Though the presidential task force assigned to reform the nation's health-care system has floated an amazing variety of trial balloons, it has failed to loft one particularly promising suggestion.
We're referring to the idea of Medical Savings Accounts. Unlike the modish "managed competition," MSAs are understandable. Unlike "global budgeting," which relies on all-wise central planners to decree how much money the government and the public should spend on health care each year, they sound as if they actually could work.That may be why, as Scripps Howard News Service reports, more than 200 members of the House of Representatives co-signed one or another of the 11 MSA bills introduced last year - more than sponsored any other approach to health-care reform. To the humble consumer, the concept has immediate appeal.
Here's how it works. The federal government changes the law to permit the creation of tax-free Medical Savings Accounts (also known as medical IRAs). Individuals can deposit pre-tax dollars in these accounts and make tax-free withdrawals to pay for health care or medical insurance. While they are young and healthy, their accounts might accrue large balances, helpful later in their child-rearing years or when medical trouble strikes. From age 65 on, say, withdrawals from the accounts could be used for any purpose.
Medical Savings Accounts would mesh readily with the present system of work-based health benefits. Today, the average employer-paid health plan costs $3,600 to $4,000 per family. Under the new system, employers might buy much cheaper insurance with a high deductible, say $2,000, and give each employee an annual allowance of $2,000 to be deposited in an MSA. If the worker had a healthy year, money left over would build up in the account; if the family were sick a lot, insurance would cover expenses over $2,000.
The core advantage of Medical Savings Accounts is that they give the great mass of health-care consumers an incentive to keep costs down. Fewer trips to the doctor, less expensive drugs, a healthy lifestyle mean tax-free savings. Deductibles, under present schemes, are meant to encourage prudent use of medical systems, but they arbitrarily penalize the first expenditures of the year and burden low-income families; medical IRAs encourage careful spending year round, yet provide ready cash to cover necessary bills.
A September 1992 study from the Mackinac Center for Public Policy suggests that widespread application of dthe MSA idea could shave as much as $200 billion off the nation's $900 billion annual bill for health care.
By themselves, MSAs won't solve all that ails the American medical system. But their virtues are so plain that they deserve to be tried. Any national reforms Washington adopts must leave room for willing states to explore such promising alternatives.