use it or lose it. And might be that to be hit by a bus, happening to us and others of us think of it as they go as much as they want and someone else paying bills. We dont care. Insurance doesnt cover everything and what they do cover is more medical care than health. And medical care insurance, and healthcare financing being more of a sick care model and Health Promotion model which is what hmos are designed to do, focus to maintain and improve health that were sick. And during heyday in the mid90s, and a second opinion. And being put in place and hsas our response to those restrictions, if you have your own money to spend you can see any medical professional that you want and pay with their own dollars. The real innovation brought to the table. And and and also medical care purchased through insurance. If you dont have access to those two things. And dont need benefits that other people do. And through their employment. And dont have access to them. And also the outofpocket expenses, and employers provide other options before hsas come along, with reimbursement arrangements, and hsas for tax treatment for these types of services and hras are grounded in 213 d, the first time it was covered. And for the outofpocket expenses it is no longer necessarily in my interest, and tax dollars for everything with outofpocket expense, they can get the tax treatment for my outofpocket expenses through the hsa. Even better the money i put in the hsa is not use it or lose it as my insurance is as my fs a is as typically the hra alternative also is and cant cover many more nonmedical things that are healthrelated, not as far as the broccoli and kale caucus would like us to go but steps in those directions which i think is a positive thing when you are looking at health. Most of us do not measure healthcare spending based on what it does to improve our health. Another criticism that came from the hmos was the hmo administrators who were rationing care, and rationing their care someone you dont know or somebody that you do with the financial choice that goes with it. And a lot of things that afflict us and affect our health can get better on their own without any medical care. And people use less services. People dont do that. And that is what we need to be measuring. We need to be looking at a broader determination of what is health and is utilization of all these things have an impact, i am happy to see hs a as part of the Health Reform discussion and thank you for looking at what those impacts were. During those early days when data was harder to come by. And the data is suggesting, one of the main tenets was right on point, coverage was more affordable or increased coverage. And glad to see confirmation of that. And convince the 3 holdout states. And i can always remain hopeful. I also think the paper is useful in understanding kind of the world of hsas before the aca come along. Your research stops, if it comes into play, we need to keep watching these trends. Looking at during the aca and to get to the point we are post aca comes next, and look for what the data suggests because it is fascinating to look at the subpopulations of individuals and individual coverage choices, we know that employers are driven by the bottom line and when they can save money on premium they will do so. Thankfully the bulk of them, it appears, are sharing those savings, maybe not all of them with their employees. And one of the things i tried to work with employers on, making sure the lower paid employees who need the most or at the greatest risk with their deductibles. And they focus their contribution strategy on lower paid workers as you suggest. Most of them have greater means and able to fund with our own dollars, dont need the hsa subsidies as much as lower paid workers. That is another area to look at overtime as to what is the impact on employer contribution strategies not only on employee participation. And adoption and utilization of these programs. To doctor rosss paper i generally support the notion of making hsas more flexible and im Glad Congress is involved in so many tax policy decisions, seen fit to introduce legislation that would take some steps down this road most notably a bill introduced by senator orrin hatch of the Senate Finance committee from utah, and congressman eric paulsen who is a member of the house ways and Means Committee and this bill would go a long way in taking some of those incremental steps not as far as you would like us to go at this point but not only to allow more americans to have hsas but to raise contribution limits and provide more flexible uses for the hsa funds and it gets into things that are more along the Health Spectrum such as allowing individuals to use funds taxfree to pay for certain exercise equipment and physical fitness programs which need to be on our list. Some diet and nutritional supplements, that could be helping us maintain our health. We need to look at those ideas and maybe combine them with the broader concept of health and not just limiting it to medical care. I suspect in the short term the irs and those who are budget scorekeepers will tell us this will bust our budget and lead to a dramatic increase in tax expenditures until we figure out a better way to capture the impact on our health and longerterm payoffs. Goodness knows we have had lots of discussions at the Congressional Budget Office about the value of Preventive Care, does it pay off in the long run, for shortterm costs. And social policy, and other social benefit programs and how those concepts, and could be combined in ways to be used. Based on which department created the program and the rules that go with that. And maybe they could be used in a much more holistic manner. The challenge that we have with those things are at the end of the day is there a slippery slope that we end up falling off of completely because we dont know where should anybody be enforcing if you will what