Medical Savings Accounts (MSAs) are probably the single most popular idea on Capitol Hill. In this session of Congress they have been included in 24 different proposals with 243 cosponsors. They have been endorsed by Democrats and Republicans, liberals and conservatives - by people as divergent in views as Senator Harris Wofford (D-PA) and Senator Phil Gramm (R-TX).

At the same time, Medical Savings Accounts are being attacked on the left, on the right and by special interests. They have been criticized by the liberal New York Times and the conservative American Enterprise Institute. The most vocal criticism comes from large insurance companies who fear a huge loss of premium income if MSA deposits are tax free. Most of the criticisms are bogus. Let's see why.

Bogus Argument: Individuals do not have sufficient information to be intelligent consumers of health care.

Response: If they do not, they can solicit advice and assistance. For example, most large employers and practically all insurance companies have teams of cost management experts who judge whether, when and where medical procedures should be performed. These experienced professionals might help patients decide about complicated and expensive procedures. But their advisory roles should not include decision-making power. We should let the experts advise and the patients decide.

In addition, markets naturally generate information for those with purchasing power. One of the primary tasks of purveyors of goods and services is to provide information to potential customers. If patients had greater control over their health care dollars, health care providers would supply more information that would enable informed decisions.

Quaker Oats, International Paper and other companies have provided their empowered employees with access to sophisticated databases containing information about quality and price. But even if employers do nothing, employees can get numerous medical questions answered at little or no cost. According to the Harvard Health Letter:

• Ask-A-Nurse is a 24-hour-a-day free service under which registerted nurses with an average of 10 years of emergency room experience answer patient inquires.

• Doctors By Phone charges $3.00 per minute over a 900 number and callers' questions are answered by physicians who are usually board certified.

• Pharmacy Questions? Ask the Pharmacist is another 900 number service; at $1.95 per minute, licensed pharmacists answer questions about drugs 24 hours a day.

Bogus Argument: MSAs benefit only the rich.

Response: The tax treatment of all employee fringe benefits helps higher-income employees more than lower-income employees. Whenever a tax is avoided, the higher the employee's tax bracket, the greater the gain. That could be changed through a system of refundable tax credits - weighted to benefit lower-income families. However, MSAs can fit into any tax structure.

MSAs for employees are not a new tax-favored fringe benefit. They are simply a new way of paying for health care that can partially substitute for traditional health insurance. Wise tax policy would treat MSA deposits the same way it treats health insurance premiums. That would level the playing field on which individuals choose between self-insurance and third-party insurance.

Even under the current tax system, however, the allowable MSA deposits are likely to be viewed as insignificant to a rich person but important to a poor one. A single mother, living from paycheck to paycheck, may be deterred from taking her child to the doctor by the $200 deductible in the Clinton health care plan. With an MSA, she would have the money at hand.

When MSAs empower people in the medical marketplace, those who gain the most power are not rich. They're poor.

Bogus Argument: MSAs benefit only the healthy.

Response: MSAs confer their greatest benefit on people who are sick - especially the chronically ill. Under the current system, people are being priced out of the market for fee-for-service insurance, under which they can choose their own doctor. The alternative for most people is a health maintenance organization (HMO) or other managed care plan under which the choice of doctors is limited, the doctor-patient relationship is disrupted and the bureaucracy dictates to its doctors how they will practice medicine. In this environment, it is all too easy for the bureaucracy to pursue its financial self-interest by skimping on care for the chronically ill.

That's why MSAs are a lot more valuable to sick people than to people who are well. MSAs allow people to freely enter the medical marketplace, choose any doctor and select any therapy.

When MSAs empower people, those who gain the most are sick, not healthy.

Bogus Argument: MSAs encourage people to avoid preventive care.

Response: MSAs encourage people to make sure they get a dollar's worth of value when they spend a dollar. They do not encourage people to defer needed health care. In fact, people with MSAs are more likely to get the preventive care they need. Under conventional health insurance, people receive no reimbursement until they have met the deductible, which can be a major out-of-pocket expense for low-income individuals. MSAs, by contrast, provide first-dollar coverage so that people with limited funds can pay medical expenses. A survey of Golden Rule employees who opted for MSAs found that one out of every five used their MSA for a medical service they would not have purchased under the traditional insurance plan.

Bogus Argument: MSAs would attract the healthy, making the cost of a standard plan much higher than otherwise for sick people who are likely to choose it.

Response: "Adverse selection" occurs when plans attract a disproportionate number of healthy or sick people. The plans tend to adjust their premiums to reflect these choices. But the premiums then become a reflection of the people who joined the plan rather than the actuarial value of the benefits. This problem is much more serious for systems of managed competition, since adverse selection is greatest when premiums are artificially distorted by government regulations. However, some adverse selection could occur with Medical Savings Accounts.

Even so, 90 percent of the people with private health insurance obtain it through an employer, any problems are confined to the workplace and employers can easily deal with the problems. For example, if employers offer a choice of health plans, they can "tax" one plan and "subsidize" another so that the revealed price to the employees reflects actuarial value rather than the results of adverse selection.

For the remaining 10 percent who purchase individual and family policies, the marketplace premiums are already higher for people who are older and sicker. Yet these are the very people for whom the financial gain from selecting a higher deductible is greatest.

Bogus Argument: If some (healthy) employees have positive MSA balances at the end of the year, there would not be enough money to pay the medical expenses of the other (sick) employees.

Response: Even if employees did not change their behavior, the savings from lower administrative costs would be significant. As existing MSA plans prove, employees' behavior changes substantially and leads to less overall spending on medical care. As an example, Forbes discovered that when it paid employees bonuses for not making claims against the company insurance plan, the bonuses paid for themselves in reduced overall health costs.