Editor’s Note: While Health Savings Accounts (HSAs) aren’t exactly new, not everyone in the medical travel industry is familiar with how they work. In order to assist with reader understanding of the implications of our conversation with J. Kevin McKechnie, executive director of the American Bankers Insurance Association and director of the Health Savings Account, we developed this brief primer on HSAs. We hope you find it useful.
J. Kevin A. McKechnie, executive director of the American Bankers Insurance Association and director of the Health Savings Account (HSA) Council
Medical Travel Today (MTT): What is your interest in the medical travel market from a generic standpoint, particularly your perspectives on its tie-in to Health Savings Accounts?
J. Kevin A. McKechnie (JKM): We are big believers in freedom.
That’s a personal saying, and so to the extent that people want to travel around the world, have something fixed, and then convalesce on a beach somewhere — I’m for that.
I have the benefit of being able to work in an organization on behalf ofan industry that by its nature, promotes the advantages of personal choice. Our work is designed to assist programs like the medical travel industry. After all, it’s a cash product.
MTT: Do you know of any HSAs that are currently offering a medical travel benefit?
JKM: There’s only one other gentleman that I’ve talked to about this, and he’s actually the director of a facility in Costa Rica.
He asked me about the applicability of HSAs to medical travel, and I replied that HSAs apply to anything where the service bought satisfies two requirements:
- The first applies to the HSA funds, because they’re a tax-exempt account. You have to be buying a service that is on publication 502, issued by the IRS. That’s where the IRS lists the things you can use your HSA for. Obviously, if you pay tax on your money, you can do anything you want with it — but that’s not an HSA, that’s a savings account. In an HSA environment, it has to be something that the IRS deems “qualified.”
- The second thing that has to occur is that it is not just about the money in the account, it’s about the insurance. So, if you
would like the qualifying insurance to pay for this, it has to be a qualified medical expense.
You’re only going to get reimbursed to the extent that the insurance company would pay for that medical benefit either inside its network or, after it applied its out-of-network architecture to the charge.
Lastly, you would have to check that the insurer isn’t building its premium based upon restricting where you get the service done. All of those things have to be in place.
MTT: If you have an HSA plan with an independent HSA company, your health plan, or whatever source — and the expense qualified or actually less than you were going to be spending if you accessed care through the existing benefit program — do you see that as an attractive option for individuals?
JKM: Absolutely, especially if it falls on your deductible.
Nobody really cares about where the expense lies in terms of being higher or lower and what is reasonable and customary. You have to be able to take this money and apply it to your deductible so the insurance company knows when its obligations kick in.
There is a little hassle around that part. So let’s say you’re on the list for a knee replacement or for dialysis or something of that nature and you decide you want to go to Central America to get this done. That’s fine, and would require working up some recommendations about where you would go and the estimated costs.
Individuals need to contact their insurance company, and the insurer would probably work on this and advise you where you go.
MTT: Do you know of any people or any individuals doing this under an HSA or people that have been taking advantage of a medical travel benefit?
JKM: I don’t know anyone personally, but I know there are companies that have dealt with this issue and are addressing the queries. As long as the treatment or procedure is a permissible expense and the expenditure isn’t above what they would normally pay, they are amenable. Some of them may think that the expense is subject to the out-of-network architecture because obviously, their network doesn’t include a Costa Rican facility. Either way, you’re allowed to use your HSA funds and in some cases, it’s an insurable event — which is good.
MTT: Do you think that the connection between HSAs and medical travel opportunities will be a faster-growing trend once people realize they can do this?
JKM: I do for a couple of reasons.
First of all, the Obama health reforms are going to result in massive physician shortages in about 30 months. The American Medical Association says we’re “light” about a quarter-of-a-million general practitioners and family doctors — as soon as everybody is able to go to the doctor on an insured basis, they’re going to in droves.
So, if you’re American and need to find care that is both accessible and affordable, you’re going to be looking at places like Toronto, Vancouver, and even Mexico. If you want to go even further, you are going to get on a jet and go where you can get care quickly and confidently.
The reason why that solution isn’t going to be available to the vast majority of Americans is they don’t have any cash. They have to go and talk to the insurance company exclusively to get a “yes” or a “no.” If you have cash, then think of it this way: you’re going to be allowed to spend money on a knee replacement operation which is a permissible activity according to the IRS — so off you go!
Then there will be this negotiation, which I hope is not a very large negotiation, about what percentage of the money you spent is credited toward satisfying your deductible — and what amount of money you spent becomes insurable, either subject to the out-of-network architecture or some other contractual limitation that’s in your policy.
We are not sure how you manage this, but the issue came up in other states because it applies to medical travel. People just don’t get on a plane and go to Costa Rica. First, you get on the phone and call your insurance company, let them know what your plan is and talk it over.
Then get on the plane. You’ll then know what the financial arrangement is going to be.
MTT: So, it’s up to the individual to navigate or make arrangements that they feel are appropriate. How do you propose that the individual would know the quality or the doctors or any other standards that are being offered at the destination?
JKM: You really don’t have a very good idea — but on the other hand, you don’t have a very good idea here in this country either.
We make assumptions all the time, and so there’s something of a prejudice in that regard. But I would imagine, although I haven’t done this myself, that this endeavor is comparable to other areas of my life where I’ve investigated paths less traveled.
