0
June 5, 1996, Vol 275, No. 21 >
ARTICLE | June 5, 1996

Can Medical Savings Accounts for the Nonelderly Reduce Health Care Costs? FREE

Emmett B. Keeler, PhD; Jesse D. Malkin; Dana P. Goldman, PhD; Joan L. Buchanan, PhD
[+] Author Affiliations

Corresponding author: Emmett Keeler, PhD, RAND, 1700 Main St, Santa Monica, CA 90407-2138 (e-mail: Emmett_Keeler@rand.org).


JAMA. 1996;275(21):1666-1671. doi:10.1001/jama.1996.03530450056033
Text Size: A A A
Published online
Article
References

Objective.  —To understand how medical savings account (MSA) legislation for the nonelderly would affect health care costs.

Design.  —Economic policy evaluation based on the RAND Health Expenditures Simulation Model.

Setting.  —National probability sample of nonelderly noninstitutionalized households.

Participants.  —Persons in 23157 sampled households from the 1993 Current Population Survey.

Interventions.  —Medical savings account legislation would allow all Americans who are covered only by a catastrophic health care plan to set up a tax-exempt account that they can use to pay medical bills not covered by their health insurance. The interventions we evaluate differ in the deductibles of the catastrophic plan and in whether the employee or employer funds the MSA.

Main Outcome Measures.  —Changes in national health expenditures and net societal benefits of health care.

Results.  —If all insured nonelderly Americans switched to MSAs, their health care expenditures would decline by between 0% and 13%, depending on how the MSAs are designed. However, not all nonelderly Americans would choose MSAs; taking into account selection patterns, health spending would change by +1% to -2%.

Conclusions.  —Medical savings account legislation would have little impact on health care costs of Americans with employer-provided insurance. However, depending on the size of the catastrophic limit, waste from the excessive use of generously insured care could be reduced, and MSAs would be attractive to both sick and healthy people.(JAMA. 1996;275:1666-1671)

REFERENCES

1 +
Pauly MV.  Taxation, health insurance and market failure in the medical economy. J Econ Lit . 1986;;24:629-675.
2 +
Feldstein M, Friedman B.  Tax subsidies, the rational demand for insurance and the health care crisis. J Pub Econ . 1977;;7:155-178.
3 +
Gramm P.  Why we need medical savings accounts. N Engl J Med . 1994;;330:1752-1753.
4 +
Goodman JC, Musgrave GL. Patient Power: The Free-enterprise Alternative to Clinton's Health Plan . Washington, DC: Cato Institute; 1994;.
5 +
 Don't be seduced by Medisave. New York Times . (August 16) , 1994;:A27. Editorial.
6 +
Ellwood PM, Enthoven AC.  Responsible choices: the Jackson Hole Group plan for health reform. Health Aff (Millwood) . Summer 1995;;14( (2) ):24-39.
7 +
