[Congressional Record Volume 142, Number 88 (Friday, June 14, 1996)]
[Senate]
[Pages S6268-S6272]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MEDICAL SAVINGS ACCOUNTS

  Mr. KENNEDY. Mr. President, the House and the Senate Republican 
compromise on medical savings accounts is a capitulation to House 
Republicans who are more interested in creating an issue and serving a 
special interest constituency than in passing a bill.
  I listened with interest to speeches this morning that accused the 
Democrats of blocking health reform by not agreeing to the appointment 
of conferees. This kind of claim cannot pass the truth-in-advertising 
test. Let us look at the record. Medical savings accounts was defeated 
by the full Senate. The health insurance reform bill passed the Senate 
by 100 to 0 without medical savings accounts--100 to 0 without medical 
savings accounts.
  When the majority leader attempted to appoint conferees, he proposed 
a stacked conference--a degree of tilting unprecedented in the last 
three conferences. His only goal was to assure the bill that came out 
of the conference included this bill-killer provision. The Democrats 
will not consent to this abuse of congressional procedures. And we will 
continue to fight to pass a bill the President can sign, a bill that 
will improve health insurance, not ruin it.
  We are ready to talk to the Republicans anywhere, any time. We do not 
need a conference to work out this legislation, if the Republicans are 
willing to compromise. But we will not agree to a conference that has 
the sole goal of assuring the death of this bill by including in it an 
unacceptable provision rejected by the Senate.
  Let us be clear about who is blocking health reform. Health reform 
passed the Senate 100 to 0. It was a clean, bipartisan bill. If it were 
passed by the House today it would be signed by the President tomorrow. 
The American people are tired of partisan bickering. They want us to 
pass the bill that passed the Senate with unanimous support. The 
American people deserve to have insurance reform enacted. The House 
Republicans should not be trying to kill it by insisting on an extreme 
partisan agenda.
  Medical savings accounts have become the Trojan horse that could 
destroy health insurance reform. This untried and dangerous proposal 
does not belong in the consensus insurance reform bill. It has already 
been rejected by the Senate. A bill containing it cannot be enacted 
into law and signed by the President.
  Democrats and the White House have offered a fair compromise which 
would provide for a controlled and limited test of the MSA concept to 
see if it should be expanded. But the House Republican leadership has 
said that it will be their way or no way. As Majority Leader Armey said 
yesterday, ``I will not give up [on] medical savings accounts,'' and he 
dared the President to veto the bill. The latest Republican proposal 
clearly reflects this partisan strategy.

[[Page S6269]]

