Solving the Problems of Managed Care | |
New Medical Savings Accounts |
Federal tax law encourages us to turn over all of our health care dollars
to a third-party manager, says health policy expert John C. Goodman of the
National Center for Policy Analysis. Most private health insurance is obtained through employers because employer-paid
premiums are excluded from the employee's taxable income -- making a dollar's
worth of health insurance worth as much as 30 cents more than a dollar in
take-home pay. By contrast, individuals who purchase their own insurance
or self-insure by putting funds aside to pay medical bills directly receive
little or no tax relief. Goodman proposes a neutral tax policy with these
attributes: Tax neutrality also requires that those who put aside funds to pay medical
bills should receive tax relief. Currently, there are two tax-advantaged
Medical Savings Account (MSA) pilot programs -- one for the elderly on Medicare
and the other for small businesses and the self-employed. But contributions
to these tax-free MSAs can be made only by those with high deductible plans
-- excluding enrollees in HMOs and most other managed care plans. To make MSAs a more flexible self-insurance tool, people should be able
to use a limited tax credit to make deposits to a new type of MSA, Goodman
says. Such an MSA would provide a source of funds with which to pay any
medical expense not paid by insurance. Somewhat like the new Roth IRA, deposits
to the MSA would be made with aftertax funds, but withdrawals for any reason
would be tax-free. Thus enrollees in HMOs and other managed care plans would be able to
make MSA deposits and use the funds to see nonnetwork doctors, purchase
diagnostic tests and obtain other services not covered by their health plan.
People could then choose among medical care, other goods and services and
personal savings, without the distortions caused by current law. Source: John C. Goodman (president , National Center for Policy Analysis),
"Solving the Problem of Managed Care," Brief Analysis No. 254,
January 12, 1998, National Center for Policy Analysis, 12770 Coit Rd.,
Suite 800, Dallas, Texas 75251, (972) 386-6272. |
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