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The Role of State Regulation in Consumer-Driven Health Care

Published online by Cambridge University Press:  06 January 2021

Timothy S. Jost  and
Mark A. Hall
Timothy S. Jost
Affiliation:
Washington and Lee University School of Law; Department of Health Administration, Virginia Commonwealth University
Mark A. Hall
Affiliation:
Wake Forest University
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Extract

In December of 2003 the Medicare Modernization Act (MMA) added section 223 to the Internal Revenue Code, creating a federal tax subsidy for money contributed to (and earnings accumulated on) health savings accounts, or HSAs. Though public attention was largely focused at that time on the provisions of the MMA creating the new Medicare prescription drug benefit, the MMA was also a major victory for advocates of “consumer-driven health care” who believe that HSAs have the potential to control the cost and improve the quality of health care in the United States, and perhaps even to increase health care access.

Consumer-driven health care advocates believe that the key reason health care costs are out of control in the United States is that most Americans are too generously insured. They believe the solution is to increase consumer sensitivity to cost and effectiveness by making people spend their own money for health care.

Type
Article
Information
American Journal of Law & Medicine , Volume 31 , Issue 4 , December 2005 , pp. 395 - 418
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2005

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References

1 Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, § 1201, 117 Stat. 2066, 2071 (2003).

2 See generally CONSUMER-DRIVEN HEALTH CARE: IMPLICATIONS FOR PROVIDERS, PAYERS AND POLICY MAKERS (Regina E. Herzlinger ed., Jossey-Bass 2004) [hereinafter CONSUMER-DRIVEN HEALTH CARE].

3 See, e.g., NEWT GINGRICH, WINNING THE FUTURE: A 21ST CENTURY CONTRACT WITH AMERICA 110-11 (2005); Michael Tanner, What's Wrong with the Present System?, in EMPOWERING HEALTH CARE CONSUMERS THROUGH TAX REFORM, 27, 29-30 (Grace-Marie Arnett ed., University of Michigan Press 1999). See also, ECONOMIC REPORT OF THE PRESIDENT: TRANSMITTED TO THE CONGRESS 2004, H.R. DOC. NO. 108-145, at 194-96 (2004) (arguing that excess insurance is a fundamental cause of high health care costs in the United States), available at http://www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf.

4 See GINGRICH, supra note 3, at 110-13.

5 See JOHN C. GOODMAN & GERALD L. MUSGRAVE, PATIENT POWER: THE FREE-ENTERPRISE ALTERNATIVE TO CLINTON's HEALTH PLAN, 18-27 (1994).

6 See CONSUMER-DRIVEN HEALTH CARE, supra note 2, at 69, 98.

7 GOODMAN & MUSGRAVE, supra note 5, at 83-88.

8 Id.

9 See id. at 88-92.

10 I.R.C. §§ 62(a)(19), 106(d), 223(a)-(b), 223(e), 3231(e)(11), 3306(b)(18) (West 2005). See Bob Lyke, Chris Peterson & Neela Ranade, Health Savings Accounts, CONGRESSIONAL RESEARCH SERVICE (March 23, 2005), at 3-11; Kaplan, Richard L, Who's Afraid of Personal Responsibility? Health Savings Accounts and the Future of American Health Care, 36 MCGEORGE L. REV. 535 (2005)Google Scholar (explaining the provisions of the MMA).

11 I.R.C. §§ 223(c)(2)(A)(i) (West 2005). The insurer, however, may cover preventive medical expenses, such as the cost of screenings or vaccinations, before the deductible is met. I.R.C. § 223(c)(2)(C) (West 2005); I.R.S. Notice 2004-23, 2004-1 C.B. 725. The policy must also limit outof- pocket expenses to no more than 5000 per year for single coverage, 10,000 per year for family coverage. I.R.C. §§ 223(c)(2)(A)(ii) (West 2005). These amounts will be indexed for inflation. I.R.C. § 223(g) (West 2005).

