National Report–Keeping the cost of workers’ compensation from escalating is possible, according to some hotel executives. Most importantly, companies need to be aggressive to get injured employees back to work as quickly as possible.

Many jobs in the lodging industry, such as housekeeping, dishwashing and engineering, require a lot of physical work, and injuries create difficult situations for all parties.

“In this industry, there are going to be accidents,” said Gary Guarente, v.p. of human resources for Boykin Management.

Kent Foster, v.p. of human resources for John Q. Hammons Hotels, said there are fewer and fewer companies in the marketplace that want to insure workers’ comp.

“Insurers are very picky about the type of risks they take,” Foster said. “Internally [within the company], there is a ton of effort. We have an awareness of safety issues and that starts at the top.”

Guarente said there are many attorneys looking for work, so there are some unreasonable claims related to job safety.

“Workers’ comp claims always fall in favor of the injured worker even [if] there is abuse by the injured worker,” he said. “It’s become more dramatic than it should.”

Guarente said Boykin conducts a full investigation when an accident occurs and puts employees through rigorous questioning to make sure they’ve followed all the safety rules and to see if they were negligent in any way.

“We take an aggressive approach, [and] we let them know we will take care of them, but we will discipline them if they don’t follow safe work practices,” he said.

Joy Rothschild, senior v.p. of human resource for Omni Hotels, said that in Texas, companies can opt out of the state workers’ comp program.

“It’s the only state in the union in which you can do that,” she said. “We’ve opted out and have contracted with a medical provider. This allows us to control our costs because we’re directing the medical care. We rolled it out in 2002, and it had a dramatic reduction of the number of claims and cost of claims. Companywide, in ‘02 and ‘03, there was a 15-percent reduction in workers’-comp costs. We have nine locations in Texas, so that option in Texas has a big effect on our entire portfolio.”

Different situations

Mary Villarreal, senior v.p. of Remington Hotel Corp., said workers’ comp is different in each state and some states have better controls and measures in place to monitor the claims more closely.

“We have an aggressive back-to-work program,” she said. “You need to do timely reporting of an injury and claim because if it’s not reported within 48 hours, it can be a costly claim. We review accidents on a monthly basis and focus on taking corrective action so the next employee doesn’t get hurt.”

Villarreal said the company checks claims every two weeks to help reduce fraudulent claims. She said that when employees are out of work because of an injury, the human resources department calls them to let them know they are missed and encourages them to come back to work.

Melissa Gruber, c.o.o. of Hospitality Employee Resources, a subsidiary of Focus Enterprises that handles human resources, said the company conducts a safety walk-through once a year, has a return-to-work program and monthly meetings to address safety issues. Valparaiso, Ind.-based Focus Enterprises owns and manages hotels.

“It’s not been a great expense for us,” Gruber said.

She agreed that getting injured employees back to work quickly is important.

“We’re charged 30 percent of a claim if there is no lost time and we get the employee back to work right away,” she said. “If they stay home, the lost-time claim charges 100 percent for the expense.”

Gruber said a company needs to establish a return-to-work program if it hasn’t already.

“Find them work that they can do,” she said. “Bring them back doing something just to get them back to work, even if it isn’t their original job. You can create problems for the g.m. because the employee is not as productive, but it’s better than staying home collecting a paycheck.”

Rothschild said Omni has done some unique things with workers’ comp, such as creating a contest to see which hotel could go a year without lost-time accidents. The prize was $10 per full-time associate and several hotels won.

“We push hotels to get employees back to work and to accept the concept of a modified work schedule,” she said. “It’s a paradigm shift. Get them back to work, even if it means sitting at a coat check.”

Foster said what’s measured can be managed and JQH Hotels measures the types of accidents, the frequency and the severity. He said slips and falls, strains and cuts are the three most common injuries. He said the awareness program is attached to bonuses for the general managers.

“Now they have a vested interest to make sure training is done and up to speed and make sure the associates are getting the best kind of treatment so they can return to work,” he said. “How do we know it’s working? We have [a low] number of incidents per number of man-hours worked.”

