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Health Commission approves revisions to Healthcare Accountability Ordinance standards, including higher out-of-pocket maximum
Summary
DPH proposed updates to the Healthcare Accountability Ordinance to align with the Affordable Care Act and market realities; commissioners approved a resolution that raises the out-of-pocket maximum to $6,350, lowers the deductible cap and allows HRAs/HSAs to count toward cost-sharing limits.
The Health Commission voted to adopt revisions to the Healthcare Accountability Ordinance (HCAO) minimum standards, a set of local rules that require certain city contractors and lessees to offer employer-based insurance meeting minimum standards or pay a fee.
Frances Culp of DPH’s Office of Policy and Planning summarized a stakeholder process that reviewed plan features in the wake of the Affordable Care Act. Staff recommended aligning minimum-standard language with Covered California benchmark plans, deferring dependent coverage until 2016 for further study, and allowing employer-funded health reimbursement accounts (HRAs) and health savings accounts (HSAs) to be used to satisfy out-of-pocket maximums.
A key and contested change was raising the allowable out-of-pocket maximum from $4,000 to $6,350—matching the ACA ceiling that many small-group plans have adopted—while lowering the permissible deductible from $2,000 to $1,500. DPH said it analyzed about 157 small-business market plans and estimated that the recommended settings would increase the share of compliant plans available to employers from roughly 24% to about 50% of the plans surveyed.
Public commenters and some commissioners voiced concern that the higher out-of-pocket maximum would shift costs to low-wage workers; other stakeholders, including nonprofit employers and labor representatives, said the change balances affordability for employers and consumer access to plans in the current market. The commission approved the resolution (identified in materials as Resolution 14‑14). DPH committed to a 12‑month review and interim recommendations if plan availability falls below a 40% threshold before the next scheduled minimum‑standards review.
