NCPA - National Center for Policy Analysis

GOP Senators Seek MSA Expansion

May 10, 1999

A group of 43 Republican Senators recently wrote Majority Leader Trent Lott (R-Miss.) recommending key corrections in Medical Savings Account legislation. The four-year MSA pilot program is entering its third year with many people who were previously uninsured signing up.

MSAs combine high-deductible private medical insurance to cover costly illnesses with tax-favored savings accounts designed to pay for routine medical bills.

  • The Senators want to allow anyone to open an MSA, lower the minimum family deductible to $2,000 from $3,000, and permit both employees and employers -- rather than either one or the other as the law now stands -- to contribute to the accounts.
  • At present, MSAs are only available to the self-employed and employees of firms with 50 or fewer workers.
  • Since under current law no new accounts will be allowed after the end on next year, the Senators want to remove that obstacle and make MSAs permanent -- thus encouraging insurers to enter the market.
  • Currently singles may only fund 65 percent of the deductible up front and couples 75 percent -- a provision the Senators want to change to allow full funding initially.

The General Accounting Office has estimated that some 37 percent of MSA participants were previously uninsured.

Source: Albert B. Crenshaw, "GOP Seeks to Expand Medical Savings Plans," Washington Post, May 9, 1999.


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