Healthcare providers often must furnish services to patients who are confused about their coverage, believe that managed care has limited their access to quality care, and resent their lack of choice in selecting a plan that meets their individual needs. Many employers are attempting to address these patient concerns and reduce their health-benefit expenditures through a new approach to employer-sponsored coverage called defined-contribution health insurance.

A shift to a defined-contribution model would transform the healthcare delivery system and put significant new demands on PFS professionals to help beneficiaries understand their coverage and ensure that their organizations receive adequate payment for services. It therefore is incumbent upon PFS professionals to become knowledgeable about this new benefit model and consider developing effective revenue-cycle approaches tailored to the needs of patients who have or are considering such coverage.

Although there are many variations, in a defined-contribution health insurance model, the employer provides a fixed monetary contribution to each employee, and the employee selects his or her own health plan and level of benefit. The employee uses personal contributions to cover all costs not covered by the employer. The employee has the option, however, to select a plan that costs less than the employer contribution and retain the difference as additional taxable income.

Under the defined-benefit approach, true portability is possible because the employee owns the coverage. Thus, if the employee changes jobs, as long as the new employer offers a defined-contribution benefit plan, the employee can continue with the same plan using the new employer’s contribution.

Not all benefits specialists believe this defined-contribution approach is likely to become the predominant model of employer-sponsored healthcare coverage. But results of recent research suggest that there is a strong potential for such an outcome. In 1999, KPMG surveyed 103 senior executives and more than 14,000 employees of Fortune 1000 companies to identify their interest in the defined-contribution concept. (a) Seventy-three percent of the surveyed employees expressed interest in this new approach.

In December 2000, the human-resources consulting firm William M. Mercer, Inc., reported that of 3,300 public and private employers it surveyed, 40 percent planned to increase employee contributions for health insurance benefits. (b) Mercer cited three issues that are influencing employers to pass additional insurance costs on to employees:

* An 8.1 percent increase in the average annual health insurance costs per employee, from $4,097 in 1999 to $4,430 in 2000;

* A 17.5 percent increase in prescription drug costs in 2000; and

* A projected 11 percent increase in health insurance premiums for 2001.

In addition, the international consulting firm Booz-Allen & Hamilton surveyed 31 employers from Fortune Magazine’s “100 Best Companies to Work For” and found that two-thirds of these employers were expecting the market to shift to the defined-contribution model. (c) Booz-Allen concluded that “defined-contribution plans will emerge rapidly, but only after a major shock to the economic system.” That shock may be occurring with the recent U.S. economic downturn.

How Will PFS Be Affected?

Employee-benefit shoppers are likely to become confused while selecting their plan and coverage level and seek guidance from their healthcare providers. PFS professionals therefore should be ready to provide information that helps employees to make wise purchasing decisions.

PFS professionals should encourage employee-benefit shoppers to evaluate different benefit packages using guidelines provided by the National Association of Insurance Commissioners. These guidelines recommend 14 screening questions:

* What services does the plan cover?

* What services does the plan exclude?

* What are the limits on preexisting medical conditions?

* Will the plan pay for preventive care, immunizations, well-baby care, substance abuse treatment, organ transplants, vision care, dental care, infertility treatment, durable medical equipment, or chiropractic care?

* Will the plan pay for prescriptions, and if so, how much will it pay?

* Will the plan pay mental health benefits?

* Will the plan pay for long-term physical therapy?

* Do rates increase as the covered members age?

* How often can rates be changed?

* What are the member deductibles and copayments?

* Are there limits on how much a member must pay for healthcare services (ie, out-of-pocket maximums)?

* What is the company’s average number of member complaints?

* What happens when a member calls the company’s consumer-complaint hot-line? What is the average time to wait to speak to a representative?

PFS staff should be prepared to provide examples of charges for various services, including the costs for which the employee will be liable, for the plans under consideration.