12 I.R.C. § 223(b)(2)-(3) (West 2005). See also U.S. Treasury - HSA Frequently Asked Questions, http://www.treas.gov/offices/public-affairs/hsa/faq_contributing.shtml#hsa10 (last visited Oct. 4, 2005). Persons aged 55 to 65 may also make an additional “catch up” contribution. I.R.C. § 223(b)(3)(A) (West 2005).

13 I.R.C. § 223(f)(1) (West 2005).

14 I.R.C. § 223(f)(2), 223(f)(4)(A) (West 2005).

15 I.R.C. § 213(d) (West 2005); Rev. Rul. 2003-102, 2003-38, I.R.B. 559; Notice 2004-2, 2004-2 I.R.B. 269 272.

16 I.R.C. § 223(f)(4)(B), (f)(4)(C) (West 2005).

17 See, e.g., Davis, Karen, Consumer-Directed Health Care: Will it Improve Health System Performance?, 39:4 HEALTH SERVICES RES. 1219 (2004)CrossRefGoogle ScholarPubMed; Jacobi, John V., Consumer-Directed Health Care and the Chronically Ill, 38 U. MICH. J.L. REFORM 531 (2005)Google Scholar; Swartz, Katherine, Informed Consumer - Caveat Emptor, 42 INQUIRY 3 (2005)CrossRefGoogle ScholarPubMed; Paul B. Ginsburg, Tax-Free But of Little Account, MODERN HEALTHCARE, Feb. 16, 2004, http://www.hschange.org/CONTENT/653/.

18 Sarah Lueck, Congress Created Health Savings Accounts to Help People Cover Medical Costs. But State Law are Getting in the Way, WALL ST. J., June 20, 2005, at R4; See also Jerry Geisel, State Laws May Stymie HSA Development, BUS. INS., May 30, 2005, at 11.

19 From all accounts, the MMA strategy has been spectacularly successful. By March of 2005, an estimated 1,031,000 people had opened MMA compliant HSAs and purchased MMA compliant HDHP policies. AHIP, Number of HSA Plans Exceeded One Million in March 2005. See www.ahip.org for the most current statistics.

20 See Symposium, Federalism In Health Care, 3 HOUS. J. HEALTH L. & POL'Y 151 (2003).Google Scholar

21 Paul v. Virginia, 75 U.S. 168, 183 (1868).

22 United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944).

23 McCarran-Ferguson Act, 15 U.S.C. §§ 1011, 1015 (2000).

24 See generally 29 U.S.C. §§ 1001-1461 (2000).

25 29 U.S.C. § 1144(a)(2000).

26 29 U.S.C. § 1144(b)(2)(A).

27 See, e.g., Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 387 (2002); New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 662 (1995); See also Rich, Robert F. & Erb, Christopher T., The Two Faces of Managed Care Regulation & Policymaking, 16 STAN. L. & POL'Y REV. 233 (2005)Google Scholar (examining the early judicial tendency to allow significant preemption of state managed care laws and the more recent tendency to grant considerable deference to state managed care laws).

28 29 U.S.C. § 1144(b)(2)(B). See FMC Corp. v. Holliday, 498 U.S. 52, 57-58 (1990).

29 See Aetna Health Inc. v. Davila, 124 S. Ct. 2488, 2495-96, (2004); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52-53 (1987).

30 29 U.S.C. § 1132(a) (2000).

31 29 C.F.R. § 2560.503-1 (2004). ERISA is not the only statute through which Congress has preempted state insurance law and replaced it with federal law. The 1997 Balanced Budget Act, for example, preempts state regulation of provider-sponsored Medicare managed care organizations, placing them instead under federal regulation. 42 U.S.C. § 1395w-25(a)(2) (2000). See also 42 C.F.R. § 422.402(a) (2004) (generally preempting state law regulating Medicare managed care organizations when it is inconsistent with federal regulation).

