While many in the health insurance industry rave about the savings and investment potential of medical savings accounts (MSAs), not everyone shares their enthusiasm.
As legislation is proposed in the United States Senate and House of Representatives to remove restrictions on the number of MSAs that can be created and the size of company that can utilize them, concerns are being raised about what that could mean for those relying on traditional health insurance benefits.
Critics have questioned what the effects would be on the important risk-pooling principle of group insurance. If young, healthy and better-healed persons in the group insurance pool switch over to MSAs, will remaining members of the group see their insurance costs go up?
“There is the possibility in theory that would happen – but as to whether it would happen in practice is hard to say,” said John Peacock, fiscal analyst with the Wisconsin Council on Children and Families.
Peacock does see value in MSAs, particularly when it comes to the small businesses the current pilot program is aimed at.
“MSAs could be useful in dealing with the state’s failure to develop an acceptable plan for insuring small businesses,” Peacock said. “That will continue to be a problem because of the increases in the insurance rates for small employers. Looking at the segment of the uninsured, employees of small businesses and farms are a real problem area. In this state, as people think about the medical savings account issue, thinking about it will be shaped somewhat by the need to find insurance. I would be very concerned about eliminating the sunset date. And I also am not persuaded that we should eliminate the limit of 50 employees. The logic of MSAs is a lot more persuasive for small employers. Whether MSAs are the right solution – I don’t know.”
According to retirement planning expert Michael Gutter, director of the Certified Financial Planner program at the University of Wisconsin-Madison’s School of Human Ecology, not all young and healthy people are likely to flock to MSAs should they be made widely available.
“I could see companies switching to this, as this would be more cost-effective to a company – the same way that defined-benefit retirement plans were abandoned for defined contribution retirement plans,” Gutter said. “It might be cheaper for employers to offer an MSA program, and I don’t think many companies would give you the option of an MSA and another policy as it would be too expensive to offer both.”
Gutter thinks large as well as smaller companies targeted in the current pilot study could find MSAs attractive as group policies.
“I do think you would see some larger companies doing it,” Gutter said. “But some companies would stick to the plan that was more expensive, thinking they would be attracting higher quality employees. This is kind of the case now. Strong benefits can allow companies to offer you less monetary compensation while maintaining the same level of overall compensation.”
Critics also charge that MSAs work against the principles of preventive health because people may postpone important services and checkups because these are not covered by the high-deductible catastrophic health policies. Supporters counter by claiming that those covered by MSAs are likely to make better lifestyle and health choices because they will bear the cost of treatment resulting from destructive behaviors. Gutter feels this door could swing both ways.
“I definitely think we’ll see some of both of those effects,” Gutter said. “We’d likely see more preventive care put off. With today’s HMOs, we are more likely to get things checked out – after all, it’s only a $10 co-pay. But with an MSA, we might be a lot more selective. Certainly having the catastrophic coverage eliminates the fear that if there is a concern that someone does get checked out – and it turns out that surgery is required. After all, that would be covered by the high-deductible policy. My concern would be people not doing preventive medicine with the help of a professional. Catching things earlier always improves the possibility for treatment. But I do think that anything that would give a consumer more choice is a good thing. Some people would prefer this option. I am not sure that it is a good replacement for existing health coverage choices, but it might be a good choice for employers to offer.”
Christine Krsko, a Franklin chiropractor, thinks education is key to seeing that MSA clients keep up on preventive health measures.
“I can see how some people might think that,” she said regarding concerns about patients slacking off on preventive measures. “But many preventive things are not covered by insurance plans anyway. I do a lot of alternative things, and many of those things, I feel, are more beneficial for ensuring long-term health. You don’t often find massage therapy as a benefit, or acupuncture as a benefit – or oftentimes chiropractic. Nutritional consult is not always covered by a plan. But I have a different idea on what provides long-term health.”
Krsko also feels out-of-pocket expenses should not scare off those who know the value of preventive measures like diagnostic tests.
“I can elect to have tests paid for out of pocket,” she said. “I just had a CT scan of my heart – which tests for calcification – and I paid out-of-pocket for my test and an employee’s test – kind of a perk for her. I considered that test valuable and important. It cost $350 for each of us for that test. People will always find money for what they think is important. It’s maybe the education of what’s important that is needed.”
The continued involvement of physicians should also act as a moderating influence, Krsko said.
“Remember – it’s still the doctor that has to order the test,” she added. “In the end, the patient can’t order his or her own testing. The physician should know to test for cholesterol if there is a family history – or diabetes, or perform mammograms for women and prostate tests for men after a certain age. There are some basic tests that should be done.”
April 13, 2001 Small Business Times
