The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Medical savings accounts (MSAs) have the miraculous potential to bring market dynamics and efficiency to CanadaÕs government-funded health care system. Under such a plan, the government funds an MSA for each family or individual. The family or individual then draws on the MSA to pay for medical services. This empowers consumers by providing choice. MSAs are simple in concept but they can be structured in a number of ways. Consider one possible plan: each year the government funds a personalized MSA for every Canadian. Projected medical expenses, based on factors such as age, sex, and medical condition, determine the amount paid into the MSA. The MSA can only be spent on a designated list of health services, which could include not only currently insured services, but also items currently not insured, such as dental and vision care. Those who spend less than their allotted amount during the year may retain some or all of the balance. Those who exceed their allowance would be covered by an ÒoverchargeÓ fund designed to cover medical expenses which, for whatever reason, exceed the individualÕs MSA. Affluent Canadians could be made responsible for paying some costs on their own before accessing the fund. The fund would kick in immediately for poorer Canadians, so they would never be charged for medical services. This would solve a problem identified in a RAND Corporation study on health insurance. It found that an insurance plan with modest out-of-pocket payments significantly reduced use of health care without impairing the health of participants, except for a small subgroup of poor participants with serious medical conditions. MSAs could liberate the supply side of the health care system. Centralized fee schedules set by governments would be abolished; the provision of hospital services would be opened to all qualified providers, whether for-profit, not-for-profit, or public sector. Consumers would be able to choose among them based on normal consumer preferences such as cost and quality. With consumers paying their own health bills though their MSAs, health providersÕ incomes would be determined by revenue from MSAs rather than by bureaucratic fiat. Consumers would have an incentive to seek the most cost-effective care possible. MSAs could appeal to many Canadians, in part because the public has been quicker than politicians to realize that the system needs reform.
