Medical Savings Accounts Research Articles

Health Reform for the 21st Century?It May Have to Wait Until the 21st Century

To assess the likelihood of health care legislation in the forthcoming 105th Congress in 5 areas: health care coverage, tax and Employee Retirement Income Security Act (ERISA) policy, Medicaid, Medicare, and managed care. Informal, semistructured conversations that took place in the months prior to the 1996 elections. Congressional health staff and administration officials. Unofficial, off-the-record personal opinions. Health care coverage initiatives to benefit children and unemployed persons are likely to be proposed, but have little chance of enactment; children are seen as well provided for under current Medicaid law, the strong economy and high employment levels lower concern for unemployed issues, and the effort required to pass the Kassebaum-Kennedy legislation needs time to settle. Tax proposals, such as medical savings accounts (MSAs), and ERISA amendments have no constituency; also, the MSA demonstration in Kassebaum-Kennedy will forestall further action. Medicaid is far less an issue than in the previous Congress, because spending has fallen unexpectedly, the bitter fight over block grants makes them unlikely to be revisited, and the administration is likely to enhance state flexibility through waivers. Medicare will be the subject of substantial action to defer impending insolvency temporarily, but there is virtually no chance that definitive long-term solutions will be enacted even though the underlying fiscal problems are thoroughly understood and recognized. Managed care will be the venue for numerous proposals designed to address specific consumer and quality issues. Four bitter years of fighting over health care issues has raised awareness of the problems, but has produced a political chemistry that is too rancorous to permit passage of significant legislation in the near future.

Health Expenditure Persistence and the Feasibility of Medical Savings Accounts

Medical savings accounts (MSAs) have recently received considerable policy attention as an alternative approach to improving the efficiency of individual spending decisions for health care. The Health Insurance Portability and Responsibility Act includes specific tax incentives to support the use of MSAs on a limited basis beginning in 1997. We review the implications of such tax incentives for insurance and health care purchasing decisions. We then focus on a crucial equity consideration: the extent to which the feasibility of MSAs is limited by the persistence of medical expenditures over an individual's working life. We conclude that persistence does not present an overriding impediment to MSAs. Finally, we consider other key behavioral issues that will be important in evaluating such plans.

Who Benefits From Medical Savings Accounts?-Reply

In Reply. —Putting the patient in charge, as Dr Guazzo recommends, may be a good idea, but to make socially optimal decisions, patients need to face the full costs of care. The implicit tax subsidy to MSA savings and the reasonable chance (20%-37%) of exceeding the catastrophic deductible prevents this. If we could limit the tax subsidies of health insurance, people would have more incentive to choose plans in which they paid a higher percentage of the costs of care. Dr Kastner and colleagues assert that consumers will choose the plan with the lowest out-of-pocket cost. If so, their figure implies that healthy people should choose FFS and that sicker people should choose HMOs. In fact, HMO enrollees are healthier than those remaining in FFS. 1 Our model of choice was based on many factors besides out-of-pocket payments and assumed the value of choice of physician and of amount of treatment is

Who Benefits From Medical Savings Accounts?

<h3>To the Editor.</h3> —Unfortunately, the simulation study of MSAs conducted by Dr Keeler and colleagues¹did not simulate the conditions under which MSAs would be offered to employees by their companies. Rather, the simulations assumed that everyone in the United States would be offered a choice between 3 identical plans: a typical 1996 FFS policy, a typical staffmodel health maintenance organization (HMO), and an MSA. In reality, companies will carefully tailor their benefit options to achieve at least 2 objectives. First, they will design the options to control adverse selection among them. Second, they will not alter their benefit options and include an MSA unless their benefit costs are reduced or stay the same. This means that each company's set of options will differ in some or many respects from those of others because they will be tailored to the risks and preferences of each company's workforce; many more options than the 3

Who Benefits From Medical Savings Accounts?

