HSSAs Out of Medicare, HSAs Alive and Kicking

IN THIS ISSUE:


? HSSAs Out of Medicare, HSAs Alive and Kicking

? Hawaii Looking at MSAs to Enhance Competition

? Wisconsin Reforms Blasted by Business Group

? Cost Insulation Raises Prices for All

? Spending Other People’s Money – Priceless

? New Choices for Employees

? Small Employers Switch to CD Plans

? Anthem Merges With WellPoint


HSSAs Out of Medicare, HSAs Alive and Kicking


According to the “Washington Post,” the Health Savings Security Accounts (HSSA) provision has been kicked out of the Medicare package now in conference committee, but the HSA (MSA expansion) remains. This is not surprising. The HSSA was added at the last minute in the House version. It is an innovative idea and one we will see again, but it suffered from insufficient ground work and a score of $164 billion (over ten years) by the Joint Tax Committee. Some people believed the HSSA was in there as a bargaining chip to protect the much less costly HSA provision, and whether that was the intent or not, it seems to have worked out that way. Ways and Means Committee Chairman Bill Thomas (R-CA) should be applauded for his bold thinking and for introducing an entirely new idea in health care financing. At a minimum, the HSSA would have enabled people to pay for their individual health insurance premiums on a tax-favored basis and that is an idea that is sure to come back.

SOURCE: http://www.washingtonpost.com/wp-dyn/articles/A26501-2003Oct27.html


 


Hawaii Looking at MSAs to Enhance Competition



Meanwhile, in Hawaii – of all places – the new Lingle administration is trying to “inject competition into a health insurance market dominated by two major players – the Hawaii Medical Services Association and Kaiser Permanente,” according to Bruce Dunford in the “Honolulu Advertiser.” The governor is trying to get MSAs approved in that state and legislation has passed the state Senate and is pending in the House. But the state auditor, Marion Higa, is resisting. She issued a report that maintains, according to the newspaper, “Based on a federal projection, Hawaii could lose $900,000 in tax revenue in 2004, with projected revenue loss rising to $5.5 million in 2005, $9.9 million in 2006, or a total of $208 million by 2013.” It is astonishing how MSA opponents have to make things up to support their case. Those numbers are not from a “federal” report, but a hatchet job by the Leftist Center for Budget and Policy Priorities, and it is a projection of HSSA impact, not MSAs. MSAs involve virtually no revenue loss because money deposited into the MSA is usually money saved from lower insurance premiums. Ms. Higa also maintains MSAs may be preempted by ERISA, which is patently untrue. In fact, the federal MSA law was written as an amendment to ERISA.

SOURCE: http://the.honoluluadvertiser.com/article/2003/Oct/27/ln/ln22a.html


 


Wisconsin Reforms Blasted by Business Group



Writing in “Madison.com” and the “Capital Times,” Matt Pommer reports that Republicans in Wisconsin have offered a four-point plan for health insurance reform. The proposal would encourage MSAs, allow chambers of commerce to set up their own benefit plans, allow an optional “basic benefits” plan, and allow individuals to form their own “health insurance cooperatives.” But, wouldn’t you know it? — opposition is coming from the Wisconsin Independent Businesses in the form of Executive Director Wayne Corey. Mr. Corey says the plan “is a guaranteed failure.” He wants to have community rating to prevent insurance companies from “discriminat[ing] against people with pre-existing or new health conditions.” The well-informed Mr. Corey also opines that MSAs are “unpopular” and that basic benefits are “lousy health insurance.”

SOURCE: http://www.madison.com/archives/read.php?ref=tct:2003:10:27:285896:FRONT


 


Cost Insulation Raises Prices for All



Dr. Bernadine Healy, former head of the American Red Cross, writes in “US News & World Report” that, “Americans seem willing to spend whatever it takes to cure disease.” She asks, “Is 15 percent (of GDP) too much or too little?” She notes that we spent a third of that in the 1950s – and got pretty much what we paid for. Still, she notes, there is the problem of the uninsured, which is “tied to the fact that the insured are insulated from what they are spending. This insulation from real costs drives up prices for everyone and turns the uninsured into charity cases.” She takes comfort in knowing that “plans for money-wise patients are starting to emerge,” including MSAs.

