Investing in Medical Savings Accounts

When Congress returns from its summer recess, it has a tremendous opportunity to do something truly innovative and helpful for the nation’s uninsured: expand access to Medical Savings Accounts (MSAs).

MSAs replace traditional health insurance with a combination of a catastrophic health insurance policy and a tax-free savings account. Under MSAs, individuals can save money tax-free for routine medical expenses while being covered for large expenses by a high-deductible catastrophic insurance policy.

Unspent medical savings can be rolled over into the next year or used for retirement savings later. MSAs have clear advantages over traditional insurance:

1. MSAs have dramatically lower premiums, usually less than half of a traditional insurance policy.

2. MSAs give patients greater control over day-to-day medical decisions.

3. Unspent medical savings can be used for retirement purposes.

4. Overall medical expenses are reduced as patients have a role in controlling medical costs.

Congress allowed only a limited number of MSAs to be created when it authorized them in 1996. It also put severe limits on who can get access to MSAs.

Legislation expanding access to MSAs was included in the version of the Patients Bill of Rights that passed the House in July of this year, and its future could be decided when a House and Senate conference committee meets to settle differences between the House and Senate patients’ rights bills. If Congress fails to act, access to MSAs is scheduled to end next year.

MSAs are vitally important to small businesses, the self-employed, and others who have trouble affording traditional insurance. In fact, 30% of those who have signed up for MSAs were previously uninsured.

All Americans deserve the option of full access to MSAs. Congress should make MSA expansion a priority.

Darrell McKigney, President Small Business Survival Committee Washington, DC

Publication date: 09/10/2001