Medical Savings Accounts will not advance Canadian health care objectives.

© 2002 Canadian Medical Association or its licensors In his review of the literature on Medical Savings Accounts (MSAs) and the implications for the integration of MSAs into Canada’s health care system (see page 159 of this issue), Samuel Shortt rightly emphasizes that MSAs must be assessed, not against a predominately privately financed system such as the one in Singapore, or a fragmented, multi-payer system such as the one in the United States, but rather against Canada’s publicly financed system and the objectives set out for it. Evidence of “success” in these other contexts may still imply failure against Canadian goals. MSA-based financing would represent a radical departure from Canada’s current system of health care finance. Under publicly financed MSAs, the government would provide individuals and families with a lump sum of money annually to be spent (paying full price) on purchasing health care services. This would be supplemented with comprehensive, universal catastrophic health insurance for severe illnesses. Those who do not spend the annual allotment would be able to accumulate funds over time that could be spent on a broader range of goods and services. Thus, MSAs are designed to give people greater choice and control of health care services, provide them with an incentive to use fewer services and encourage them to shop around with their MSA funds, thereby inducing competition among health care providers. In economic terms, these are “demand-side” controls. Like Shortt, I believe that MSAs are unlikely to advance key Canadian policy goals with respect to expenditure control and health system equity. Demand-side controls have historically been used extensively and found wanting: they do not lead to effective expenditure control, they generate widespread inefficiencies, and they are incompatible with equity in the financing and utilization of health care services. For well-understood reasons, health care markets do not operate the same way most markets for ordinary consumer Medical Savings Accounts will not advance Canadian health care objectives