Managed-care plans are asking members to identify their race on forms or trying to collect the data through other means. Industry insiders say the efforts are to help explain and close racial disparities in medical treatment. About half of the respondents to the Health Insurance Plans Address Disparities in Care report are collecting race data, according to the study released last year by the Robert Wood Johnson Foundation, a healthcare nonprofit. Executives at some of those insurers say they’re surprised at how receptive their members are to being asked about their ethnicity.

Not surprisingly, some privacy advocates are turning a skeptical eye toward the practice, which they say is fraught with opportunities for racial and other personal data to be mishandled.

“My first question to the health insurer would be do they have a plan in place and if not, they have no business collecting that information,” says Pare Dixon, executive director of the World Privacy Forum, a San Diego-based privacy watchdog group.

Insurers are gathering data on race against a backdrop of glaring and persistent disparities in medical treatment and the prevalence of certain diseases, such as hypertension and stroke, among particular ethnic groups.

Beyond that, blacks and other minorities, on average, receive poorer quality healthcare than whites, says Susan Pisano, a spokesperson for America’s Health Insurance Plans, the health insurance industry’s trade group.

“Nobody thinks collecting race and ethnicity data alone will get the job done,” she says. “You have to measure [the disparity], try to fix it, and then measure it again.”

But Dixon says consumers should be wary of a policy that doesn’t spell out exactly how long their information will be kept, what it will be used for; and who, if anyone, it will be disclosed to. She advises not answering questions about race.

“Once you give that information up,” she says, “that’s the toothpaste that’s out of the tube and you can’t put it back”

Cigna and about 450 other health insurers are using software programs that automatically restrict doctors’ fees, according to an article in The Wall Street Journal (July 31, 2002). The insurers say they are trying to keep health care costs down and prevent doctors from “padding” their claims. A survey, published in the Journal of the American Medical Association in 2000, reported that 39% of doctors admitted to exaggerating a patient’s condition, changing a patient’s billing diagnosis, or reporting non-existent symptoms ’sometimes or more often’ when billing insurers. In that same year, “the federal government won more than $1.2 billion in judgments, settlements or fines in healthcare fraud cases for just Medicare and the low-income insurance plan Medicaid alone.”

Doctors say that the automatic payment reduction has cost US physicians hundreds of millions in fees. The article gave examples in which insurers denied payment for an office visit if a procedure was also performed; for example, instead of paying $250 for an office exam and biopsy, Cigna paid $175 for the biopsy and refused to pay $75 for the office visit. The insurer says that the exam was part of the biopsy. Such policies have led 11 state medical societies and several physicians to file lawsuits against insurers for breach of contract.

WHEN HILLARY RODham Clinton stepped up to the podium at the American Academy of Pediatrics annual meeting in Washington on November 1, her political strategy was clear. To blunt growing criticism of the Clinton health plan, it was time to target a new villain. Drug companies, the old standbys, had made perfectly good punching bags for the Clintons throughout 1993. But since pharmaceuticals account for only 8 percent of health-care spending, there was an obvious limit to how much blame the industry could shoulder.

It was time to go after the insurance companies. “One of the great lies that is currently afoot in the country is that the president’s plan will limit choice,” Hillary Clinton said, responding to powerful insurer-sponsored TV ads challenging the Clinton plan. “To the contrary, the president’s plan enhances choice.” Then she continued shrilly, “It is time for you and for every American to stand up and say to the insurance industry: Enough is enough–we want our health-care system back.” Loud applause.

The First Lady was being cleverly disingenuous. She actually likes a lot of what’s going on in the $300-billion-a-year insurance industry, which is reacting to the prospect of federal control by accelerating toward a major shakeout. In 1991, more than half of the 150 million Americans covered by employee-sponsored insurance plans were enrolled in some type of managed-care program–a category including health-maintenance organizations, preferred-provided organizations, and similar networks of health providers and funders. In 1980, only 5 percent of insured Americans were in managed care programs. The Clinton plan is predicated on the notion that managed care is the answer to America’s health problems, arguing that traditional doctor-patient-insurer relationships are inefficient and can’t control costs.