32 See Aetna, 124 S.Ct. at 2503.(Ginsburg & Breyer, JJ., concurring). Another example is the 1974 federal HMO statute, which preempts some state laws governing federally-qualified HMOs that were viewed as obstructive to the development of this desirable form of health care finance and delivery. 42 U.S.C. § 300e-10 (2000). The federal HMO Act, however, does not directly regulate HMOs, other than to specify the terms for federal qualification and hence protection from obstructive state laws. 42 U.S.C. § 300e (2000).

33 See 29 U.S.C. § 1144(b)(2)(B). Their internal claims practices are subject to 29 C.F.R. § 2560.503-1, 42 U.S.C. § 1395w-25(a)(2), and 42 C.F.R. § 422.402(a), but they are otherwise largely unregulated.

34 See, e.g., Hall, Mark A., Wicks, Elliot K., & Lawlor, Janice S., HealthMarts, HIPCs, MEWAs, and Association Health Plans: A Guide for the Perplexed, 20(1) Health Affairs 142, 142–143 (Jan./Feb. 2001)CrossRefGoogle ScholarPubMed.

35 29 U.S.C. §§ 1181-1182(2000); 42 U.S.C. § 300gg-41(2000).

36 See generally Medill, Colleen, HIPAA and Its Related Legislation: A New Role for ERISA in the Regulation of Private Health Care Plans?, 65 TENN. L. REV. 485 (1998)Google Scholar; Rovner, Jack, Federal Regulation Comes to Private Health Care Financing, 7 ANN. HEALTH L. 183 (1998)Google ScholarPubMed; Symposium, Making a Federal Case out of Health Care, 22(1) CATO J. 1 (Spr./Sum. 2002).

37 29 U.S.C. § 1181(a); 42 U.S.C. § 300gg-41(a), 44.

38 See U.S. GEN. ACCOUNTING OFFICE, GAO/HEHS REP. 99-100, PRIVATE HEALTH INSURANCE: PROGRESS AND CHALLENGES IN IMPLEMENTING 1996 FEDERAL STANDARDS (1999), http://www.gao.gov/archive/1999/he99100.pdf.

39 Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191, §264(c)(2), 110 Stat. 2033 (Recommendations with Respect to Privacy of Certain Health Information) (codified as 42 U.S.C. § 1320d-2 (2000)); 45 C.F.R. § 160.203(b) (2004).

40 42 U.S.C. § 300gg-41(b).

41 See U.S. GEN. ACCOUNTING OFFICE, supra note 38.

42 See, e.g., Trubek, Louise G., Public Interest Lawyers and the New Governance: Advocating for Healthcare, 2002 WIS. L. REV. 575, 580-81 (2002)Google Scholar (discussing a “movement of authority downward from federal to state and municipal governments”).

43 See, e.g., TIMOTHY STOLTZFUS JOST, DISENTITLEMENT? 162-78 (Oxford University Press 2003); Blum, John D., Overcoming Managed Care Regulatory Chaos Through a Restructured Federalism, 11 HEALTH MATRIX 327 (2001)Google ScholarPubMed; Farrell, Margaret G., ERISA Preemption and Regulation of Managed Health Care:The Case for Managed Federalism, 23 AM. J.L. & MED. 251 (1997).Google ScholarPubMed

44 See supra notes 10-16 and accompanying text.

45 I.R.S. Notice 2004-43, 2004-27 I.R.B. 10.

46 See JOST, supra note 43, at 77-80; See generally MARK V. PAULY, HEALTH BENEFITS AT WORK (University of Michigan Press 1998).

47 See Paul Fronstin, Health Savings Accounts and Other Account-Based Health Plans, EBRI ISSUE BRIEF NO. 273 (Employee Benefit Research Institute, D.C.) (Sept. 2004).

48 Id. at 6.

49 See BARRY R. FURROW, ET AL., HEALTH LAW, 461-508 (2d ed. 2000). (describing health insurance regulation in the United States).

