Shakespeare and Medical Savings Accounts

Commentary by Pete du Pont

"Fair is foul, and foul is fair."

Thus incant the three "weird sisters" usually referred to as witches - at the outset of Shakespeare's "MacBeth", as they set forth the proposition that what is good will be made bad and what is bad will be made good.

In like manner, three nationally syndicated columnists - Joan Beck, Molly Ivins and Jane Bryant Quinn - have recently stirred the pot, proclaiming a fair health care reform proposal foul and a foul one fair.

All three columnists attack the idea of Medical Savings Accounts (MSAs), particularly the Republican proposal to provide Medicare beneficiaries with an MSA option.

Currently, most people get their health insurance either through their employer, or from the federal government through Medicare and Medicaid. In the past, most employers offered a health insurance policy with a deductible up front, and then people had to pay, say, 20% of their medical bills up to a maximum amount. Increasingly, companies are moving to health maintenance organizations (HMOs) or other types of managed care.

An MSA permits a third option. A person may take the same money that is currently spent on that low-deductible policy or HMO and purchase a less-expensive, high-deductible health insurance policy, say, with a $3,000 deductible. The money that is saved by purchasing that less expensive policy is then deposited by the employer in a Medical Savings Account and can be used during the year to pay smaller health care bills. Any unspent money in the account at the end of the year can be withdrawn or rolled over and grow with interest to be used for health care in the future.

In attacking MSAs, the three columnists quickly assert that fair is foul. Joan Beck claims that "the idea of Medical Savings Accounts is largely an untried idea."

Not true. Congressman Matt Salmon (R-AZ), testifying recently before the House Subcommittee on Civil Service, said that there are some 3,000 U.S. businesses that have adopted some form of MSA. Abroad, in 1984 the country of Singapore adopted a "Medisave" program as the primary means of paying for health care. Today, Singaporeans have access to the same technology as most European countries, with hospital stays equaling those of aggressive managed care firms in the U.S., but they are only spending 3.1% of their GDP (compared to about 14% in the U.S.).

Jane Bryant Quinn thinks that only healthy and wealthy people would want an MSA, but during the same congressional hearing, everyone testifying -- some of whom had implemented MSA plans for their own employees -- found that both the healthy and sick benefited financially from the plans. The healthy benefited because they got to keep the unspent MSA balance at the end of the year, and the sick because they spent less money out of pocket, since their exposure was limited to the MSA amount. Insurance paid 100% of the rest.

Molly Ivins thinks that Republican support of MSAs is the result of recent lobbying by special interest insurance companies looking to make money off selling the MSA plans. But the MSA idea goes back to the mid-1980s; several think tanks and congressmen -- including those now in the Republican leadership -- have supported the idea for years. Further, most large insurance companies have opposed all MSA legislation for the very reason that it would encourage individuals to retain some of the money they had been giving to the insurance companies. (As in "MacBeth", you know the world is topsy-turvy when Molly Ivins would rather people give their money to insurance companies than keep it themselves.)

All of the above columnists also think that foul is fair -- that MSAs would undermine the Medicare system. Surely a system that is by everyone's count going bankrupt in seven years is already undermined. Medicare has been plagued with exploding costs and suffocating regulations for years.

MSAs are simply not a radical idea. Indeed, most self-employed individuals who purchase a health insurance policy on their own -- and thus don't perceive the employer or government as providing a health insurance policy free -- usually choose a high-deductible policy and pay for smaller medical expenditures out of pocket. All an MSA does is provide individuals or their employers with the opportunity -- not a requirement -- to put a limited amount of tax-free money in an account to pay those smaller medical bills.

Congressional Republicans are trying to fix and preserve Medicare by providing senior citizens with private sector options such as MSAs. By contrast, these columnists criticize the plan as threatening to an already bankrupt system.

Their solution is to stir the pot and chant: "Double double toil and trouble; Fire burn and cauldron bubble." It may be good theater, and even good liberal politics, but it won't help Americans get better health care.