Furthermore, the largest commercial insurers, the so-called Big Five–Prudential, Cigna, Met Life, Travelers, and Aetna–are moving rapidly out of the traditional insurance business and into managed care, as are the 71 nonprofit Blue Cross and Blue Shield associations. Already, 43 percent of all HMOs nationwide are owned by commercial insurance companies or Blue Cross, and that number is growing day by day.

In short, the Big Five and the Blues expect to survive the coming insurance industry shakeout. When the Clintons’ “health alliances” select the few plans in each geographical area they will offer to subscribers, these firms are confident they will pass muster. To Mrs. Clinton, they say, in effect, “Sock it to us.” The Clinton health plan (in its latest, though potentially not last, incarnation) imposes strict rules on the plans that will be available to Americans. Each will have to include at least the minimum benefits identified by the federal government. Plans cannot turn down applicants for any reason and cannot charge different premiums based on health risk. To be approved by a health alliance, a plan will have to make it through a gauntlet of applications, hearings, and approval deliberations. It will help to have a large stable of lobbyists, in-house lawyers, public-relations specialists, and compliance officials.

A health alliance is, in fact, a cartel and, for all these reasons and more, is most likely to include only the largest firms in each market. Medium-size and small insurers who simply want to provide traditional indemnity and catastrophic coverage to employers and individuals will have no meaningful role in a cartelized market. A few will survive–in rural areas where HMOs can’t function, for example–but most will vanish.

The Washington-based Health Insurance Association of America represents almost 300 of these threatened firms (serving about 35 percent of the market), and it–not the Big Five–is the organization behind the commercials that drove Mrs. Clinton to throw her carefully calculated fit. HIAA members understand all too well what the Clintons intend. “It’s politically correct from |the administration’s~ point of view to put black hats on us,” said Bill Gradison, HIAA president and a former congressman, at an October 12 news conference to rebut earlier shots across the bow by President Clinton.

Perhaps the administration had expected the HIAA to wither under fire. Less than two years ago, after all, Washington cognoscenti were writing the group’s obituaries, as the Big Five pulled out of the association and embraced national health insurance along “managed competition” lines.

For years, the association had tried to straddle the fence between the large firms that paid the bills and the small firms that made up the bulk of its membership. Even so, it could never accommodate the divergent interests within the industry. The Big Five do most of their business with large, self-funded corporate health plans. This fact, together with their recent investment in HMOs, led the large firms to push the HIAA to embrace key elements of the managed competition model, such as health alliances, the virtual elimination of underwriting, and significant government control of premiums. As their smaller peers in the HIAA continued to resist these positions–particularly the notion that every insurer must take everyone regardless of risk and without significant difference in price–the Big Five began to withdraw from the association. Cigna went first, in early 1992. Robert O’Brien, the firm’s executive vice president, was a member of the Jackson Hole Group (a Wyoming-based think tank that originated the “managed competition” model) and saw little need to continue an affiliation with the HIAA. After health-care reform is enacted, he predicted to Congressional Quarterly in March, “about half of the insurance companies would be knocked out.” Sharing Cigna’s view that many HIAA members were doomed and that the association was taking too combative a stance, Aetna, Met Life, and Travelers withdrew over the next year. Finally, the last holdout, Prudential, left the HIAA in November 1993.

IN A recent study published by the Dallas-based National Center for Policy Analysis leading health economists John Goodman and Gerald Musgrave show that state regulators, responding to pressure from special-interest groups ranging from AEDS patients to bald-headed women, have imposed a myriad of Mandated Health Insurance Benefit (MBIB) laws.

This kind of legislation, according to Goodman and Musgrave, forces all private health insurers to “cover specific diseases and disabilities and specific health-care services.” Consumer advocates argue that such laws are necessary so that the poor and people who are at high risk for certain illnesses and disabilities are guaranteed “affordable” health insurance. Ironically, these efforts have made basic health insurance for a rapidly growing number of Americans prohibitively expensive.

