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Let me see if I've got this straight. Medicare is going broke because it can't afford to take care of the baby boom generation.

So the way to reform the system is to let people use scarce Medicare funds for anything they want, including health expenses that they currently pay themselves.

Hmmmmm. What a novel approach.

But that's one of the promises of Medicare Medical Savings Accounts, now taking shape in a House-Senate conference on Medicare reform.

The Congressional Budget Office figures that the modest pilot project planned for Medicare Medical Savings Accounts will add $2 billion to Medicare's expenses over the first five years.

And who will get that $2 billion windfall? Primarily healthier, wealthier older people.

The program will run as a five-year test starting in 1999. The details aren't worked out yet but the concept goes like this:

Participating seniors will drop out of regular Medicare. In its place, they'll buy private health insurance with an annual deductible of as much as $6,000. They'll also get an Medicare Medical Savings Account.

Each year, Medicare will pay a certain sum into the account, probably depending on your age, sex and where you live.

As an example, say you get $5,000 a year -- the average for treating Medicare patients last year. Part of that payment -- maybe $3,000 -- will pay your health-insurance premium (insurers have been big backers of the Medicare Medical Savings Accounts.)

The other $2,000 a year is yours. You can use it, tax free, to pay medical bills, including bills not covered under Medicare.

You're responsible for the first $6,000 of your own health expenses that would have been covered by Medicare. After that, the policy gives you the equivalent of Medicare coverage, and even better coverage for doctor bills.

Obviously, seniors expecting $6,000 in medical expenses won't choose Medicare Medical Savings Accounts. Fee-for-service or Medicare HMOs will cost them less.

Neither will Medicare Medical Savings Accounts appeal to healthy seniors who don't want the risk of owing $6,000 if an emergency strikes. (Under the program, they won't be allowed to buy Medigap coverage.)

But for healthy seniors with plenty of cash, Medicare Medical Savings Accounts will be an interesting gamble. If $2,000 is added to your account and your medical expenses come to only $500 a year, you'd have $1,500 left over -- a little gift from Medicare.

Each year, you'd net another $1,500, provided that your health held up. That money would earn interest tax free and could be used for future medical expenses.

Alternatively, you could use your Medicare money for anything you wanted, providing that you kept at least 60 percent of your deductible in your Medicare Medical Savings Account. You'd owe income taxes on withdrawals not used for medical bills.

There's always the risk that your health might fail. But you'd face only one year of heavy expenses. The following year, you could return to traditional Medicare, which would cover most of your bills.

You could even hold off on expensive surgery until you were back under Medicare's umbrella. Any Medicare money left in your Medicare Medical Savings Account would be yours to keep.

It's not clear how insurers would keep track of whether the money you took from your Medicare Medical Savings Account was for tax-free medical bills or other taxable expenses. It's plausible that these accounts could allow for more of the Medicare fraud you've been reading about.

The ostensible reason for promoting Medicare Medical Savings Accounts is to hold down health-care costs. If you're spending your own money, the theory goes, you'll shop more carefully.

But have you ever tried to price-compare medical procedures? A reporter for this column did once. She got nowhere, because hospitals rarely give out prices for specific services. Anyway, you don't shop for doctors when you're sick the way you shop for discounts on consumer goods.

Ironically, under Medicare Medical Savings Accounts, doctors will be able to charge you more than the Medicare limit. You may not mind the higher price because the money is tax free.

Having spare money in an Medicare Medical Savings Account might even encourage you to spend more on health care than you otherwise would.

Adrienne Mitchem, legislative counsel for Consumers Union, worries that unscrupulous salespeople will use these tax-free Medicare Medical Savings Accounts as a "killer hook." They'll catch seniors "who want the extra income and don't understand that they'll have to pay the first $6,000 in medical bills," she says.

The congressional response to all criticism is: "This is a test." But as everyone knows, programs that benefit a lucky few are hard to stop, no matter what their cost.

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