I imagine that people who pursue medical tourism, at least according to some of my colleagues, are vested in their own healthcare…to the extent that they are not going to leave any stone unturned and they’re not going to enter a facility that looks like something out of a bad Moscow movie. It’s not going to be that way.
These people are paying for the privilege of accessing medical services quickly. They need to be confident that rapid access to quality care is what they will be getting. That’s what matters most to people who are willing to travel.
MTT: Documenting quality is certainly a priority. Do you think JCI accreditation, and now Press Ganey scores would be important in documenting quality?
JKM: I see a lot of that, but if you go on some of the websites of institutions offering medical services out of the country, it’s really the universities that are providing the branding, per se.
A lot of these people are foreign nationals anyway. They come to the United States and study at UCLA, Harvard, or Stanford medical schools — then, they go back to Costa Rica or Columbia and say, “I’m a graduate of Harvard Medical School.”
MTT: Now a $64,000 question: What about Medicare? Do you see HSAs getting any traction in Medicare and would it open up the medical travel market more quickly?
JKM: It will, but you have to understand that the idea of putting seniors in charge of their own medical treatment is a terrifying prospect for most elderly folks.
They’re not interested in that dynamic, but they’re going to be pushed to really look at this as early as 2013. It isn’t just that the system is going bankrupt — that’s 10 years or so away.
It’s more the fact that as people in the marketplace get older, they’re going to have 10 or 15 years experience working for John Deere or Wal-Mart or all the places that have HSAs where the experience and level of freedom and choice have been available. You simply can’t get this with any other policy.
They’re going to then come to the gates of Medicare where you can barely get an appointment. That’s another feature of the reform package: Medicare reimbursements to physicians are so low; it’s unclear to me that any physician is actually going to accept a Medicare patient.
It’s much more likely that physicians are going to opt out of all insurance completely, and patients will be forced to submit claims on their own and see what Medicare covers.
No doctor can afford to run his/her physical plant on essentially a quarter of what commercial insurance reimburses — and that’s where we are going with Medicare.
MTT: While you have not yet taken advantage of any of the medical travel opportunities, is it something you would consider personally?
JKM: Absolutely I would.
I travel pretty frequently in Europe and the Caribbean. The reason I am making the comment about our universities branding some of these facilities is because I have seen these doctors practicing there.
I don’t think we’re talking about heart transplants — we’re talking about cosmetic surgeries, sometimes reconstructive surgeries or more orthopedic right now…simply because there is a wait for all of these things.
MTT: Yes, for bariatric and others surgeries.
JKM: Exactly. For those things, I wouldn’t have any problem at all getting on a plane and going to see a doctor. And I don’t think a lot of other people would either.
It’s about convenience and price. And with HSAs, we have an insurance product that helps you do that.
MTT: With medical travel and medical tourism delivering such benefits, why do you think U.S. employers have been reticent to offer it as a benefit package?
JKM: I think it’s a couple of reasons.
To a great degree, I let employers off the hook. It was decades ago when World War II happened, and that’s when we got off on the wrong foot in making health insurance almost a captive of all of our employers in this country.
We encourage them opportunistically at every turn, and so they are going to do the kinds of things that they need to do to exert control and to cut costs. They never had a tool like HSAs in the past.
Now that they have this tool, it’s beginning to dawn on them that you can now consider a lot of the ancillary products that you didn’t previously consider. Ultimately, they are looking for a healthy employee, that’s why they offer these benefits in the first place. This might actually improve that.
Now you’ve got somebody who is not out sick for days and waiting for treatment. Maybe if they allowed medical tourism, they’d be out fewer days, they’d get the treatment they want using their HSA funds and move on.
It’s kind of a preventive care initiative, along the lines of obesity treatments and wellness programs — it’s all of the things that didn’t used to be part of an employer program that are certainly now included as companies begin to embrace happier employees.
Part II of this interview will be featured in our next issue.
About J. Kevin A. McKechnie
Executive director of the American Bankers Insurance Association and director of the Health Savings Account (HSA) Council, McKechnie ealth Savings Account (HSA)represents the ABIA and HSA Council before Congress. He served as legislative director to former Congressman William Dannemeyer, of California. He holds a B.A. in History and Political Science from York
University in Toronto, Canada.
The American Bankers Insurance Association
The American Bankers Insurance Association is the separately chartered insurance subsidiary of the American Bankers Association and is the only Washington, D.C.-based full-service association for bank insurance interests. ABIA’s mission is to develop policy and provide advocacy for banks in insurance and to support bank insurance operations through research, education, compliance-assistance and peer-group networking opportunities. ABIA membership consists of banks, and their affiliated agencies, insurance companies, marketing, and administrative services suppliers, non-bank lending organizations and other firms involved in the bank affiliated insurance industry. Additional information on ABIA can be found on the Internet at www.theabia.com.
The American Bankers Association
The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $13 trillion banking industry and its two million employees. ABA’s extensive resources enhance the success of the nation’s banks and strengthen
America’s economy and communities. Learn more at aba.com.
About The HSA Council
The HSA Council is an organization of banks, insurers and technology leaders committed to increasing the adoption velocity of health savings accounts in the United States. The HSA Council represents its members before Congress, the White House and U.S. Courts in order to preserve the ability of Americans to pay for healthcare using an HSA.