To the Editor. —Dr Keeler and colleagues 1 provide us with insight into patient behavior in choosing between fee-for-service (FFS) and MSA options. Using the RAND Health Insurance Experiment model, they demonstrate that the likelihood of market segmentation as a result of MSAs, with healthy consumers choosing health insurance programs that offer financial incentives, depends on the size of the MSA deductible: specifically, the larger the deductible, the larger the market segmentation. However, the effect of managed care (MC) on market segmentation, when compared with the MSA and FFS options, is not described. We have modified the Figure contained in their analysis to highlight consumer behavior in choosing among FFS, MSA, and MC options. In our Figure, the MSA and FFS lines are similar to those in Keeler et al. The less steep slope of the FFS line reflects the presence of a co-payment. The MC option is shown as a horizontal line,

Who Benefits From Medical Savings Accounts?

To the Editor. —Although the objective of the study by Dr Keeler and colleagues 1 was to understand the effects of medical savings accounts (MSAs) on health care costs, an equally important feature of this legislation on health care is that it puts the patient back in charge of his or her own money. This gives the patient some control of the medical system and allows the patient to be an independent shopper, somewhat free of physician, insurance company, and politician constraints. In other words, it is similar to the way medicine used to be some years ago, from an economic point of view. From a marketing point of view, we have a much more sophisticated patient today than was the situation a generation ago. The old adage that the doctor knows best would be tempered with the MSA system and informed choice. Ultimately, this bodes well for the patient

Reducing Employee Health Expenses With Medical Savings Accounts

Reducing Employee Health Expenses With Medical Savings Accounts

The controversial medical savings account: what needs to be known!

Journal of the American Academy of Nurse PractitionersVolume 8, Issue 9 p. 427-428 The Controversial Medical Savings Account: What Needs to Be Known! Carole P. Jennings PhD, RN, Carole P. Jennings PhD, RNSearch for more papers by this author Carole P. Jennings PhD, RN, Carole P. Jennings PhD, RNSearch for more papers by this author First published: September 1996 https://doi.org/10.1111/j.1745-7599.1996.tb00688.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume8, Issue9September 1996Pages 427-428 RelatedInformation

Medical Savings Accounts

This position paper examines medical savings accounts (MSAs) as a supplemental mechanism for financing health care services.Although federal legislation to encourage MSAs did not pass in 1995 and is not likely to pass in 1996, MSAs will continue to be seriously considered by public policymakers. Individual retirement accounts accumulate funds for retirement; MSAs could be used to accumulate funds for health care expenditures.Changes in the federal tax code would be required to permit tax-deductible contributions and tax-free earnings to individual MSAs. To be withdrawn without penalty, funds from an MSA could only be used to pay for approved medical or health insurance expenses. Each person would own and control his or her account, regardless of changes in employment. Coupled with high-deductible health insurance, MSAs could empower cost-conscious patients in health care decision making, increasing competitive pressure to reduce health care costs. Administrative costs and paperwork associated with health insurance might also be reduced, and some people who currently do not have health insurance might be able to obtain some financial protection. Medical savings accounts may not help unemployed persons or low-and middle-income persons who cannot afford to contribute to such accounts. These accounts may result in reduced health insurance protection and greater out-of-pocket expenses for those most in need of health care. Problems of adverse risk selection could arise if healthy persons choose insurance options involving MSAs; this choice would cause premiums to increase for persons who desire traditional health insurance. *This paper was written by Jack A. Ginsburg, MPE, and was developed for the Health and Public Policy Committee of the American College of Physicians: Whitney Addington, MD, Chair; Philip D. Bertram, MD, vicechair; Philip Altus, MD; Robert A. Berenson, MD; William M. Fogarty, MD; Nancy E. Gary, MD; David J. Gullen, MD; Janice Herbert-Carter, MD; Richard Honsiger Jr., MD; Derrick L. Latos, MD; Risa J. Lavizzo-Mourey, MD; Angela McLean, MD; and James Webster Jr., MD. Approved by the Board of Regents on 15 July 1995.

