November 13, 1995
Few things coming out of Washington make less sense than the virulent opposition to the inclusion of Medical Savings Accounts in Medicare legislation.
Opponents claim that only the healthiest and wealthiest seniors would benefit from them. But the evidence is overwhelming that large numbers of Medicare enrollees would actually benefit financially and medically from such an option.
MSAs give seniors the opportunity to move from conventional low-deductible health insurance to insurance with a high-deductible (say $2,000-$3,000) and put the savings in personal accounts. Seniors pay all medical bills up to the deductible from their MSAs and out-of-pocket funds. Catastrophic insurance pays all expenses above the deductible.
A study underwritten by the National Center for Policy Analysis shows:
- Medicare would pay for the catastrophic policy and put $1,500 to $2,100 a year into the retiree's MSA.
- Such a policy would pay 100% of expenses above $3,000 in medical bills annually.
- Maximum out-of-pocket exposure would be either $900 (for those choosing managed care) or $1,500 (for fee-for-service arrangements).
Some 71 percent of Americans over 65 consider their health good to excellent. About 73 percent of Medicare enrollees incurred bills of less than $2,000 in 1992. This means some 17 million seniors could accrue $1,000 to $1,600 yearly in their MSAs. Healthy seniors are not the only winners with MSAs. Nearly 30 percent of elderly Americas consider their health status fair to poor, and some 17 percent incurred health care costs of $5,000 or more last year. Under MSAs, they would never have to pay more than $900 or $1,500, depending on the type of plan chosen.
Source: Sue Blevins (health policy consultant), "MSAs: Everybody Wins," Investor's Business Daily, November 13, 1995.
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