BYPASS:

New plans shift health costs to workers (AP, 9/17/05)

Mark Galvin, founder of Whaleback Systems Corp., bypassed the traditional low-deductible health insurance plans he used for his three previous companies and bought a health savings account plan from Patriot Healthcare.

Gavin found he could save money for his high-tech Portsmouth company - half the $1,300 to $1,400 monthly premium for each employee. The trade off was a $10,000 deductible for the workers.

Galvin used some of his savings to fund $5,250 tax-free savings accounts for his 18 employees and agreed to pick up the slack if anyone had medical expenses that fell between that amount and the $10,000 deductible.

"The math just works out so much better," Galvan said. "The savings allowed us to fund everyone's health savings account to the maximum by law and still have some money left over." [...]

Health savings accounts are plans in which employees pay pared-down premiums in exchange for deductibles of $1,000 or more. The accounts work by letting employees set aside pretax income into an investment account that can be used for medical expenses.

To take advantage of the account, the worker must be signed up for a health insurance plan that has a minimum deductible of $1,000, or $2,000 for a family, and they cannot set aside more than $2,650 per individual, $5,250 per family.

Either workers or employers - or a combination - can contribute to the accounts. Some accounts roll over year after year and workers can transfer them to another job. Older employees also are allowed to make catch up contributions.

The accounts first became available in 2004 as part of the federal Medical Reform Act and some New Hampshire insurers began selling them late last year.

Patriot Healthcare, founded by former Health and Human Services Commissioner Nick Vailas, bases nearly all coverage on health savings accounts.

Offerings in New Hampshire should grow next year when Harvard Pilgrim introduces its health savings account plan and other insurers revamp prices to make them competitive, say brokers.

Don Mullen, a marketing manager for Anthem in the Northeast said so far the accounts represent a fraction of the overall market - perhaps 2 percent of Anthem's business in the state.

The theory behind health savings accounts is that high deductibles encourage consumers to be more price-savvy and comparison shop.

George Bush will be long gone by the time conservatives figure out that this was the key to the prescription drug bill.

Posted by Orrin Judd at September 18, 2005 1:22 PM