Joint Committee on Taxation Staff. Description of Ways and Means Chairman's Mark on Medical Savings Accounts: Bureau of National Affairs Health Care Policy Report . Washington, DC: Bureau of National Affairs: 1995;;3:1470-1472.
8 +
Pauly MV. An Analysis of Medical Savings Accounts: Do Two Wrongs Make a Right? Washington, DC: AEI Press; 1994;.
9 +
American Academy of Actuaries. Medical Savings Accounts: Cost Implications and Design Issues . Washington, DC: American Academy of Actuaries; 1995;.
10 +
Warden C.  Letting employees rein in costs: firms save on health care by letting market work. Investor's Business Daily . (May 20) , 1993;:1.
11 +
Wildavsky R.  Here's health-care reform that works. Reader's Digest . (October) 1993;;143:77-82.
12 +
Freudenheim M.  Health costs paid by employers drop for first time in a decade. New York Times . (February 14) , 1995;:A1.
13 +
Newhouse JP and the Insurance Experiment Group. Free for All? Lessons From the RAND Health Insurance Experiment . Cambridge, Mass: Harvard University Press; 1993;.
14 +
Sine JJ. Demand for Episodes of Care in the China Health Insurance Experiment . Santa Monica, Calif: RAND Graduate School; 1994;. RAND document RGSD-110.
15 +
Keeler EB, Buchanan J, Rolph JE, Hanley JM, Reboussin DM. The Demand for Episodes of Medical Treatment in the Health Insurance Experiment . Santa Monica, Calif: RAND; 1988;. RAND document R-3454-HHS.
16 +
Buchanan JL, Keeler EB, Rolph J, Holmer M.  Simulating health expenditures under alternative insurance plans. Manage Sci . 1991;;37:1067-1090.
17 +
Marquis MS, Buchanan JL. Subsidies and National Health Care Reform: The Effect on Workers Demand for Health Insurance Coverage: Health Benefits and the Workforce . Washington, DC: US Dept of Labor, Pension and Welfare Benefits Administration; 1992;.
18 +
US Dept of Labor, Bureau of Labor Statistics. Employee Benefits in Medium and Large Private Establishments, 1993 . Washington, DC: US Dept of Labor; 1994;.
19 +
Chakraborty G, Ettenson R, Gaeth G.  How consumers choose health insurance. J Health Care Marketing . 1994;;14:21-33.
20 +
Nichols LM.  Medical savings accounts and risk segmentation. Health Aff (Millwood) . 1995;;14:275-276.
21 +
Short PF, Taylor AK.  Premiums, benefits, and employee choice of health insurance options. J Health Econ . 1989;;8:293-311.
22 +
Ellis RP.  The effect of prior year health expenditures on health coverage plan choice.  In: Advances in Health Economics and Health Services Research . Greenwich, Conn: JAI Press; 1985;;6:149-170.
23 +
US Bureau of the Census. Health Insurance Coverage—1993 . Washington, DC: US Bureau of the Census; October 1994;. Statistical Brief SB/94-28.
24 +
Pauly MV, Goodman JC.  Tax credits for health insurance and medical savings accounts. Health Aff (Millwood) . 1995;;14( (2) ):126-139.
25 +
Gruber J, Poterba J. Tax Subsidies to Employer-Provided Health Insurance . Cambridge, Mass: National Bureau of Economic Research; 1995;. NBER Working Paper 5147.

