Medical savings accounts offer opportunity for private duty
Pilot program studies the privatization of Medicare’
A pilot project being considered for the Medicare program could open the Medicare market up to private duty providers. If the project goes through, it will be a boon to the private duty industry, says Marc Catalano, president of Catalano’s Nurses Registry in Hialeah, FL, and vice president of the Private Care Association in Washington, DC.The project involves the use of medical savings accounts (MSAs). Both the House and Senate are considering pilot programs to offer MSAs to older Americans as an option to traditional Medicare payments. The House bill would allow 500,000 MSAs; the Senate bill would allow 100,000.
Under the plan, the government would make contributions from Medicare dollars into the participants’ accounts. The accounts would have high deductibles ($1,500 to $2,250 under the Senate proposal and up to $6,000 in the House version). The seniors could then withdraw money to pay for medical expenses. The notable part of this project is that the seniors can choose their own providers and how they want to spend their dollars.
"The Medicare dollars are available to the individuals to use on their health as they see fit," says Dan Perrin, executive director of Eclipse MediSave American Council in Washington, DC. The council is a group of small businesses, physicians, and insurers that support the MSA option. "The point is to empower the consumer and let the market dictate prices."
The Private Care Association is a participating member of the council.
"Obviously as a group we’re trying to get the 500,000 through, and eventually open it up to the entire system," Catalano says. "Essentially, this will privatize the Medicare program in a slow fashion. [The pilot program] is a study on privatization of Medicare."
Here is an example of how the MSA would work under the House proposal, as explained by the council. The average Medicare recipient would receive $5,850 a year from Medicare. A $3,000 deductible policy in 1999 would cost $4,300 and would leave $1,550 to be deposited in the MSA.
The participants would have spent roughly $1,400 in 1999 on Medigap insurance. Since Medicare MSAs do not allow Medigap insurance, the $1,400 would be used to contribute toward their health care costs, supplementing the funds in the MSA. (The beneficiaries cannot deposit any additional funds into their MSAs.)
The beneficiary will have a total of $2,950 available for health care spending ($1,550 from the government, and $1,400 from what they would have spent on Medigap insurance) that could be spent toward the $3,000 deductible. A senior that purchased $250 a month in maintenance drugs, therefore, could pay for medication for virtually an entire year from these funds.
The money is not lost if it is not spent. Money not spent would grow with tax-free interest, and the participants could use it for medical expenses after retirement or as part of their estates.
The project has a good chance of passing, says Perrin. (For a list of who to call to show your support for MSAs, see box, at right.)
Another part of the proposed budget that could benefit private duty providers is the money earmarked for children’s health care. The Senate package provides $24 billion to cover up to half the nation’s 10 million uninsured children. The House provides $16 billion, designed to provide for up to five million children. The nonpartisan Congressional Budget Office, however, says the money would cover only 520,000 children.
Whether this allotment will be helpful to private duty agencies depends on whether or not the government sends the money to the states with strings attached, says Catalano. If the federal government sends the money down in the way of block grants, the states would have the flexibility to use the money to get the "best bang for the buck," he adds.
"This gives flexibility to the states to shop the market and use managed care or care management techniques of some sort to control utilization and cost per unit," he explains.
In its package, the Senate would give states the choice of getting the money within Medicaid or in a less-restrictive block grant. Most of the money in the House proposal would go to states as block grants, giving states more flexibility for using the money than under the Senate plan. The Senate specified that certain children’s services would be covered, including eye-and-ear care. Both bills prohibit using federal money to provide abortions to teen-agers in the program.
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