ANNAPOLIS – Congressional Republicans have touted medical savings accounts as the way to provide coverage for millions of Americans without health insurance, but a pilot program initiated by Congress in 1997 has had few takers in the nation or in Maryland.
Medical savings accounts allow people to save money, tax-free, and use it to pay medical bills. Purchasers of MSAs must also buy catastrophic health insurance with a high deductible, as much as $4,500 annually. Federal legislation allows 750,000 medical savings accounts to be sold to small businesses and the self-employed during the four-year pilot project, but demand is far short of that. In 1998, just 32,371 of the accounts were established nationally, according to the Internal Revenue Service. In 1999, another 44,784 MSAs are expected to be sold, the service said.
Only one Maryland carrier sells MSAs to small businesses, said Gary Petrik of the state Health Care Commission, and no Maryland company sells individual accounts. The handful of out-of-state companies that offer MSAs to individuals in Maryland say they’ve had few buyers. But because the commission doesn’t regulate those out-of-state companies, there is no record of how many self-employed have purchased the accounts here.
That may change soon. Federal lawmakers are trying to make MSAs less complicated and more efficient with the Medical Savings Account Effectiveness Act, which would lower deductibles; open the program to larger companies and individuals who are not self-employed; allow both employers and employees to contribute to MSAs; and simplify regulations governing when and how much money can be deposited in the accounts. No such legislation will be introduced on the state level, said Delegate Marilyn Goldwater, D-Montgomery, who was one of several sponsors of Maryland’s MSA legislation.
“I was willing to give it a chance, but MSAs haven’t proven to be effective,” she said. “People aren’t clamoring for them, and it doesn’t look like we need them.”
U.S. Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee, disagrees. MSAs are a necessary option for the 44 million Americans without insurance, said the congressman’s press secretary Sean Rushton. Archer was a sponsor of the federal MSA program.
Many of the problems with large insurance companies can be solved with MSAs, Rushton said. The problem with the health insurance system is that large companies try to provide health insurance for employees at the lowest possible cost, he said, but people consuming the health care services have incentives to spend as much as possible. MSAs could solve that conflict by giving consumers control over how their money is spent, Rushton said.
Republicans have long supported MSAs, saying they give consumers control over health care spending, allow them to choose any doctor, lower deductibles or premiums, and save toward future health care expenses.
Howard County resident Dan Balkin has an MSA for his family with Fortis Health, based in Wisconsin. He said he likes choosing his own doctors, cutting the amount he spends on insurance premiums and saving money tax-free.
Maryland has a significant need for some reduction in the ranks of the uninsured. Last year, the state recorded one of the nation’s greatest increases in the rolls of the uninsured, up 160,000 to total more than 800,000 people, the Census Bureau reported.
Marylanders who want the accounts have slim pickings. Only one carrier in the state, Maryland Fidelity, sells the accounts to small businesses. And the self-employed have few options — Fortis Health or Golden Rule Insurance, based in Illinois.
Balkin said he was frustrated by the lack of options.
“As a consumer, this doesn’t make me too happy – fewer companies means less competition, which could lead to higher prices,” he said.
Several Maryland companies filed the necessary forms to offer MSAs in 1997, but quickly withdrew them with no explanation, said Brenda Wilson, chief of managed care at the Maryland Insurance Administration.
Petrick, with the Health Care Commission, has an answer: “Some carriers say Maryland makes it too hard to do business with individuals.”
That’s exactly what Fortis Health said. Maryland’s insurance regulations are more complicated than other states, with many more mandates, making it more difficult to sell MSAs here, said Kathy Quirk, Fortis spokeswoman. Fortis Health has sold 24,000 MSAs nationwide, but fewer than a dozen of those sales were in Maryland, she said.
Maryland Fidelity has sold only “a few here and there” since it started offering MSAs to small businesses in July 1998, said marketing coordinator Todd Daniels. Medical savings accounts sell significantly less than any of Maryland Fidelity’s other products, he said.
“The state of Maryland doesn’t make it an easy process,” Daniels said. “There are a lot of regulatory issues that need to be addressed.”
Golden Rule Insurance hasn’t had a problem with Maryland’s regulations, said spokeswomen Joanne Robinson. Golden Rule has sold 1,125 MSAs to individuals in Maryland as of October, out of 38,767 MSAs nationwide. -30-