What if: Medical savings accounts were established? Raisa B. Deber, University of Toronto With the assistance of Kenneth C...
What are Medical Savings Accounts? <ul><li>A family of financing approaches </li></ul><ul><li>Use a personal health spendi...
Why MSAs? <ul><li>Basic assumptions: </li></ul><ul><ul><li>People will be more efficient purchasers if they have to use th...
Benefits - if assumptions hold <ul><li>More efficient system </li></ul><ul><li>Lower costs </li></ul><ul><ul><li>People wi...
Experience <ul><li>In use in several jurisdictions: </li></ul><ul><ul><li>Singapore </li></ul></ul><ul><ul><li>U.S. </li><...
Evidence of success <ul><li>Depends heavily on : </li></ul><ul><ul><li>Plan design </li></ul></ul><ul><ul><li>Type of serv...
Challenges and limitations - 1 <ul><li>MSA models are explicit rejection of risk pooling </li></ul><ul><ul><li>Pay your ow...
Skewing <ul><li>Preview: </li></ul><ul><li>iHEA 8th World Congress on Health Economics Monday, July 11, 2011 </li></ul><ul...
Total Attributable Expenditures (Means by Vingtiles), Manitoba, Fiscal 2005-2006
Challenges and limitations <ul><li>Model may produce higher costs   </li></ul><ul><ul><li>Harder for individuals to bargai...
Our review suggests <ul><li>MSA models should be reserved for services that meet all of the following three criteria   </l...
1:  Utilization not highly skewed <ul><li>For skewed categories of expenditures, almost all those receiving allowances wil...
2.  Costs relatively large, and episodic <ul><li>If not large, should be manageable through regular household spending </l...
3.  Service not seen as necessary <ul><li>Otherwise, adverse health and fiscal consequences of not using needed services <...
Very few services meet all three criteria <ul><li>MSAs represent high costs for minimal benefit </li></ul><ul><ul><li>Excl...
Conclusion <ul><li>MSAs do not appear to be a valuable addition to financing Canadian health care </li></ul>
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WHAT IF: Medical saving accounts were established?

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Raisa Deber, University of Toronto

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  • Canadian suggestion - use only for services not currently under CHA Problems - moving target (as things move out of hospitals) Note - NO plan studied uses that model!
  • Note - may counter some of this if good catastrophic coverage, but then we’re not using MSAs any more! Insurance - particularly if we have voluntary insurance, competitive models
  • Earlier findings indicated that health care expenditures is highly skewed with 80% of the people spending less than the population mean
  • Note - may counter some of this if good catastrophic coverage, but then we’re not using MSAs any more! Insurance - particularly if we have voluntary insurance, competitive models
  • WHAT IF: Medical saving accounts were established?

    1. 1. What if: Medical savings accounts were established? Raisa B. Deber, University of Toronto With the assistance of Kenneth C. K. Lam
    2. 2. What are Medical Savings Accounts? <ul><li>A family of financing approaches </li></ul><ul><li>Use a personal health spending account, often combined with a high-deductible insurance plan, to pay for specified healthcare services. </li></ul><ul><li>Often tax subsidized </li></ul><ul><li>Considerable variability in the nomenclature used and the plan details </li></ul>
    3. 3. Why MSAs? <ul><li>Basic assumptions: </li></ul><ul><ul><li>People will be more efficient purchasers if they have to use their own resources </li></ul></ul><ul><ul><li>If care is “free” then “moral hazard” encourages overuse </li></ul></ul><ul><ul><li>Patients make the decisions about what care they will purchase </li></ul></ul>
    4. 4. Benefits - if assumptions hold <ul><li>More efficient system </li></ul><ul><li>Lower costs </li></ul><ul><ul><li>People will shop around for best deal </li></ul></ul><ul><ul><li>Lower administrative costs to insurers (if fewer claims filed) </li></ul></ul><ul><li>Enhanced patient choice </li></ul>
    5. 5. Experience <ul><li>In use in several jurisdictions: </li></ul><ul><ul><li>Singapore </li></ul></ul><ul><ul><li>U.S. </li></ul></ul><ul><ul><li>China </li></ul></ul><ul><ul><li>South Africa </li></ul></ul><ul><li>Considerable variability in plan design </li></ul>
    6. 6. Evidence of success <ul><li>Depends heavily on : </li></ul><ul><ul><li>Plan design </li></ul></ul><ul><ul><li>Type of services </li></ul></ul><ul><ul><li>Client characteristics </li></ul></ul><ul><li>Co-payments may affect utilization </li></ul><ul><ul><li>Similar reductions found for both necessary and unnecessary care (RAND study) </li></ul></ul>
    7. 7. Challenges and limitations - 1 <ul><li>MSA models are explicit rejection of risk pooling </li></ul><ul><ul><li>Pay your own way </li></ul></ul><ul><ul><li>Can undermine insurance arrangements (if healthier opt for MSAs) </li></ul></ul><ul><li>If health expenditures are skewed, MSAs may transfer resources from sick to healthy </li></ul>
    8. 8. Skewing <ul><li>Preview: </li></ul><ul><li>iHEA 8th World Congress on Health Economics Monday, July 11, 2011 </li></ul><ul><li>Raisa Deber and Kenneth C. K. Lam (with Leslie Roos, Evelyn Forget, and Randy Walld) </li></ul><ul><li>The Persistence of Health Expenditures Over Time </li></ul><ul><li>Funded by CIHR Fund Number 4597: Exploring Alternative Funding Models for Canadian Health Care </li></ul>
    9. 9. Total Attributable Expenditures (Means by Vingtiles), Manitoba, Fiscal 2005-2006
    10. 10. Challenges and limitations <ul><li>Model may produce higher costs </li></ul><ul><ul><li>Harder for individuals to bargain for good prices </li></ul></ul><ul><ul><li>“ Use it or lose it” may encourage marginal care </li></ul></ul><ul><ul><li>Avoiding necessary care may produce worse health outcomes and higher costs </li></ul></ul>
    11. 11. Our review suggests <ul><li>MSA models should be reserved for services that meet all of the following three criteria </li></ul>
    12. 12. 1: Utilization not highly skewed <ul><li>For skewed categories of expenditures, almost all those receiving allowances will not need to use them </li></ul><ul><li>Both expensive and inefficient </li></ul><ul><li>Note: 80-20 rule </li></ul>
    13. 13. 2. Costs relatively large, and episodic <ul><li>If not large, should be manageable through regular household spending </li></ul><ul><ul><li>If not, this may be an income issue </li></ul></ul><ul><li>If not episodic, accounts would soon be depleted </li></ul>
    14. 14. 3. Service not seen as necessary <ul><li>Otherwise, adverse health and fiscal consequences of not using needed services </li></ul><ul><ul><li>E.g., prevention, chronic disease management </li></ul></ul>
    15. 15. Very few services meet all three criteria <ul><li>MSAs represent high costs for minimal benefit </li></ul><ul><ul><li>Exclude most expensive services </li></ul></ul><ul><ul><li>Exclude services most important to improving health </li></ul></ul><ul><ul><li>Would seem low priority for public subsidy (either directly, or through tax system) </li></ul></ul>
    16. 16. Conclusion <ul><li>MSAs do not appear to be a valuable addition to financing Canadian health care </li></ul>

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