Medical Savings Accounts Study: Case Studies
Valley Surgical Group of Phoenix, Arizona

• Sponsor: Valley Surgical Group Health Plan

• Coverage: Small Group MSA/Catastrophic Health Plan

• Underwriter and Administrator: Golden Rule Insurance Co.

• Number of employees: 14

• Year of origin: MSA initiated 1994

• Summary effect: Annual employer costs reduced by $400 per employee.

From 1988 to August of 1994, Jeff Singer's Valley Surgical Group used a standard Preferred Provider Health Benefit for its surgeons and clinic employees. This plan included payment for prescriptions. Medical services had to be purchased from a defined network. The deductible was $250 per individual with a maximum of $500 per family. Coinsurance above the deductible required a 20% payment up to $5000 or $1000 per individual. The maximum out-of-pocket limitations were $1250 per individual and $2500 for families. The employer paid 90% of the premium. When the plan was terminated in 1994, the premium for a family was $290 per month.

To improve employee satisfaction, increase cash compensation, provide incentives for preventive care, and make a transition from prepaid comprehensive health benefits to employee managed, incentive-based health benefits, Singer's surgical group in Phoenix, Arizona installed a Medical Savings Account plan.17

"At Golden Rule, medical spending has decreased dramatically, employees have greater choice and participation in both clinical and economic decisions, and overall acceptance exceeds initial expectations."

Under the Golden Rule Small Group MSA Plan installed in August 1994, a PPO network was retained, including prescription coverage. Five surgeons, nine employees, and eight of their families were included. One additional employee declined coverage. The deductible is now $2000 per individual and $3000 per family. The Clinic annually pays $1500 per individual and $2000 per family into dedicated Medical Savings Accounts. Employee contributions to the same MSA are $500 for single employees and $1000 for employees with families. Bank One is the fiduciary for these accounts. Federal income tax withholding is 25% of each deposit. The monthly premium for the catastrophic health insurance is $90 per month. Once the deductible has been met, providers outside of the PPO may be used for care, with 20% coinsurance.

Reports of initial experience with this plan are favorable and initial employee satisfaction has been high. There is insufficient experience in this MSA to offer valid conclusions. However, the Golden Rule plan managers predict the above formula will benefit everyone.

"Reports of initial experience with this plan are favorable and initial employee satisfaction has been high.".

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org