Medical savings accounts: what story do the data tell?

Fewer than a quarter-million tax units had reported a medical savings account (MSA) by the end of 2001. Nearly one-quarter of those having an MSA reported being previously uninsured. The tax data support the prediction that higher-income taxpayers are more likely than others to be MSA consumers. Surprisingly, the middle-aged had the greatest predicted MSA demand, even after income and marginal tax rate were controlled for. There is mixed evidence as to whether the account was treated as a savings vehicle. For those who continued their accounts, their build-up was generally sufficient to offset a year or two of future medical expenses below the deductible.