Are medical savings accounts a viable option for funding health care?

Abstract

Aim. To summarize the international experience of medical savings accounts (MSAs), make a preliminary evaluation of the impact of MSAs, and assess their feasibility in other countries, particularly Central and Eastern Europe. Method. A review of published literature in academic journals, books, Internet sources, and other “gray” literature. Results. Most published studies were theoretical. Advocates argued that MSAs improved the efficiency of insurance, increased consumer choice, and reduced health care expenditures. Critics argued that MSAs led to adverse selection, reduced equity, resulted in cost inflation, and deterred necessary utilization. MSAs have been implemented in China, Singapore, the United States of America, and South Africa. The organization of MSAs varied between countries. MSAs were combined with either a public or private insurance element to cover catastrophic expenses. Few empirical studies of MSAs have been conducted and, therefore, the evidence on their impact is limited. Conclusion. More empirical evaluations are needed on the impact of MSAs. Results of empirical evaluations cannot be easily generalized but depend on the complementary systems of financing and the extent of state regulation. MSAs are not likely to be feasible in countries where the unemployment rate is high, savings rates and average earnings low, and the state weak