  The Republican leadership pretends their proposal is a fair attempt 
to deal with concerns about medical savings accounts. But it is nothing 
of the kind.
  Under their proposal, medical savings accounts could be sold to all 
small businesses and the self-employed immediately. This opens MSA's to 
a massive market, consisting of more than 40 million workers, one-third 
of the Nation's entire labor force. This is hardly a controlled, 
limited test.
  Even more serious, experts agree that the small business sector of 
the health insurance market is the most vulnerable to the disruption 
that medical savings accounts would cause. The joint tax committee 
concluded that the sales of medical savings accounts would be 
concentrated in small and medium-sized firms.
  The proposal would clearly go beyond the bounds of what is 
acceptable, even if it stopped there. But it does not. After 3 years in 
which medical savings accounts are sold in this vast market, the 
accounts would be expanded to everyone. Only if both the House and 
Senate voted to stop the expansion would it be prevented. Rather than 
evaluation by an impartial body, the evaluators would be chosen by the 
chairmen of the Finance and the Ways and Means Committees, both strong 
proponents of MSA's. This is not a test. It is a travesty.
  There are other objectionable aspects of this compromise. It sets a 
deductible that is $5,000 per individual and $7,500 per family, far 
beyond the means of working families. Instead of capping the 
obligations to people who finally meet the deductible, it allows the 
insurance company to subject them to further unlimited costs that the 
insurer is not obligated to cover.
  Do we understand that? We are talking about a $5,000 deductible. Then 
after an individual reaches that $5,000 deductible, additional 
deductibles or co-payments can be added on.
  So, Mr. President, we have to ask ourselves, what working family is 
going to be able to afford that per year? What senior citizen? What 
group of Americans would be able to afford that? Only a very small 
number of Americans would be able to afford to pay those costs. And 
they would be the wealthiest individuals and obviously the healthiest, 
the ones that do not believe they would have any kind of health care 
needs over the course of a year.
  Beyond these problems, there is no guarantee under the Republican 
proposal that the company cannot cancel your policy, or cannot 
establish a lifetime ceiling on benefits or a yearly limit. We had the 
debate here on the floor, on the Jeffords' amendment which would have 
prohibited lifetime limits. The debate over this issue was brought to 
everyone's attention earlier this year when one of our leading film 
actors, Christopher Reeve, had that tragic horseback riding accident. 
And he had one of the best insurance policies available. And then he 
reached the limit on benefits under his insurance policy. And that 
company said, ``No more. We're not going to pay any more.''
  If this proposal were enacted and tax benefits were provided, there 
is nothing to prohibit insurance companies from establishing a very low 
ceiling on benefits. Nothing--no provision, no explanation. None of the 
proponents of MSA's has guaranteed that we will not have any kind of 
limit or that MSA's will take care of all the catastrophic needs. That 
has not been mentioned and has not been suggested, has not been 
justified. Not one Republican has stated that, ``Well, if we provide 
this program, and we give the tax benefits, then insurance companies 
are not going to cancel your policy.'' Of course they are going to be 
able to cancel it. Of course they are going to be able to cancel it.
  So, Mr. President, these are some of the points that need to be 
examined before we give additional kinds of tax benefits for the 
development and marketing of MSA's.
  It is no accident that the leading proponents of medical savings 
accounts are insurance companies, like the Golden Rule Insurance Co., 
which has been one of the worst abusers of the current system. They 
give millions of dollars to political candidates to try to get this 
business opportunity into law.
  The Golden Rule's record is, in particular, so shameful that Consumer 
Reports rank them near the bottom of all companies because of its 
inadequate coverage and frequent rate increases and readiness to cancel 
policies. The Golden Rule Insurance Co. is the primary proponent of 
this whole program of medical savings accounts. This is why Consumer 
Reports has been so critical of this company--because of the inadequate 
coverage, the frequent rate increases, and the cancellation of 
policies. Golden Rule was effectively run out of the State of Vermont 
because of poor performance. It was run right out because of 
misrepresentations.
  When the Golden Rule Insurance Co. withdrew from Vermont because it 
was unwilling to compete on a level playing field created by the 
State's insurance reform, Blue Cross and Blue Shield took over their 
policies. They found that one in four policies included fine print 
laden with unfair provisions. Sometimes arms, backs, breasts, even skin 
were written out of coverage.
  Newborns were excluded unless they were born healthy. It is an 
interesting fact that about 85 to 90 percent of all the medical 
complications to newborns happen in the first 10 days. Look at some of 
the fly-by-night insurance companies and they will say, ``We provide 
comprehensive coverage for newborns except for the first 10 days.''
  How many expectant mothers, prior to the time they become pregnant 
and get up to speed in terms of this wonderful opportunity of giving 
birth, understand that 80 percent of childhood abnormality comes within 
that first 10 days? Very few. But the insurance company understands it. 
Golden Rule understood it. Remember, they are the primary sponsors of 
medical savings accounts.
  The strongest opponents of the medical savings accounts are 
organizations representing working families, senior citizens, 
consumers, and the disabled, who have the most to lose if the current 
system of comprehensive insurance is destroyed. We know whose voices 
should be heard when Congress decides this issue--not the voices of the 
greedy special interests, but the voices of those who depend on 
adequate insurance to get the care they need at a price they can 
afford.
  It is very interesting who is on which side during the course of this 
debate. On the one side of medical savings accounts is Golden Rule, the 
primary contributor to political candidates that support that concept. 
Golden Rule is also one of the worst abusers of the system that we are 
trying to address in the underlying bill, dealing with pre-existing 
conditions and portability.
  Who is on the other side? Working families, seniors, consumers, 
middle-income families. They have the most to lose with skyrocketing 
increases in their insurance premiums. As the medical savings accounts 
draw the healthiest and the wealthiest individuals out of the system, 
the premiums of working families are going to continue to increase.
  The great danger of medical savings accounts is that they are likely 
to raise the health insurance premiums through the roof and make 
insurance unaffordable to large numbers of citizens. They will 
discourage preventive care and raise health care costs. They are a 
multibillion dollar tax giveaway to the wealthy at the expense of 
working families and the sick, and their costs could balloon the 
deficit by tens of billions of dollars.
  The Joint Tax Committee estimated there would be 1 million 
individuals who would take advantage of medical savings accounts. It 
would cost the Treasury $3 billion over 10 years for 1 million people. 
The Republican proposal presented to us, allegedly as a compromise, 
would make 43 million Americans eligible for it. If it is $3 billion 
for 1 million people, it does not take a genius to figure out that we 
are risking adding tens of billions of dollars to the deficit with this 
untested and untried program.