50 See generally Mila Kofman, Health Savings Accounts: Issues and Implementation Decisions for States, ISSUE BRIEF, (AcademyHealth State Coverage Initiatives, D.C.), Sept. 2004 (explaining “the key issues that state officials need to know about HSAs—including what they are, how they compare to other types of tax-preferred accounts, and what public policy implications and implementation issues need to be considered.), available at http://www.statecoverage.net/pdf/issuebrief904.pdf.

51 26 U.S.C. § 223(d)(1)(B) (2005).

52 See BARRY R. FURROW ET AL., HEALTH LAW: CASES, MATERIALS AND PROBLEMS 625- 626 (5th ed. 2004).

53 See Britton, Gerard, Discount Medical Plans and the Consumer: Health Care in a Regulatory Blindspot, 16 LOY. CONSUMER L. REV. 97, 111-12 (2004).Google Scholar

54 Id. at 112-15.

55 See generally Hall, Mark A., Managed Care Patient Protection or Provider Protection? A Qualitative Assessment, 117 AM. J. MED. 932 (2004).CrossRefGoogle ScholarPubMed

56 Robert J. Doyle, United States Department of Labor, Field Assistance Bulletin 2004-1 (Apr. 7, 2004), http://www.dol.gov/ebsa/regs/fab_2004-1.html (last visited Oct. 6, 2005).

57 Jacobi, supra note 17, at 579.

58 See, e.g., N.J. STAT. ANN. §17:48-6m (West 1996 & Supp. 2005); N.J. STAT. ANN. §17:48E-35.10 (West 1996 & Supp. 2005); N.J. STAT. ANN. § 17B:27-46.1l (West 1996 & Supp. 2005), requiring coverage for groups of over 50 blood lead screening for children and of any necessary medical treatment for lead poisoned children without application of a deductible.

59 See, e.g., Charles Rapacciuolo and Thomas C. Zyra, Circular Letter No. 4 (2004) - Health Savings Accounts and High Deductible Health Plans, N.Y. INS. DEPARTMENT (2004), available at http://www.ins.state.ny.us/cl04_04.htm (New York law prohibiting HMOs from imposing deductibles on in-network benefits).

60 See generally Hall, Mark A., The Structure and Enforcement of Health Insurance Rating Reforms, 37 INQUIRY 376 (2001).Google Scholar

61 See Clifford, Karen A. & Inculano, Russel P., AIDS and Insurance: The Rationale for AIDSRelated Testing, 100 HARV. L. REV. 1806, 1812-14 (1987)CrossRefGoogle Scholar (discussing actuarial fairness).

62 See Davis, Karen, Consumer-Directed Health Care: Will it Improve Health System Performance? 39 HEALTH SERVICES RES. 1219, 1224-25 (2004)CrossRefGoogle ScholarPubMed (studies show some evidence of favorable selection).

63 Hall, Mark A., The Competitive Impact of Small Group Health Insurance Reform Laws, 32 U. MICH. J.L. REFORM 685, 691 (1999).Google Scholar

64 Under the terms of our research involving human subjects protection protocol these interviews were confidential. This is also important for protecting the commercial interests of the private sector representatives we interviewed. For this reason we do not cite to individual interviews.

65 Arizona, California, Colorado, Maryland, New Jersey, New York, Pennsylvania, Virginia, and Vermont. Several of these states followed up our interview by sending us additional information.

66 See, e.g., Geisel, supra note 18; Kofman, supra note 50; and Lueck, supra note 18.

67 26 U.S.C. § 223(c)(2)(A)(i) (2004).

68 26 U.S.C. § 223(c)(2)(C) (2004).

69 I.R.S. Notice 2004-23, 2004-1 C.B. 725, available at http://www.ustreas.gov/press/releases/reports/notice200423.pdf.

70 FLA. STAT. ANN. § 624.128 (West 2004).

71 MD. CODE ANN., INS. § 15-812(g)(1) (West 2002); 40 PA. CONS. STAT. ANN. § 1583(c) (West 1999).

72 40 PA. CONN. STAT. ANN. §§ 3904, 3906(b) (West 1999).

