NCPA - Daily Policy Digest - Barriers to Consumer-Directed Health Care

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Barriers to Consumer-Directed Health Care

Daily Policy Digest

Health Issues

Friday, October 19, 2001

An increasing number of U.S. employers are interested in switching to so-called defined contribution health plans -- both to increase the choices available to employees and their families, and to control rising health care costs. However, a group of experts called the Wye River Group on Healthcare says there are legal and regulatory obstacles to such plans that should be removed.

Among their recommendations:

Repeal "use-it-or-lose-it" rules that currently apply to Flexible Spending Accounts (FSAs), in which pre-tax contributions to a certain kind of health care savings account must be used by the end of the year or the money is forfeited.

Permit purchases of insurance through FSAs, which would "open up new avenues for employers who can't afford the entry cost of a health insurance policy."

IRS clarification of flexibility and tax treatment of funds accumulated in health care accounts.

Improving the portability of Personal Health Accounts via the tax code.

Also, they suggest improving the ability of healthmarts and association health plans to serve health care consumers -- that might involve, for instance, increasing the universe of consumers who could join group health plans unconnected to their workplace.

Source: Wye River Group on Healthcare, "An Employer's Guide to Consumer-Directed Healthcare Approaches," October 2001.

For text
http://www.ncpa.org/extra/health/wye_full.pdf

For more on Health
http://www.ncpa.org/iss/hea/

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