NCPA - National Center for Policy Analysis

Internet Health Plans Give Consumers More Choice

July 10, 2000

The Internet business boom is expanding the health care market with new companies offering online health care products such as managed care, flexible spending accounts and medical savings accounts (MSAs). One company estimates the new online products will cut 18 to 20 percent from the administrative costs of regular health products.

Minneapolis company Vivius, Inc., is launching an Internet-based system where providers set their own rates and consumers build their own health plans based on their individual needs.

  • The new program is based on specific contributions for health expenses by employers, called "defined contributions," to special accounts for these expenses, called flexible spending accounts.
  • Participants in the program are required to also purchase an umbrella or catastrophic health policy to cover expenses excluded under the plan or in emergency circumstances.

HealtheCare, another Minneapolis company, is introducing a similar product. It is also distributing medical information to participants and physicians to better educate both on health issues.

  • Instead of a flexible spending account, this plan is based on pretax contributions by employers to MSAs for health expenses.
  • The plan allows for the rollover of unused funds from year to year, discouraging overuse of the system simply to "get one's money's worth."
  • Unlike Vivius, Healthecare does not require an umbrella policy; however, the plan is dependent on the repeal of the current cap on the number of MSAs by Congress.

The Vivius and HealtheCare plans are scheduled to become available in fall 2000.

Source: "Internet-Based Health Plans to Address Industry Trends, Cut Out Middleman," and "'E-Health Plan' Would Integrate MSA Concept With Internet Technology," May 15, 2000, BNA's Health Policy Report.


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