MSA's Can Be a Windfall for All
Table of Contents
- Introduction
- Types of Health Spending Accounts
- A Drumbeat of Criticism
- Are Cost Savings from Raising Deductibles Exaggerated?
- Do MSAs Change Patient Behavior?
- Will MSAs Attract "the Healthy And the Wealthy" at the Expense of Everybody Else?
- Do MSAs Encourage People To Avoid Needed Preventive Care?
- Will MSAs Pull the Best Risks from "the Insurance Pool," Raising Costs for Those Who Remain?
- Can MSAs Help Control Costs over the Deductible, Where the Need Is Greatest?
- Conclusion
- Notes
- Appendix
Conclusion
Over the years, the United States and most other industrialized countries have moved gradually to a system of third-party payment in which health care consumers have little knowledge of the costs of their care. Currently, only about 20 percent of total national health expenditures are paid directly by consumers, and these are concentrated on services that are rarely covered by insurance - plastic surgery, vision and dental care, over-the-counter medications, long term care and in-home nursing services.
As consumers are unaware of costs, they are also unable to influence the provision of services or the course of treatment. The third party that pays the bills ends up deciding what bills to pay and what services to provide. Only the third parties are aware of the costs, and only they are alarmed when they increase. So, it is the third-party payers that try to hold down cost increases by limiting access to care.
"We can expect a wide variety of MSA programs in the private sector, even without the tax advantage."
With the collapse of managed care, employers as well as employees are searching for ways to make health care more responsive to the needs of patients and to give consumers more control over their resources. MSAs are an attempt to bring patients back into the decision-making process by giving them more control over the resources available to them. We can expect a wide variety of MSA look-alike programs to be developed in the private sector, even without the tax advantage of official MSAs. Congress would do well to heed the experience of these experiments and open up the MSA law to encourage innovation.
Greg Scandlen is a Senior Fellow in Health Policy with the National Center for Policy Analysis.
