Medical Savings Accounts in South Africa

Policy Reports | Health | International

No. 234
Thursday, June 01, 2000
by Shaun Matisonn


"MSA plan members have lower inpatient costs."

During the 1990s an important and perhaps unique experiment took place in South Africa's market for private health insurance. Deregulation enabled a wide array of health insurance plans to compete in a relatively free market and a favorable tax ruling placed Medical Savings Account plans on a level playing field with third-party-payment insurance.

"MSAs are attracive to all age groups, regardless of health status."

In just five years MSA plans captured half the market, proving that they are popular and meet consumer needs as well as or better than rival products. South Africa's experience with MSAs shows that MSA holders save money, spending less on discretionary items in a way that does not increase the cost of inpatient care. Contrary to allegations by some critics, the South African experience also shows that MSAs attract individuals of all different ages and differing degrees of health.

These findings present important lessons to other countries considering health insurance reform.

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.

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