those rules or limitations are, i remember my days at the Treasury Department, hsas being created when we do the same thing for defining Preventive Care which is subject to the deductible and we were lobbied by pretty much everyone saying everything they did was preventive and prevented something and if it wasnt it would become it. Absolutely. Not everything can be preventive but not everything can be prevented either. We sometimes go back and forth about whether or not we trust americans to spend their own money appropriately. A recent example of that is some conservative republicans who dont want hsa funds to be used to pay for elective abortions. On all sides of the spectrum there are views on what people should be allowed to spend their money on, whether it is your favorite vegetables or yoga classes or what have you, im in favor of things that promote health but we need to understand there are limitations and do we really want the irs, somebody who is not trained in Health Policy, to be making those decisions at the taxpayer level . After that we may have to accept some limitations on subsidies as a tradeoff for that flexibility. With that, let me stop so that we can engage in broader discussion. You certainly mentioned the dreaded magic word tradeoffs. These accounts would work perfectly if they were 100 funded for everything because we may be trusted to spend our own money. Which is the publicprivate lets talk a little bit about those gradations and if you are spending the funds in the hsa for other things that dont fall under the category of additional insurance you have a tradeoff in terms of killing that gap before you reach 100 coverage insurance land and given that would tend to create larger out of pocket requirements, you might be better off, there is a gap and mileage may vary. Work through that because if money is not infinite to do something what was great. And spend hsa funds on other things that come with that, and pay for traditional medical expenses and one of the things is bearing the risk, housing is more important today but we got hit by that. And not to harp on the point, there is not enough funding in those accounts, facing this choice anyway, for the fact that if they can spend it on other things there might not be money left over, this may be to the point, having different there may be different pools depending on income levels. All types of insurance is used to cover those catastrophic expenses such as in this country we rely on it for basic care as well although we are shifting the cost to individuals. There are still ways to make sure even if there is a gap we can lower deductibles depending on income classes. There are different ways to do this requiring the government for those costs and the other issue is individuals, the impact on the providers of these if people get to this sooner with traditional medical care and other things, this will mean they go up, and get to the deductible and require Services Provided through the Insurance Plan, if we give people to get to that deductible sooner. And the tradeoff needs to be made, we have been making them in the wrong direction for a certain income levels for traditional medical care. And we dont use insurance for things with no value or low value. And to get those services and argue over whether people should allow their own money on other things but it is interesting to engage in that conversation. Given the Swiss Army Knife analogy before, 6 or 7 blades in it, and what we accomplish through more hsa accountbased flexibility. Lauren is talking at times, distributional benefits, to resort those money, to be more reverse income sensitive and the tax code works the exact opposite, progressive tax code structure, the way it is wired. The distributional arm over here and the middle is flexibility, occasionally we hear they have a different time horizon. It is another straddle. And an opportunity for the single answer that in different places and to all those things, 100 at the same time. They are trying to give a benefit to each group, and tax expenditures, people who are breathing most rewards, people in higher brackets and a higher marginal tax rate getting more of the benefit when you get to deduct this money from your income and that is why hsas have Savings Vehicle for people in the upper middleclass and upperclass groups and seeing increasingly high account balances and the legislation aimed at increasing contribution level is only going to accelerate that trend and the huge gap have no money in their account and a lot of people using it to save for healthcare, medical care expenses 20 years down the line. And in too many benefits, who have, and we take those dollars. 19 billion, and whenever the figure is to expand the contribution limits, and we focus on using those to redistribute money and to some extent hsa still has a bad rap on the left because we are not talking about distribution. So we have to do that at once and not pay attention. That is working. I will jump in on contribution limits. They are designed to achieve parity at the out of pocket limits on Health Insurance plans and i would argue that is protection at the thickest need. I will send those expenses out of pocket. What i prefer that on a managed basis . Absolutely. The nice thing with the hsa as i can do that after the year is over between now and april 15th. I dont have to worry about predicting, some people take advantage of it because they are thinking about the future many of us need to start thinking about the future because every study i show says Health Care Expenses and retirement will be more than most of us are thinking of, it does not cover longterm care. Lets talk a little data for a second. I chose looking at the survey and they had the image of a piggy bank on the cover. That is how people view that. Some view childhood savings and other people dont put any and. We pay for our insurance premiums, with all this money we have