Savings accounts may be future of health care>

By Andrew Dunn

andrewdunn@charlotteobserver.com

Posted: Wednesday, May. 20, 2009

The future of health insurance likely lies in personal spending accounts rather than traditional copayment plans, business leaders said Wednesday at a health care summit hosted by the Charlotte Chamber.

Though still making up a small percentage of medical insurance plans, health savings accounts and health reimbursement accounts are gaining in popularity as Charlotte-area businesses of all sizes look to cut costs.

Health savings accounts allow people to save money in an account designated solely for health care expenses. Employers often pay into the accounts as part of a benefits package, but all money in the accounts is owned by the individual.

Health reimbursement accounts are a similar type of health care plan but are owned by the employer. Businesses set aside a certain amount of money per year to pay employees back for medical expenses.

Participation in these programs is growing quickly.

About 8 million people nationwide are enrolled in health savings account programs, up 31 percent since last year and a seven-fold increase since 2005, according to the America's Health Insurance Plans association. In January, North Carolina had about 123,000 people enrolled in the plans, about 3percent of the nearly 4 million residents covered by private insurance.

Blue Cross and Blue Shield of North Carolina saw the number of Mecklenburg County residents enrolled in either savings or reimbursement accounts grow 49 percent in the past year – to 95,388.

Unlike traditional copay plans, where employees pay a fixed amount and company-sponsored insurance picks up the rest, these plans give employees a finite amount of money for health care. This encourages them to spend more wisely – saving big firms a lot of money. For small companies, these plans are a way to provide some form of health insurance. Contributions are tax-deductible for employers.

“The day of HMOs that you might have had in the 1990s has been driven out by rising health care costs,” said Roger Rollman, Southeastern regional spokesman for UnitedHealthcare.

But the accounts aren't pitched as something that just helps companies cut costs, said Cameron Hayes, employee benefit consultant at Benefit Controls of the Carolinas.

He recently helped move Cash Cycle Solutions, a Charlotte-based billing and processing company, to a health reimbursement account plan from a traditional preferred provider organization plan.

“It wasn't purely about how can the employer save money,” he said during Wednesday's panel discussion on health care costs. “It was about how to get the employee more engaged in the process.”

Hayes said Cash Cycle Solutions has seen a drop in number of days employees call in sick in the two years since the switch, presumably because their program stresses preventive care.

Still, the shift in responsibility from employers to employees has raised red flags. The plans are known in the industry as “consumer-driven,” meaning that individuals decide when and where to get care.

“They require that individuals be a lot more tuned in to what they're spending than they would be,” said Jennifer Troyer, economics professor at UNC Charlotte and moderator of the summit discussions on health care costs. “It's difficult to be a good consumer in the medical market. Seldom do we go into the doctor's office and say, ‘How much is this going to cost me today?'”

There is a chance that national health care reform that President Obama has promoted could eliminate these kinds of health coverage. But Austin Pittman, chief growth officer at UnitedHealthcare of the Carolinas, said he doesn't see that happening.

And Suzanne Johnson, an employee benefits specialist at Strategic Employee Benefit Services in Charlotte, said she expects such plans to keep catching on, particularly among Fortune 500 companies. She said 80 out of 400 firms in her portfolio now have either health savings accounts or health reimbursement accounts.

“This is the only way I'll have a career in 10 years.”