[Congressional Record Volume 141, Number 108 (Thursday, June 29, 1995)]
[Extensions of Remarks]
[Page E1362]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                   MEDICAL SAVING ACCOUNTS: NOT A CURE

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                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Thursday, June 29, 1995
  Mr. STARK. Mr. Speaker, Medical Savings Accounts--MSAs--are the 
latest fad sweeping Congress and are seen as an easy way to solve the 
health care insurance crisis.
  Wrong.
  They are a brilliant scheme by some profit-hungry insurers to skim 
healthy people out of the insurance pool and increase health care 
premiums for the sick, the disabled, and those planning to have a baby.
  The Washington Post editorial of June 29 entitled ``Not a Cure'' 
explains the problem:
               [From The Washington Post, June 29, 1995]

                               Not a Cure

       In the name of health insurance reform, a proposal is being 
     advanced in Congress whose effect could well be to weaken 
     rather than strengthen the health insurance system. To some 
     extent that's even its goal. It's an idea that should be 
     approached with the greatest caution.
       The proposal is to change tax law to allow what are known 
     as medical savings accounts. Instead of normal insurance, a 
     person or his boss would buy a high-deductible policy that 
     would kick in only after the first several thousand dollars a 
     year of medical expenses. To help pay the uninsured expenses, 
     the individual or employer would then also put some money in 
     a special savings account. The savings account contributions, 
     whether made by the employer or the beneficiary, wouldn't 
     count as part of the beneficiary's taxable income.
       The new wrinkle here would be that part of the 
     ``insurance'' would be in cash that the employee could keep 
     in the account for future use if he didn't spend it all. 
     Advocates say the great virtue is that the employees would 
     have an incentive they currently lack to limit their health 
     care spending while increasing national savings. They add 
     that the health care costs of employers would likely decline 
     under the plan, while the cost to the government would 
     increase only marginally (in part because more people would 
     be at least partially insured).
       The problem is that the savings accounts would likely split 
     the insurance market. The healthy would be drawn to the new 
     system. The others--those likely to face high costs--would 
     not. Health insurance is supposed to be a system for 
     spreading risk. You put as large a cross-section of premium 
     payers as possible into a common pool, and the healthy at any 
     given moment then support the sick, secure in the knowledge 
     that when they become sick in turn, they too will be 
     supported. To the extent that you take away the healthy, the 
     sick are left to support themselves, and the system unravels.
       The American Academy of Actuaries commissioned a study of 
     the savings account idea. ``Employees who have little or no 
     health care expenditures stand to reap a real financial 
     reward. The biggest losers will be employees with substantial 
     health care expenditures,'' said the head of the study group. 
     The head of Blue Cross and Blue Shield of Ohio calls the 
     proposal ``the ultimate `cherry-picking' scheme invented by 
     some insurers to guarantee themselves large profits by only 
     insuring the healthiest among us.''
       The risk is the greater if people can ultimately use the 
     medical savings for non-medical purposes. A bill by Chairman 
     Bill Archer of the House Ways and Means Committee, on which a 
     hearing was held the other day, seeks to prevent that. Some 
     people doubt that for all the debate it has stirred the bill 
     would have the momentous effect that either side expects, and 
     therefore that it's safe to enact. That's not much of a claim 
     for it. Congress should look twice at this one.
     

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