  The most troubling aspect of the medical savings accounts is the risk 
that they will destroy the insurance pool and price conventional 
insurance out of sight for millions of Americans.
  Leading newspapers all over America have editorialized strongly 
against medical savings accounts. I will read some excerpts from their 
comments, and I ask unanimous consent to have printed in the Record the 
full text of editorials at the conclusion of my remarks.

[[Page S6270]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. KENNEDY. On May 8, Robert Samuelson of the Washington Post wrote:

       MSAs are mostly an untested concept . . . If MSAs are as 
     good as claimed, let them prevail as a stand-alone measure 
     after a full debate . . . If Republicans let their 
     ideological fantasies obstruct their useful legislation, they 
     risk being attacked ruthlessly. And they will deserve it.

  The point mentioned here, if MSA's are as good as they say they are, 
let us pass the Kassebaum-Kennedy bill today, and then we can debate 
MSA's and medical malpractice later. We can do that and have a good 
debate, and let the chips fall where they may. Why hold this bill 
hostage?
  On June 6, 1996, a Los Angeles Times editorial states:

       Large, national consumer groups . . . have argued 
     reasonably that the MSA provision being pushed primarily by 
     House Republicans with the backing of the American Medical 
     Association would encourage the wealthy, who could afford to 
     pay high deductibles, to opt out of low-deductible or 
     comprehensive plans, thus raising the costs for everyone 
     else, and could tempt the presumably healthy to avoid 
     wellness checkups that might save them money in the short 
     term but could raise their medical costs down the line . . .

  The New York Times on Thursday, May 30, 1996 says:

       Demonstration projects of an untested idea make sense.

  The Dallas Morning News says:

       Medical savings accounts represent special-interest 
     legislation activities at their worst. What this country 
     needs is major reform that guarantees full health care 
     coverage to everyone, not another junk insurance plan. 
     Medical savings accounts are a bad idea.

  That was the Dallas Morning News.
  The Baltimore Sun, April 25, writes:

       Senator Dole would be well advised to drop this idea [of 
     medical savings accounts] which is in the House bill, rather 
     than make it a veto-bait amendment that would wreck prospects 
     for any health care reform this year.

  The Washington Post on June 3 writes:

       In fact, the effect [of medical savings accounts] would be 
     to fracture the insurance market; the healthy, for whom the 
     savings account would have greatest appeal, would no longer 
     be in the pool to help pay the bills of the sick, whose costs 
     would rise.

