IN THIS ISSUE:
? Federal Unions Oppose HSAs in FEHBP
? In the Real World – “Tremendous Level of Innovation”
? VENDOR CORNER
? BCBS Minnesota
? Principal Financial Group
Federal Unions Oppose HSAs in FEHBP
A Congressman’s office forwarded the following e-mail. This one office has received about 100 of these, supposedly from constituents, and several other offices are also being deluged. The arguments are being circulated by the National Association of Retired Federal Employees (NARFE). These folks know how to apply pressure:
“I am writing to ask you to urge Office of Personnel Management (OPM) Director Kay Coles James to withdraw plans being made by her agency to offer costly Health Savings Accounts (HSAs) with high deductible catastrophic health insurance in the Federal Employees Health Benefits Program (FEHBP).
I believe the proposal could further increase the premiums I pay for my comprehensive FEHBP coverage by siphoning off healthy enrollees into catastrophic/HSA plans. And, the nonpartisan Congressional Budget Office (CBO) says that legislation to make the savings accounts and high deductible insurance available in the FEHBP would cost taxpayers nearly $1 billion over five years. Moreover, research by the nonpartisan RAND Corporation, the Urban Institute and the American Academy of Actuaries indicates that premiums for coverage under a traditional health insurance policy could at least double if HSA use becomes widespread.
Although HSAs may provide short-term financial gains to some individuals, their growth in the FEHBP could result in higher costs for enrollees and taxpayer in the long run. It’s a mistake to transform a successful group health system — where risk sharing keeps health insurance affordable and predictable throughout life — to an “every man for himself” scheme – where premiums and out-of-pocket expenses are only reasonable for healthy participants.
Some elected officials have held up the FEHBP as a model for other employers and health care systems to emulate. However, the imposition of HSAs on the FEHBP will have the opposite effect by encouraging employers to replace traditional health insurance with less comprehensive HSAs. As a result, traditional health insurance may no longer be an affordable option for those of us in need of comprehensive coverage and our risk of losing coverage will only grow as HSAs become more dominant.
For these reasons, I urge you to ensure that OPM withdraws its proposal to offer costly HSAs in FEHBP.”
If you want to see what sophisticated lobbying is all about, go to the NARFE web page, headlined “Stop New Threat to FEHBP,” where you can send this letter to your own members of Congress with just a click of the mouse. You don’t have to be able to write or even think, all the writing and thinking has been done for you, courtesy of the union bosses.
If you would like to write your own letter, I urge you to check my HSA paper which includes a section on “Answering the Critics.”
In the Real World – “Tremendous Level of Innovation”
Despite the carping of the federal unions, HSAs and HRAs are doing just fine out in the real world. “Employee Benefit News” reports that, “with the ink barely dry on the colossus Medicare bill? insurers have already begun planning, developing and rolling out new HSA products?. Industry watchers say the HSAs are the logical evolution in the market trend toward consumer-driven health care.” The article quotes Mohit Ghose, a spokesman for AAHP-HIAA as saying “we’ve seen a tremendous level of innovation? as more and more people realize what the main health care cost drivers are and how they want to better manage their health care costs.” And Susan Relland of the American Benefits Counsel says HSAs are something employers can do “that not only helps their retirees, but also their active employees.” The article goes on to discuss product development efforts at Aetna, Humana and United Health Group. These will likely not be available until mid-year 2004, but Starmark “plans to offer new products that can be coupled with HSAs beginning in February (and) American Medical Security, which currently offers HSAs for individuals, will have products available by April for small employers.” The article also notes that “Fortis Health sold the first individual HSA in the country and now has products for both individuals and small groups.” EBRI’s Paul Fronstin adds a cautionary note, “It’s probably not useful to look at 2004 as an example of whether HSAs might take off?. These things don’t take off in the first year, and they shouldn’t be expected to.”
In the past few days a number of additional vendors have announced their own versions of consumer driven coverage. To wit:
? Blue Cross Blue Shield of Minnesota has announced an HRA-driven plan for smaller employers called “Options Blue.” The plan features a high deductible, and employer-funded account, first dollar coverage of preventive services, and a strong on-line customer support and disease management program called Blueprint for Health. The company press release says Blue Print for Health saved the company $36 million in the first year of operation (for its regular business) and resulted in an 11% drop in ER visits and a 14% drop in hospital admissions, for a per-member claims savings of $500. Contact Joel Swanson at 651-662-2882.
? Lumenos is adding HSAs to its product line. It is well-positioned to serve this market through its wholly owned subsidiary MSAver, one of the first MSA administrators in the country. It will convert its MSA business to HSAs and continue to serve the small group market, while adding an HSA option for large employers. Company president Chip Tooke says, “HSAs broaden the appeal for consumer-driven programs by creating more flexibility and product options for employers and employees. Ultimately this empowerment will lead to better health outcomes and a more effective use of health care dollars.” Go to http://www.lumenos.com for more information.
? The Principal Financial Group has announced a new consumer-driven product it calls the Principal Reimbursement Arrangement. It is aimed at the small to mid-sized market and features an insured HRA with consumer support services such as health assessments and case management. The news release says, “the Principal Reimbursement Arrangement is funded through premiums, allowing the employer to determine the portion paid by employees.” Contact Rhonda Clark-Leyda at 515-247-6634 or clark-leyda.Rhonda@principal.com
? BENU has inked its first contracts in Oregon. It offers a “consumer-driven benefits exchange” program that offers employees a choice of not only plan design, but of carrier. In Oregon it provides both Kaiser HMO coverage and two designs from Cigna. The value BENU brings to the package is a “unique risk mechanism that eliminates carrier problems with adverse selection,” according to Kaiser’s Denise Honzel. For more information, contact BENU’s Ben Singer at 562-936-1466.
? Destiny has named a new CEO to replace Ken Linde. It is Scott Spiker. Most recently president and CEO of the Stanton Group of Minneapolis and president and COO of Definity Health. Mr. Spiker is a graduate of the Naval Academy and University of Chicago MBA. Contact Eileen Rochford at 312-953-3305 or firstname.lastname@example.org
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