accumulated in the bank. Where are we in terms of averages and medians and subsets and how much can be parked effectively without being spent along the way. Say you are a diligent person . How much can you accumulate over a longer time, you need to get out there. At age 65 how much you actually got in the hsa and how much gets saved looking ahead needs to be spend anyway. Most people think of hsa where it is money in money out, so the as part of hsa in spending to them, and that is something the industry is working on to get people to understand a strong savings component for this account. The average contributions going up every year, and an average of 2400 a year. And close to the maximums, great distributions with that and we have some that end up with 0 balance at the end of every year because they dont understand, the same experience others have, i have an hsa until they tell me it is usable lose it and then it is not so that happens and other people and other people look at this as supplement to their retirement savings. Every walk of life in here and and more walks of life in their. A new group of people who understand what hsas or potential for them and how it can help them meet their particular needs. You looked at medicare drug benefits. The donut hole will be somewhere. Do we move around where it matters more practically, at the front end, drug benefit, it has been negated over time and you can do more limited benefits and what they need right away, i dont care about that catastrophic expense and is the default basically to say there are a lot of places and come up short somewhere or do we pretend everyone is insulated from having risks with prefunding benefit. I am erring on the side of focusing on immediate needs. If people believe that these funds are spent elsewhere, that is what they should be spend. There is this fundamental misunderstanding of what we need to be spending on to improve health. And gym membership and things like that and that is Something Else that could be helpful, People Living in dilapidated housing conditions, it is hard for them to focus on the tiny percentage chance that abuzz hitting them every day of the week. It is the immediate need, integrating some of the other funding through other agencies and having a more overarching approach. Putting things into hsas, it is hard because you you make for some great data. We have studies about what is working best and improve Health Savings. The problem is all anyone wants to talk about is the dollars going out the door and the next project im working on is a study dealing with policies that save costs in premedicare population because it is rare you can say to people if you do this in two years leading up to medicare you save x amount of dollars, why wouldnt you spend on that. It is harder to do, people have so many different needs but we do need to think more creatively than we have been thinking. Every manifestation, if you miss something along the way. And trying to show the incremental effects. And not just the holdout states, but some states and big ones, florida, texas, dont have an income tax. You want to control everything to say what was going on in those states over the years. Did they have a different growth pattern . They were not enhanced by additional state taxes, did that work out okay to throw them out of the pile if you understand that. A very good question. I think the ideal situation to get rid of those, to redo the task, that didnt imply the state savings tax subsidies for no tax income and trying to control every statelevel characteristic especially for the housing Insurance Plan. I control the state level for years and there are premium levels, they should have something related to the premium for tax exempt and control that type of thing. Games are good compared to what it said. Of threshold level of tax advantage which accomplishes most of what you want to do. And what the variation is the poorly educated. Looking at other data, the key mechanism, and other data is coming from large firms, and the record for the federal government, special company, and pleasing to results. And federal employees dont think i can find something. If there are any more comprehensive things including all types of firms. Looking at something i notice they can cover different cares for traditional healthcare, it is dollar for dollar trading deal. Patterns and expenditures, Preventive Care becoming money. Preventive care and the Affordable Care act makes it affordable for everybody. You may have proposals value based and designed basically thinking about not just prevention in the purest sense that you never got anything, how can you prevent it from getting worse, that is an interesting redefinition of prevention which is true but it slides further down the scale and there is not a full tank of gas. The question is who should be making those decisions . Someone at a distance are somewhat affected by it . It is interesting because people bristle at the idea that anyone other than the individual should be making these decisions but they havent million caveats. We dont want them to spend on having an abortion. There are 1 million things they want to add to that. If we dont want the government doing it, positions deciding what should be, what is important as far as health care and what people should be spending money on and the slippery slope, into all sites of issues, and 2 Different Things which realistically you have to have someone in the government making a decision, and certain things, tax advantaged money, you do have to cut off somewhere and if you dont make those decisions you dont have any funding at all for anything beyond Hospital Services and doctors visits. We are going to go to your audience questions in another minute or two and go back to roy because roy is dealing with people at the irs lose they are difficult. Once they leave the job they have neighbors and family that are very nice