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Len Nichols, PhD, a health economist at the Urban Institute in
Washington, says the outstanding flaw in MSAs is that they are likely to appeal
only to the youngest, healthiest, and wealthiest of the population. Left behind
in the traditional insurance market would be the older and sicker population,
for whom costs would likely rise.
"The difficulty is that health expenditures are extremely
skewed," Nichols tells WebMD. "One percent of the population accounts
for 30% of all expenditures."
Additionally, some have feared that MSAs could be used by the
very wealthiest -- who can pay out of pocket for even the most expensive care
-- simply as a tax shelter.
Partly in response to these criticisms, the HIPAA law capped
the number of allowable MSAs at 750,000 and limited them to self-employed
individuals or employers with less than 50 workers. It also imposed minimum
deductible requirements and restrictions on amounts that could be contributed
Since that time, less than 100,000 MSA accounts have been
formed. Scandlen says the restrictions have inhibited the growth of MSAs
unnecessarily. He also disputes the notion that such accounts are only for the
wealthy and healthy, citing research by the Rand Corporation showing that MSAs
have broad appeal across income groups.
Now, there is reason to believe that the vision of MSAs may not
have faded entirely. One patients' bill of rights proposal, sponsored by
Republicans in the House of Representatives, contains a provision that would
remove the restrictions currently imposed on MSAs. And during his campaign,
President George W. Bush expressed support for medical savings accounts.
Scandlen also says that some businesses confronting high
employee healthcare costs are beginning to develop MSA-like products for their
workers -- even if they are not being called medical savings accounts.
"The same notion is taking on different forms,"
Scandlen says. "When HIPAA first passed, most [employers] were moving
toward managed care. In the past five years, that attitude has changed
dramatically. Now large employers are thinking that some kind of cash account
for employees to pay directly for services makes sense."