73 I.RS. Notice 2004-43, available at http://www.treas.gov.press/releases/reports/n200443.pdf.

74 See AMERICA's HEALTH INSURANCE PLANS (AHIP), 2004 AND 2005 ENACTED/ADOPTED HSA LEGISLATION/REGULATIONS: IMPEDIMENTS OR TAX DEDUCTION AS OF MAY 20, 2005 (on file with authors).

75 AMERICA's HEALTH INSURANCE PLANS (AHIP), STATE LAWS AFFECTING HSAS: IMPEDIMENTS AND TAX TREATMENTS AS OF AUGUST 12, 2005, http://www.nahu.org/government/issues/MSAs/HSAs-HSSAs/Chart%20-%20HSA%20Impediments-%20State%20Tax%208-12-051.pd (available as of Oct. 15, 2005).

76 Hall, Mark A. & Havighurst, Clark C., Reviving Managed Health Care with Health Savings Accounts, 24(6) HEALTH AFFAIRS 1490 (Nov./Dec. 2005).CrossRefGoogle ScholarPubMed

77 Id.

78 Ellwood, Paul M. Jr., et al., Health Maintenance Strategy, 9 MED. CARE 291, 295 (1971).CrossRefGoogle ScholarPubMed

79 VA. CODE ANN. 38.2-4303(a)(8) (2002 & Supp. 2005).

80 AHIP, supra note 75.

81 AMERICA's HEALTH INSURANCE PLANS, HEALTH SAVINGS ACCOUNTS OFF TO A FAST START IN THE INDIVIDUAL MARKET (2005), http://www.ahip.org/content/default.aspx?docid=7418.

82 AHIP, supra note 75, at 2.

83 See generally id.

84 See Blue Cross and Blue Shield Association, State Legislative Health Care and Insurance Issues, 2003 SURVEY OF PLANS, 80-82 (2003).

85 AHIP, supra note 75.

86 See id. at 2 (according to AHIP's survey, eight had failed to do so).

87 See KAISER COMMISSION ON MEDICAID AND THE UNINSURED, STATE FISCAL CONDITIONS AND MEDICAID (Nov. 2004), http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=49527.

88 Lueck, supra note 18, at R4.

89 Id.

90 See Hyman, David A., Regulating Managed Care: What's Wrong With a Patient Bill of Rights, 73 S. CAL. L. REV. 221 (2000)Google ScholarPubMed; Jacobson, Peter D., Who Killed Managed Care: A Policy Whodunit, 47 ST. LOUIS U. L.J. 365 (2003).Google Scholar

91 See Press Release, BlueCross BlueShield Association, BCBSA Approves Use of Blue- Branded Debit Cards for Tax-Favored Health Savings Accounts (Feb. 1, 2005), available at http://bcbshealthissues.com/proactive/newsroom/release.vtml?id=144430.

92 FURROW, supra note 49, at § 9-1.

93 26 U.S.C.S. § 223(d)(1)(B) (LEXIS 2005).

94 See I.R.S. Notice 2004-50, Q&A 72 (Aug. 10, 2004), available at http://www.treas.gov/press/releases/reports/hsanotice200450072304.pdf (referencing Treas. Reg. § 1.408-2(e)).

95 This may well be because most insurers we spoke with have decided to avoid these concerns altogether by using banks to administer HSAs, and the one insurer we spoke with who is administering its own accounts has considerable experience with consumer-driven health care. But it was surprisingly difficult to locate anyone who had thought through this problem.

96 See Hacker, Jacob S. & Marmor, Theodore R., How Not to Think About “Managed Care”, 32 U. MICH. J.L. REFORM 661 (1999).Google Scholar

97 See FURROW, supra note 52, at 625-633.

98 Hall & Havighurst, supra note 76.

99 26 U.S.C.S. § 223(c)(2)(D)(i) (LEXIS 2005).

100 I.R.S. 2004-50, Q&A 16, 18, 19; Treas. Notice 2004-2, Q&A 4 (Dec. 22, 2003), available at http://www.treas.gov/offices/public-affairs/hsa/pdf/notice2004-2.pdf.