faith efforts to not violate any trust but verify as needed through random audits which is the current process and i do think that is probably going to be a reasonable approach. We could go as far as harvard looking at the swiss system where we measure Peoples Health when they join their insurance and 5 years later we measure it again and see if it is the same, better or worse and decide whether or not we need to assess them accordingly and maybe there is an objective way to measure everyones health is what you do to keep it there or make it better is okay with us and if it gets worse, and dont quibble about the details in between. We have to look at broader context well beyond medical care. You have been very patient. If you have microphones, and if they disguised editorials in the voice, dont limit to a minute or so. Identify your self or you will have to listen to my question and you dont want to do that. Steve davis. We recently produced a paper on hs a market, very few hsa qualified plans, i would like to get roys thoughts on why they are so scarce and doctor ross in the scenario, how do i make it work on the individual market . It is a priority as the aca was being rolled out. And in some cases goals requirements and hsa qualified, and challenging. And the types of coverage those plans have to offer but for example 2017, and to be added covering things below. Policy cannot do that. There was enough kicking and screaming that there has been a specifically identified hsa qualified bronze plans that can be offered for 2018 but it is hard to distinguish these policies from other plans in those categories that have high deductibles and you cant really tell which ones make you eligible for hsa versus not so as to why people would choose one over the other i dont know. There is a lot of confusion in the marketplace, until people understand the value and hsa brings to the table along with High Deductible Health plan they may not decide to choose. I should confess first my preference when the Obama Administration says we are not going to let employers give employees tax subsidized money to let them go off and through hr as, plans on the exchanges, that was a big mistake because they would not be robust enough to survive and i think without propping up they are having trouble now. I had envisioned we want to allow as many people who dont have access to subsidized funds to have those funds are lucky enough to use them. I had envisioned a lot of it, exchanges where you purchased the plan and allocate between expenses for the Healthcare Plan and the money to apply to other things so i think it is still possible to have those contributions to find the plans on the individual markets if that will allow you to use money for other things. Interesting, and the individual market. The market is pure people in the individual market, and relatable plans, so many qualified plans in the individual market and that is what you find. What plans in the individual markets, very low premium, high premium but low deductible. [inaudible] group market, they dont appear to be many hsa qualified hchp. I had a hard time finding them when i was looking for them. I couldnt often tell by the name but a lot more effort was put into the silver cost sharing eligible plans to provide those individuals with the premium subsidies but the modeling to receive in lieu of the cost subsidy to produce the same actuarial value of the costsharing reductions would produce and in some cases it could be several thousand dollars. One has to wonder why not give the individual individual choices sharing cost subsidy in one form or another. Cut out the middleman. Im from the Health Resource administration with a two part question. The senate bill engine in multiple places, if you could clarify what was in the play, and giving states flexibility with essential Health Benefits, how hsa is under the aca Preventive Care cost even if you have hchp and when you start tampering with the hps, how do you affect population and Health Outcomes . I start on the archer msas, they were the precursor to hsas as we know them, started in 1997 after enactment in 1996, they know new archer msas can be created as of september 30 first 2007. There are archer msas out there, we try to get them all converted over, the advantages are better under the hsa but some still exist but you find them with some of these references in the bill still artifacts, the legacy of the archer msas. On Central Health benefit requirements, you have a choice with you rely on states to define the more have a uniform federal standard. Hsa deals with care, which one you choose, but whichever preventive benefits are required to be provided below the deductible with essentially exempt from the application of the deductible under either scenario. I dont necessarily care who defines it or how it is defined. Just be consistent across the board and dont have a separate standard for hsa qualified plans from other plans. Other questions . Going once, joe. With the Panel Comment on hsas connection to fee for service . You have to come up with a receipt for some of the service in order to get the hsa to be a barrier to further reform. I personally have been growing in my concern of the fee for service linkage and hsa being ties to a receipt, i think medical care is evolving and we are seeing more bundling of services, packaging of services, which sounds like insurance but in a lot of cases is not. It is just a package of services that may be a diabetic need a bunch of different feeforservice things but bought and sold in a package with one price. To gauge. You have a service, there is a receipt. We know what you got, how much you paid for it and therefore how much comes out of your hsa taxfree. When i start putting other pieces together, im less certain about what you actually bought and what did you actually get . And should the tax code turn a blind eye to that, so to speak, and say its all