Can medical savings accounts for the nonelderly reduce health care costs?
OBJECTIVE
To understand how medical savings account (MSA) legislation for the nonelderly would affect health care costs.


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


METHODS
National probability sample of nonelderly noninstitutionalized households.


METHODS
Persons in 23 157 sampled households from the 1993 Current Population Survey.


METHODS
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.


METHODS
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.
Keeler
E B
EB
Health Sciences Program, RAND, Santa Monica, CA 90407-2138, USA. EmmettvKeeler@rand.org
Malkin
J D
JD
Goldman
D P
DP
Buchanan
J L
JL
D017047:Cost Sharing / Q000331:legislation & jurisprudence* / Q000706:statistics & numerical data; D003669:Deductibles and Coinsurance / Q000331:legislation & jurisprudence; D017050:Episode of Care; D005069:Evaluation Studies as Topic; D005382:Financing, Personal / Q000331:legislation & jurisprudence* / Q000706:statistics & numerical data; D017048:Health Care Costs; D005102:Health Expenditures / Q000706:statistics & numerical data; D006279:Health Maintenance Organizations / Q000191:economics; D006302:Health Services Research / Q000379:methods; D007183:Income Tax / Q000331:legislation & jurisprudence; D017057:Medically Uninsured; D017059:Models, Econometric; D014481:United States