101 At least forty-two states have such laws. Rich, Robert F. & Erb, Christopher T., The Two Faces of Managed Care Regulation and Policymaking, 16 STAN. L. & POL’Y REV. 233, 269 (2005).Google Scholar

102 See Margaret Ann Cross, Will Providers Seek New Contracts as Consumer-Directed Plans Grow?, MANAGED CARE (May 2004).

103 See Hall, Mark A., The Death of Managed Care: A Regulatory Autopsy, 30 J. HEALTH POL. POL’Y & L. 427, 427 (2005).CrossRefGoogle ScholarPubMed

104 See Sarah Rubenstein, Savings Accounts for Health Care Cause Confusion, WALL ST. J., Nov. 30, 2004, at D3.

105 See generally Britton, supra note 53, at 98-101 (describing discount policies).

106 See id. at 108-10; Mila Kofman, Jennifer Libster & Eliza Bangit, Discount Medical Cards: Innovation or Illusion? COMMONWEALTH FUND (March 2005), available at http://www.cmwf.org/publications/publications_show.htm?doc_id=263783.

107 Britton, supra note 53, at 110-11. A recent survey of insurers found that 46% of high deductible plans used “rented” networks and only 38% used “proprietary” networks for their insured products. See Reden and Anders, Ltd., Consumer Directed Insurance Products: Survey Results April 2005, http://www.cahi.org/cahi_contents/consumerinfo/pdf/HSAsurveyRedenAnders0405.pdf.

108 Britton, supra note 53, at 111-12.

109 Id. at 112.

110 See, e.g., FLA. STAT. ANN. tit. 37, § 636 (2005).

111 See James Maxwell, et al., Are California's Large Employers Moving to Catastrophic Health Insurance Coverage?, HEALTH AFFAIRS (Web Exclusive), http://content.healthaffairs.org.cgi/reprint/hlthaa.w5.233v1?ijkey=VflpznJFN.6Lo&keytype=ref&siteid=healthaff, May 2005 (reporting that 12% of large private and 5% of large public employers in California offer high deductible PPOs, with 15% of private employees and 18% of public employees taking up high deductible policies when offered). High deductible policies are even more common in the individual and small group market. One recent study of adults aged 50 to 70 with individual insurance coverage found that 42% had deductibles of 1000 or higher and 24% had deductibles of 2000 or higher. Sara R. Collins, Paying More for Less, Older Adults in the Individual Insurance Market, COMMONWEALTH FUND, June 2005, available at http://www.cmwf.org/usr_doc/841_collins_olderadults_ib_06-30-2005.pdf.

112 See Hall, supra note 103, at 448.

113 In 2004, plan deductibles averaged 287 for PPO preferred providers and 558 for PPO nonpreferred providers for individuals with single-coverage employee health benefits. Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits, 2004, chart 14, available at http://www.kff.org/insurance/7148/upload/Employer-Health-Benefit-Survey-2004-Chartpack.pdf.

114 Reden & Anders, supra note 107.

115 See generally Dawn M. Gencarelli, Health Insurance Coverage for Small Employers, NATIONAL HEALTH POLICY FORUM (Apr. 2005), available at http://www.nhpf.org/index.cfm?fuseaction=Details&key=560.

116 See Schearer, Gail, Commentary–Defined Contribution Health Plans: Attracting the Healthy and Well-Off, 39 HEALTH SERV. RES. 1159 (2004)CrossRefGoogle Scholar; Mariner, Wendy K., Can Consumer-Choice Plans Satisfy Patients? Problems with Theory and Practice in Health Insurance Contracts, 69 BROOK L. REV. 485, 511 (2004)Google Scholar; Barbara T. Dreyfuss, Cheap Trick, AMERICAN PROSPECT. Sept. 1, 2004, available at http://www.prospect.org/web/page.ww?section=root&name=ViewPrint&articleId=8345; Beth Fuchs and Julia James, Health Savings Accounts: The Fundamentals, NATIONAL HEALTH POLICY FORUM 24-27 (Apr. 2005), available at http://www.nhpf.org/pdfs_bp/BP_HSAs_04-11-05.pdf.