Figures

Tables

Interactive Graphics

Video

Country-Specific Mortality and Growth Failure in Infancy and Yound Children and Association With Material Stature

Use interactive graphics and maps to view and sort country-specific infant and early dhildhood mortality and growth failure data and their association with maternal

1 +
Pauly MV.  Taxation, health insurance and market failure in the medical economy. J Econ Lit . 1986;;24:629-675.
2 +
Feldstein M, Friedman B.  Tax subsidies, the rational demand for insurance and the health care crisis. J Pub Econ . 1977;;7:155-178.
3 +
Gramm P.  Why we need medical savings accounts. N Engl J Med . 1994;;330:1752-1753.
4 +
Goodman JC, Musgrave GL. Patient Power: The Free-enterprise Alternative to Clinton's Health Plan . Washington, DC: Cato Institute; 1994;.
5 +
 Don't be seduced by Medisave. New York Times . (August 16) , 1994;:A27. Editorial.
6 +
Ellwood PM, Enthoven AC.  Responsible choices: the Jackson Hole Group plan for health reform. Health Aff (Millwood) . Summer 1995;;14( (2) ):24-39.
7 +
Joint Committee on Taxation Staff. Description of Ways and Means Chairman's Mark on Medical Savings Accounts: Bureau of National Affairs Health Care Policy Report . Washington, DC: Bureau of National Affairs: 1995;;3:1470-1472.
8 +
Pauly MV. An Analysis of Medical Savings Accounts: Do Two Wrongs Make a Right? Washington, DC: AEI Press; 1994;.
9 +
American Academy of Actuaries. Medical Savings Accounts: Cost Implications and Design Issues . Washington, DC: American Academy of Actuaries; 1995;.
10 +
Warden C.  Letting employees rein in costs: firms save on health care by letting market work. Investor's Business Daily . (May 20) , 1993;:1.
11 +
Wildavsky R.  Here's health-care reform that works. Reader's Digest . (October) 1993;;143:77-82.
12 +
Freudenheim M.  Health costs paid by employers drop for first time in a decade. New York Times . (February 14) , 1995;:A1.
13 +
Newhouse JP and the Insurance Experiment Group. Free for All? Lessons From the RAND Health Insurance Experiment . Cambridge, Mass: Harvard University Press; 1993;.
14 +
Sine JJ. Demand for Episodes of Care in the China Health Insurance Experiment . Santa Monica, Calif: RAND Graduate School; 1994;. RAND document RGSD-110.
15 +
Keeler EB, Buchanan J, Rolph JE, Hanley JM, Reboussin DM. The Demand for Episodes of Medical Treatment in the Health Insurance Experiment . Santa Monica, Calif: RAND; 1988;. RAND document R-3454-HHS.
16 +
Buchanan JL, Keeler EB, Rolph J, Holmer M.  Simulating health expenditures under alternative insurance plans. Manage Sci . 1991;;37:1067-1090.
17 +
Marquis MS, Buchanan JL. Subsidies and National Health Care Reform: The Effect on Workers Demand for Health Insurance Coverage: Health Benefits and the Workforce . Washington, DC: US Dept of Labor, Pension and Welfare Benefits Administration; 1992;.
18 +
US Dept of Labor, Bureau of Labor Statistics. Employee Benefits in Medium and Large Private Establishments, 1993 . Washington, DC: US Dept of Labor; 1994;.
19 +
Chakraborty G, Ettenson R, Gaeth G.  How consumers choose health insurance. J Health Care Marketing . 1994;;14:21-33.
20 +
Nichols LM.  Medical savings accounts and risk segmentation. Health Aff (Millwood) . 1995;;14:275-276.
21 +
Short PF, Taylor AK.  Premiums, benefits, and employee choice of health insurance options. J Health Econ . 1989;;8:293-311.
22 +
Ellis RP.  The effect of prior year health expenditures on health coverage plan choice.  In: Advances in Health Economics and Health Services Research . Greenwich, Conn: JAI Press; 1985;;6:149-170.
23 +
US Bureau of the Census. Health Insurance Coverage—1993 . Washington, DC: US Bureau of the Census; October 1994;. Statistical Brief SB/94-28.
24 +
Pauly MV, Goodman JC.  Tax credits for health insurance and medical savings accounts. Health Aff (Millwood) . 1995;;14( (2) ):126-139.
25 +
Gruber J, Poterba J. Tax Subsidies to Employer-Provided Health Insurance . Cambridge, Mass: National Bureau of Economic Research; 1995;. NBER Working Paper 5147.

Letters

Submit a Letter
CME Course for:


You need to register in order to view this quiz.


To understand the clinical management of acute heart failure syndromes.
Accreditation Information The American Medical Association is accredited by the Accreditation Council for Continuing Medical Education to provide continuing medical education for physicians.
The AMA designates this journal-based CME activity for a maximum of 1 AMA PRA Category 1 CreditTM per course. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
Physicians who complete the CME course and score at least 80% correct on the quiz are eligible for AMA PRA Category 1 CreditTM.
Note: You must get at least of the answers correct to pass this quiz.
Note: You must get at least of the answers correct to pass this quiz.
You have not filled in all the answers to complete this quiz
The following questions were not answered:
Sorry, you have unsuccessfully completed this CME quiz with a score of
The following questions were not answered correctly:
For CME Course: A Proposed Model for Initial Assessment and Management of Acute Heart Failure Syndromes
Indicate what changes(s) you will implement in your practice, if any, based on this CME course.
To view and print your certificate and access a summary of your CME courses go to My CME.
NOTE:
Citing articles are presented as examples only. In non-demo SCM6 implementation, integration with CrossRef’s “Cited By” API will populate this tab (http://www.crossref.org/citedby.html).
Compression-Only CPR: Pushing the Science Forward
Cone
AAM 2010;304:1493-1495.
All you need to read in the other general journals
BMJ 2010;341:c5893-c1494.
Submit a Response

Some tools below are only available to our subscribers or users with an online account.

Related Content

Customize your page view by dragging & repositioning the boxes below.

© 2012 American Medical Association. All Rights Reserved.
Powered bySilverchair Information Systems