SOURCE: http://www.usnews.com/usnews/biz/e_friend.php3?goto=%2Fusnews%2Fissue%2F031027%2Fopinion%2F27healy.htm


 


Spending Other People’s Money — Priceless



Dr. James Knight is president of the San Diego Medical Society. He asks in the San Diego “Union Tribune,” “Did you get your OPM card yet?” An OPM card is “sort of like a credit card, only much, much better,” because you get to spend Other People’s Money. They don’t really exist – except in health care. “Feeling that virtually everything is already paid for, people’s appetite for more and more health services? has increased unchecked.” That is what is driving the strikes in Southern California, and with the new pay-or-play law in California it will apply to every mid- to large-sized business in the state. “Fortunately,” he says, “there are new strategies called ‘consumer driven health care’ to make the transition (to cost containment) less painful.” He walks through the numbers of how this all works and concludes, “In the end, only empowered, informed and financially responsible consumers will be truly effective in controlling?health care costs.”

SOURCE: http://www.signonsandiego.com/news/uniontrib/wed/opinion/news_mz1e22knight.html


 


New Choices for Employees



Eileen Ambrose writes in the “Baltimore Sun” and “Chicago Tribune” that open enrollment time is here and workers need to pay attention to their options. A Families USA spokeswoman says, “It’s very hard,” to understand all the choices. But Johns Hopkins professor Jonathan Weiner says that “one of the causes of skyrocketing health care is that consumers don’t know the true cost,” according to the paper. “If a doctor suggests a $1,500 test that’s fully covered by insurance, you’re likely to say, ‘why not?’ But if you’re buying a car and an add-on costs $1,500, ‘rest assured you would think about the cost benefit.'”

SOURCE: http://pqasb.pqarchiver.com/chicagotribune/index.html?ts=1067374442 There is a fee to purchase the article.


 


Small Employers Switch to CD Plans



Employees aren’t the only ones wrestling with choices at this time of year. “Business First” of Columbus, OH, reports that local employers are also making some changes. The article cites Northway Transportation, with 22 employees that has long provided “Cadillac” benefits. Company VP Joan Harker says, “We had to look at a health insurance plan that would allow us to offer insurance and still stay within a reasonable rate for coverage.” They chose a $2,500 deductible plan with Anthem ByDesign. Ms. Harker says, “The savings to the company was significant.” Mark Saxton, a spokesman for Nationwide Health Plans reports that sales of consumer driven plans have taken off in nearby West Virginia, but not yet in Ohio. He says employers can save 20% on premiums by going from a zero deductible to a $1,000 version. Nationwide offers MyChoice Health Plan that sounds like a standard HRA product.

SOURCE: http://columbus.bizjournals.com/columbus/stories/2003/10/20/focus7.html


 


Anthem Merges With WellPoint



Speaking of Anthem, you have surely seen the reports that Anthem is merging with California’s WellPoint to create the country’s largest private insurer with 26 million members in 13 states. (Medicare still dwarfs it with 40 million beneficiaries.) The corporate headquarters will be in Indianapolis. Most of the analysis I’ve seen speculates that the combined company will be driving hard bargains with providers. Maybe, but the merger doesn’t really grow their market share anywhere, since both companies are essentially combined Blue Cross Blue Shield plans, licensed only in discrete states. Their market areas have never overlapped other than with some much smaller subsidiaries like UniCare. Both companies have been extremely well run, so it is hard to see new administrative efficiencies, either. There might be some home office savings, but the deal looks like it is intended mostly to enhance share value. WellPoint has been quicker to market with new products like MSAs and HRAs, and that culture might improve Anthem’s performance in the new consumer driven era. But this seems to be a time of insurance industry consolidation with HIAA and AAHP merging, and United Healthcare taking over MAMSI on top of other recent acquisitions. Stay tuned.

SOURCE: Milt Freudenheim’s article in the New York Times is the best I’ve seen – http://www.nytimes.com/2003/10/28/business/28care.html


 


Please send all comments/questions directly to me at gmscan@aol.com.



“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.


If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.


