Friday, November 16, 2007

Medicare's biggest little secret - MSAs

Medicare Medical Savings Accounts.


One of the great ironies of public policy in the past few years was that the Medicare Modernization Act (MMA) of 2003, that created the "Part D" prescription drug benefit, also created Health Savings Accounts for everyone in the United States – except those on Medicare. The law did, however, reauthorize the old "Medical Savings Accounts" (MSA) provision that was passed as part of the Balanced Budget Act in 1997 but never implemented.

There were many reasons the original MSAs in Medicare never came about. The plan was time limited and restricted to no more than 300,000 beneficiaries. It was unlikely that any private insurer would invest significant Research and Development funds in a program that was so tentative – and none did.

Today conditions have changed. The idea of consumer driven health care is now widely accepted as a major addition to the offerings in the private benefits market. Over ten million people are currently covered by some sort of "account-based" health plan (HSA or HRA), and virtually every insurance company is offering a version of the approach. Banks and information services companies see consumer driven care as an unprecedented opportunity to reform the health care system and open up new markets. And the MMA law removed most of the restrictions that made Medicare MSAs unattractive to vendors.

So, now we have a world in which the vendors are adept at marketing and managing account-based plans, citizens are increasingly accustomed to the approach, and Congress removed the most onerous restrictions to providing MSAs in the Medicare program.