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WASHINGTON -- The slight interest individuals have shown in participating in the Medical Savings Account experiment in lieu of traditional health care plans signals that common sense won out over political hype, according to Consumers Union, a long-time foe of MSAs.
"With insurance companies selling only three percent of the MSA policies permitted, the early prognosis on the Medical Savings Account experiment is that it is a giant flop," said Gail Shearer, Director of Health Policy Analysis at Consumers Union. "It is not at all surprising to us that consumers have rejected MSAs. The tepid interest in MSAs illustrates when it comes to health care policy a wide gulf exists between the Capitol Hill proponents of MSAs and their constituents, who know a bad deal when they see it."
"This MSA experiment is simply not an attractive choice for consumers," added Adrienne Mitchem, a legislative counsel at CU. "People understand that health insurance plans which sock us with high deductibles are not a good bargain, because life can sometimes hit us and our families with unexpected medical emergencies."
According to the public record, although the Congress allowed 525,000 people to sign up for the MSA insurance try-out at this stage, as of June 30, 1997 only 22,051 people are participating in MSA health plans. Government data also show that only 3,670 taxpayers who were previously uninsured have enrolled in MSA plans. At Arizona State University, of the 6,300 employees who were offered the MSA plan only 16 signed up according to the Arizona Business Gazette.
Consumers Union comments about the early failure of the MSA experiment came as Rep. Bill Thomas, R-Calif., held a hearing reviewing the impact of the Health Insurance Portability and Accountability Act. According to CU, people are reluctant to sign up for this experiment largely because of the strong likelihood of high out-of-pocket costs faced by MSA enrollees. These costs could leave MSA enrollees underinsured B that is, at risk of spending more than ten percent of their income on health care expenses.
A related problem with MSAs is that they drive up premiums for people with traditional coverage. Ada County, Idaho's experience with MSAs demonstrates why these plans are so unpopular with the public. County employees were offered a choice last June between an MSA plan or a traditional plan with $100 deductible and 20 percent co-pay. Had county leaders not pulled the plug on their MSA plan, members of the 1,100 workforce who were in the traditional plan would have faced absorbing a 15 percent price increase. This added up to $328,000 in additional premiums, a steep unanticipated cost for a county which had reaped only $39,000 in savings by offering an MSA option.
After he broke his ankle, Ada County's human resources director Terry Johnson discovered the shortcomings of MSAs firsthand. Johnson told BNA Health Care Policy Report in August that before his MSA health plan kicked in, he found himself socked with a $900 in out-of-pocket medical expenses toward a $2000 deductible.
"If I had to redo it today, I would give some serious thought before enrolling in the MSA program," said Johnson, one of 150 county workers who signed up for MSAs, during an interview with Business Insurance.
Consumers Union has stated their strong opposition to legislation introduced in Congress on March 13 which would raise the cap on the number of people eligible for MSAs (HR 1068). The bill is authored by Illinois House Democrat William Lipinski. Reps. Jerry Costello, D-Ill., and Rep. Glenn Poshard, D-Ill., are original cosponsors. Altogether, there are 20 cosponsors to this bill, which has been referred to the House Ways and Means Committee.
"The MSA idea was ill-considered from the start, and these early returns support the view of Consumers Union that it would be a serious mistake to expand the MSA experiment. What Congress should do instead is cancel it," said Shearer. "As long as MSAs are on the market, consumers should beware of the hidden costs of MSAs B and their impact on premiums for traditional policies."