PRO: Medical Savings Accounts and Women's Health Care Issues

Journal of Women's HealthVol. 5, No. 3 PRO: Medical Savings Accounts and Women's Health Care Issuesis corrected byCorrigendumMERRILL MATTHEWSJr.MERRILL MATTHEWSJr.Search for more papers by this authorPublished Online:25 Apr 2009https://doi.org/10.1089/jwh.1996.5.175AboutSectionsPDF/EPUB ToolsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail FiguresReferencesRelatedDetailsRelated articlesCorrigendum25 Apr 2009Journal of Women's Health Volume 5Issue 3Jun 1996 To cite this article:MERRILL MATTHEWSJr..PRO: Medical Savings Accounts and Women's Health Care Issues.Journal of Women's Health.Jun 1996.175-180.http://doi.org/10.1089/jwh.1996.5.175Published in Volume: 5 Issue 3: April 25, 2009PDF download

CON: Medical Savings Accounts: Take Two Aspirins and One Step Backward

Journal of Women's HealthVol. 5, No. 3 CON: Medical Savings Accounts: Take Two Aspirins and One Step BackwardJOHN BURRYJr.JOHN BURRYJr.Search for more papers by this authorPublished Online:25 Apr 2009https://doi.org/10.1089/jwh.1996.5.181AboutSectionsPDF/EPUB ToolsPermissionsDownload CitationsTrack CitationsAdd to favorites Back To Publication ShareShare onFacebookTwitterLinked InRedditEmail FiguresReferencesRelatedDetails Volume 5Issue 3Jun 1996 To cite this article:JOHN BURRYJr..CON: Medical Savings Accounts: Take Two Aspirins and One Step Backward.Journal of Women's Health.Jun 1996.181-184.http://doi.org/10.1089/jwh.1996.5.181Published in Volume: 5 Issue 3: April 25, 2009PDF download

Advocacy alert: Health insurance reform

The Senate unanimously passed health insurance reform legislation on April 23. The differences between the Senate bill, S. 1028, and the House version, H.R. 3103, will be worked out in conference committee later this summer. The House and Senate bills would: • Restrict the use of pre-existing condition exclusion clauses in health insurance contracts; pregnant women and newborns are exempt from all preexisting condition exclusion clauses. • Make health insurance more portable as an individual changes jobs. Differences include the following: • The Senate bill increases the tax deduction for health insurance for the self-employed to 80 percent by 2006; the House bill increase is 50 percent by 2003; • The House bill includes medical savings accounts (MSAs); the Senate bill does not; • Medical liability reforms are not included in the Senate bill, but are in the House version; • A provision in the Senate bill requires parity for mental and physical health care benefits; the House has no such provision.

Is a Medical Savings Account in Your Future?

Proposed federal legislation would expand the coverage options Medicare beneficiaries have. One option--Medisave--would enable beneficiaries to replace traditional Medicare coverage with a catastrophic insurance policy coupled with a medical savings account. At least initially, this risky insurance product is likely to appeal to only a small segment of the Medicare population.

Can Medical Savings Accounts for the Nonelderly Reduce Health Care Costs?

To understand how medical savings account (MSA) legislation for the nonelderly would affect health care costs. Economic policy evaluation based on the RAND Health Expenditures Simulation Model. National probability sample of nonelderly noninstitutionalized households. Persons in 23 157 sampled households from the 1993 Current Population Survey. Medical savings account legislation would allow all Americans who are covered only by a catastrophic health care plan to set up a tax-exempt account that they can use to pay medical bills not covered by their health insurance. The interventions we evaluate differ in the deductibles of the catastrophic plan and in whether the employee or employer funds the MSA. Changes in national health expenditures and net societal benefits of health care. If all insured nonelderly Americans switched to MSAs, their health care expenditures would decline by between 0% and 13%, depending on how the MSAs are designed. However, not all nonelderly Americans would choose MSAs; taking into account selection patterns, health spending would change by + 1% to -2%. Medical savings account legislation would have little impact on health care costs of Americans with employer-provided insurance. However, depending on the size of the catastrophic limit, waste from the excessive use of generously insured care could be reduced, and MSAs would be attractive to both sick and healthy people.

Medical Savings Account — A Political Solution

Medical Savings Account — A Political Solution

Medical savings accounts: lessons from Singapore.

In the Spring 1995 issue of Health Affairs Mark Pauly and John Goodman outlined their proposal for medical savings accounts (MSAs) supplemented with tax credits to purchase insurance and encourage cost-effective consumer behavior. This proposal has been widely debated, both in Washington and across the nation. To further enlighten the debate, Health Affairs presents two accounts of the experience with MSAs in Singapore, which differ over how successful Singapore has been at controlling health spending using MSAs. In part, this difference reflects a divide in the broader debate over the outcomes by which MSAs should be evaluated. It is clear that there is ample room here to sustain a debate between honest, serious parties. The result of the exchange is an enriched discussion that will prepare the reader to reach an informed judgment.

