Medical Savings Accounts
(MSA) are a combination of a high deductible catastrophic insurance
and a saving plan that covers the cost up to the deductible. What one doesn't
spend on health care, one can keep in the MSA for future health care uses.
Medical Savings Accounts
(MSA) are a combination of a high deductible catastrophic insurance
and a saving plan that covers the cost up to the deductible. What one doesn't
spend on health care, one can keep in the MSA for future health care uses.
Many variations of MSAs and related tax policies are possible. The advantage of MSAs is that they provide a means for indiviudals to save to pay for coverage and health care between jobs.
As one can see in the adjacent graph, Medical Savings Accounts have the potential to be the foundation of a self funding Universal Health Care Social MarketPlace. This is primarily because those with an MSA can pay for coverage between jobs and because MSAs promote personal responsibility in health care and lifestyle choices.
In the adjacent fiscal model of a universal health care benefit, the premiums for the MSA would be paid by individuals or by their employer just as most other current health care coverage is paid for. The big difference is that at the end of the year, many people will have funds left in their MSA. In regular prepaid coverage, all the premiums are left with the insurance carrier. This reserve allows many people to be able to maintain their own coverage, if and when they should be between jobs, something that can't be said for any other form of coverage.
What also helps make this form of coverage be so fiscally balanced is that one can have a modest tax on the catastrophic coverage (as is in the current MSA law). If this tax is dedicated to subsidies for those in need of support, one can define a virtually self funding universal HC system if about 70% of the population were to choose MSA coverage.
There are also systems for MSAs being proposed as an option for Medicare and also for Medicaid. Under Medicare, seniors would be provided a voucher to purchase MSA coverage as an option to managed care or regular Medicare. The advantage of MSA coverage for seniors is that they could select the provider and treatments of their choice.
It is a common myth that only the healthy benefit from MSAs. If one is sick, MSAs provide you with both the most flexibility in choice of providers as well as treatment options of any health care coverage. Yes, a sick patient will spend their total yearly MSA in treatment and then use the catastrophic coverage, leaving nothing in the MSA for next year. However, this is the also way that other forms of coverage work. The benefit under an MSA is to stay healthy and you can be rewarded with a healthy and growing MSA for retirement years. Those with unable to save for an MSA would be able to get support from the additional tax revenue created by the investments of those with MSAs.
There are individual as well as group MSA plans. Under group MSA plans, a group will pool their MSAs into a common pool and at the end of the year, what is left is divided up between the group. The group might also consider using any leftover funds to purchase some of next years premiums. This has the advantage of sharing risk. However, it also removes some of the aspects and incentives of individual responsibility.
How the catastrophic coverage is administered under MSAs varies but generally it has a managed care component. Most existing MSA catastrophic coverages also provide all coverage at 100% once the catastrophic level of care has been reached. Many other forms of coverage require people to pay supplemental fees or copayments for catastrophic coverage. In all respects, MSAs are a good choice for individuals regardless of health.
One might speculate that many sick people might choose MSA coverage so that they might get the provider and treatments of their choice. This could drive the cost of the catastrophic coverage up in relation to other forms of coverage. This situation can be prevented by reinsuring the catastrophic coverage in a common reinsurance pool along with other forms of coverage. Such a policy also deals with the concerns of many about adverse selection between various forms of health care coverage.
As a disclaimer, I don't stand to gain any significant direct benefits from promotion of MSAs. I am not an agent for an MSA carrier (I am a dentist). I merely set out to model various forms of health care financing using my background in computer modeling. Of all the thousands of systems I have modeled, only the MSA financing system was found to provide any significant long term stability with an ability to be be self funding. Other parts of the computer model (not shown in this homepage) show that MSAs also have the greatest benefit on the wages of average workers when compared to hidden costs necessary to operate the various prepaid systems of health care coverage. If you wish to explore these various additional aspects of health care financing, you can download the computer model used to generation this information as a zipped .exe file of a Quattro Pro Windows spreadsheet. In other words, what is said in this web page on health care is not based upon rhetoric but basic arithmetic. If you believe otherwise (which is your right), your perspective based upon false rhetoric, you have been misled, and you will have to prove the basic arithmetic of the computer model of health care financing to be at fault. At the very least, if your are honest with yourself and other's, you should temper with the perspective that your opinions are just that, an unsupported opinion.
