Expanding the availability of Medical Savings Accounts (MSAs) by making MSA contributions tax deductible -- just like other employer-provided insurance plans -- could make them a major form of insurance for currently insured workers in small businesses, concludes a forthcoming RAND Corporation study.

MSAs combine a high-deductible catastrophic insurance plan with a special savings account -- the actual MSA -- into which funds are deposited on a regular basis. MSA funds can be then used to pay for uncovered health care expenses.

• Using a computer simulation, researchers found MSAs with tax advantages could attract 56 percent of all employees offered a plan by a small business.

• The fraction of small business employees who would be offered insurance would increase from 41 percent to 43 percent with an MSA option.

• And many small business employees now signed up for a fee-for-service plan would switch to MSAs if they were available.

Nearly sixty percent of uninsured non-elderly workers are employed in small firms.

Source: Danna P. Goldman, et al., "Will Medical Savings Accounts Increase the Number of Employees Who Are Insured at Small Businesses?" October 1999, Rand Corporation, 1700 Main Street, P.O. Box 2138, Santa Monica, Calif. 90407, (310) 393-0411.