Medical Savings Accounts on Way : Major Insurers Ready to Start Pilot Plan Under New Law

Californians will be hearing a lot about a new type of health insurance plan, called the medical savings account, being unveiled soon by two of the state’s biggest insurers.

The new plan allows consumers to open a tax-deferred savings account they can draw from to pay for routine medical care until a high-deductible medical insurance plan kicks in. Congress approved MSAs last year as part of major health reform legislation, permitting them to be marketed to the self-employed or by companies with 50 or fewer workers.

In part, the idea is to make it more affordable for small employers to offer health insurance coverage to their workers, many of whom are uninsured.

The new law, which took effect Jan. 1, sets up a four-year pilot program for MSAs, allowing up to 750,000 policies to be sold nationwide. Insurers and financial institutions are drawing up MSA programs, anxious to get experience with what could prove to be a popular new product.

In its haste to get to market, Woodland Hills-based Blue Cross of California, a managed-care company, ran afoul of regulators last month after placing an ad for its new MSA program in the Wall Street Journal.

That decision proved costly when the California Department of Corporations slapped Blue Cross with a $100,000 fine on Dec. 26 for “misleading� advertising and for failing to get prior state approval for its MSA plan.

WellPoint Health Networks, a Blue Cross unit, said the company didn’t believe it was doing anything wrong when it advertised the program, and it said it will work with the state to get the necessary approvals.

Meantime, Blue Shield of California, a separate company unaffiliated with Blue Cross, plans to introduce its own MSA product, perhaps as early as next week.

“I don’t know, when the consumers actually look at them, that they’ll find it’s a worthwhile deal,� says Alan Katz, principal with Centerstone Insurance & Financial Services, a Woodland Hills insurance broker specializing in small employers. The plans will tend to benefit “healthier and wealthier� consumers, he said.

But Carl Volpe, health policy analyst for Blue Cross’ WellPoint subsidiary, said the pilot program is, in part, an effort by Congress to see if MSAs will appeal to small employers who may not offer health insurance coverage to their workers because of the high cost. The high-deductible plans will have lower premiums. That, in turn, could help trim the ranks of the uninsured.

Hospitals Ranked: Nine California hospitals are listed among the nation’s top 100 in a ranking that accounts for such factors as the quality of patient care, financial performance and efficient delivery of services, according to health-care consultant William M. Mercer Inc. and HCIA, a health information firm.

Of the nine California hospitals, six are in Southern California: Community Hospital of Huntington Park, Hospital of Barstow Inc., Lancaster Community Hospital, Fountain Valley Regional Hospital and Medical Center, Pomona Valley Hospital Medical Center and Queen of Angels Hollywood Presbyterian Medical Center.

The hospitals “show a balance of high-quality care, efficient delivery and superior financial performance,� said Kenia Casarreal, who heads Mercer’s Western region consulting practice.

Times staff writer David Olmos can be reached via fax at (213) 237-7837 or by e-mail at [email protected]