Medical Savings Accounts, Let's not add to the costs of health care

Re: Squaring the Circle on Health Care, by John Robson (31 July 2002)
Published in the Ottawa Citizen August 7, 2002

John Robson rightly notes the impossibility of administering medical savings accounts based on age, gender and income, without a vast government bureaucracy (and its attendant costs) devoted to administration. He also rightly points out that MSAs are "too good to be true" - they will not simultaneously turn all Canadians into Nike-sporting health freaks, by punishing the profligate and rewarding the prudent.

But he errs in one detail. He claims that by giving the 80% of Canadians of every age and gender who currently spend less than the mean for their category, more than enough to cover their current needs and letting them keep the change, somehow the system may cost less. If we give people as much or more than they are currently spending so as not to penalize the "deserving" sick, we have the system already in place. If we let them keep any surplus from this entitlement, there is no system saving. People might spend less on health care, but it costs the government more. If we don't let them keep the surplus, there is no incentive to spend less than is already being spent.

Data published in this week's CMAJ makes it very clear that, whether we give everyone the same allowance or taylor the allowances on the basis of age and gender, whether we limit MSAs to routine care or use them for both physician and hospital care, MSAs will cost more than the current system. If you add to these costs the costs of administering such a complex system, one begins to understand the desperate ad hominem attacks of proponents. The real lesson of the data is that there is no evidence whatever that consumers are misusing the system.

Medical Savings Accounts are a wonderful example of a situation where equity and efficiency arguments are consistent: MSAs do not make sense. If they did, proponents would design and cost a detailed system, rather than relying on misrepresenting the evidence, making up data and positing imaginary reductions in demand on the part of people currently spending almost nothing on health care.

Evelyn L. Forget, University of Manitoba
Raisa B. Deber, University of Toronto
Leslie L. Roos, University of Manitoba

Forget EL, Deber R, Roos LL. Medical savings accounts: will they reduce costs?
CMAJ 2002;167(2):143-7. (PDF - requires Acrobat Reader)

Note: The debate on this topic has been summarized at: http://www.umanitoba.ca/centres/mchp/hot_topic/msa.html

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This page was created/updated on Sept 15, 2002