Individual Expenditures and Medical Saving Accounts

Matthew J. Eichner, Mark B. McClellan and David A. Wise

in Labor Markets and Firm Benefit Policies in Japan and the United States

Published by University of Chicago Press

Published in print October 2003 | ISBN: 9780226620947
Published online February 2013 | e-ISBN: 9780226620954 | DOI:
Individual Expenditures and Medical Saving Accounts

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This chapter examines the medical saving account (MSA), which has received considerable policy attention as an alternative approach to improving the efficiency of individual spending decisions for health care. Simulations show that most employees would approach retirement with a substantial proportion of MSA contributions remaining in the account. If investment of MSA assets were in equities, more than 50 percent of employees would have MSA balances greater than 300 percent of lifetime contributions to the MSA. Only about 10 percent of men would retain less than 200 percent of contributions and only about 10 percent of women would retain less than 125 percent of contributions. If investment were in bonds, balances would be much lower. In this case about 10 percent of both men and women would retain less than 50 percent of contributions. Thus, the persistence of medical expenditures does not present an overriding obstacle to the adoption of MSA plans.

Keywords: health insurance; medical savings account; health care costs; retirement income

Chapter.  8282 words.  Illustrated.

Subjects: Business and Management

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