Coming out of the federal government shutdown, health care has again surged to the forefront of national debate. Amid all the finger-pointing, one truth is clear: America’s health care system remains bloated, costly, and unsustainable.
For years, Congress has excelled at identifying what’s wrong but struggled to offer practical, free-market alternatives. Ironically, one of the best solutions already exists within current law, the Medicare Medical Savings Account (MSA). This overlooked program could inject competition, transparency, and consumer choice into an increasingly bureaucratic Medicare system.
The Centers for Medicare and Medicaid Services (CMS) describes an MSA as “a type of Medicare Advantage plan that combines a high-deductible health plan with a medical savings account. Enrollees of Medicare MSA plans can initially use their savings account to help pay for health care, and then will have coverage through a high-deductible insurance plan once they reach their deductible.”
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In short, MSAs are HSA-like Medicare-funded accounts that empower patients to manage their own health care dollars. Instead of relying on insurance or government gatekeepers, beneficiaries can use the funds in their account to pay directly for care. After the deductible is met, the insurance component covers larger medical expenses.
Unlike traditional Medicare, MSA plans fully cover costs above the deductible, meaning the enrollee’s financial exposure is limited. Each year, an MSA plan’s risk is finite and predictable, equal to the deductible minus Medicare’s deposit into the account. By contrast, traditional Medicare carries a theoretical unlimited risk, as it only covers 80 percent of costs with no annual out-of-pocket maximum.
The contrast is even greater when considering that MSA funds roll over from year to year. Savings from well-managed health care accumulate, increasing the balance available to cover future expenses. Over time, a patient who manages their care effectively may reach a point where their MSA balance exceeds their deductible—resulting in no out-of-pocket costs in a given year.
This simple shift has transformative potential. When patients control the dollars, they become discerning consumers, shopping for quality and price. Providers must then compete to earn their business, driving efficiency and innovation. An engaged senior population, motivated to seek value, would drive down costs while rewarding high-quality care, ultimately reforming the entire system, even for those outside Medicare.
The recently passed One Big Beautiful Bill (OBBB) expands this potential by allowing MSA funds to pay for Direct Primary Care (DPC). DPC practices offer unlimited visits, same-day appointments, and telemedicine for a low monthly fee, cutting out the bureaucracy of insurance.
Studies show DPC patients experience better outcomes and reduce total medical spending by about 20 percent. For seniors, that means improved access and affordability without adding new government programs or taxes.
Despite being authorized since 2007, Medicare MSAs remain one of the least utilized options in the entire system. As of 2024, fewer than 5,000 beneficiaries nationwide are enrolled.
The problem isn’t the product; it’s the lack of consumer awareness. Few insurers market MSAs, few policymakers promote them, and most seniors have never heard of them. The result: a powerful free-market reform tool left idle as Medicare spending soars above $1 trillion annually.
Here lies a solution that requires no new bureaucracy, no sweeping legislation, and no partisan gridlock. The structure is already there; all that’s missing is awareness and leadership.
If Congress wants to champion a serious, patient-centered Medicare reform, it should start by expanding and promoting MSAs.
Doing so would give seniors real control over their care and reintroduce the basic market forces that keep prices in check. Instead of being passive recipients in a government-run system, seniors would become empowered consumers, the kind who ask what care costs, demand quality, and function as their own auditors.
MSAs align perfectly with American principles: individual choice, fiscal responsibility, and freedom from unnecessary government control. MSAs restore agency to the people Medicare serves most, our seniors, while bending the cost curve the right way: through competition and transparency, not rationing and regulation.
The path to modernizing Medicare and empowering millions of Americans isn’t hidden in a think tank white paper. It’s right in front of us. Now, it’s time to use it.
Chad Savage, M.D., is the founder of YourChoice Direct Care, Heartland Institute policy advisor, founder, and the president of DPC Action.
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