[Congressional Record Volume 141, Number 12 (Friday, January 20, 1995)]
[Senate]
[Pages S1258-S1259]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MEDICAL SAVINGS ACCOUNTS

  Mr. FRIST. Mr. President, I rise today to discuss the issue of health 
care in America and specifically the concept of medical savings 
accounts, sometimes called medical IRA's.
  I speak today as an elected official, as a U.S. Senator, but also as 
a practicing physician having devoted the last 20 years of my life to 
caring for patients.
  I have witnessed first hand the unequalled quality of health care in 
the United States. But I have also witnessed the problems in health 
care today--the skyrocketing costs and limitations in terms of access.
  Last year, President Clinton addressed the problems of our health 
care system, but his proposed solutions were fatally flawed. He favored 
monopolization, not competition. He sought to empower bureaucrats, not 
individuals.
 And in the end, he relied on Government, not the private sector.

  Fortunately, once the American people heard the truth about the 
administration's plan, they rejected it. Nevertheless, the problems 
with our health care system have not disappeared. Make no mistake. 
There are problems with our health care system in this country today. 
Instead of scrapping the whole system we must target and fix what is 
broken.
  Mr. President, I believe the use of medical savings accounts is an 
important first step in that process. A fundamental problem which 
characterizes every interaction between patient and health care 
provider is that the provider is not paid directly by the patient but 
by a third party. On average, every time a patient in America receives 
a dollar's worth of medical services, 79 cents is paid for by someone 
else, usually the Government or an insurance company. The result is 
that we grossly overconsume medical services in this country today.
  Imagine if we were all required to pay out of pocket only 20 cents 
out of every dollar of food that we purchased, or transportation, or 
clothing. We would all buy more than we need. That is what happens in 
medicine every day. Since people do not feel they are paying for it out 
of their own pockets, and everyone does want the very best and the very 
most at any price. Whether it is the deluxe hospital room, whether it 
is the MRI scan for a headache, whether it is the latest and the newest 
in nuclear medical imaging, we all want the best and we overconsume. We 
must become more cost-conscious consumers of medical services.
  Mr. President, there are two methods of doing this. First, as the 
Clinton administration urged this past year, we can limit technology. 
We can ration care thereby ultimately destroying the good quality of 
health care that we have today. The American people outright rejected 
this alternative. And with good reason. It would have reduced the 
quality of care in this country.
  I saw this happen first hand during a year I spent in England as a 
medical registrar in heart and lung surgery. I watched over and over 
again as patients waited months for medical procedures which they would 
have obtained in a few days or a few weeks in this country. Sadly, in 
some instances, I watched patients die while they waited.
  The second choice, and the one I believe we must follow if we are to 
stem the skyrocketing cost of health care in this country, is to 
empower individuals to enable them to purchase their medical services 
directly, as they do other services in our society today.
  Medical savings accounts would encourage patients to become more 
prudent in their decisionmaking in the purchase of health services. 
What are medical savings accounts? Medical savings accounts are tax-
free personal savings accounts which can be used by an individual to 
pay his or her medical bills. Take, for an example, an employee of a 
typical company. Today, an employer might pay $2,000, $3,000, or even 
$4,000 for a medical insurance policy with a $500 deductible for an 
employee. But the employee then has no incentive to be cost conscious. 
In contrast, if medical savings accounts were available, the employer 
would deposit an amount, say $2,000, in a tax-free personal savings 
account which would belong to the employee. The employee would turn 
around and buy an inexpensive catastrophic-type policy which would 
cover medical expenses greater than $2,000 if they occurred in any 
single year. For medical expenses incurred up to that $2,000 deductible 
limit, the employee, using his or her own discretion, would use money 
from the savings account for these purchases.
  Any savings account money not spent on health care over the course of 
that year would roll over into that savings account and grow tax free. 
It would accumulate, year after year. At retirement that money--the 
money not used--could be rolled over into an IRA, into a pension or be 
used to pay for long-term care or other expenses.
  Thus, the individual would have a strong incentive to become a cost-
conscious consumer of medical care. He or she will demand quality care 
at competitive prices. The consumer, the individual, the patient, will 
then drive the market. The system will respond with better outcome 
measures, better and lower unit prices for health care broadly. In 
short, medical savings accounts will give American health care 
consumers strong incentives to change to modify the way they consume 
health care services because they are able to keep any money that they 
do not spend.
  We will potentially save billions of dollars in health care costs 
because individual patients will modify their purchasing habit 
behavior. Medical savings accounts will also potentially save billions 
of dollars in administrative costs. In 1992 alone, administrative costs 
for health insurance exceeded $41 billion. With medical savings 
accounts, patients will deal directly with health care providers and 
eliminate many of the third-party intermediaries.
  Finally and perhaps most importantly, the use of medical savings 
accounts will maintain the high quality of care that Americans have 
come to know. While the Clinton administration would limit technology 
and force hospitals and doctors to ration care, medical savings 
accounts will put the individual back in charge of his or her own care 
and consumption of medical services.
  Mr. President, in closing, we in America are fortunate to have the 
absolute highest quality of health care in the world. When the leaders 
of the world become seriously ill they do not go to Great Britain or 
Canada to seek treatment. They come here, to the United States. While 
there are those who would like to stifle our technological advances and 
allow bureaucrats to tell people how much and what kind of health care 
we can receive, the American people have spoken loudly and clearly and 
rejected this notion.
  No one can predict what will happen in the next 50 years of the 21st 
century in the field of medicine; 50 years ago when my dad was a 
practicing physician, making house calls day by day, he would not 
envision that somebody such as myself would be doing heart transplants 
in the 1990's. The technological advances are simply mind-boggling.
  Mr. President, the challenge for everyone is to maintain the highest 
quality health care in the world, and to continue to make it available 
to all Americans. This can only be done if we change the basic 
framework through which medical services are consumed and continue with 
a market-based system.
  I believe the use of medical savings accounts will be a major first 
step in that direction. Individual patients become part of the 
solution, not just part of the problem. For this reason I hope that my 
colleagues in the Senate will support my efforts to pass legislation 
later in this session to create medical savings accounts.
  Thank you, Mr. President. I yield the floor.
  (Disturbance in the visitors' galleries.)
   [[Page S1259]] The PRESIDING OFFICER. The gallery is reminded not to 
display any approval or disapproval of remarks on the floor.
  Mr. FORD. Mr. President, I have a longtime habit that is hard to 
break and it is opposed to the rules of the Senate. I should not refer 
to another Senator as ``you.'' It was not any disrespect at all. So in 
referring to the two Senators, one, I think, from Oklahoma, the other 
from Pennsylvania, by using the word ``you'' I hope that it will not be 
taken as an affront in any way because I did not mean it that way. I 
will look at the Record and see if I cannot straighten it out by 
unanimous consent.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FORD. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. KYL. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KYL. Mr. President, I ask unanimous consent I be allowed to 
address the Senate in morning business.
  The PRESIDING OFFICER. The Senator is recognized for up to 15 
minutes.

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