Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 21, 1995 TAG: 9505190082
SECTION: BUSINESS PAGE: F4 EDITION: METRO
SOURCE: CHRISTOPHER CONNELL ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
The president of the business magazine, Malcolm Forbes Jr., believes that people spend health dollars more wisely if the money comes out of their own pockets.
``The program has awakened people to the fact that they are consumers with some impact'' on health costs, said Joel B. Redler, Forbes's vice president and treasurer.
The magazine's workers now are less inclined to rush to a doctor with a minor ailment, or make ``a third visit to a chiropractor or for physical therapy or outpatient mental health services,'' said Redler.
Forbes's bonus plan is a variant of an idea high on the health agenda of many Republicans in Congress this year: medical savings accounts.
House Speaker Newt Gingrich, R-Ga., and House Ways and Means Committee Chairman Bill Archer, R-Texas, are both enthusiastic proponents of letting Americans save for their own medical expenses.
A conservative think tank in Dallas, the National Center for Policy Analysis, is promoting medical savings accounts as a market-oriented way to wrestle down health costs.
The Golden Rule Insurance Co., which specializes in selling health insurance policies to individuals, now markets medical savings accounts to companies, coupled with catastrophic coverage that kicks in after a person meets a deductible as high as $2,000 or $3,000.
Forbes reduces employees' $1,500 bonuses by $2 for every $1 in claims they submit after meeting a deductible of 1 percent of salary.
That means a worker making $50,000 is better off paying up to $2,375 in bills out of pocket rather than submitting all the claims and getting reimbursed at 80 cents on the dollar after the deductible, Redler said. The company is spared the expense of handling the paperwork on dozens of minor claims.
Rita Koselka, 32, pocketed bonuses of $1,000 and $1,200 for 1992 and 1993 by watching her medical expenses like a hawk.
She got a family friend who is a dentist to clean her teeth for free, and went to a women's clinic that charged just $75 for a gynecological exam.
But last year the 32-year-old associate editor had a string of minor problems, including a chipped tooth and a bout of bronchitis that developed into walking pneumonia. Like two-thirds of her co-workers at Forbes, she wound up with no medical bonus for 1994.
Laura Saunders, a senior editor with two young children and lots of routine medical expenses, has never come close to getting the money.
``We have a lot of medical spending, with the various calamities that children go through,'' said Saunders, 40, whose husband is also covered on her plan. ``I just don't even think about [the bonuses] because it's not even something that pays me to work out the math.''
Dan Perrin, executive director of the Business Coalition for Affordable Health Care, which is lobbying for medical savings accounts, said that 73 percent of all Americans run up $500 or less in claim costs each year, and 90 percent have claims of $1,000 or less.
``The vast majority will end up with savings at end of year. The next year they'll get another $1,500 and presto, you have an account which is building savings and providing a pool of money to pay for health insurance if you're laid off [or] to save for your retirement,'' said Perrin.
But critics fear that medical savings accounts could derail the country's movement toward managed care, which emphasizes early care and prevention.
The American Academy of Actuaries in a recent review concluded medical savings accounts work best for workers with ``little or no health care expenditures.'' Older workers, pregnant women and others with steep bills could wind up losers.
Robert Reischauer, the former director of the Congressional Budget Office, fears that premiums for traditional insurance will soar as the healthier workers abandon the regular pool and switch to savings accounts with catastrophic coverage.
``What we're really talking about is shifting more of the cost of health care onto sick people,'' said Reischauer, now a senior fellow at the Brookings Institution. ``Health insurance is a pooling of risk. Those people who are healthy are subsidizing those who are unhealthy.''
But medical savings accounts have drawn strong support from the American Medical Association, which hails them as a way to help preserve patient choice of doctors ``freed from the intrusion of third-party payers.''
by CNB