Thursday, July 30, 1998

Medical savings accounts offer many benefits

Donna Shalala, secretary of Health and Human Services, voiced the administration line about medical savings accounts the other day, saying they were risky, a benefit only to the healthy and wealthy, and a threat to the less fortunate among us.

The secretary, who often cites biased reports as "science" when they favor her political position, should have stuck her nose in a neutral study by the highly respected RAND think tank.

It concluded in 1996 that these accounts, also known as MSAs, would not only save the nation an enormous amount of money in its health care expenditures but would also benefit many low-income families.

To be sure, you can't prove the efficacy of MSAs by the limited, experimental, overly compromised program enacted two years ago. A chief idea of medical savings accounts is to allow tax-free dollars to be spent on routine medical care before high-deductible catastrophic insurance kicks in.

Perversely, the legislation did not allow the account amount to equal the deductible. The legislation, among other self-defeating prohibitions, also excluded large businesses from the experiment.

The genius of MSAs, which Congress could help demonstrate by reforming its test program this session, is the genius of self-accountability and the marketplace.

The way health insurance often operated prior to managed care, people were in effect given vouchers to get as much care as they wanted, need be hanged.

As one writer has put it, it's as if your company gave you a card to get whatever food you wanted. Wouldn't you soon quit looking for bargains or deciding to get by with macaroni occasionally?

With medical savings accounts, people would know they could keep the money if they didn't spend it and most would therefore exercise prudence.

MSAs are also an answer to complaints about HMOs. With these accounts, you would have freedom to spend your health dollars however you liked. You would have choice.

You would be medically liberated. However, you would not be forced to accept the accounts. If you did, you could simply shop for the doctors of your liking.

While that sort of insurance independence may not be sufficiently collectivist or paternalistic for Shalala and any number of others of a statist stripe, their specific arguments can easily be proven false with the legitimate experiment the administration opposes.