Wise"
BY: REGINA T. JEFFERSON
Catholic University of America
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=171973
Contact: REGINA T. JEFFERSON
Email: Mailto:Jefferson at Law.CUA.edu
Postal: Catholic University of America
Columbus School of Law
Washington, DC 20064 USA
Phone: (202)319-5025
Fax: (202)319-4459
ABSTRACT:
This article analyzes the Medical Savings Account (MSA) program,
and critiques its impact on the retirement and health care
systems. The MSA program is an experimental health care program
created by The Health Insurance Portability and Accountability
Act of 1996. The program allows a limited number of small
employers and self-employed individuals to establish MSAs during
an experimental period. MSA funds may be used for medical
expenses, or carried forward and accumulated tax-free as
retirement savings. The underlying purpose of the MSA program is
to reduce the cost of medical care by providing consumers
greater incentives to be sensitive to health care costs than
traditional insurance provides. Based upon the outcome of the
MSA experiment, in 2000 Congress will decide whether to abolish
or expand the program.
On its face the MSA program appears to be an efficacious
method of tackling both the overwhelming problem of health care
financing, and the increasing need for retirement income
security. However, this article demonstrates that the MSA
program is a questionable response to these concerns because its
underlying policy runs counter to existing retirement income and
health care goals. Furthermore, the article shows that the MSA
program raises serious issues of fairness as it benefits only
relatively few, namely, the healthiest, wealthiest, and most
informed members in society. The article acknowledges that the
program's failure to deliver health benefits and savings
opportunities to all Americans would not render it void of
value, or its cost unjustifiable, if it were successful in
curbing rising health care costs. However, using health care
consumption trends, a comparative analysis, and MSA
participation rates the article determines that the MSA program
is unlikely to significantly impact medical care costs.