America Talks Health Care
Tax credits and Medical Savings Accounts took center stage at the Bush administration’s first “Talk to Tommy” public forum on health care, held December 10, 2002 in Minneapolis. Similar meetings are being held across the country, including one held December 17 in Jacksonville, Florida to focus on doctors and medical malpractice issues.
Billed as America Talks Health Care, the event featured Tommy Thompson, secretary of the Department of Health and Human Services, and two panel discussions addressing individual control and ownership of health insurance.
Thompson invited the audience of approximately 250 people to share any ideas for improving health care, no matter how radical. “Health care is the number one issue facing Americans today,” he said. The Bush administration plans $117 billion in new health care initiatives, Thompson noted, including tax credits, health accounts, and association health plans. Health insurance, he said, should be accessible, accountable, and affordable.
Russell Hagen, CEO of Data Recognition Corporation (DRC), described during one of the panel discussions the menu of health benefits his company offers to its employees, and how enrollment in the various plan options has changed in recent years. As insurance premiums have increased, he noted, enrollment in the company’s most expensive plans has fallen. Nevertheless, only 17 percent choose the company’s major medical plan, which costs 43 percent less than the highest-priced plan.
DRC is unusual in that it will not allow its employees to be uninsured. Employees are enrolled automatically, and their share of premium payments is deducted from their paychecks, unless they present a letter to human resources stating they are enrolled in a spouse’s health plan.
“It’s a bit paternalistic, but tough bounce,” Hagen admitted. His primary goal, he said, is a healthy workforce.
Panelist Grace-Marie Turner, president of the Galen Institute, discussed tax reform as key to increasing consumer choice and the share of the U.S. population covered by insurance. Although employers receive tax deductions for providing health insurance to employees, “millions of women believe they could pick a better policy than the HR department,” she noted. Tax credits would make it financially possible for individuals to purchase policies that suit their needs better than the one-size-fits-all employer-provided group policies.
Saying the number of uninsured would drop by half, Turner advocated refundable tax credits that would target the uninsured, while not disturbing those with existing coverage. She emphasized, “Whoever controls the money controls the choices.”
William McGuire, CEO of UnitedHealth Group, wants consumers to have good information. He advocated evidence-based medicine to increase accountability and wise use of health care resources. And then, as if to prepare members of the audience for the inevitable public opposition, he quipped, “Remember that for the privacy thing.”
John Goodman, president of the National Center for Policy Analysis (NCPA), charged the federal tax code with being “very biased against people being allowed to control health care dollars.” He revealed “tax law is encouraging us all to be in HMOs.”
“We need a use-it-or-save-it account,” Goodman said, because “nobody cares about you more than you care about you.”
David Hess, corporate vice president for benefits at Medtronic, and Carla Bender, a Medtronic employee, discussed Health Reimbursement Arrangements. Since it began offering Definity Health’s HRA plan, Medtronic’s costs have decreased. Employees choose generic drugs more often, and they use the company’s nurse line more often to address relatively minor health issues. To Bender’s relief, Definity allows her to “know the exact financial obligation” of any procedure.
Medical Savings Accounts
Kallija Paraska, senior vice president for Accordia Northwest, a Seattle-based insurance brokerage firm, discussed Medical Savings Accounts as a way to significantly reduce health insurance costs. She said she can provide a Washington State employer with an MSA plan for just $103 per employee per month, compared to at least $312 per employee per month for standard insurance policies.
Thirty-four percent of MSA enrollees are senior citizens, who use their MSAs primarily for prescription drug coverage. According to Paraska, the cost of an MSA plan for seniors is $175 per month. Accordia’s MSA enrollees have seen premium increases of no more than 5 percent. One CEO with 24 employees used Accordia to switch to MSAs. The company’s $89,000 annual health insurance expense dropped to $51,000. Part of the savings went to the employees, and $13,000 went to support the company’s bottom line.
Accordia has a stringent requirement for those considering MSAs: No MSA purchases without education. To assure success of the program, Accordia requires that MSA enrollees learn how to use the MSA wisely. Training sessions are held three times a year in large auditoriums. All of them are packed, Paraska said.