The Impossible Has Happened

I've found an HSA plan I like:

Oshkosh Truck Corp. (OSK ), for example, has veered away from the old -- and costly -- health maintenance organization it used for its 4,500 nonunion employees. The plan's low copayments encouraged doctor visits and contributed to the double-digit annual growth in Oshkosh's health-care bill.

So in January, 2004, the company switched to what's known as a consumer-driven plan. Under the new plan, annual physicals and other preventive tests such as mammograms and prostate cancer screenings are fully covered. After that, workers and their families receive a $1,000 annual health-care account. Any unspent portion can be rolled into the following year. But once that account is tapped out, workers are responsible for the next $1,500 of medical expenses. If expenses go beyond that, the company steps back in and will pick up 90% of expenses. Oshkosh is betting that the gap will discourage wasteful spending while still ensuring workers are covered for serious illness.

That's a pretty interesting structure. By fully covering the first $1,000 of costs, you destroy the disincentives for seeking basic care. By fully covering a variety of tests, screenings, and procedures, you ensure workers won't skimp on necessary diagnostics. By limiting the worker portion to the space between $1,001 and $2,500, you ensure that a family with a variety of high health costs but nothing catastrophic doesn't find themselves overwhelmed by the charges. And you retain the good part of HSA's, making consumers more aware of their health care decisions.

The general problem with HSA's is that all care, until the deductible is surpassed, comes out of your pocket. That often stops folks from seeking basic care, which is not only bad for them but bad for health care costs generally as untreated, unnoticed conditions balloon. Osh Kosh's system, conversely, pays for all care up to $1,000, and only then does your deductible start. That means folks will get basic care, and then those who have ailments that force them above $1,000 will have to pay for the next $1,500 of treatment out of pocket -- but crucially, you will get treatment, because you actually have a condition that needs to be treated. This, in my eyes, a supportable consumer-driven structure.

By the way, this all comes from a Business Week article on strategies corporations are using to lower their costs. It's easily the most interesting thing I've read on health care lately, so I strongly encourage you all to take a look. Pay particular attention to PepsiCo's portion at the bottom: each employee is offered $100 to fill out a comprehensive health questionnaire, their risks are then evaluated by health consultants and they're able to work with a health coach -- for free! -- to learn how to better care for themselves and lower their risk. That's a great, great idea, both on the employer side (lowers costs) and the worker's side (makes them healthier). 16% of PepsiCo's 50,000 employees are currently using the program. That's the sort of incentive-driven preventive care we need much more of.