While explaining the MSA concept is quick and easy, it takes time for an insurance agent just to outline the deductible limits and other restrictions to a prospective client, either an individual or a small employer. Once you have a plan like that, you can open a Medical Savings Account and contribute 65 percent of your deductible if you are an individual or 75 percent of your deductible if you are a family. Only the self-employed or companies with 50 or fewer employees may participate. If you get the MSA from your employer, only you or your employer, but not both, can contribute to the MSA in a single year. Even a knowledgeable health policy analyst's eyes would glaze over with that explanation, which does not even include the penalty for nonmedical withdrawals or the prohibition on other coverages.
Deductible levels are precisely the kind of issue that can be fine-tuned only in the market.
No one can predict ahead of time what the optimal deductible level will be for different market segments and population groups. Yet the MSA legislation dictates the size of deductibles, and it has driven some insurers and individuals out of the MSA market. As a result, a number of companies have stopped offering a choice of deductibles. Another problem is that deductibles do not reflect geographic differences in medical costs. Neb. Insurers thus look for an average within the limits permitted by the MSA legislation that will meet the widest possible demand.