Provide access, portability, financial benefits
Medical Savings Accounts (MSAs) are being promoted as a boon to employees, but the insurance plan also could be a key to lifting the heavy hand of managed care organizations (MCOs) on the health care delivery system.
MSAs give employees the power to select their own physician, shop for the medical services they believe they need and provide attractive financial benefits that could dampen employees' enthusiasm for joining MCOs.
The Health Insurance Portability and Accountability Act of 1996 authorized a four-year demonstration project allowing up to 750,000 individuals who are self-employed or employed by a business with 50 or fewer employees to use MSAs.
By switching from a low-deductible health insurance plan to a less expensive high-deductible plan, an employer or individual can place the premium savings into accounts used by employees to pay medical expenses. The individual is personally responsible for payment of smaller medical bills and uses insurance coverage when expenses reach a high deductible level.
Contributions to the savings accounts aren't taxed as income and the interest earned is tax-free. Money not spent in one year can be rolled over into the account the following year. That feature is expected to make employees prudent buyers of health services because the money in the accounts can accumulate for years providing a substantial sum for a major purchase or for retirement.
"MSAs may not be the total solution, but our members should become aware of them," said Douglas W. Jackson, MD, Academy president and moderator of a symposium on MSAs at the Annual Meeting in February. "(Under the law) there is a limited number of individuals who can use the MSA; our members should step up to the plate and offer them."
James W. Strickland, MD, 1995 Academy president, has been offering MSAs to his employees since 1993. Of 213 employees of the Indiana Hand Center, 193 or 91 percent are enrolled in the plan. Dr. Strickland said no employee has ever converted out of the MSA plan into a conventional indemnity or managed care plan. The plan does not permit the employee to accumulate money in the savings account; funds are returned to the employees each year. In April 1995, $80,000 was returned to employees and in 1996, $87,000. This year an estimated $80,000 to $90,000 will be returned.
The plan has been economical for the practice. Dr. Strickland said premium costs are 15 percent less than what was previously paid. The practice's annual insurance premium growth has been reduced to 7 percent vs. double digit rates in 1988 through 1992.
He said MSAs allow patients to retain choice of providers, return unspent medical allowances in the saving component to the employee, reward employees for being healthy, discourage frivolous health care spending and encourage shopping for the best health care alternatives.
Robert P. Nirschl, MD, traced the evolution of health care financing in the U.S. from development of employer-based benefits in World War II, to Medicare and then to MCOs. The result, he said, has been loss of insurance portability, loss of pre-existing illness coverage, and loss of free market competition. MCOs added the component of rationing of medical services.
As the system evolved, the purchaser of health care was not the patient, but the employer and the government. "If the user is not the purchaser of medical services then the free market is destroyed," Dr. Nirschl said.
The solution to current health care financing problems is to return the patient to the role of purchaser of medical services who determines the value of those services, he said. This will restore the traditional physician-patient relationship and competition in the marketplace.
"The more complex the market, the more critical is the need for patient sovereignty," Dr. Nirschl said. "If choosing a doctor is complex, then choosing an employer who chooses an HMO that chooses the doctor is really complex."
He believes that as more people are educated about MSAs and more employers learn about the costs of MCOs, there will be a shift away from MCOs. Dr. Nirschl, who has been very active in promoting MSAs, said he gets the attention of business people when he tells them that health maintenance organizations have big mark-ups on preventive servicescharges of $3,000 for $500 of services.
"Employers are learning that HMOs are bad buys," he said. "The ascendancy of HMOs is ending. The future HMO is not likely to be in its present form."
Robert P. Nirschl, MD
James W. Strickland, MD