Hit by the rising costs of administering and paying for employee health insurance, I & C Systems Engineering in Westbrook took an unusual step three months ago: It gave each of its 11 workers a special health-care MasterCard, with up to $1,500 a year in their accounts.
The MasterCard helps them pay for services ranging from doctor visits to prescription drugs to dental work.
Why would a company do this? To save money.
I & C Systems is among the first businesses in Maine to experiment with a new trend in health insurance known, perhaps euphemistically, as consumer-driven health care. Supporters say the approach corrects the failed financial assumptions of managed care, which promotes preventive care but shields patients from the true cost of services.
The trend to consumer-driven health care can produce the most dramatic savings in companies that are switching from HMO-type managed-care plans to policies that carry high deductibles, the amount patients pay for covered services before their benefits kick in. Because the MasterCard program at I & C Systems is new, and because the company already offered its workers a high-deductible plan, it’s too early to say how much the company will save.
But if the program succeeds, workers should wind up paying lower premiums than they otherwise would in the future. In exchange, they’ll have to think more carefully about unnecessary health-care purchases that could deplete their MasterCard accounts, such as visiting the doctor’s office for a sore back that would heal on its own.
Consumer-driven health care is still being refined, and there’s concern that it could keep some people from getting the care they need. But Jay Hunter, president of The Choice Care Card in Montpelier, Vt., the company that operates the program used by I & C Systems, said consumers have lost the incentive under managed care to use medical services wisely.
“We don’t have health insurance today,” Hunter said. “We have health assurance.”
Desperate for relief
Three years of double-digit rate increases have made both businesses and their employees desperate for relief. Some sweeping proposals are under study, such as taxpayer-supported health care directed by the government. In the meantime, consumer-driven health care is emerging as one immediate option for business. The Greater Portland Chamber of Commerce, which is working to set up a lower-cost insurance plan for its members, is looking at a similar health-care card.
Here’s how The Choice Care Card works.
The card is a debit card that works with employer-sponsored health insurance plans. Workers get a set amount of money in their accounts each year from their employer – perhaps $1,000 or $1,500. The card is good at most health-care providers that accept MasterCard and can be used for co-payments, deductibles or other charges not covered by the insurance plan. If a medical provider doesn’t take MasterCard, a claim form usually can be submitted.
Swiping the card automatically sends the payment from the account to the provider, just as with any bank debit card. Each time the employee uses the card, the balance drops. So a $200 visit to the doctor would cut the balance from $1,500 to $1,300.
Workers can check their account balance online. Whatever’s left in the account at year’s end is typically rolled over for the next year. Employees become more aware of what health-care costs, supporters say, because their balance must last all year. If it doesn’t, they pay out of their own pocket for medical care when the account runs dry.
How does this save a company money?
Typically, The Choice Care Card is used in conjunction with “catastrophic” insurance plans. These plans are meant to cover major medical needs, and often carry deductibles for employees in the $1,000 to $3,000 range. They also have lower premiums than most managed-care plans that pay the bulk of routine, “first-dollar” expenses. That’s why they can save a company money on premiums.
Premium costs drop
The problem is, catastrophic plans have proven unpopular with workers, who have to spend a lot out of their own pockets before coverage kicks in. With lower premiums, however, employers can use some of the savings to offset those out-of-pocket costs by funding the health-card accounts. All totaled, many companies will see their premiums drop by 25 percent, according to Hunter at The Choice Care Card.
If companies use a reasonable portion of the savings to fund the card, Hunter said, workers should have enough money to help them pay many uncovered expenses. And if they don’t need much medical care, they can use the money for other health-related services, such as eyeglasses or dental care.
“For most people,” he said, “they’re getting better coverage. They’re getting real, first-dollar coverage.”
The card can also make sense for companies that already offer some sort of medical spending account for their workers.
At I & C Systems, workers have health coverage through an Anthem Blue Choice plan. The company pays 100 percent of health-care premiums for its workers.
Workers had been getting $1,000 per family for uncovered expenses, with the program administered by a part-time employee. The contribution could be used for dental or other noncovered services, offsetting the $2,000 deductible for Anthem’s family health coverage.
Cuts back on paperwork
But workers had to submit claims forms, making the plan costly to manage. Going to The Choice Care Card eliminates that. The administrative savings helped the company boost the amount of money in employee spending accounts to $1,500 a year.
Kathie Hebert, the company’s accounting manager, said most workers seem happy with the card so far. One problem that has emerged is that the card won’t work at store pharmacies, such as Hannaford and Wal-Mart. These stores are tagged as retail accounts, and the card won’t honor retail purchases. Those claims have to be submitted by mail.
The growth of consumer-driven health care is of particular interest to Gino Nalli. An assistant research professor at the Muskie School of Public Service at the University of Southern Maine, Nalli is also board president of the health-care alliance formed by the Portland chamber.
Nalli said managed care does some things well. Developing quality guidelines helps doctors follow the best practices in their fields. Requiring patients to use a primary care doctor as a gatekeeper provides a central hub for coordinating treatment. If consumer-driven health care becomes more popular, he noted, it will put more responsibility on the patient to sort out the best course of treatment.
“Is it reasonable for consumers to be critical shoppers for health care services?” Nalli asked.
‘A reasonable concept’
Nalli said there’s a good chance the chamber of commerce will introduce a plan next year that features high deductibles. It will likely offer a spending account tied to a debit card.
“It’s probably not a silver bullet,” he said. “But I think it’s a reasonable concept. People are going to explore it.”
Frank Mazur is gearing up for that exploration.
President of Business Benefits and Investments in Portland, Mazur is the state’s first representative of The Choice Care Card. He works with small companies in southern Maine and said the concept is especially appealing to those who can no longer afford HMO-type managed care policies. He expects a lot of interest this fall as policies come up for renewal.
“We’re seeing the change right before our eyes,” Mazur said. “It’s going to happen really big from November to March. That’s when 80 percent of companies in Maine renew.”
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
The Choice Care Card is often used in conjunction with “catastrophic” insurance plans.
To learn more about the special health-care MasterCard, visit the Internet site www.choicecarecard.com
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