What Would Happen If Large Firms Offered MSAs?

Abstract

This paper reports the results of a survey of more than 500 health benefit specialists about the advice they would give to medium-size and large employers on offering a tax-advantaged medical savings account (MSA). About 42 percent of respondents would recommend an MSA combined with a catastrophic health plan, while a third would advise against such a plan. When presented with a specific example of an MSA package that would be attractive to a large fraction of workers, the percentage of benefit specialists favoring adding an MSA option rose to 74 percent. However, respondents generally did not believe that most workers would choose the MSA, especially if the alternative were a health maintenance organization (HMO).

Medical Savings Accounts: Theory, Politics, Pros, and Cons

“…Pauly, Percey, Herring, and Rosenbloom (2000) recently surveyed a large group of employee benefit specialists. The results suggest that although some voiced concerns about complexity, employee education, and administrative costs, many companies would seize the opportunity to offer MSAs if they were made available to them on a tax-neutral basis.…”

Medical savings accounts: opportunities for cost savings?

“…Supporters of MSAs draw on results of the RAND Health Insurance Experiment (Newhouse and The Insurance Experiment Group, 1993) as evidence of likely cost reductions under MSA plans. Beyond their potential to reduce healthcare costs, MSA advocates argue that MSAs have many benefits including greater patient involvement in their healthcare decisions (Bond et al, 1996; Gratzer, 1999; Pauly et al, 2000a; Van Mieghem and Pichette, 1997). Opponents argue that MSAs are unlikely to reduce costs (Forget et al, 2002), and that even if they do, they may have undesirable distributional consequences by financially rewarding the healthy and punishing the sick (e.g., Deber et al, 2004; Hanvoravongchai, 2002; Yip and Hsiao, 1997 and others).…”

“…MSA research in the United States has concentrated on the acceptability of MSAs as alternative forms of employer‐provided health care (Battistella and Burchfield, 2000; Pauly et al, 2000a,b) or alternative methods of providing coverage through Medicare (Grimaldi, 1996; Kendix and Lubitz, 1999). Additional research has looked at changes in tax status or financial incentives offered by employers that would be needed for MSAs to be viable alternatives to traditional forms of insurance coverage (Pauly and Goodman, 1995; Pauly and Herring, 2000).…”