The Boston Globe
January 4, 2002
by Diane E. Lewis
Mark Abate, a health care and group benefits consultant at William M. Mercer Inc., noted that “some employers were considering a market-driven approach in which employees would receive catastrophic or high deductible insurance for unexpected health care expenses and a health care spending account for more routine expenses. In all, 29 percent of companies with 20,000 or more workers and 17 percent of all of the companies polled indicated they were somewhat or very likely to establish that plan within two years.”
Comment:
To see how these plans may work, we can look at an example provided by the Pacific Business Group on Health for their new “Breakthrough Plan with Definity Health”:
“An employee is seriously injured, and her medical expenses total $20,000. The first $1,000 is paid by the employee’s PCA and applied toward the deductible. The employee pays the next $500 of the plan deductible. After a total of $1,500 has been spent on primary medical services, the deductible is met and the health coverage feature covers all remaining costs. If the employee chooses preferred network providers, co-payments and deductibles are likely to be low. If she chooses providers from outside the network, her cost-share will be somewhat higher, but care will still be provided. At the end of the calendar year, the employer will establish a new PCA with a $1,000 contribution.”
(Note that the $1500 deductible used in this example is much smaller than many analysts expect will be the norm.)
Source:
Caveat emptor!
These plans are being promoted as a pain free method of meeting medical expenses. First the savings account is depleted, and then the patient pays the remainder of the plan deductible. After that, the “health coverage feature covers all remaining costs.” But look at what is omitted by this “catastrophic coverage” that “covers all remaining costs.” If the patient is lucky enough to have had contracted network providers care for her serious injuries (often a chance occurrence), then she will still have to pay “co-payments and deductibles.” If the providers are outside of the network, she will be responsible for all uncovered costs. Those that have used PPO products are aware of the severe financial penalties for using out-of-network providers.
A visit to the website of WellPoint’s Blue Cross of California is revealing (
Although considerable concern has been expressed over the large deductibles of these MSA-catastrophic plans, the catastrophic backup being offered should be sounding all alarms. And yet these plans are destined to become the standard based on the initial response of business interests!
Let’s put at end to policies that are designed solely to create successful business models for the insurance industry, and let’s instead adopt policies that are designed to establish equity in access and coverage for patients.
Kip Sullivan responds to the message on catastrophic plans for MSAs:
“What the press isn’t telling the public is that Definity and other defined contribution plans are using managed care tactics. A Definity official told me Definity uses utilization review and profiling, but not gatekeeping. Of course, choice of doc is limited. An article in HR Today indicates Vivius uses capitation. I suspect that means Vivius also uses UR. I would say we have gone from bad to worse if we go from manage-care plans with low deductibles to managed-care plans with large deductibles.”