How will medical savings accounts affect medical spending?

This paper estimates that if a cross-section of nonelderly adults switched from comprehensive insurance to a combination of catastrophic insurance and a medical savings account (MSA), they would reduce their medical spending by between 2% and 8%. The author constructs measures of the prices individuals pay for medical care under a typical comprehensive insurance policy and a particular combination of catastrophic insurance and MSA. The difference in prices paid in the two health plans is combined with price elasticity estimates from the Health Insurance Experiment to predict changes in spending. Several qualifications to the estimate are considered.