Medical Savings Accounts (MSA)

Question 1

Key aims of MSAs

Answer 1

(1) encouraging personal responsibility for
health and health care
(2) increasing provider choice for patients
(3) enhancing
financial protection
(4) improving efficiency
(5) controlling health-care costs

Question 1

What are MSAs?

Answer 1

Medical savings accounts (MSAs) allow enrolees to withdraw money from earmarked funds to pay for health care. The accounts are usually accompanied by out-of-pocket payments and a high-deductible insurance plan.

Enrollees therefore pool risks over time, although they do not pool risks across the wider population. The accounts are usually accompanied by out-of-pocket payments and a high-deductible insurance plan that covers catastrophic costs. In the USA, this combination is sometimes called ‘consumer-directed health care’ (Buchmueller, 2008). MSA plans can differ in terms of cost sharing (i.e. user charges), contribution and spending rules.

Question 2

Example of MSA

Answer 2

MSAs were introduced in the USA in 2003 and are generally known as health savings accounts (HSAs).

HSAs are voluntary, employer-sponsored schemes that
are often managed by private insurers or other financial institutions; they are also available for individual purchase. The aim of HSAs is to increase insurance coverage rates and curb health expenditure growth.

Program: Operates in the private insurance
market within a national regulatory framework; scheme
the design varies across insurance plans

Contributions: Voluntary; annual contribution cap;
employees and employers contribute

Incentives to save: Contributions, interest and
withdrawals are not taxed; health savings accounts are portable across jobs

Restrictions on the use of savings: Contributions are capped; most insurers provide a list of preferred providers that are accompanied by lower user charges; to support the use of preventive care, most plans exclude selected services (e.g. immunizations and diagnostic colonoscopies) from deductibles.

(Clyus and Thompson 2012)

Question 3

MSA and Efficiency

Answer 3

Potential benefit: MSAs could reduce spending by discouraging low-value treatments, but some studies suggest they also deter necessary preventive care.

Uncertain impact on high-value care: Once the deductible is met, MSAs likely don’t influence expensive treatments where patients have less control.

Limited effect on overall costs: Voluntary MSAs may not be effective since low-income people, who use more healthcare, are less likely to enroll.

Risk selection: Studies suggest MSAs tend to attract healthier people, which may artificially lower costs but not reflect real program effectiveness.

Consumer awareness: Many enrollees might not be aware of deductible details or how to use MSAs effectively to compare prices and choose quality care.

Lack of price transparency: Difficulty obtaining price and quality information continues to be a challenge in the US healthcare system, limiting MSAs’ potential for active purchasing.

Potential for overuse in some countries: In China, doctors aware of MSAs might prescribe unnecessary services to maximize account funds.

Overall, the effectiveness of MSAs in controlling healthcare costs seems uncertain. More research is needed on how MSAs influence treatment choices and how patients can navigate the healthcare system to get the most value.

Question 4

MSA vs Equity and financial protection

Answer 4

Limited protection: MSAs may not cover large medical bills, especially for people who contribute without employer support.

Financial burden: Studies show MSAs can increase financial strain, particularly for those without employer contributions or with chronic illnesses.

Disparity among health groups: MSAs may disproportionately burden low-income, unemployed, disabled, and chronically ill people who can’t afford to contribute or may deplete their savings quickly.

Inequitable tax benefits: Tax breaks for MSAs often favour wealthier people who are in higher tax brackets.

Limited use for retirees: While MSAs can be used for non-medical expenses after retirement, accumulating enough savings to cover medical costs throughout retirement can be difficult.

Overall, the passage suggests MSAs may not be an effective solution for achieving universal financial protection in healthcare systems.