Thursday, April 01, 2004

The US System for Delivering Medical Services. Our system of rationing scarce medical resources is to make the cost of insurance too high for many people. The big winners are the insurance companies, the medical profession, and people like my family who can afford to pay for the insurance.

What alternatives are there? My vote is a Medical Savings Account ("MSA"), where people can save money in an account like an IRA and then draw from it to pay medical expenses. There would be a tax deduction for putting money into the plan and no tax taking money out of the plan, provided it is used for medical expeneses.

That plan would be paired with catastrophic medical insurance that would pick up after a substantial deductible is paid (say, $2000 or more). For poor people, the government would deposit money in such an account or just give them money that they can use as they choose, including putting it in such an account.

A Medical Savings Account would let people withdraw money from it after they reach a certain age for any purpose. If they draw it out for a non-medical purpose, however, then its subject to the income tax.

This will give people an incentive to do what they can to avoid medical expenses or keep them reasonable. Maybe they will lose some weight and get some exercise. Maybe they will shop around for the best physician or hospital for their needs at the best cost.

Paired with that appraoch, we should de-regulate the medical service industry. Let Wal-Mart (OK, Macon, Super Target) type people get hold of the system.

MSAs are currently available under some circumstances. They have been made more accessible under the recent Medicare legislation. We are looking into MSAs here at the firm.

Let me add, finally, that the current US medical services delivery system, with all of its faults, has been very, very good to my family and me over the years. I don't think that medical services delivered by any other country can compare with the quality of those services here in the US, provided you have the insurance or other means with which to pay for it. But I don't think its the best of all possible worlds.

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