Medical Savings Accounts: Will they reduce costs?

Dear Sir,

Evelyn Forget et al's paper on this subject is, at best, simplistic. The paper concludes with the statement, "it is past time that they (MSAs) be buried", which is built upon research that assumes away all the relevant variables. It is akin to evaluating lets say, a "Shoe Allowance", while supplying to the market only size 9 shoes. Obviously, as she pointed out in her comments to the press, "it is simple arithmetic", since you are giving away money and leaving everything else unchanged.

No one should promote Medical Savings Accounts without at the same time changing the supply side of the equation. Only if the supply side is competitive i.e. privatized, will the consumer be able to benefit from the choice allowed by Medical Savings Accounts. The paper uses only historic costs for direct health care, that is, it ignores both all the administrative costs associated with the various Provincial and Federal bureaucracies and the potential benefits, in terms of lower prices, provided by a competitive market. Consumers of health care must have choice if there is to be any benefit. This means not only a choice of doctors but also a choice between doctors, midwives, chiropractors, nurses etc. However, Governments could not simply wash their hands of medical services, since, they would remain responsible for the setting of standards, the testing of drugs, the licensing of practitioners etc.

The other key error is that the authors assume that individuals would receive their Medical Savings Accounts as a cash benefit, with some rules as to how it could be spent, so that the system is running at a deficit from the word go. In reality, everyone would draw down only what they needed, until the competitive benefits of the new system were realized. What they did not spend would accrue to their account as a credit. There would not therefore be a cash drain from the system as they imply.

Another necessary component of a Medical Savings Account system would be that all professional and labour services would operate in a free market. In other words, there would be no artificial limitation imposed on the training or licensing of any discipline, nor on the negotiation by an individual with his, or her, employer.

Back to the drawing board I'm afraid!

Yours truly,

Kendall Carey

400 Woodsworth Rd Toronto ON M2L 2T9

416 445 5698