  Mr. President, that is a sampling of editorials from around the 
country, North, South, East, West, all raising serious, serious 
problems with regard to an untested and untried idea.
  Now, the first rule of medicine is: Do no harm. We could say, why not 
go ahead and take the bill that passed this body by 100 to 0, and pass 
it again rather than trying to add this poison pill--this idea that is 
risky, untested, and has the potential to be so costly in terms of the 
deficit and what it might do to the health insurance system. That is 
our position. It is a reasonable position. The American people are 
coming to understand that.
  To those who genuinely believe medical savings accounts offer an 
improvement in the health care system, I say we should work together to 
devise a fair test of the concept that will not put millions of 
American families at risk. The American people's hopes for insurance 
reform should not be held hostage to a partisan special interest 
agenda.
  Over time, we are very hopeful that given the importance of this 
legislation, we can still pass it in the remaining weeks of this 
Congress. As I have stated many times, this legislation, crafted by 
Senator Kassebaum, represented the common ground that came out of the 
debate in 1994 over a more comprehensive health program. It passed 
unanimously out of our committee. I think it was probably the only 
major piece of legislation that passed unanimously out of our committee 
and unanimously in the U.S. Senate.
  The time is here for broad, broad support for health insurance reform 
that will help Americans across this country. Why risk it with an 
untested and untried idea? Why risk it? Why risk jeopardizing 
successful completion of this health insurance reform that will make 
such a difference to the 25 million Americans who have some disability 
and to the tens of millions of Americans who are moving and changing 
their jobs? This bill provides portability.
  Why risk a concept that Democrats and Republicans alike are strongly 
committed to? That is what the issue is before the Senate. I am very 
hopeful that common sense and the needs of the American people will be 
put first and we will still be able to pass this very good bill that 
has been sponsored by our distinguished colleague, the Senator from 
Kansas, Senator Kassebaum.

                               Exhibit 1

                [From the Washington Post, May 8, 1996]

              Dubious Crusade for Medical Savings Accounts

                        (By Robert J. Samuelson)

       Just why some Republicans have chosen Medical Savings 
     Accounts (MSAs) for their latest crusade is a mystery known 
     only to them. Some issues assume symbolic meaning well beyond 
     their practical significance--the minimum wage, for example. 
     Its mainly liberal advocates wrongly portray it as an 
     important way of reducing poverty. Medical savings accounts 
     are a similar phenomenon. Their mainly conservative 
     supporters see them as a bold way to control health costs and 
     expand patient choice. All this is dubious.
       Judgments must be hedged because, unlike the minimum wage--
     where there's ample experience--MSAs are mostly an untested 
     concept. They would allow people to combine a catastrophic 
     health insurance policy with an annual tax-exempt 
     contribution (made either by employers or by individuals) 
     into an MSA. People would use their MSAs for normal health 
     expenses (checkups, colds, minor injuries) and rely on 
     insurance for crises. This, the theory holds, would inspire 
     cost consciousness. Americans would shop for doctors and 
     hospitals with the lowest prices and best care.
       On their face, MSAs are not a nutty idea. If we were 
     starting a health insurance system, they might make sense. 
     One basic problem of the present system is that comprehensive 
     insurance made almost everyone indifferent to costs. Patients 
     wanted the best care. Doctors and hospitals benefited 
     financially by maximizing care. Arguably, the health cost 
     spiral might have slowed if insurance had covered only 
     expensive disasters.
       But we aren't starting from scratch. Government policies 
     have created a different system. Tax subsidies encouraged 
     companies to provide workers comprehensive insurance. The 
     subsidy is the exclusion of the employer's insurance 
     contribution from taxes. Suppose a company buys $4,500 of 
     insurance for each worker; the workers don't pay taxes on 
     that $4,500. In 1995 these subsidies cost the Treasury $59 
     billion. And of course, there's Medicare and Medicaid for 
     more than 65 million elderly and poor. As a result, most 
     Americans have broad insurance and like it.
       This is why tax-free MSAs, if offered, might not attract 
     many takers. Congressional Republicans have twice tried to 
     create MSAs; first for Medicare recipients in legislation 
     vetoed by President Clinton; and now for the under-65 
     population in the House version of the Kassebaum-Kennedy 
     bill, which would protect workers against insurance loss. The 
     Congressional Budget Office projected that 2 percent of 
     Medicare recipients would switch; for the under-65 
     population, the congressional Joint Committee on Taxation put 
     usage at about one percent.
       If accurate, these estimates mean that MSAs wouldn't do 
     much to cut costs or expand choice. Moreover, the basic 
     theory may be flawed. Buying health care is not like buying 
     groceries. With their money at stake, people may not rush to 
     the doctor at the first sniffle; and competitive pressures 
     might trim prices for some routine services. But 70 percent 
     of health spending stems from 10 percent of seriously sick 
     Americans. These people have heart attacks, AIDS or 
     complicated pregnancies. Catastrophic insurance would 
     cover these costs; MSAs wouldn't matter.
       The explosion of ``managed care'' has also undermined MSAs' 
     potential. Competition has already come to the health care 
     market in the form of massive groups of buyers and sellers--
     companies, local governments, health maintenance 
     organizations--haggling over prices, coverage and quality. At 
     least temporarily, this has dramatically slowed health 
     spending. MSAs embody a different philosophy of cost control. 
     Individuals wouldn't have much clout in today's medical 
     market.
       What's the fuss then? If MSAs wouldn't matter much, why not 
     authorize them and be done with it? The main reason for 
     caution is that all the predictions of modest usage could 
     prove wrong--and if MSAs became hugely popular, they could 
     radically change the health care system. Under today's 
     insurance system, the premiums of younger and healthier 
     workers subsidize the higher health spending of less healthy 
     middle-aged and older workers. MSAs would, in theory, enable 
     millions of younger workers to opt out of this invisible 
     subsidy.
       They could take the cheaper catastrophic coverage and keep 
     the unused portion of their MSAs as tax-free saving to be 
     withdrawn at age 59\1/2\. A mass defection of younger workers 
     could have a devastating effect on the premiums of older 
     workers. A study by the Urban Institute estimates that if 20 
     percent of workers switched to MSAs, premium costs for those 
     sticking with comprehensive insurance would rise almost 60 
     percent. Just what would happen then is anyone's guess. 
     Businesses might abandon comprehensive insurance or lower 
     workers' salaries to pay for it.

