[Congressional Record Volume 141, Number 12 (Friday, January 20, 1995)]
[Senate]
[Pages S1267-S1268]
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, 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 care 
that we have in the United States, but also the problems which include 
skyrocketing costs, uneven access, and inadequate emphasis on 
prevention.
  Last year, President Clinton addressed the problems in our health 
care system, but his proposed solution was 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. And make no mistake, there are problems with our health 
care system. But 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 this process.
  A fundamental problem which characterizes every interaction between 
patient and health care provider is that the provider is paid not 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 over-consume medical services. Imagine if 
we were all required to pay out of our own pockets only 20 cents of 
every dollar spent on food, clothing, and transportation. We would 
over-consume--we would buy more than we need. And that's what happens 
in medicine. Since they don't feel they are paying for it, everyone 
wants the most and the best--at any price--whether it's the deluxe 
hospital room, the latest in nuclear medical imaging, or the MRI scan 
for a headache. 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, we can limit medical technology and 
ration care, thereby limiting choice of physician and ultimately 
access. The American people rejected this alternative--and with good 
reason. It would have severely reduced the quality of patient care. I 
saw this happen first-hand during the year I spent in England as a 
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 days or weeks in the United States. And sadly, in some 
instances, I watched patients die while they waited.
   [[Page S1268]] The second choice, and the one I believe we must 
follow if we want to stem rising health care costs without decreasing 
the availability and quality of patient care, is to empower individuals 
and enable them to purchase medical services directly, as they do other 
services. Medical savings accounts would encourage patients to make 
prudent, cost-conscious decision about purchasing medical services.
  What are medical savings accounts? Medical savings accounts are tax-
free, personal accounts which can be used by an individual to pay 
medical bills. Take, for example, an employee of a company: today an 
employer might pay $3,000 or $4,000 for a medical insurance policy with 
a $500 deductible. The employee has no incentive to be cost-conscious. 
In contrast, if medical savings accounts were available, the employer 
would deposit an amount--say $2,000--tax free in a savings account, 
which would belong to the employee. The employee would buy an 
inexpensive, catastrophic-type policy which would cover medical 
expenses above $2,000 per year. For medical expenses up to the $2,000
 deductible limit, the employee using his own discretion would use 
money from the savings account. Any savings account money not spent on 
health care that year would grow tax free in the employee's account and 
would accumulate year to year. At retirement, the money could be rolled 
over into an IRA or a pension, or could be used to pay for long-term 
care or other expenses. Thus, the individual has a strong incentive to 
become a cost-conscious consumer of medical care. He will demand 
quality care at competitive prices. The consumer will drive the market. 
The system will respond with better outcome measures and lower unit 
prices for health care.

  In short, medical savings accounts will give American health care 
consumers strong incentives to change the way they consume health care 
services because they keep any money they don't spend.
  We will potentially save billions of dollars in health care costs 
because individual patients will modify their health care purchasing 
habits to consume health care services prudently.
  Medical savings accounts will potentially also 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 third parties.
  Finally, and perhaps most importantly, the use of medical savings 
accounts will help 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 consumption of medical services.
  Mr. President, in closing, we in America are fortunate to have the 
absolute highest quality health care in the world. When the leaders of 
the world become seriously ill, they don't go to Great Britain or 
Canada to seek treatment, they come to the United States. And while 
there are those who would like to stifle our technological advances and 
allow bureaucrats to tell us how much and what kind of health care we 
can receive, the American people have loudly and clearly rejected this 
notion.
  No one can predict what will happen in medicine in the first 50 years 
of the 21st century. Fifty years ago, when my father was a young doctor 
in Tennessee making house calls, he could not have envisioned what 
medical practice today would be like. The technological advances are 
simply mind-boggling. Mr. President, the challenge for us is to 
maintain the highest quality health care in the world and to continue 
to make it available to all Americans. But this can only be done if we 
first 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 step in that direction. 
Individual patients will become part of the solution, instead of 
remaining part of the problem. For this reason, I hope that you and my 
other 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.
  

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