MSAs: STUDY PROJECTS LITTLE EFFECT ON HEALTH SPENDING
Health care expenditures would "not change appreciably" ifThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
Congress approves medical savings accounts (MSAs) as part of the
health insurance reforms now pending on Capitol Hill, according
to a study in today's JOURNAL OF THE AMERICAN MEDICAL ASSOCIATION
(JAMA). Conducted by researchers at California-based RAND Health
Sciences Program, the study concluded that because MSAs would be
"attractive to both sick and healthy people" and rich and poor
alike, the accounts would have "little impact on health care
costs of Americans with employer-provided insurance" (Keeler et
al, 6/5). Overall, the study found that "encouraging MSAs would
not do much to slow the overall growth in health care spending"
(Merline, INVESTOR'S BUSINESS DAILY, 6/5).
MAKING THE SWITCH: The study notes that if MSAs are
approved, not everyone would select the accounts. MSAs with out-
of-pocket spending limits of $3,000 would attract 57% of the
populace, while MSAs that limit spending to $5,000 would attract
48% of Americans, according to the study. Based on these
projections, the authors conclude that health care spending could
decline by as much as two percent or increase by as much as one
percent if the accounts are approved. If all "insured
nonelderly" Americans switched to some form of MSA, which the
authors note is unlikely, overall health care spending would be
reduced by between 0% and 13%, depending on MSA design. If that
same group enrolled only in higher deductible MSAs or employer-
funded MSAs, (instead of employee-funded or low-deductible MSAs)
the cost savings would be between 6% and 13%, according to the
study.
NO ADVERSE SELECTION?: The study's authors said that their
"model does not support [the] hypothesis ... that people with
high incomes would choose MSAs while people with low incomes
would retain their current coverage." People using employee-
funded MSAs have "higher incomes than average," but people using
employer-funded MSAs -- the larger group of MSA users -- have
"below-average incomes." The study also concludes that many
"upper-income sick people" would be more likely to select
employer-funded MSAs because the accounts' tax-preferred status
would limit their personal health care spending. Overall, the
"median MSA user" would be only "slightly" wealthier than people
in HMOs and conventional fee-for-service plans, according to the
study (Keeler et al, JAMA, 6/5).
POLITICAL EXAGGERATIONS: INVESTOR'S BUSINESS DAILY notes
that political "claims by both [MSA] backers and critics have
been overblown" (Merline, 6/5). WASHINGTON POST reports that
despite their "fierce" opposition to MSAs, Democrats are wrong in
their contention that the accounts would attract only the
healthiest people, and Republicans are mistaken when they say
that MSAs would "cut health spending sharply" (Rich, 6/5).