APA Newsletters

Spring 2001
Volume 00, Number 2

Newsletter on Philosophy and Medicine

Papers, Poems and Narratives

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Just Allocation and Medical Savings Accounts

Kathleen Barnes
Mount Sinai School of Medicine

Healthcare costs in the United States have been steadily increasing as a proportion of national spending and it has long since reached the point where most people agree that changes in the system must be made. One solution that has been proposed by Republican members of Congress and by candidate George W. Bush, during his bid for the White House, is the wide utilization of Medical Savings Accounts (MSA's). Recent signs of slowing economic growth will put even greater pressure on policy makers to implement low cost healthcare reforms. Given the outcome of the presidential election and the economic outlook, an ethical evaluation of the impact MSA's will have on the distribution of healthcare resources cannot be postponed.

The basic feature of MSA's is that an individual would be allowed to make tax-deductible deposits into special, tax-exempt accounts, similar to IRA's. Individuals who choose to use MSA's for basic healthcare expenses would be required to also obtain coverage under a high-deductible, catastrophic health insurance policy. Money contributed to the MSA would accumulate tax-free. Typically, this money could only be used for medical expenses, except after death, when any unused money could be passed on to heirs. Some proposals would even allow use of MSA funds for non-medical expenses after retirement age without a penalty. Proponents of MSA's believe that healthcare costs would be reduced because individuals would have responsibility for their own healthcare spending. From an ethical viewpoint, proponents argue that MSA's permit and encourage patient autonomy.1 Unfortunately, they neglect to address the injustice in allocation of healthcare dollars that would be created if MSA's become a major component of healthcare reform.

In the United States, the pool of healthcare spending comes from a variety of government, corporate, and private sources. Given that there is a finite size to this pool of money, the question is how should it be divided up? A just healthcare policy would require that similar cases be treated in similar ways and that burdens be distributed equally. With MSA's, similar cases would be treated differently because the amount of health care dollars you are allocated is determined by how much you chose to put in your own account. Since wealthy individuals have more disposable income, without much risk they could put more money into their MSA than poorer individuals. To compound this further, since the money individuals put into MSA's is tax exempt, individuals in higher tax brackets would receive a larger reduction in their taxes for every dollar they put into their MSA, giving them an even larger share of the pool of healthcare dollars. This injustice is again exacerbated because at death the money can be passed on to heirs, which totally removes the money from the pool of medical resources.

MSA's also tend to distribute the burden of medical costs to the sickest individuals in society. Healthy people would tend to choose MSA's over traditional medical insurance plans because they could take the chance that out of pocket costs would be lower than the premiums in a traditional plan. Since chronically ill people could not make this same choice, this would leave a greater percentage of them in traditional medical plans, causing a dramatic increase in the premiums. The effect of MSA's siphoning money from the limited pool of healthcare dollars would be to destroy the concept of medical insurance in which a large number of people pool their money to protect themselves against worst case scenarios. This effect is known as adverse selection. Ultimately, premiums could rise so high for those too sick to benefit from MSA's that they would be unaffordable. MSA's would lead to implicit rationing to those in greatest need, which clearly is unjust.

What happens if John Rawls' Theory of Justice is applied to healthcare reforms, which include wide access to MSA's? Rawls' theory describes allocation of "primary goods" that are both worth possessing in themselves and are necessary for securing more specific goods that an individual may want. Although Rawls' didn't specifically discuss medical resources, access to healthcare must be considered a primary good since without a basic level of health an individual may be unable to obtain "the specific goods" such as education, employment, money, etc. From behind Rawls' "veil of ignorance", people in the "original position" would agree upon the principles for a society that would fairly distribute the primary goods and not principles which would provide individual benefit. From such an uncertain position, "maximin" strategy would lead representatives in the original position to design a policy in which the worst case outcome is better than the worst case outcome of the alternative policies. When it comes to health care expenses, the worst case outcome is to become chronically ill and not have the resources to provide for treatment and care. Since MSA's are not protective of the worst case outcome, any reform that includes MSA's would be rejected designed by rational people in the original position.

MSA's represent an injustice in allocation of medical resources. MSA's tend to distribute more medical resources toward wealthier individuals and to shift the burden of costs to the chronically ill. The virtue of patient autonomy should not be promoted at the expense of just allocation. Rawls' principles of justice do not require that everything is divided equally, but that in a just society each individual should have a fair opportunity for equality. When it comes to health, no policy could actually guarantee achievement of equal levels of health, but only equity in access to basic care. This would not be the case with widespread use of Medical Savings Accounts.

Endnotes

1. Matthews, M. "Medical Ethics, Medical Economics and Medical Savings Accounts," APA Newsletters 92:2 (1993): 77-78; p. 78.

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APA Newsletters

Spring 2001 Volume 00, Number 2

Spring 2001
Volume 00, Number 2