Kimberly Salzbrunn of Oswego, Illinois, is on the cutting edge
of a dramatic change in health care. Since January, she has taken
her two-year-old son Jacob to the doctor three times for chronic
breathing problems, purchased five prescriptions, and spent a
recent Saturday in the emergency room. She has not yet had to
pay for any of it out of her own pocket.
So far, she’s paid her bills—$358—by drawing down $1,500
that her employer, Budget Rent-A-Car, is putting aside for her
health care this year. She can use the money for her own medical
needs, or those of Jacob or her husband, Dan. Preventive
care is 100 percent covered, though doctors must be in the network.
If the Salzbrunns use up their $1,500, they must pay health
care expenses themselves until they hit a $2,000 deductible. If
they don’t spend the entire $1,500 this year, what is left will be
added to their account in future years.
Salzbrunn, a 34-year-old job-training specialist, is one of
tens of thousands of Americans with what’s known as
consumer-driven, or defined-contribution, health care. Her plan
is run by Definity Health of Minneapolis, one of two players—
Lumenos of Alexandria, Virginia, is the other. About 50 companies
offer these plans, including defense contractor Raytheon
and chipmaker Intel.
So far, 12 percent of Budget’s staff—625 workers—is participating
in the plan. Budget won’t disclose how much workers
kick in, but it’s 20 percent less than the preferred provider organization
(PPO) and 10 percent more than the HMO options.
With health care costs poised to double in five years, companies
have no choice but to find alternatives. If employees like
those at Budget continue to express satisfaction with consumerdriven
plans, they’re likely to get a lot of company—very soon.
Questions
Why did Kimberly Salzbrunn not have to pay from her own pocket even though she has taken her two-year-old son to the doctor three times, purchased five prescriptions, and spent a day in the emergency room?
What will happen when the Salzbrunns use up their $1,500? What if they don’t use their $1,500 this year?
What is the name for this kind of a health plan?
Source: Laura Cohn, “Giving Power to the Patient,” Business Week, May 6,
2002, p. 102.
Making Sense of Medicare
Eugenio Costa, 65, received a 100-page booklet from Uncle
Sam called Medicare and You 2002. It doesn’t have much of a
plot, but it might be the most important reading he does this
year.
For seniors or their adult children, the booklet outlines the
choices Medicare recipients face in the fast-changing world of
health care. But Medicare is mind-numbingly complicated, and
it is too easy to get lost in a maze of options.
Eugenio is fully aware, however, that Medicare, Medicare
HMO (Medicare _ Choice), or medigap do not cover long-term
nursing home or at-home care. For that, he will have to buy private
insurance, which can cost thousands of dollars a year if he
signs up now.
All of these choices allow seniors to tailor a plan to their
needs. But it also makes picking insurance much more complicated.
Eugenio knows that a mistake can be costly in terms of
both health and money.
Questions
What factors should Eugenio Costa consider in making the choice among various types of Medicare, medigap, or HMO health care insurance policies?
Visit the following websites for Medicare resources to obtain general information, guides on buying medigap or HMO coverage, and price quotations with insurance company ratings on medigap insurance carriers.
