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Medical Savings Accounts: Obstacles to Their Growth and Ways to Improve Them
Notes
1 PL 104-191, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), popularly known as the Kassebaum-Kennedy bill; the MSA provisions created a new section of the Internal Revenue Code, Section 220.
2 For an analysis, see Merrill Matthews Jr., "Medical Savings Account Legislation: The Good, the Bad and the Ugly," National Center for Policy Analysis, Brief Analysis No. 211, August 19, 1996.
3 In September 1997 the General Accounting Office awarded an $11 million contract to study the MSA program, as required by the enabling legislation, but then decided to wait until at least 350,000 accounts were established to attempt to survey account holders. Given that the 100,000 or so who have accounts are spread throughout the United States, it is virtually impossible to identify and interview those who have used an MSA. So we are left to rely on anecdotes and reports from the field. See Greg Scandlen, "GAO Awards $11 Million Contract to Study MSAs," Patient Power Report, vol. 2, no. 8, September 1997.
4 Source Book of Health Insurance Data, Health Insurance Association of America, 1998, p. 110.
5 Ibid., pp. 112-113.
6 The introduction to an early (1990) draft of NAIC's "Small Employer Health Coverage Reform Act" states that in addition to making "adequate levels" of insurance available to employers, the act provides a vehicle "through which greater stability and predictability are achieved in the small employer market." A draft "Report of the Health Care Insurance Access Working Group" of NAIC, dated December 10, 1991, discusses this in detail. It calls for "a series of health care payment reforms that will: (1) stabilize the market; (2) correct or at least limit the impact of abusive rating and pricing practices; (3) guarantee the availability and renewability of products; and (4) attempt to deal with the affordability of needed products." But the report acknowledges that "these reform models are sailing on largely uncharted waters." And it cautions, "...states need to evaluate the cost impact of these models (because they) will have a noticeable cost redistributional effect. The result is that a larger number of small employer groups will see some rate increases than those who will see decreases.... In addition, the guaranteed issue component is anticipated to have an additive cost impact on all small groups." The report concludes, "Neither model does much to deal with the big issue - cost of health care." Three years later, a report sponsored by the Commonwealth Fund agreed, "While small-group market reforms may appear to stabilize the rates in the market, they are unlikely to solve the problems of affordability and availability of insurance." Small-Group Market Reforms: A Snapshot of States' Experience, February 1995.
7 Susan S. Laudicina, Gretchen Babcock, Joan M. Gardner, et al., "State Legislature Health Care and Insurance Issues: 1997 Survey of Plans," Blue Cross Blue Shield Association, January 1998.
8 Patient Power Report, vol. 3, no. 2, March 1998.
9 "Medical Savings Accounts State Environment," Council for Affordable Health Insurance, May 18, 1998.
10 Bureau of the Census, U.S. Department of Commerce, 1990.
11 Internal Revenue Service, Ruling 97-20, April 22, 1997.
12 Patient Power Report, vol. 3 no. 1, February 1998.