Congress may soon make Medical Savings Accounts (MSAs) the law of the land. And even labor unions like the idea.
Medical Savings Accounts give people the opportunity to move from a conventional, low-deductible health insurance plan to one with a high deductible (say $2,000 to $3,000) and to put the premium savings in a medical savings account. Employees and their families pay all medical bills up to the deductible from their MSAs and out-of-pocket. Insurance then covers 100% of everything else.
The political battle for MSAs has been long and hard, but even when the political battle is over, the fighting will continue. That's because the real issue behind the MSA debate is who will control our health care dollars. MSA supporters want individuals to control more of their health care dollars; MSA opponents want someone other than the patient – a manager, "gatekeeper" or bureaucrat – to control those dollars.
It is becoming the ultimate in populist vs. elitist battles, and nowhere is that more evident than in Bucks County, Pennsylvania, a suburb of Philadelphia.
During 1995 contract negotiations between teachers at the Bucks County Technical School and officials of the Bucks County School Board, the issue of the high cost of health care became a topic for discussion. Members of the Bucks County Technical School teachers union had recently heard of Medical Savings Accounts and thought that by shifting to an MSA plan, both the teachers and the administration could benefit.
They learned that some 3,000 businesses have adopted some form of MSA plan. The apparently universal experience is that MSA plans reduce employers' health insurance expenditures over time and permit employees to benefit financially by managing their health care dollars wisely. A win-win situation for everyone involved.
Ed Moffit, who teaches air-conditioning and refrigeration technology for the school and is president of the teachers' union, optimistically presented the idea to the Board. After all, the money employees spend for health insurance ultimately belongs to the employee. He thought the Board would be delighted that a union was proposing a free-market solution to their health care dilemma.
He was wrong.
The Board's solution to restraining health care spending was to move the teachers out of their fee-for-service policy and into a managed care plan, lowering the Board's cost and pocketing the difference. Unwilling to let a managed care plan make choices for them, union members opposed the school's solution.
The battle thickened. Moffit and the union publicly asked the school Board to release information about the union members' health care costs. Finally it did, and now pressure is building for MSAs.
What the Bucks County Technical School Education Association has learned is what union members and employees across the country are learning – MSAs make sense. For example: ·
In 1994, the United Mine Workers adopted an MSA-type proposal by providing members with a $1,000 deductible policy and writing them a check for $1,000 at the beginning of the year.
City employees in Jersey City, New Jersey, get an $1,800 MSA contribution to a family plan and a $2,000 deductible – and the average MSA refund was about $1,000 at the end of the first year.
Union members often have the most comprehensive health insurance plans in the country, often costing well above the national average of about $5,000 for a family plan. As a result, union members who choose a less expensive catastrophic plan can have a significant amount of money left over to deposit in their MSA, and most would have a nice bonus waiting for them at the end of the year.
But as the Bucks County experience makes clear, management often mistakenly thinks it knows best.
For example, in recent testimony before Congress, John N. Sturdivant, president of the American Federation of Government Employees, AFL-CIO, which represents 700,000 federal and District of Columbia employees, declared that "people are willing to accept limitations on their choice of providers in exchange for more comprehensive benefits and lower out-of-pocket costs." Translation: Mr. Sturdivant wants your choices limited if it will save a little money.
And, he added, "Under MSAs . . .consumers would delay treatment until it was absolutely necessary." Translation: You can't be trusted with the money because you're too stupid to make good health care decisions for yourself.
Condescension, whether practiced by management or union leaders, is a poor substitute for individual empowerment. There is no reason to think that the Bucks County School Board or John Sturdivant or anyone else besides you and your physician should make decisions about your health care. Medical Savings Accounts will give you that opportunity.