NCPA Study Cites Evidence from South Africa Where MSAs Account for Half the Market
DALLAS (August 07, 2002) — Before members of Congress enact a new prescription drug benefit for the elderly, they should look carefully at the experience of South Africans with medical savings accounts (MSAs), according to a study released today by the National Center for Policy Analysis (NCPA).
The study compares South African families with conventional insurance plans to those with plans under which people have an employer-funded account from which they pay some medical expenses directly. The results are striking – discretionary spending is 47 percent lower under MSA plans.
“Unlike the prescription drug plans before Congress, South African MSA plans do not set the same deductible for every drug,” said the study’s author, Shaun Matisonn, executive vice president of Discovery Health.
- When a drug is needed to treat a chronic condition and skimping on spending could lead to more expensive care later, there is no deductible.
- Where patients can safely exercise more discretion, the typical deductible is about $1,100.
“MSA patients will spend substantially less on discretionary services, including prescription drugs, given the right incentives,” Matisonn added. The study shows that once patients reached their deductible and the insurer started paying all claims, per-member monthly costs increased 27.6 percent.
“No one is in a better position to weigh the costs against the benefits of prescription drugs than patients,” said NCPA Senior Fellow Greg Scandlen. “MSA patients are often more effective and efficient monitors of prescription drug therapy than third-party payers, even under strict managed care.” For example:
- MSA patients spent 20 percent less on Ritalin than those same patients spent a year later under managed care, with no adverse health effects.
- Patients using MSAs were more likely to purchase a cheaper generic equivalent of Prozac; when they were spending insurance company money, purchases of the brand name drug rose 45 percent.
“Patients with MSAs are able to control drug costs as well or better than under managed care, but without the cost of managed care,” Scandlen added.