WHAT IF: Medical saving accounts were established?

What if: Medical savings accounts were established? Raisa B. Deber, University of Toronto With the assistance of Kenneth C. K. Lam

What are Medical Savings Accounts?
A family of financing approaches
Use a personal health spending account, often combined with a high-deductible insurance plan, to pay for specified healthcare services.
Often tax subsidized
Considerable variability in the nomenclature used and the plan details

Why MSAs?
Basic assumptions:
People will be more efficient purchasers if they have to use their own resources
If care is “free” then “moral hazard” encourages overuse
Patients make the decisions about what care they will purchase

Benefits - if assumptions hold
More efficient system
Lower costs
People will shop around for best deal
Lower administrative costs to insurers (if fewer claims filed)
Enhanced patient choice

Experience
In use in several jurisdictions:
Singapore
U.S.
China
South Africa
Considerable variability in plan design

Evidence of success
Depends heavily on :
Plan design
Type of services
Client characteristics
Co-payments may affect utilization
Similar reductions found for both necessary and unnecessary care (RAND study)

Challenges and limitations - 1
MSA models are explicit rejection of risk pooling
Pay your own way
Can undermine insurance arrangements (if healthier opt for MSAs)
If health expenditures are skewed, MSAs may transfer resources from sick to healthy

Skewing
Preview:
iHEA 8th World Congress on Health Economics Monday, July 11, 2011
Raisa Deber and Kenneth C. K. Lam (with Leslie Roos, Evelyn Forget, and Randy Walld)
The Persistence of Health Expenditures Over Time
Funded by CIHR Fund Number 4597: Exploring Alternative Funding Models for Canadian Health Care

Total Attributable Expenditures (Means by Vingtiles), Manitoba, Fiscal 2005-2006

Challenges and limitations
Model may produce higher costs
Harder for individuals to bargain for good prices
“ Use it or lose it” may encourage marginal care
Avoiding necessary care may produce worse health outcomes and higher costs

Our review suggests
MSA models should be reserved for services that meet all of the following three criteria

1: Utilization not highly skewed
For skewed categories of expenditures, almost all those receiving allowances will not need to use them
Both expensive and inefficient
Note: 80-20 rule

2. Costs relatively large, and episodic
If not large, should be manageable through regular household spending
If not, this may be an income issue
If not episodic, accounts would soon be depleted

3. Service not seen as necessary
Otherwise, adverse health and fiscal consequences of not using needed services
E.g., prevention, chronic disease management

Very few services meet all three criteria
MSAs represent high costs for minimal benefit
Exclude most expensive services
Exclude services most important to improving health
Would seem low priority for public subsidy (either directly, or through tax system)

Conclusion
MSAs do not appear to be a valuable addition to financing Canadian health care

http://www.chsrf.ca	102
http://www.fcrss.ca	37
http://www.cfhi-fcass.ca	18
http://www.fcass-cfhi.ca	4
http://70.38.102.192	2
http://fcrss.ca	1

WHAT IF: Medical saving accounts were established?

by CHSRF/FCRSS

Accessibility

Categories

Upload Details

Usage Rights

6 Embeds 164

Statistics