Medical Savings Accounts Study
What is the future for MSA programs in Washington State?

A number of organizations and individuals have been advancing Medical Savings Accounts as an option for employers, individuals, and government since Governor Booth Gardner convened the Washington State Health Care Commission over five years ago. Lacking the organization and resources of special interests, MSA plans were kept in the background until recently. Quoting a Seattle Times medical reporter, "MSAs seemed mostly a proposal coming from the fringes on the far right. Recently they have gained respectability."44

"Much of the discussion surrounding MSAs is a debate not over the desired objectives of health care reforms."

"Too often, the discussion starts and stops on the respective ideologies that guide experts and common people alike."

As directed by the 1993 Washington state Health Services Act, the Health Services Commission convened a task force in the summer of 1994 to assess the feasibility of the state offering MSA plans to public employees.45 This thirteen-member task force reviewed MSAs within the context of the 1993 Managed Competition legislation.

The MSA Task Force did not support offering MSA programs to public employees due to gross complexities, inconsistencies, and ambiguities within the governing legislation. Questions were raised about MSAs, their policy implications, tax status, property rights, and interaction with provisions of the state's health legislation. Endeavoring to develop common understanding of the basic concepts that establish and operate MSAs and catastrophic health insurance was difficult, and at the end of the seventh meeting, this common understanding still had not occurred.

Despite continuing questions, the members voted eight to five supporting a recommendation that the state legislature take further steps to review and explore authorizing MSA programs as an option for all citizens of the state. The Health Services Commission endorsed, with reservation, this recommendation.46

During the 1994 Washington State Legislative Session, Senator Emilio Cantu submitted legislation establishing Medical Savings Accounts. Though his proposal was not considered by the state senate, Senator Cantu further refined and amended this legislation for inclusion in 1995 legislation.47 The Evergreen Freedom Foundation is monitoring the introduction and possible enactment of MSA enabling legislation scheduled for the state legislative session, January to April, 1995.

Seven states enacted MSA legislation in 1993 and 1994. The legislation addressed income tax codes in each state. Washington State has no income tax but does have a general business and occupation revenue act. Arizona's MSA legislation directed the Governor to offer state employees and dependents MSAs as optional health benefits beginning no later than December 31, 1999. Ohio has proposed offering MSA programs for its state employees with a likely start date in 1995.48

Numerous states have submitted resolutions in support of MSA programs to Congress. One of the most reliable sources of information about progress with state and federal legislation involving Medical Savings Accounts is the Council for Affordable Health Insurance. CAHI has played a prominent part in educating the public, legislators, and the health care industry about MSAs, their workings, their merits, and their role in health care insurance reforms.49

During the recent national debate on health reform, MSA programs were introduced in various proposals and legislation. Approving and endorsing MSAs was the single item in various reform proposals agreed upon uniformly by a majority of the members of the 103rd Congress. Though major health reform legislation did not pass in the 103rd Congress, MSA programs have been introduced in the 104th Congress. MSA program enabling legislation will very likely include tax preferences similar to those that apply to other health benefits for Americans.

"Seven states enacted MSA legislation in 1993 and 1994."

"Numerous states have submitted resolutions in support of MSA programs to Congress."

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