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One undeniable aspect of health-care reform is the need for innovation--a challenge of immense proportions, if past congressional wranglings are any indication. It is an Indiana company that has eagerly taken up the challenge; its solution is being met with enthusiastic support from companies across the nation.
Golden Rule Insurance Co., based in Indianapolis, continues to promote its unique remedy for controlling rising health-care costs. Termed the medical savings account--or MSA--the concept shows great promise in the fight for health-care reform.
The basic premise of the MSA is that it gives consumers the incentive to be efficient health-care shoppers. The medical savings account is designed to shift to employees the responsibility of cutting medical costs, encouraging them to do so by letting workers keep the money that they save. The plan is ingenious in its simplicity.
The basics: Golden Rule has offered its employees MSAs to replace their traditional medical coverage. These accounts are combined with a catastrophic umbrella insurance policy that pays 100 percent of the normal covered expenses after a deductible is satisfied ($3,000 for a family, $2,000 for an individual).
The medical savings account and the umbrella policy together leave employees facing potential out-of-pocket expenses similar to or even less than what they faced with the previous insurance, but they may pay medical bills out of the savings accounts from the start, without first having to satisfy a deductible. They also may use money in the account for services not always covered by traditional insurance, including vision and dental care.
J. Patrick Rooney, chairman of Golden Rule, makes the comparison. "Our traditional family plan carried a $500 deductible with a 20 percent copayment for the next $5,000." That left a maximum potential out-of-pocket expense of $1,500 per employee. Golden Rule's medical savings account, on the other hand, pays for the first $2,000 of medical care for those on the family plan. The 100 percent catastrophic coverage kicks in at $3,000, leaving the employee responsible for the remaining $1,000. The maximum out-of-pocket expense, then, is $1,000 under the MSA option, $500 less than the maximum under traditional insurance.
Golden Rule makes deposits into the employee's account on a monthly basis. Should the employee encounter substantial medical expenses during the...