These laws force consumers to purchase coverage for certain illnesses and disabilities, whether they want it or not, as part of the basic or standard insurance policy. “In some states,” write Goodman and Musgrave, “couples who cannot have children cannot buy policies that do not provide for newborn-infants coverage…. People who do not intend to see chiropractors, psychologists, or marriage counselors cannot buy policies that exclude such coverage.” This sort of legislation prohibits Americans from purchasing health-insurance policies that suit their own needs and means.

In 1970 there were only thirty MHEB laws in America. Today there are close to one thousand, and they exist in every state. These statutes force insurers to cover people who are at exceptionally high risk but prohibit them from adjusting their prices accordingly. The result: low-risk consumers, if they wish to protect themselves and their families at all, must pay ever-increasing premiums in order to cover the costs of insuring certain politically powerful groups, e.g., AIDS patients, drug addicts, the blind, amputees, etc. The alternative is to go without medical insurance.

It is not subsidization per se that is the problem. Just as in the delivery of newspapers or milk, where those who live closer to the plant subsidize the delivery of services to those who live farther away, a certain amount of voluntary subsidization may also occur in a free-market insurance network. Insurers often charge low-risk consumers premiums which are higher than their particular riskiness warrants (but low enough so that the consumer is still willing to pay) in order to subsidize higher-risk consumers; over all, insurance premiums are kept affordable. For insurers to do this and remain competitive, the network must have a large pool of clients, most of whom are of low risk.

When governments impose MHIB laws, however, the actual share of high-risk people within the insurance network automatically rises; they are, after all, getting a real bargain. On the other hand, the percentage of low-risk people in the pool is significantly reduced because federal law allows some fortunate groups to opt out of the traditional insurance industry. Large and middle-sized companies often establish their own employee health-insurance plans in house. Since they do not purchase insurance from outside coverers they are not subject to MHIB laws.

State regulators thus create a vicious circle. MHEB laws force private insurers to insure ever-increasing numbers of high-risk people at below-market prices. To cover their increased costs, they must drastically overcharge low-risk consumers. As prices rise, low-risk people opt out of the health-insurance market, preferring to take their chances with illness or injury, or, as in the case of larger groups, insuring themselves rather than pay uneconomical insurance rates. As the number of low-risk people in the pool dwindles, insurance premiums for the average American rise even higher. The cycle makes it impossible for the natural “subsidization” process to keep overall premiums low.

Ironically, the very people these statutes are designed to aid are harmed the most. When financial pressures mount, health insurance is one of the first things the poor cut from their budgets. When the choice is feeding your babies or paying a monthly insurance premium of at least $600 (for a family of four) there is no contest. And the evidence bears this out. According to Goodman and Musgrave, 69 per cent of all uninsured full-time workers in 1985 earned less than $10,000.

Moreover, for consumers who are at high risk of acquiring a catastrophic illness covered by MHO3 laws but who will not necessarily acquire it, e.g., hemophiliacs who do not have AEDS but must regularly have blood transfusions, or people with a family history of familial polyposis but who do not have polyps or colon cancer, MHEB laws make it exceptionally difficult to obtain health insurance, even if they are willing to pay higher prices. Because the insurer is not permitted to cancel the policy after the disease is diagnosed, most insurers go out of their way to avoid selling any policy to people who are at even a slight risk of acquiring the disease. And they paint with a rather broad brush when determining who these people are. For example, some insurance companies have stopped doing business in large cities like Washington, D.C., altogether to avoid MHEB laws regarding AIDS.

When 41,000,000 people lack health insurance, it is not just the uninsured and their families who suffer, cautions a group of organizations sponsoring Cover the Uninsured Week (March 10-16). The impact is felt on the nation’s economy and health care system, as well as in the communities in which they live. Not having health insurance is a leading cause of personal bankruptcy. Moreover, the large number of uninsured patients often overwhelms hospital emergency rooms and other health facilities.

People without health insurance get sicker and are more likely to die sooner than those who have it. those who have insurance tend to have better health and receive better, more-timely care across a range of preventive, chronic, and acute care services than those who do not. In a study of more than 28,000 patients, those without insurance were more likely to be diagnosed with skin, colorectal, breast, and prostate cancers at a later, more-dangerous stage than those with insurance. All of these cancers can be detected earlier through regular screening–an option usually unavailable to the uninsured. According to another study of breast cancer patients, uninsured women had a 49% greater chance of dying following diagnosis of the disease than did privately insured women.

