The most important section of the Republicans' Medicare reform bill is Medical Savings Accounts.
It is the inclusion of Medical Savings Accounts (known as MSAs) that makes the Republican Medicare bill a genuine, free-market-oriented reform. Without them, according to Peter Ferrara of Americans for Tax Reform, the Medicare plan could not be supported "by anyone who opposed the Clinton health plan last year." Ferrara argues that MSAs will allow "market incentives and competition [to] control costs consistent with patient preferences." Without MSAs, "the Medicare reform would only meet the budget targets through the same heavy- handed rationing mechanisms included in the Clinton plan last year."
All fall, there has been tremendous pressure from the media and the liberal establishment to drop MSAs from the Medicare package, but that would be a tremendous mistake and jeopardize the future of Americans in their golden years. According to policy analyst Peter Ferrara, "reimbursements to doctors and hospitals would be cut so much that many would refuse to treat Medicare patients. In particular, the elderly would no longer have access to the latest, most advanced, most sophisticated care. They would suffer with essentially the same low-quality care as imposed on Medicaid patients today." Or they would be shunted off into health maintenance organizations, "where they would have to give up control over their health care to a third-party bureaucracy."
Who gets control -- "each individual patient, or the government and its designated rationing bodies" -- is the central issue in health care reform. "MSAs give power to the people. Without MSAs, the Medicare reform plan would only take control over their health care away from retirees."
According to Ferrara, Medical Savings Accounts "provide complete catastrophic coverage for all expenses over the deductible in the plan. Medicare does not provide such coverage." MSAs put a reasonable cap on "out-of-pocket expenses for the elderly." Medicare, by contrast, "has no cap on out-of-pocket expenses. Retirees can be liable for tens of thousands in expenses each year under the program," says Ferrara. "That is why 70 percent of the elderly buy private supplemental insurance to cover those gaps." MSAs can be used to "pay for health expenses not covered by Medicare, such as prescription drugs." MSAs also "allow broader freedom of choice of doctors and services than Medicare." As it stands now, many doctors refuse to treat Medicare patients because Medicare "underpays health providers so substantially." Ferrara says "that problem will only get worse in the future."
Widespread use of Medical Savings Accounts would reduce health care spending dramatically. Health care costs would be reduced by as much as 30 percent if all Americans switched from traditional third-party insurance to Medical Savings Accounts. Those opposed to MSAs use false budget estimates, claiming that MSAs would increase Medicare spending. But Peter Ferrara insists that "MSAs do not increase out-of-pocket costs for the sick. They reduce them," and, in fact, are better than what Medicare gives seniors now.
