The Big Health Story in 05:Consumer-Driven Plans
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Right now, brokers, insurers and policy experts agree that the big health insurance story in 2005 will be the performance of "consumer-driven" health insurance programs that combine health savings accounts, health reimbursement arrangements or other personal health accounts.
"HSAs may be to 2005 what HMOs were to 1995," says Thomas Harte, president of Landmark Benefits Inc., Hampstead, N.H.
Congress has enacted a law, the Medicare Prescription Drug, Improvement and Modernization Act of 2003, that will let consumers and employers deduct qualified contributions to and qualified distributions from HSAs.
The Internal Revenue Service has obliged with a series of rulings, regulations and guidances designed to encourage employers and their benefits advisors to jump on in.
Benefits brokers who have tried the concept on clients and at their own firms say they like it.
The account-based plans "are really not that complex," says Carl Cease, marketing director at The Cason Group, Columbia, S.C., a benefits broker that has established an account-based plan for its employees. "And they do work. Everybodys talking about how much things cost."
Even when employers end up sticking with conventional plans rather than shifting to account-based plans, "they know they want to hear about them," Cease says.
Samuel Fleet, president of National Employee Benefit Companies Inc., Warwick, R.I., thinks the announcement that UnitedHealth Group Inc., Minnetonka, Minn., has agreed to pay $300 million for Definity Health Corp., Minneapolis, a pioneer in the account-based health plan market, has given the account-based approach a big boost.
"Its going to become more mainstream," he says.
For now, growth in account-based plan enrollment seems to be patchy. In Rhode Island, for example, growth is about as strong as Fleet had expected but slower than some HSA and HRA advocates had hoped.
In South Carolina, Cason is seeing "well over half" of its clients choose HSAs, and about 75% of the employers that adopt HSAs are making some contributions to the HSAs, Cease says.
Aetna Inc., Hartford, reported that 1.6% of its 13 million health plan members were enrolled in account-based plans at the end of the third quarter of 2003. The percentage could increase dramatically this year as new coverage contracts take effect.