Also, for uninsured Americans with chronic conditions, lack of access to needed care results in more medical crises and emergency hospitalizations. People without insurance are up to 70% more likely to be hospitalized for ailments such as diabetes, hypertension, pneumonia, and bleeding ulcers than those with insurance. Uninsured people tend to be sicker upon admission to the hospital, and are more likely than the privately insured to die there.

The uninsured in some communities may obtain basic health care services through “safety net providers” such as community health centers, hospital clinics, and free health clinics. In many communities, though, these facilities have limited hours, long waiting periods, and are not equipped to provide medicines or treatment for complicated illnesses, so many of the uninsured rely on the nearest hospital emergency room for treatment when they or their family members are sick. The ER, however, is neither the most-effective nor most-efficient setting for treating most health problems. It does not provide a continuum of care for uninsured patients once they are discharged.

Many hospitals and physicians provide charity care to low-income, uninsured patients at no or reduced charge, but that care imposes a cost on society. It is often paid for indirectly by insured patients, who wind up with higher charges as a result. Taxpayers also pay through Federal and state subsidies to the hospitals and clinics that serve them. America’s hospitals incur substantial operating losses from high rates of uncompensated care, possibly forcing them to cut back on their services to all patients or even close their facilities.

YOUR NEXT MASSAGE CouLD BE COVERED by your health insurance. A new plan called “consumer-directed insurance,” offered by several insurers, pays for both conventional and alternative treatments. It covers 100 percent of annual checkups and some preventive procedures like mammograms. It also calls for employers to put money, usually $500 to $2,000, into accounts for each employee to use for whatever therapies they choose, including alternative therapies. When employees deplete their accounts, they pay for health care out-of-pocket until they satisfy a deductible (usually about $500). Then a more comprehensive plan, covering all medical expenses but not alternative treatments, goes into effect.

Consumer-directed plans aren’t for everyone, says Mike Thompson, a New York City-based principal at the business consulting firm PricewaterhouseCoopers. If choosing your doctors and therapies isn’t important to you, your traditional plan has no deductible, or you have a chronic illness, you may be better off not switching.

The Census Bureau reported on September 28, 2001, that the number of Americans without health insurance actually declined from 39.3 million in 1999 to 38.7 million in 2000. An estimated 14 percent of the population had no health insurance coverage during all of 2000, down from 14.3 percent in 1999. Healthcare industry observers expect, however, that the number of people without insurance will increase in 2001 as a result of the economic downturn, increases in health insurance premiums, and layoffs triggered by the September 11 terrorist attacks.

The Census Bureau also reported that 29.5 percent of all poor Americans had no health insurance of any kind during 2000, compared with 31.1 percent in 1999. Among Americans overall, 64.1 percent were covered by a health plan related to employment for some or all of 2000, an increase of 0.6 percentage points over the previous year. Reflecting widespread Medicare coverage, 99.3 percent of people age 65 and older were insured. Young adults (18 to 24 years old) remained the least likely (72.7 percent) to have insurance in 2000. To view the Census Bureau’s data, go to http://www.census.gov/hhes/www/hlthins.html.

Following the release of the Census Bureau’s data, the Institute of Medicine (IOM) issued a report seeking to correct a number of “myths” that may hinder efforts to expand coverage to the uninsured. Contrary to the view that the uninsured somehow manage to obtain adequate care, the IOM finds that the uninsured are less likely than the general population to see a physician and receive preventive services. Further, the IOM cites increases in the cost of health insurance outpacing real income as a major barrier to acquiring coverage.

The IOM also expressed concern that hospitals lack sufficient funding to meet their obligation under the Emergency Medical Treatment and Active Labor Act to provide emergency care for the uninsured. Nonetheless, the IOM does not attribute the problem of overcrowded emergency departments to the uninsured, but rather to the declining number of hospital inpatient beds and the resulting inability of hospitals to transfer stabilized patients out of emergency departments.

