I was invited by Miles Cole of the Maryland Chamber of Commerce to speak about Health Reimbursement Arrangements (HRA) at a public hearing before the Maryland Health Care Commission in Baltimore on Wednesday.
Reception to the idea by this government agency was markedly different than last week in my talks with doctors in Ocean City and insurers in Salt Lake City.
The Maryland commission is conducting its annual review of the comprehensive standard health benefit plan that all small employers providing health insurance in the state must offer. The Chamber thought it would be a good idea for the commission to hear about the new HRA consumer-driven health plan option.
I provided a package of materials including an excellent description of HRAs prepared by the Employers Council on Flexible Compensation and a detailed description of the new HRA offering for Federal workers by the American Postal Workers Union.
Concerns: To put it mildly, commission members had many concerns about HRAs. Commissioner Ernie Crofoot, who repeatedly implied his support for a single-payer system, said he believed: 1) People will forgo care to save money, and 2) HRAs would lead to the very adverse selection that the small group market reforms were created to address 10 years ago.
I responded that most of the HRA plans are incorporating generous incentives for people to get screening and other diagnostic tests, immunizations, etc. Also, it is penny wise and pound foolish for people to forgo care since they will pay in poorer health and more expensive care later on.
Also, people with more health problems are likely to find a plan attractive that allows them maximum choice of physicians through their spending account. Once they trigger the catastrophic insurance threshold, they have good fee-for-service insurance.
Too complicated? Executive Director Barbara McLean said, “Do you really think small business owners can organize something this complicated?”
I suggested that they are very motivated to find some way to control costs, and many find it appealing to offer a product that engages consumers as partners in saving money on health care. I also believe that the market would organize itself to make the HRA offering relatively simple for small businesses to administer.
Acceptance: Another senior staffer of the commission asked, “Why would HRAs work when only one company in Maryland is offering MSAs, and MSAs and HRAs are virtually the same thing?”
First, Maryland makes it almost impossible to offer MSAs because of its comprehensive benefit package requirement; second, HRAs have many fewer dictates from government about how they can be shaped; and third, HRAs have a much bigger potential market, making it worthwhile for companies to invest in creating this new product.
Competition: Commission members did express their concern about how little competition there is in the small group health insurance market in Maryland. Witness after witness said that competition would bring down prices. Commissioner Crofoot suggested that the only solution he sees is a single-payer system. (He was, by the way, very distressed that a union would be offering the HRA plan to Federal employees, believing they must have been tricked.)
BTW: I was surprised to see that Dr. Lynn Etheredge of George Washington University’s Health Insurance Reform Project is a member of the commission. He brought both insight and knowledge to the discussion.
My conclusion: Government officials are not very receptive to new ideas, especially those that would empower consumers. Especially in Maryland. The commission will decide October 17 what to do. I’m not holding my breath that HRAs will be an option for small businesses in Maryland this year.