Medicare to offer version of HSA

July, 2006 - The Centers for Medicare & Medicaid Services (CMS) announced plans last week to offer Medicare beneficiaries access to plans similar to health savings accounts through Medicare Advantage programs in 2007.

The agency will offer a demonstration program that would permit Medicare Advantage organizations "to offer more flexible accounts," according to the CMS Web site.

"We're asking insurance companies to submit products, medical savings accounts, that we would then approve the contract for them to offer," CMS spokesman Peter Ashkenaz said.

Medicare Advantage plans are more comprehensive than traditional fee-for-service Medicare, though they're not necessarily more expensive, Ashkenaz said. They typically offer flat copayments instead of coinsurance in their cost-sharing structures, and may be HMOs, PPOs or private fee-for-service plans, he said. Some offer vision, drug coverage and even dental care as well.

About 7 million of the 42.5 million Medicare beneficiaries have Medicare Advantage plans, though any beneficiary can enroll in one, he said.

"We are giving Medicare beneficiaries the option of health savings account-type plans, as an additional choice among other health plan options in Medicare," Health and Human Services Secretary Mike Leavitt said in a prepared statement.

"Along with HMOs, PPOs, and private fee-for-service plans, Medicare is aiming to provide a full range of coverage options so that our beneficiaries can get the coverage they prefer at the lowest possible cost," Leavitt said.

The plans will be available in January, though advertising for them likely will begin in October ahead of the open enrollment period for both Medicare Advantage and Medicare Part D that runs from Nov. 15 through Dec. 31, Ashkenaz said.

The National Center for Policy Analysis, a nonprofit research group in Washington that promotes free-market solutions to social problems and opposes government regulation, lauded the move.

"Seniors are the ones who use the most medical services, so they are the ones who are most in need of more choice and more control in their health care," Devon Herrick, a senior fellow at the NCPA, said in a prepared statement. "A personal health account provides control, while also encouraging them to be more prudent health-care consumers."