As a newspaper columnist and a writer for national magazines, I have spent much of my time the past several years advocating medical savings accounts as one solution to the nation’s health care problems. MSAs would allow individuals (and participating employers) to put tax-advantaged money into special accounts from which they could pay routine medical bills; major medical problems would be covered by high-deductible, low-premium catastrophic insurance plans. I’ve absorbed and employed all the standard arguments for MSAs - that the special tax treatment given employer-provided health insurance is distorting the market, that MSAs would increase consumer choice, that they would reduce administrative expenses and simplify medical purchases.

As it happens, I am also the president of the John Locke Foundation, a nonprofit think tank that provides health insurance coverage to nine employees with a wide range of ages and health conditions. If any small business Could benefit from the MSA option, you would think it would be ours. But you would be wrong.

When last year’s ghastly Kassebaum-Kennedy health insurance bill passed Congress, one item was worth cheering: a test of MSAs in the small-group market. Beginning January 1, 1997, self-employed persons and firms with 50 or fewer employees could purchase MSA-based health insurance policies. These policies can have deductibles of up to $4,500 per family and allow both employers and employees to make deposits into MSAs, from which subscribers can draw to pay for routine medical care. Three-quarters of all money deposited into MSAs is tax-deductible, thus helping to equalize the tax treatment of wage compensation (such as cash or MSA deposits) and non-wage compensation (such as insurance premiums). This is not a “use it or lose it” program: Any balance remaining in an individual’s account at the end of the year continues to accumulate.

The MSA program is a test, not a permanent change in policy. The test period is four years, and the number of individuals who can participate is limited to 750,000 nationally.

Depending on whom you listen to, the MSA test has been either a bonanza or a bust. Knowledgeable observers believe that some 100,000 people have chosen MSAs. While that’s a lot of customers for a new product - a leading MSA advocate, Golden Rule Insurance, has itself enrolled nearly 30,000 people - it is only a hiccup in the context of millions of potential customers. No one really knows what the long-term trend in MSA enrollment will be, but it is fair to say that MSA advocates (including me) expected a lot more interest at the outset.

MSA opponents have seized on the underwhelming early results of the MSA test to proclaim the concept irrelevant at best. But based on my own experience as a would-be MSA Customer, the problem lies not with the idea of MSAs but with the design of the test.

Earlier this year, I set out to look for MSAs for the Locke Foundation. I learned a lot. First of all, talking to insurance agents about MSA plans available in my area was like pulling teeth. Part of the problem is that most independent insurance agents who sell health coverage to firms like mine make their money by taking a commission on the first year of premiums. Since MSAs are combined with high-deductible insurance policies that have correspondingly lower premiums, agents who rely on such commissions aren’t likely to be wild about MSAs. Of course, insurers could change their compensation structures to eliminate this disincentive, but that will probably take some time and experience.

Commissions are not the only financial disincentive. Acquiring the information required to sell MSAs is an expense that many agents have apparently not chosen to pay. I discovered that, while some agents may not have liked MSAs in the first place, many others were simply ignorant about them. I found myself explaining the benefits of MSAs to agents purportedly trying to sell them to me - not exactly a typical buyer-seller relationship.

In defense of insurance agents, however, the limitations placed on the MSA test are probably the main culprit. A product that can be sold only to a limited category and number of customers, and only during a test period, is a product unlikely to interest potential sellers with money to make elsewhere. Not surprisingly, while many large national insurers have come up with MSA products, few have designed serious training and marketing programs to make them competitive.

In my case, I finally found an agent who understood MSAs and could give me some real information about policies and prices. Then I really got a shock. The most competitive alternative would have cost us hundreds of dollars more a month than our current insurance plan, which combines traditional deductibles and copayments with a preferred provider network. The reason? Like many small firms in similar circumstances, we are enrolled in a purchasing alliance - in our case provided as a perk of membership in the local chamber of commerce - that allows us to receive price breaks through bulk buying.