Under the plan, governments would divide up health care funds into accounts that individuals would draw on to pay for health services. In some models individuals would be responsible for anything over the amount of the account, to a preset maximum. Government or private insurance could then step in to pick up further costs.
But there wont be enough money in individual MSAs to protect against many routine health care needs let alone more complex ones. Individuals without adequate insurance may be bankrupted.
Those who dont empty their MSA can bank it for future health care needs or use it to buy other services such as health club memberships, quit smoking programs or, in some models, vacations. It sounds good until the internal logic of MSAs is examined.
As Manitoba Center for Health Policy co-director Noralou Roos told the Romanow commission, the amount in MSAs will end up being both too much and too little. She pointed out that 85 per cent of Manitobans cost Medicare about $500 per year. Allocating a higher amount to every individual, as the scheme envisions, will artificially drive up health care spending without ensuring adequate funds are available when really needed, such as after a car accident.
MSAs will need a complex administrative structure that monitors each account. This means in addition to funding health services, governments will also fund an administrative layer, increasing overall health costs.
MSAs will benefit the insurance industry by increasing the need for catastrophic insurance. Much like Health Medical Organizations in the United States, the insurance industry will exert considerable control over claims in order to ration care and thus protect their profits.
The MSA math doesnt add up. If the government funds each account and, as outlined in some scenarios, pays the cost of catastrophic insurance and allows the excess in any account to be spent, not only will there be no savings there will be further costs on top of the administrative ones.
Those pushing MSAs claim they lower demand for health care services as individuals become aware of the cost of health services and assume responsibility for their own spending. Sadly, this will be true for some. Seniors, poor people, women and children will be the hardest hit.
Like user fees, MSAs will pressure some to avoid care, forgoing spending on minor health matters to save for other major health needs in the future. Forgoing early or minor treatments may mean more significant and expensive health care needs in the long term. Insurers bent on rationing care will worsen the situation.
Saskatchewan Premier Lorne Calvert condemned MSAs in a presentation to the Romanow commission. Punishing people for their health status is not the answer, he said. People who have MS or cancer are not victims of their own behaviour.
The international MSA experience speaks volumes. Singapore introduced them in 1984. Per capita health care costs have risen faster than under the old system ever since, and the government has rationed care because MSAs did not stifle the need for care even with Singapores relatively young, healthy population. Chinas experiment with MSAs also failed to control costs. The government still had to limit diagnostic procedures, medications and control remuneration to health care providers.
MSAs exist in the United States, run by insurance companies for self-employed workers and individual workplaces, but have not yet undergone a rigorous assessment. Studies projecting the impact of MSAs on the American health care system conclude that MSAs will neither reduce health care spending nor ensure that more Americans are covered.
Clearly, MSAs do not achieve cost reductions as the Advisory Council suggests. If MSAs are introduced, they will be an ideological experiment with no justification in experience, but with plenty of benefits for the insurance industry.