MSA'S EXECUTIVE SUMMARY
Why Medical Savings Accounts?

In September 1994, the Evergreen Freedom Foundation and the Washington Medical Savings Account Project undertook observational and descriptive research to answer that question.

From all indications, MSAs seemed to meet several criteria necessary to be considered a viable part of true health care reform. They appeared to: increase access to health care, provide cost stability without sacrificing quality care, and satisfy both employers and employees. A number of large and small companies and organizations had been using MSAs, but no specific analysis of the various projects and their levels of success had been made. Empirical data comparing, contrasting and analyzing the various MSA programs needed to be undertaken. It's one thing to say it works; it's quite another to prove it. Then again, if they work for some companies, are there models other employees and individuals can implement for their own use?

Critics of MSAs leveled serious charges. They said MSAs reduce the use of preventive services and penalize those who are poor or chronically ill. If those criticisms proved valid, clearly EFF could not support MSAs as a viable building block toward health care reform. We needed to determine whether those indictments had merit.

Since numerous organizations and corporations were already using MSA programs for their employees, we knew the answers to our questions could be obtained through careful research. And in light of the pressing national and state health care reform debate, obtaining accurate information about MSAs was urgent. We made our case to the directors of the M.J. Murdock Trust and they awarded EFF a grant to evaluate and analyze MSA Health Plans in the workplace.

The research is now complete and it indicates MSAs are a better option than we originally thought. In on-site investigations of companies and organizations using MSAs for their employees, we found—at a minimum—the following results can be obtained:

• reduced health care expenditures to both the sponsor/employer and employees
• wiser use of health services by consumers
• greater use of preventive services
• increased consumer involvement in health care decisions and purchases
• strong employee participation and satisfaction

Having confirmed the utility and effectiveness of the MSA concept for employers, employees, and families, we defined the important central elements of MSA programs. Together these components provide a framework for others to assess for themselves the merits of MSAs in meeting the goals of health care reform.

With MSAs, the sick and the poor are well-served and may be better served than in many "managed care" plans. This is because they have the same access to medical care as everyone else. The patient with a Medical Savings Account calls the shots—not an insurance company clerk. Patients also have better access to health care. This is because they typically don't have to jump the "pre-authorization" hurdles often faced in managed care organizations, where financial incentives sometimes hinder patient and physician choice. And contrary to charges made by critics, people with MSAs use more preventative medical services than people in non-MSA plans.

In April 1993, the Washington State Legislature signed into law the Washington Health Services Act of 1993—a program of government-designed and controlled health care measures. Bob Williams, President of EFF, was chosen by the Health Services Commission to participate in a task force to determine if and how MSAs could realistically be implemented under the new law.

The task force concluded MSAs had merit but could not be offered to the state's public employees. Regulatory and prescriptive constraints made offering MSAs impractical. Without changes in the 1993 Act, supply-based management of health care must prevail over individual needs and preferences. We were disappointed with those conclusions.

This study confirms that people controlling their own health care dollars with MSAs don't need huge central bureaucracies to make intimate health care decisions for them. MSAs allow patient choice, high quality medical service and lower spending—all of the benefits government plans promise without the costly, inefficient invasion of a centrally-run bureaucracy.

Medical Savings Accounts won't solve all our health care problems, but they will make a big difference. MSAs are simple. They do not require another government commission or new state dollars.

So, what do you say about a program that is popular with employees and employers as well as being cost-effective—a program that gives access to health care to the "working poor,"—a plan that gives incentives to engage in preventive care and to use health care dollars wisely? You say, "Let's do it!"

Lynn Harsh, Executive Director, EFF

Note: Now that we know MSAs are a viable health care reform option, EFF's workable MSA model can be plugged in to the public and private sector. Please call or write us if you want further details.

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org