Organizational, operational review required for building health savings accounts
NATIONAL REPORTS-Since health savings accounts (HSAs) were created by the recent Medicare reform law, managed care executives are investigating options and developing products to offer a plan compatible with HSA legislation.
Ron Bachman, principal, HR services at PricewaterhouseCoopers, believes that HSAs are 'the most important legislative change to healthcare in 30 years. HSAs present another option to build an effective consumer strategy that promotes personal responsibility, cost and quality awareness and self help in lowering medical plan costs,' Bachman says.
Congressional tax analysts estimate that 40 million HSA accounts will be sold to consumers over the next 10 years. 'By marketing HSAs to individuals and families, as well as to employees of small and large employers, carriers will be at the forefront of potentially a huge market opportunity,' says Robert Fahlman, senior vice president and chief operating officer of eHealthlnsurance.com.
HSAs are like a healthcare 401(K) plan, according to Jacque Sokolov, MD, chairman at Sokolov, Sokolov, Burgess. 'They accumulate dollars for healthcare use in the future, and there is no use-it-or-lose-it provision similar to the FSA [flexible spending account],' Sokolov says.
Initially, HSAs will be offered to large and midsized employers that are comfortable dealing with a complicated benefit option, such as administration of large numbers of HSAs, according to William Todd, attorney at the Columbus, Ohio, office of Squire, Sanders & Dempsey. 'However, as familiarity with these accounts grow and administration costs decrease, this opportunity will further spread to small employers.'
HEALTH PLANS AND HSAs
'If a health plan has the administrative system to handle these accounts ... if they have the plan design portfolio flexibility, and if they are into consumerism ... then this new product is attractive,' according to Michael Taylor, principal of Towers Perrin's Health and Welfare practice.
'Initially, all of the major national health plans-Aetna, CIGNA, United and some of the larger Blues plans [Anthem/WellPoint, Highmark]-will start marketing HSAs,' Taylor says. 'For example, Aetna announced at the end of last year that it will offer an HSA with its consumer-driven health plan [CDHP], Aetna Health Fund.'
Later adopters will be the local Blues plans that traditionally targeted small employers and had high-deductible health plan designs, according to Taylor. 'In fact, the Blues-owned claims processor NASCO is launching an HSA administration module that local Blues plans can use as an outsourced administration system for HSAs. Some small group carriers also will offer HSAs.'
HSAs will be a critical vehicle for employers to be able to introduce high-deductible plans in a positive way, says Susan Fleming, senior vice president, product management and external affairs at First Health, a national managed care company serving the group health, workers' compensation and state public program markets. 'They will likely accelerate the trend toward consumers' having a greater portion of the financial obligation,' Fleming says. First Health is working with third-party money managers and will be prepared to offer HSAs in 2005.
Exclusively HMO-based managed care companies will not be able to implement an HSA because the size of the deductible required-at least $1,000 for an individual-is inconsistent with the philosophy and structure of an HMO, according to Ron Goldstein, president at CaliforniaChoice, a health purchasing alliance.
It is a strategic decision whether plans will want to build an infrastructure for an HSA or not, according to Ryan Levin, vice president of new product development and risk management for Destiny Health. 'They should conduct an organizational review and operational review to see if the plan has the technical platforms, customer service capabilities and informational reporting structure necessary to support this product,' he says. If not, the plan must decide whether it should build or buy these capabilities. Destiny Health is offering an HSA option for its existing personal medical fund, which has been a part of its consumer-driven plan since 2000.
COST CONSIDERATIONS
The effect on cost cannot be easily predicted with an HSA, says Peter Kongstvedt, vice president of Cap Gemini Ernst & Young's managed care practice. 'Since the amount one can put into the HSA in pretax dollars is equal to the deductible, it is possible to consider an HSA product to be health insurance without a deductible,' he says. 'And, if an individual rolls unused funds from year to year, it is possible in the course of just a few years to have funds to cover not only the deductible, but the coinsurance, as well.'
Glen Moller, vice president of marketing at HealthMarket, a provider of CDHPs to small and midsized companies, says that physicians might have to compete more on the basis of outcomes. 'It's not hard to imagine that consumers-suddenly feeling like they're spending their own money-will demand more information on outcomes so they can make the appropriate cost-benefit analysis -with their decision,' Moller says. 'It seems likely that competition might create further incentives for physicians and hospital systems to produce favorable outcomes.'
[Author Affiliation]
TRACEY WALKER
SENIOR EDITOR