good or in the worst case in my opinion, saying none of it is good because its all been handled and we dont know whether you actually got any medical care or health care or what have you or not. So i think this is a future issue that we are going to have to grapple with. I dont think we have a good idea at this point how it would come out. Glenn . A related question which is an informational question but when and essays were first being promoted the idea was you go to the doctor because you were paying money out of your own pocket, you could negotiate a low price. That probably work and a few people did and it didnt work in a whole lot of people did, im sure blue cross can do a better job of negotiating raises than i can under current transactions, you go to your doctor and get a receipt and you submitted for reimbursement or do you get the negotiated price through your insurer . I would prefer the latter option and i think most people would urgently it is the latter option in most cases. If youre going to end in Network Provider under your insurance, you generally will get the negotiated rates and its really up to that Doctors Office how to collect the payment from you. Most of the ones ive gone to wait and submit it all to insurance and then bill me. They could be collecting what use to look like a copay so at least they get some money out of me while im standing there in front of them because i have seen some studies suggesting that people are not paying their bills when it comes to the pay and chase method. So if you are in network, you do get the benefit of the negotiated rates as opposed to the full bill charges so that is a huge benefit to saying in network. Regardless of whether you stay in network or not you could use your hsa funds taxfree to pay an out of Network Doctor just like an in Network Doctor although the amount would be different. A secondary concern which is with hsa is when you are out of network that the insurance may pay at the contracted rate and you may pay the entire amount out of pocket and when you get into public programs, you got disputes as to whether thats fully legal or not. Another hand back here . Its all still medical care. Thanks very much for an excellent panel, andrew mcpherson, i serve as director of the Health Coalition in washington. Smarter Healthcare Coalition is made up of organizations, us chamber of commerce, pharma Life Science Companies and consumers so consumer groups Like National coalition on Healthcare Providers and others this on the issue that tom brought up related to valuebased insurance design. My question for roy or anybody that wants to comment is legislation, Bipartisan Legislation on the hill that is looking at expanding the current preventative safe harbor to include services and drugs related to ones current condition so its a limiting factor, just a chronic condition. Theres a whole variety of definitions used by pdc, cbs and others for what a chronic illness is theres a limiting factor to it but if the panel could comment on expanding to include, to allow health plans to offer those services on apredeductible basis. So i unfortunately dont know as much about the issue as i would like but i think this goes again to the fact that like with a lot of my proposals to expand the definition of Preventative Care , obviously you are increasing the cost of the policy so then the question is, is that where we want to put the funds . Is there another way to help these people . I dont know what your experience has been with that quick i have lots of experience with this issue and generally im in favor of giving plans he flexibility to be able to do that. There are plenty of employers out there who are resistant to specific hsa plans designs because they are concerned about individual employees who wont take their Blood Pressure medications, their insulin for their diabetes, etc. And they worry that with. [audio lost]. [audio lost] dont actually improve adherence all that much which is why the next project im working on is looking at going even further than your proposal. And really paying tax incentives to make them give a negative cost. Because studies are showing that to get the cost savings from improving insurance, you have to go beyond expanding them to the Preventative Care definition. One followup. Just to respond to that last point, you can do it one of two ways. Expand the current safe harbor get a new safe harbor which is what the access to better care act in the house, diane black, a republican from tennessee and a democrat from oregon on ways and means would do. They create a new safe harbor , it allows for costsharing and would create flexibility for those services and the idea is that, steve pariente who hopefully will be confirmed have done a tremendous amount of research and they shown that italy would impact premiums by 2 to 3 percent so theres ways to do it but the core issue is there a growing, notification of the market as you said and a lot of peaceful have chronic conditions and it creates a barrier for them to getting care and as roy was just saying ultimately they may end up in the emergency room and cost more down the road. Youre welcome, were nearing our time of closure and departure. Care is Pretty Simple to solve, i think, as long as you have infinite resources. Im reminded of a different comedy routine by steve martin about three or four decades ago, used to say steve, how do i become a millionaire . Hed say its a most a step problem, first become a millionaire. We are not in that world and we are limited. What i think todays panel is saying to you is there are perfect answers but the more that there is some flexibility and we can try to focus more on what this produces, rather than what goes into it and begin to align and integrate, not just one person, there are several individuals or someone whos plant paying the bills, that if theyre all pulling in the same direction on the same thing, we might get