117 Hall, supra note 63, at 376-88.

118 See, e.g., Herzlinger, supra note 2, at 119-120, 157-9.

119 See Consumer-Driven Plans Can Reduce Number of Uninsured, Panelists Say, BNA HEALTH CARE DAILY (May 4, 2005).

120 See generally Gauthier, Anne K. & Clancy, Carolyn M., Consumer-Driven Health Care: Beyond Rhetoric with Research and Experience, 39 HEALTH SERVICES RES. 1049 (2004), available at http://www.blackwell-synergy.com/doi/full/10.1111/j.1475-6773.2004.00272.x.CrossRefGoogle Scholar

121 See Parente, Stephen T. et al., Roger Feldman, & Jon B. Christianson, Employee Choice of Consumer-Driven Health Insurance in a Multiplan, Multiproduct Setting, 39 HEALTH SERVICES RES. 1091 (2004), available at http://www.blackwell-synergy.com/doi/full/10.1111/j.1475-6773.2004.00275.x.CrossRefGoogle Scholar

122 See Tollen, Laura A. et al., Risk Segmentation Relating to the Offering of a Consumer- Directed Health Plan: A Case Study of Humana Inc., 39 HEALTH SERVICES RES. 1167 (2004), available at http://www.blackwell-synergy.com/doi/full/10.1111/j.1475-6773.2004.00281.x.CrossRefGoogle Scholar

123 See Shearer, Gail, Defined Contribution Health Plans: Attracting the Healthy and Well Off, 39 HEALTH SERVICES RES. 1159 (2004), available at http://www.blackwellsynergy.com/doi/full/10.1111/j.1475-6773.2004.00280.x.CrossRefGoogle ScholarPubMed

124 See generally Siegelman, Peter, Adverse Selection in Insurance Markets: An Exaggerated Threat, 113 YALE L. J. 1223 (2004).CrossRefGoogle Scholar

125 Parente, Stephen T. et al, Evaluation of the Effect of a Consumer-Driven Health Plan on Medical Care Expenditures and Utilization, 39 HEALTH SERVICES RES. 1189 (2004)CrossRefGoogle ScholarPubMed, available at http://www.blackwell-synergy.com/doi/full/10.1111/j.1475-6773.2004.00282.x.

126 See Gabel, Jon R., Whitmore, Heidi, Rice, Thomas & Lo Sasso, Anthony T. et al., Employers’ Contradictory Views about Consumer-Driven Health Care: Results from a National Survey, W4 HEALTH AFFAIRS 210 (2004)Google Scholar, at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.210v1.

127 Hall, supra note 63.

128 See, e.g., R. CUNNINGHAM III AND R.M. CUNNINGHAM JR., THE BLUES: A HISTORY OF THE BLUE CROSS AND BLUE SHIELD SYSTEM (Northern Illinois University Press 1997).

129 See generally STATE HEALTH INSURANCE MARKET REFORM: TOWARD INCLUSIVE AND SUSTAINABLE HEALTH INSURANCE MARKETS (Alan C. Monheit & Joel C. Cantor eds., 2004).

130 See COMMUNICATING FOR AGRICULTURE AND THE SELF-EMPLOYED, COMPREHENSIVE HEALTH INSURANCE FOR HIGH-RISK INDIVIDUALS – A STATE-BY-STATE ANALYSIS, 25 (18th ed. 2004/2005) [hereinafter COMMUNICATING FOR AGRICULTURE].

131 Id. at 13. See also SelfEmployedCountry.com, State Health Insurance High-Risk Pools: Serving People Denied Insurance Coverage, http://www.selfemployedcountry.org/riskpools.html (last visited Sept. 30, 2005).

