October 11, 2019
White House Executive Order on Medicare Could Open Door to HSA Participation for Working Seniors
In an executive order issued on October 3, the White House directed the U.S. Department of Health and Human Services to “protect and improve” Medicare, particularly by strengthening Medicare Advantage programs. The executive order includes a provision that could possibly be interpreted as an opportunity to expand health savings account (HSA) participation to working seniors who are collecting Social Security.
Promoting Medicare Advantage
The executive order sought to draw a contrast between the president’s health care agenda and so-called “Medicare for All” proposals being promoted by many Democrats. The order repeatedly calls for a “transition toward true market-based pricing in the [fee-for-service] Medicare program,” largely by bolstering Medicare Advantage, under which Medicare dollars are used to purchase qualified private health insurance.
Specifically, the executive order calls for “providing more plan choices to seniors” (Section 3) including a proposed payment model that would let Medicare Advantage beneficiaries share in the program’s savings through cash rewards or monetary rebates. The order also calls on HHS to propose rules “improving access through network adequacy” (Section 4) within one year, citing enhanced access through telehealth services or other innovative technologies.
Medicare Payment Reforms
Under Sections 6, 7 and 8, the order advances payment reform proposals that parallel the Council’s ongoing efforts in the private market. These provisions directing HHS to issue rules that provide more incentives for value-based insurance design (which prioritize services that save money and improve outcomes), promote “site-neutrality” (under which reimbursement for certain outpatient services is the same regardless of setting) and expand the availability of treatment cost and quality data.
Expanding HSA Eligibility for Seniors
Notably, Section 11 of the order seeks to “maximize freedom for Medicare patients” by allowing individuals to elect Social Security Benefits while also taking advantage of HSA-eligible high-deductible health plans. Under current law, individuals who are eligible for Medicare based upon age are automatically enrolled in Part A when they begin receiving Social Security benefits, and individuals who are covered by Part A in a given month are not permitted to deduct the amount of any contributions to an HSA.
It is possible that the Administration is contemplating a regulatory change providing for an opt-out, where enrollment automatically occurs as is currently the case, but there is some sort of grace period under the HSA-rules for individuals to opt out of Part A to instead receive employer coverage.
The underlying policy goal of the auto-enrollment provision was ostensibly to increase coverage under Medicare Part A, and allowing individuals to withdraw from the program is likely to alter the Medicare risk pool. Any proposal is also likely to encounter legal challenges, since then-Circuit Court of Appeals for the District of Columbia Judge Brett Kavanaugh ruled in a 2012 case (Hall v. Sebelius) that there is “no statutory avenue for those who are 65 or older and receiving Social Security benefits to disclaim their legal entitlement to Medicare Part A benefits.”
Most of the directives in the executive order call for proposed rules to be issued by October 2020, just prior to the next presidential election, although Section 11 of the order calls for administrative action within 180 days . For more information, contact Ilyse Schuman, senior vice president, health policy, at (202) 289-6700.