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December 06, 2001
A New Type of Health Plan
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Families with relatively low medical bills could save money under such plans, according to the Times, but those with several thousand dollars in medical expenses could wind up paying much more.
Some health benefits experts warn that these plans could be less fair than current plans to people who are sick and that they could discourage people who need care from getting it.
The insurers preparing to offer the plans within a year include Aetna , Humana, Cigna, the UnitedHealth Group, and the Wellpoint Health Networks. Some are already testing the new plans on their own employees or even with a few companies, the Times reports.
The new plans typically require a family to pay an annual premium of $1,000 to $1,400, slightly lower than the cost of traditional managed care. Families then receive an allowance of $2,000 to $3,000 each year to spend on medical expenses, including drugs.
But after they have spent that, they have to cover every cost above that cap, sometimes up to $5,000 or more. After the higher amount is reached, the employer picks up most of the bills.
In addition, instead of covering all but a few dollars of the cost of each drug prescription, some of the new plans will require employees to cover a much bigger portion of the cost.
"The effect will be to shift more of the costs into the pockets of the sick people," said Uwe E. Reinhardt, an economist at Princeton University. "The insurance industry has decided that if you are sick, you ought to eat the costs. It's a very dubious social policy."
The plans also offer online information to help consumers make their own medical decisions, including descriptions of different diseases and treatments, data on the costs of numerous treatments, and a network of doctors and hospitals that employees can use to keep their medical costs down.
A family that keeps its medical bills lower than the allowance can roll over any unspent money to pay medical bills in future years.
But for a family that uses up the allowance, the plans stop paying entirely until a ceiling is reached. At one company offering the new plans, employees who use only network doctors are responsible for a deductible of $1,000 to $5,000 in medical expenses beyond their allowance of $2,000, depending on the premium they are willing to pay. If they go to doctors outside the network, their deductible could rise even higher.
For employees whose medical expenses exceed the allowance and the deductible, the plan typically covers all medical costs provided by a network of doctors and hospitals. Employees who go to doctors and hospitals outside the network are covered for 70 to 80 percent of charges up to $1,000. After that, the plans typically cover all expenses.
To read the New York Times article, click here.