The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

SHARE THIS ARTICLE

About the author

IN THIS ISSUE:


? HSSAs Out of Medicare, HSAs Alive and Kicking

? Hawaii Looking at MSAs to Enhance Competition

? Wisconsin Reforms Blasted by Business Group

? Cost Insulation Raises Prices for All

? Spending Other People’s Money – Priceless

? New Choices for Employees

? Small Employers Switch to CD Plans

? Anthem Merges With WellPoint


HSSAs Out of Medicare, HSAs Alive and Kicking


According to the “Washington Post,” the Health Savings Security Accounts (HSSA) provision has been kicked out of the Medicare package now in conference committee, but the HSA (MSA expansion) remains. This is not surprising. The HSSA was added at the last minute in the House version. It is an innovative idea and one we will see again, but it suffered from insufficient ground work and a score of $164 billion (over ten years) by the Joint Tax Committee. Some people believed the HSSA was in there as a bargaining chip to protect the much less costly HSA provision, and whether that was the intent or not, it seems to have worked out that way. Ways and Means Committee Chairman Bill Thomas (R-CA) should be applauded for his bold thinking and for introducing an entirely new idea in health care financing. At a minimum, the HSSA would have enabled people to pay for their individual health insurance premiums on a tax-favored basis and that is an idea that is sure to come back.

SOURCE: http://www.washingtonpost.com/wp-dyn/articles/A26501-2003Oct27.html


 


Hawaii Looking at MSAs to Enhance Competition



Meanwhile, in Hawaii – of all places – the new Lingle administration is trying to “inject competition into a health insurance market dominated by two major players – the Hawaii Medical Services Association and Kaiser Permanente,” according to Bruce Dunford in the “Honolulu Advertiser.” The governor is trying to get MSAs approved in that state and legislation has passed the state Senate and is pending in the House. But the state auditor, Marion Higa, is resisting. She issued a report that maintains, according to the newspaper, “Based on a federal projection, Hawaii could lose $900,000 in tax revenue in 2004, with projected revenue loss rising to $5.5 million in 2005, $9.9 million in 2006, or a total of $208 million by 2013.” It is astonishing how MSA opponents have to make things up to support their case. Those numbers are not from a “federal” report, but a hatchet job by the Leftist Center for Budget and Policy Priorities, and it is a projection of HSSA impact, not MSAs. MSAs involve virtually no revenue loss because money deposited into the MSA is usually money saved from lower insurance premiums. Ms. Higa also maintains MSAs may be preempted by ERISA, which is patently untrue. In fact, the federal MSA law was written as an amendment to ERISA.

SOURCE: http://the.honoluluadvertiser.com/article/2003/Oct/27/ln/ln22a.html


 


Wisconsin Reforms Blasted by Business Group



Writing in “Madison.com” and the “Capital Times,” Matt Pommer reports that Republicans in Wisconsin have offered a four-point plan for health insurance reform. The proposal would encourage MSAs, allow chambers of commerce to set up their own benefit plans, allow an optional “basic benefits” plan, and allow individuals to form their own “health insurance cooperatives.” But, wouldn’t you know it? — opposition is coming from the Wisconsin Independent Businesses in the form of Executive Director Wayne Corey. Mr. Corey says the plan “is a guaranteed failure.” He wants to have community rating to prevent insurance companies from “discriminat[ing] against people with pre-existing or new health conditions.” The well-informed Mr. Corey also opines that MSAs are “unpopular” and that basic benefits are “lousy health insurance.”

SOURCE: http://www.madison.com/archives/read.php?ref=tct:2003:10:27:285896:FRONT


 


Cost Insulation Raises Prices for All



Dr. Bernadine Healy, former head of the American Red Cross, writes in “US News & World Report” that, “Americans seem willing to spend whatever it takes to cure disease.” She asks, “Is 15 percent (of GDP) too much or too little?” She notes that we spent a third of that in the 1950s – and got pretty much what we paid for. Still, she notes, there is the problem of the uninsured, which is “tied to the fact that the insured are insulated from what they are spending. This insulation from real costs drives up prices for everyone and turns the uninsured into charity cases.” She takes comfort in knowing that “plans for money-wise patients are starting to emerge,” including MSAs.

