New studies from such prestigious organizations as Rand, Harvard and the liberal Urban Institute support the concept of Medical Savings Accounts, rebutting arguments against them advanced by Sen. Ted Kennedy (D-MA).

MSAs give people a new way to pay for health care, involving the option of high-deductible insurance to cover major expenses paired with a personal savings account to pay for routine and preventive medical care. Individuals may withdraw or roll over any moneys left in the account at year's end.

Some 2,000 employers have already adopted some version of MSAs. But employer deposits to MSAs are subject to federal income and payroll taxes, unlike employer-paid health insurance premiums. Kennedy wants to deny MSAs the same tax status because he says they would favor the healthy or wealthy and harm the sick and poor. But the studies show otherwise.

• Rand researchers say MSAs would be attractive to those who expect high health-care costs, because potential out-of-pocket expenses under traditional health insurance -- which requires deductibles plus copayments -- are higher than under MSAs.

• Thus, sick people will pay more under a traditional policy than under an MSA plan.

• Rand also disputes the claim that they would favor the wealthy.

• In the plan before Congress, MSA deposits could be funded by either the employee or the employer, but not both.

• In a comparison of employee-funded and employer-funded MSAs, traditionalhealth insurance and HMOs, Rand found that 57 percent of the population -- almost three-fifths-- would choose an MSA.

• Employees choosing the employer-funded MSA -- the most popular MSA option -- would have an average income of $29,000, only slightly higher than those remaining in fee-for-service plans ($28,000) and well below the income of those choosing an HMO ($43,000).

• MSAs would be a welcome option for minorities, according to Urban Institute studies.

• It estimates that 75 to 80 percent of non-elderly Americans would gain by switching to an MSA plan.

• Some 79.2 percent of whites would benefit from MSAs, and 83.9 percent of blacks -- as well as an overwhelming majority of Hispanics.

Then there is the question as to whether MSAs would help hold down health care costs. According to the Rand study:

• Private employers report that health-care spending drops significantly after the introduction of MSAs.

• But since the present law would subject non-health related withdrawals from MSAs to income taxes -- plus a 15 percent penalty -- people's incentive to economize on health spending would be reduced.

• According to Rand, if everyone in the under 65 age group switched to an MSA, health care spending would drop by 6 to 13 percent

A poll by health economists at the Harvard School of Public Health confirmed that patients in managed-care plans face more obstacles to obtaining specialized care and tests, even when both physician and patient believe additional care is needed.

• The survey found that managed-care patients were almost twice as likely to complain they were not getting the treatment they and their doctors thought was needed.

• And such patients were about 50 percent more likely to be unable to see a specialist or to get needed diagnostic tests.

The results of such studies suggest that health care critics such as Sen. Kennedy should focus their attentions on HMOs rather than MSAs.

Source: John C. Goodman (National Center for Policy Analysis), "Kennedy: Off-target on MSAs," Investor's Business Daily, June 18, 1996