Demographic Development and Moral Hazard: Health Insurance with Medical Savings Accounts

The Geneva Papers on Risk and Insurance, Vol. 29, No. 4, pp. 689-704, October 2004

16 Pages Posted: 30 Mar 2010 Last revised: 27 Feb 2011

See all articles by Jonas Schreyoegg

Jonas Schreyoegg

University of Hamburg - Faculty of Economics and Business Administration

Date Written: 2004

Abstract

In times of ever-rising health expenditures it is becoming more and more obvious that conventional models for funding health care are increasingly experiencing difficulties in meeting this challenge. The concept of Medical Savings Accounts ("MSAs") represents an innovative and so far rarely analysed alternative for the funding of health care systems. In this concept an anticipated amount of money needed is saved up ex ante by each individual in a special account set aside to cover health care expenses. Since, however, health care expenses for certain kinds of treatment frequently exceed the financial capacity of the individual, Medical Savings Accounts are normally introduced in combination with health insurance covering defined services with higher financial risk. From a theoretical point of view the MSA concept helps to counteract the phenomenon of moral hazard in health insurance systems, at the same time coping with the future challenges posed by demographic development. This paper also examines experience gained so far in the implementation and use of Medical Savings Accounts in different countries. It draws a mixed but positive picture of the results. Therefore it could be feasible to integrate certain elements of this concept into health care systems of European countries.

Suggested Citation

Schreyoegg, Jonas, Demographic Development and Moral Hazard: Health Insurance with Medical Savings Accounts (2004). The Geneva Papers on Risk and Insurance, Vol. 29, No. 4, pp. 689-704, October 2004. Available at SSRN: https://ssrn.com/abstract=1574176

Jonas Schreyoegg (Contact Author)

University of Hamburg - Faculty of Economics and Business Administration ( email )

Von-Melle-Park 5
Hamburg, 20146
Germany

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