Tax-Preferred Medical Savings Accounts and Catastrophic Health Insurance Plans

Research Report

Tax-Preferred Medical Savings Accounts and Catastrophic Health Insurance Plans

A Numerical Analysis of Winners and Losers

Abstract

This paper uses nationally representative data to analyze the implications of introducing tax-favored medical savings accounts (MSAs) coupled with catastrophic health insurance plans into the mix of employer-sponsored health insurance arrangements. It address four areas: (1) the effect on national health expenditures if all employees switched to an MSA/catastrophic plan; (2) who would gain and who would lose financially, and by how much, if all workers switched to this plan; (3) the effect on premiums for comprehensive plans if this plan were added as a choice for all workers; and (4) how employers and workers would respond to these quantitative implications.

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