n Allow large groups, including alliances of small firms, to choose tax-deductible MSAs. The logic of allowing only small firms and the self-employed to choose MSAs was never clear to me. Because large employers often have full-time employees devoted to studying benefits and getting the best deals, the subtle advantages of MSAs are more likely to be appreciated there than in small firms where managers (like me) have many other demands on their time. Even so, Congress would fix the problem many other small firms like mine are having by letting purchasing alliances include MSAs without penalty.
n Allow all firms, large and small, and individuals to set up "back-ended" MSAs. Like the so-called back-ended IRAs included in the federal budget deal, back-ended MSAs would scrap the tax-deduction for deposits into savings accounts but allow savings to accumulate tax free and be withdrawn later without tax penalty.
The only real difference from the current tax code would be that investment earnings in these MSAs wouldn't be taxed, so they won't save depositors nearly as much as the "front-ended" MSA would. On the other hand, maybe such a reduced tax benefit could be paired with direct access by depositors to their funds, so they would write checks or swipe debit cards from their MSA at the doctor's office rather than having to file claims and wait for reimbursements.
As my own experience has demonstrated, making MSAs truly a competitive product in the insurance market means more than inserting a limited test into a bill. It means making it clear to employers, workers, and insurers that MSAs are here to stay and available in some form to just about everybody. Any test short of that will be inherently rigged against success. Medical savings accounts, an idea with so much potential, deserve better.
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