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- Jack
Bramson
- URL Financial Group Health Division
- 5320
Jaycee Avenue
- Harrisburg,
PA 17112
- 717/540-5690
- FAX
717/541-8865
- www.urlfinancial.com
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- Good afternoon.
I am Jack Bramson, President of URL Financial group Health
Division located in Harrisburg, Pennsylvania.
Thank you to both the Insurance Committee and the Health and
Human Services Committee for recognizing the importance of having a
hearing on Health Savings Accounts.
HSAs have tremendous potential.
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- I am testifying on behalf of my trade association,
the Pennsylvania Association of Health Underwriters (PAHU).
PAHU represents insurance producers who specialize in
offering health insurance and employee benefits.
What this means is that insurance producers are the delivery
system for health insurance. We
are the ones who work with small and larger businesses to analyze
their needs and attempt to find them the right coverage at an
affordable price. Understanding
today’s market and cost pressures within our health system that is
not always an easy task. Renewals
now appear to be running between 15-25%.
The risk, as you know, is that small businesses may no longer
be able to afford providing health insurance as a benefit.
If their employees are forced to go without health insurance,
they add to society’s costs via emergency room treatment and a
further drain on public dollars if they are lucky enough to get into
the AdultBasic health program funded by the Tobacco Settlement.
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- Working with business owners, I can empathize with
their burdens. Wanting
to provide decent benefits, yet being squeezed into choosing health
insurance and buying equipment or business property casualty
insurance which because of a hard market, is both necessary and
expensive. It is a
terrible set of choices facing businesses today.
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- By way of personal background, I have been in the
health insurance business for 32 years.
My firm, URL Financial Group, has offered virtually every
type of health plan imaginable as we help businesses and individuals
adapt to changes in the marketplace.
This marks various transition points…from indemnification
to HMOs…from HMOs to PPOs…Basically my firm has seen it all.
In addition to agency production, currently, about 7,000
insurance producers from PA and Delaware look to URL for insurance
products. The
agency’s business is roughly split between group health programs
and individual health products.
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- Impact on the Marketplace
- Other speakers today have explained how HSAs work so
I don’t need to dwell on what you have already heard. What I want to touch on is their impact on the marketplace.
For your information, I have enclosed a one-page fact sheet
on HSAs with my testimony. I
hope it will be a convenient reference for you and your staff.
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- One of the core issues has been whether or not group
health insurance has a future.
When Medical Savings Accounts first came out in 1996, they
were regarded by some as the answer.
Individuals would be able to choose the doctors they wanted
(remember the HMO gatekeepers?), and they would make informed health
decisions. I was one of
those early optimists. MSAs
were attacked because they looked liked cherry-picking, attracting
healthy individuals and leaving the sicker among society in a
smaller pool with higher premiums.
- MSA were also criticized because they threatened to
undermine the group market. Most
Pennsylvanians receive health benefits through their employer.
While individual choice sounds philosophically great, the
reality is that people often don’t take the initiative.
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- When do I buy health insurance?
Perhaps when I think I’m getting sick?
How many people buy long-term care insurance on their own?
The answer is not enough.
I am told by specialists in this area is that one of the
biggest reasons is inertia. Taking
the time to wade through the various plans and not seeing an
immediate need is a deterrent to long-term care placement.
It is only when a health program is offered through an
employer that you have significant parts of the population covered.
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- A Bridge between Individual and Group
Health Insurance
- I am encouraged by HSAs as they mark a bridge between
those who have said that the traditional employer group is dead
because cost pressures have forced its demise, preferring to focus
on individual products, and those who maintain that there is a
future in the group market. It
shows that the private sector, with help from the U.S. Congress, can
rise to the challenge of bridging the distinction between group and
individual coverage.
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- Health Savings accounts offer the employer a relief
from high premiums. Employees
also see relief from an increasingly greater share of those
premiums. Employees
have a larger deductible of perhaps $ 1,000 but that may be cheaper
than what they have to pay now.
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- Besides, HSAs permit a shared contribution by
employer towards the deductible.
In addition, HSA money belongs to the employee and is
portable. It gives
flexibility and personal ownership that come with individual
products yet has the advantage that it is employer-sponsored.
One option employers have is to offer some sort of gap
insurance coverage to help employees meet the costs associated with
the high deductible under HSAs.
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- The Larger Issue of Cost
- Even though I want you to do everything you can to
promote use of HSAs, please don’t lose sight of the larger issue
of cost. HSAs reduce
the price of the product. Having
a higher deductible policy with a savings account component is
cheaper than a low deductible product.
But it may not be the same thing as reducing the cost of
health care.
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- I feel that there will probably be some cost benefits
because some employees and their families will not run to the doctor
every time their kid has the sniffles because they think the office
visit only costs $10. With
HSAs, families will recognize what a doctor’s visit actually costs
and will go when they need to.
This self-restraint may result in decreased utilization of
the system and, as a result, fewer demands on insurance companies.
That helps the cost picture but is not, by itself, a silver
bullet. Because of the cost of health care and a deductible, a
downside to HSAs is similar to the traditional group market. Employees may be scared by the price, not seeing the full
benefit.
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- Larger issues of cost will still have to be dealt
with by the General assembly and by the United States Congress.
The cost of Medical Malpractice insurance, over use of
diagnostic tests such as MRIs, the explosion in prescription drug
prices, people’s expectations that medicine can cure every
ailment, etc. still must be reckoned with.
HSAs buy us some time but does not pretend to solve all the
cost pressures facing America’s health care system.
Thankfully, those are issues for another hearing for another
day.
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- Today, however, I am appreciative of the fact that
the General Assembly is looking at ways to promote the use of Health
Savings Accounts. Since
health underwriters are the people who market these products, I
encourage you to meet with someone back in your district who can
walk you through the specifics as to how businesses and individuals
can save with the HSAs. If
no one comes to mind, I am sure that PAHU’s lobbyist can put you
in touch with local expertise.
Of course, I would also be happy to serve as your resource.
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- Thank you again for convening this hearing.
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