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Medical Savings Accounts increase consumer choice, encourage individual responsibility and enhance efficiency in allocating resources in health care. Discuss - Essay Example

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Medical Savings Accounts increase consumer choice, encourage individual responsibility and enhance efficiency in allocating resources in health care. Discuss

While it has become almost prohibitive for most individuals to finance their own medical expenses without any support from an employer or an insurer, the burden on these agencies has also been a cause of concern whereby many governments and employers have gradually started encouraging individuals to become responsible for bearing at least partial cost of medication.
Another problem has been tremendous inflation in medical field due to individuals using their medical insurance irresponsibly or immorally as is a preferred terminology. Most insurees are not bothered to moderate medical expenses primarily because costs are being borne by others and not themselves (moral Hazard). Further, medical practitioners have themselves been particularly irresponsible in advising individuals regarding medical treatments with a view to making monetary profits since it didn't matter to anyone (except insurers and employers) as to how much money was spent on medical treatment.
Such a situation cannot be expected to go on for ever. Led by Singapore in 1980s, a new model was brought into effect called Medical Services Account or MSA. This required partial and compulsory contribution from the individual and was supported by the employer or the insurer beyond certain limits for some catastrophic ailments requiring expensive treatments. The model has since been adopted by many countries across the world with mixed results and varying attitudes among individuals, medical practitioners and even governments.
AIM
This paper attempts to highlight salient features of the Medical Savings Account policy adopted by many countries and bring out various advantages and disadvantages of MSA for an individual, employers and governments to choose best possible medical care option for meeting individual requirements.

MEDICAL CARE REQUIREMENTS

The medical care requirements of individuals are met through various choices available to an individual including whether to have insurance at all, choosing the insurer, right to choose particular benefits, physician or hospital and so on. MSA comes in a kind of medical benefit fund or account where the individual is contributing and paying for his own routine expenses up to a certain level, while for high deductible and catastrophic diseases, the contribution comes from the savings account up to a certain level and thereafter supplemented fully by the insurer or employer.
The surplus/unused balance in these personal accounts may be used differently as per individual plans at the end of the coverage periods. In most such accounts, supplementary assistance doesn't begin unless some basic laid down amount has been exceeded for most out patient treatments but some expensive outpatient services and most in-patient diseases are covered. The premise here is that consumers can afford minor outpatient treatments on their own and being responsible for financial consequences themselves, they will seek best available market price, avoid injudicious medical consumption and demand better quality of care for the price.
Medical Savings Accounts allow for tax-free deposits by employers and individuals and allow seniors availing medical insurance to switch ...Show more

Summary

Demand for consumer-directed health care is growing among purchasers of care, and early evidence about its effects is beginning to emerge. Studies to date are consistent with effects predicted by earlier literature: There is evidence of modest favourable health selection and early reports that consumer-directed plans are associated with both lower costs and lower cost increases…
Author : qrippin
Medical Savings Accounts increase consumer choice, encourage individual responsibility and enhance efficiency in allocating resources in health care. Discuss essay example
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