132 COMMUNICATING FOR AGRICULTURE, supra note 130, at 12.

133 Communicating for Agriculture and the Self-Employed's report for 2004-2005, lists nine states that reported that they were in the process of establishing HSA-qualified plans or already had one, two additional states with legislation pending to authorize HSA plans, and ten additional states that reported researching or considering HSA plans. See id. at 7.

134 Id. at 28.

135 Id. The Department of the Treasury does not permit tax subsidies for HSAs where the HSA owner has a low deductible pharmacy plan, Rev. Rul. 2004-38, but does allow transition relief to allow persons with low deductible pharmacy plans to qualify for HSAs until January 1, 2006.

136 See id. at 7.

137 See id. at 17.

138 See Standard Oil Co. v. Agsalud, 633 F.2d 760 (9th Cir. 1980), Aff.d mem, 545 U.S. 801 (1981).

139 Dep't of Labor, Field Assistance Bulletin 2004-1 (Apr. 7, 2004), available at www.dol.gov/ebsa/regs/fab_2004-1.html.

140 See FURROW, supra note 52, at 614-33 (describing these laws); Hall, supra note 103 (same).

141 Advocates of consumer-driven health care believe that it greatly reduces insurers’ need to manage the costs of care because, as long as subscribers are under the HDHP deductible, they are spending their own money. This argument is contestable for several reasons, however. See Hall & Havighurst, supra note 76. First, even high deductibles cover only a moderate portion of total health care spending, due to the concentration of spending among those with chronic illness or catastrophic expenses. For instance, people who spend more than 5000 a year on health services account for more than 70% of total medical costs. See Berk, Marc L. & Monheit, Alan C., The Concentration of Health Care Expenditures, Revisited, 20 HEALTH AFF. 9 (Mar./Apr. 2001)CrossRefGoogle ScholarPubMed. Moreover, the problem of provider-induced demand may be only slightly ameliorated by high deductibles, since patients are still largely dependent on their physicians in making health care spending decisions. See Newhouse, Joseph P., Consumer-Directed Health Plans and the RAND Health Insurance Experiment, 23 HEALTH AFF. 107 (Nov./Dec. 2004)CrossRefGoogle ScholarPubMed. This is why most insurers still continue to use traditional managed care tools such as networks and utilization review to control costs even with HDHPs.

142 Hall, Mark A., Institutional Control of Physician Behavior: Legal Barriers to Health Care Cost Containment, 137 U. PA. L. REV. 431 (1988).CrossRefGoogle Scholar

143 See, e.g., Palmisano, Donald J. et al., Expanding Insurance Coverage Through Tax Credits, Consumer Choice, and Market Enhancements: The American Medical Association Proposal for Health Insurance Reform, 291 JAMA 2237 (2004).CrossRefGoogle ScholarPubMed

144 David U. Himmelstein et. al., MarketWatch: Illness And Injury As Contributors To Bankruptcy, HEALTH AFF. (Feb. 2, 2005), http://content.healthaffairs.org/cgi/content/full/hlthaff.w5.63/DC1.

145 Providers who are contractually obligated to notify insurers or get preapproval before providing certain products or services and who fail to do so may find themselves barred from billing the patient's HSA under their contract with the HDHP insurer.

146 Mollyann Brodie, Lee Ann Brady & Drew E. Altman, Media Coverage of Managed Care: Is There a Negative Bias? HEALTH AFFAIRS 9 (Jan.-Feb. 1998), available at http://content.healthaffairs.org/cgi/reprint/17/1/9; Karen Ignagni, Covering a Breaking Revolution: The Media and Managed Care, HEALTH AFFAIRS 26 (JAN.-FEB. 1998), available at http://content.healthaffairs.org/cgi/reprint/17/1/26.

147 It is also important that insurers and state and national regulators and policy-makers do whatever they can to educate consumers, providers, employers, and the public about how HSAs and HDHPs operate and their advantages and disadvantages, so that those who purchases these products do not have unrealistic expectations about them and cannot later justifiably claim unfair surprise.

148 See sources cited supra note 90 and accompanying text.