msa/mike1st BEN SULLIVAN Staff Reporter Medical savings accounts are being touted by proponents as the hottest thing to hit the health insurance industry in years. But so far, most local managed care companies are keeping their distance from the novel payment method. In Woodland Hills, the hub of Los Angeles’ managed care industry, only Blue Cross of California has attempted to market a medical savings account, or MSA, and that effort earned the company a $100,000 fine last month from the California Department of Corporations. Blue Cross had run a half-page advertisement in the Wall Street Journal in December promoting its MSA, but did so before receiving final regulatory approval from the department. Blue Cross’ MSA license now hangs in limbo as the company negotiates a settlement with the department. Indeed, since MSAs went into effect Jan. 1, only San Francisco-based Blue Shield of California has received approval from the Department of Corporations to market a plan. In part, the managed care industry’s reluctance to pursue MSAs is because the products undermine existing HMOs, according to Peter Lee, director of the HMO Consumer Protection Project at the Los Angeles-based Center for Health Care Rights. HMOs rely on the concept of shared risk, in which all enrollees contribute a little each month, Lee said. For every person who opts out of an HMO in favor of an MSA plan, the burden on those left behind increases. Also, HMOs tend to emphasize preventive care, Lee said, while MSAs focus on catastrophic coverage. “The theories of the two definitely go against each other,” said Daniel Meracle, vice president of Seabury & Smith, a broker and administrator of employee benefit plans in Glendale. Managed care has also been slow to act because it is unclear how popular the plans will be with consumers. “We need to do more research,” explained David Olson, a spokesman for Woodland Hills-based Health Systems International. “We don’t have anything in the product development pipeline at this time, but we’ll continue to watch them with a great deal of interest.” Similarly, Woodland Hills-based CareAmerica Health Plans said it has been exploring the possibility of launching an MSA plan, but has yet to get one off the drawing board. Kaiser Permanente said it has no plans to offer an MSA. Still, both Lee and Meracle noted, if MSAs do catch on, the managed care industry will be unable to ignore them. Warren Blumberg, executive director Centerstone Insurance & Financial Services in Woodland Hills, said that’s just what is likely to happen. “Carriers are not jumping on the bandwagon to provide these yet,” Blumberg acknowledged. “But when they take off, (the groups) will want a piece of the action.” MSAs come out of last year’s Health Insurance Portability and Accountability Act of 1996, which sanctioned the creation of an MSA pilot program of 750,000 accounts nationally to help small companies, self-employed and uninsured individuals attain affordable health care coverage. The plans let people set aside money in tax-exempt, interest-earning bank accounts, for the exclusive purpose of covering health care expenses. Not only does the holder not pay taxes on the interest earned, but he or she can deduct the amount deposited in a given year from their taxable income. However, to qualify for an MSA, consumers must purchase a high-deductible catastrophic health insurance policy. When a medical cost arises, account holders pay the first several thousand dollars of expense out of the account, after which insurance picks up the rest. For its part, Blue Shield remains bullish on the products. “We’re very positive about the opportunity on this thing,” said Jim English, Blue Shield’s vice president of sales and marketing. “Clearly, this is new ground that we’re exploring, but it’s really exciting stuff.” we’re brokers and adminsitrators of employee benefit programs We act as general agents for MSA hard to get employers interested until after the 1st of the year. just received People like kaiser cant get a handle on the expenses. outpatient costs The theory of it def go against each other. its a defensive mechanism. the premium’s going to come down so our commison’s going Glendale, The theory of it def go against each other.Daniel Meracle, vice president and Western US area head , marsh and maclenen