SOURCE: http://www.usnews.com/usnews/biz/e_friend.php3?goto=%2Fusnews%2Fissue%2F031027%2Fopinion%2F27healy.htm


 


Spending Other People’s Money — Priceless



Dr. James Knight is president of the San Diego Medical Society. He asks in the San Diego “Union Tribune,” “Did you get your OPM card yet?” An OPM card is “sort of like a credit card, only much, much better,” because you get to spend Other People’s Money. They don’t really exist – except in health care. “Feeling that virtually everything is already paid for, people’s appetite for more and more health services? has increased unchecked.” That is what is driving the strikes in Southern California, and with the new pay-or-play law in California it will apply to every mid- to large-sized business in the state. “Fortunately,” he says, “there are new strategies called ‘consumer driven health care’ to make the transition (to cost containment) less painful.” He walks through the numbers of how this all works and concludes, “In the end, only empowered, informed and financially responsible consumers will be truly effective in controlling?health care costs.”

SOURCE: http://www.signonsandiego.com/news/uniontrib/wed/opinion/news_mz1e22knight.html


 


New Choices for Employees



Eileen Ambrose writes in the “Baltimore Sun” and “Chicago Tribune” that open enrollment time is here and workers need to pay attention to their options. A Families USA spokeswoman says, “It’s very hard,” to understand all the choices. But Johns Hopkins professor Jonathan Weiner says that “one of the causes of skyrocketing health care is that consumers don’t know the true cost,” according to the paper. “If a doctor suggests a $1,500 test that’s fully covered by insurance, you’re likely to say, ‘why not?’ But if you’re buying a car and an add-on costs $1,500, ‘rest assured you would think about the cost benefit.'”

SOURCE: http://pqasb.pqarchiver.com/chicagotribune/index.html?ts=1067374442 There is a fee to purchase the article.


 


Small Employers Switch to CD Plans



Employees aren’t the only ones wrestling with choices at this time of year. “Business First” of Columbus, OH, reports that local employers are also making some changes. The article cites Northway Transportation, with 22 employees that has long provided “Cadillac” benefits. Company VP Joan Harker says, “We had to look at a health insurance plan that would allow us to offer insurance and still stay within a reasonable rate for coverage.” They chose a $2,500 deductible plan with Anthem ByDesign. Ms. Harker says, “The savings to the company was significant.” Mark Saxton, a spokesman for Nationwide Health Plans reports that sales of consumer driven plans have taken off in nearby West Virginia, but not yet in Ohio. He says employers can save 20% on premiums by going from a zero deductible to a $1,000 version. Nationwide offers MyChoice Health Plan that sounds like a standard HRA product.

SOURCE: http://columbus.bizjournals.com/columbus/stories/2003/10/20/focus7.html


 


Anthem Merges With WellPoint



Speaking of Anthem, you have surely seen the reports that Anthem is merging with California’s WellPoint to create the country’s largest private insurer with 26 million members in 13 states. (Medicare still dwarfs it with 40 million beneficiaries.) The corporate headquarters will be in Indianapolis. Most of the analysis I’ve seen speculates that the combined company will be driving hard bargains with providers. Maybe, but the merger doesn’t really grow their market share anywhere, since both companies are essentially combined Blue Cross Blue Shield plans, licensed only in discrete states. Their market areas have never overlapped other than with some much smaller subsidiaries like UniCare. Both companies have been extremely well run, so it is hard to see new administrative efficiencies, either. There might be some home office savings, but the deal looks like it is intended mostly to enhance share value. WellPoint has been quicker to market with new products like MSAs and HRAs, and that culture might improve Anthem’s performance in the new consumer driven era. But this seems to be a time of insurance industry consolidation with HIAA and AAHP merging, and United Healthcare taking over MAMSI on top of other recent acquisitions. Stay tuned.

SOURCE: Milt Freudenheim’s article in the New York Times is the best I’ve seen – http://www.nytimes.com/2003/10/28/business/28care.html


 


Please send all comments/questions directly to me at gmscan@aol.com.



“Consumer Choice Matters” is a free weekly newsletter published by the Galen Institute, a not-for-profit public policy organization specializing in research and education on health policy. Visit our website at http://www.galen.org for more information.


If you wish to subscribe/unsubscribe or update your address, please send an e-mail to galen@galen.org.


The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

SHARE THIS ARTICLE

About the author