Positive experience with medical savings accounts in Singapore.

Medical savings accounts (MSAs) may, by introducing personal responsibility into individual decision making, reduce overall health care costs.’ This has attracted policymakers’ attention in the United States and in other countries. In fact, a mandatory MSA program has financed personal health care expenditures in the Republic of Singapore since 1984. Here we outline the operational characteristics of MSAs in Singapore and highlight the issues to be considered in any attempt to replicate such a program in the United States.

More On Medical Savings Accounts

Letters Health AffairsVol. 14, No. 4 More On Medical Savings AccountsRobert J. Myers AffiliationsCommission Silver Spring, MarylandPUBLISHED:Winter 1995No Accesshttps://doi.org/10.1377/hlthaff.14.4.316-aAboutSectionsView articleView Full TextView PDFPermissions ShareShare onFacebookTwitterLinked InRedditEmail ToolsAdd to favoritesDownload CitationsTrack CitationsPermissions View article"More On Medical Savings Accounts." Health Affairs, 14(4), p. 316TOPICSMedical savings accountMedicare savings programsOut-of-pocket expensesMedicareSurgery Loading Comments... Please enable JavaScript to view the comments powered by Disqus. DetailsExhibitsReferencesRelated Article Metrics History Published online 1 January 1995 InformationCopyright © by Project HOPE: The People-to-People Health Foundation, Inc.PDF download

Medical Savings Accounts: The Authors Respond

the pernicious problem of very high implicit tax rates that result when credits, welfare, or Medicaid is withdrawn quickly as earnings increase. Tax, health, and welfare reform can and must be made to work together. Mark Pauly and John Goodman also sug gest a fixed-dollar tax credit. As an incremental step, their proposal does not focus on a select group such as children, but they recommend that it be made available on an optional basis. Options, unfortunately, can create difficult problems for tax planning and administration; for instance, taxpayers would make alternative calculations, based on guesses of annual income, to see how to minimize taxes. Also, the addition of options without other reforms increases total subsidies for health, thus raising further the share of government spending devoted to health care and reducing the share devoted to everything else. These costs may be worth bearing only if the options are steps in transition to some new, better system. Pauly and Goodman also try to avoid the distortions contained in many MSA proposals. They do not want to favor MSAs over other cost-effective financing or delivery mechanisms. This is an important advance. But there is a Catch-22: If Strategy A (subsidized first-dollar coverage) is favored over Strategy B (unsubsidized health care purchases), and we try to solve the problem by creating Strategy C, which is more neutral with respect to Strategy A, then we will favor Strategy Cover Strategy B, while making the combined system even more complex. The Pauly/ Goodman proposal does get rid of almost all proposed preferences for Strategy C–MSAs– except that it would not allow the purchase of a credit-subsidized catastrophic plan with a higher deductible unless the purchaser put money into an MSA, and it might give a preference to interest earned in an MSA. In so doing, MSAs would still require regulation, for example, optimal size of deductible, mandated use of an intermediary for self-insurance below a catastrophic amount, and limits on abuse of saving incentives. Minimizing but not eliminating preferences for MSAs, therefore, maintains a fair amount of complexity with little gain in incentive over the basic tax credit proposal. In sum, incremental health care reform options deserve serious consideration, and Pauly and Goodman have advanced us several steps. Ironing out the details, however, remains a difficult task.

Medical savings accounts and risk segmentation.

proposal. Gone is the aspect of MSAs that would use tax-sheltered contributions and earnings to accumulate savings for retirement or to replace Medicare-the gist of Goodman’s original proposal that gave it its distinctive features. Not that Goodman has abandoned those ideas, but he has not brought Pauly around to them in this paper. So, in the end, Pauly has not endorsed MSAs, only tax-neutrality, while Goodman, at least temporarily, has set aside his abhorrence of managed care. Nevertheless, between the two, we may have the most technically appealing and politically feasible of all market-based, incremental reform ideas. As with almost all of Pauly’s proposals, this one is technically flawless, but that is in part because he and Goodman duck the tough questions of how exactly to construct the transition rules and how to prevent gaming and opportunism as particular groups and individuals decide whether and how to convert to the new tax credit.