[[Page S6271]]

       Cross subsidies and managed care (which many MSA advocates 
     dislike) are legitimate subjects of debate. But we should not 
     unleash a health care upheaval simply as an afterthought. If 
     MSAs are as good as claimed, let them prevail as a stand-
     alone measure after a full debate. Right now, they're simply 
     hitchhiking on other health care legislation. (The same 
     objection also applies to a rider on the Senate-passed 
     Kassebaum-Kennedy bill: the requirement that mental health 
     benefits be included with insurance. No one knows the 
     consequences of this; it could be immensely expensive.)
       The political puzzle is why so many Republicans are 
     obsessed with MSAs. There's no public clamor for them. 
     Portraying them as a truimph of individualism over government 
     control is a rhetorical delusion. MSAs are simply another 
     government health care subsidy in a system already swamped 
     with them. Like other subsidies, MSAs would channel and 
     constrict people's freedom. The funds in these accounts, for 
     example, could not easily be used to buy ``managed care'' 
     policies.
       Yet again Republicans seem to be falling into a self-made 
     trap. The White House cited MSAs as one reason for rejecting 
     the congressional plan to curb Medicare spending. And now the 
     president has threatened to veto the Kassebaum-Kennedy bill 
     if it authorizes MSAs, even though the bill's main feature--
     protecting workers with ``preexisting'' health conditions 
     against losing insurance--have wide support. If Republicans 
     let their ideological fantasies obstruct useful legislation, 
     they risk being attacked ruthlessly. And they will deserve 
     it.
                                                                    ____


               [From the Los Angeles Times, June 6, 1996]

 U.S. Deserves This Health Reform--Congress Should Find a Way To Save 
                            Key Legislation

       That the Kennedy-Kassebaum health Insurance Reform Bill 
     passed 100 to 0 in the U.S. Senate on April 23 was no fluke. 
     Both Republicans and Democrats knew it incorporated the best 
     and most pragmatic elements of the ambitious Clinton health 
     reforms that crashed in 1994, reforms that would limit 
     exclusions still existing in more than half of all Americans' 
     health insurance policies and that would make health coverage 
     portable so workers would not lose their insurance if they 
     changed or left their jobs.
       The bill enjoys the support of both President Clinton, who 
     applauded it in his State of the Union address in January, 
     and Senate Majority Leader Bob Dole, who as recently as 
     Tuesday said he would like a reasonable facsimile of it 
     passed before he retires from office next week.
       Nevertheless, many on Capitol Hill say the bill is doomed 
     because of the failure of House and Senate members to nail 
     down a workable compromise. Progress has been made in recent 
     days on two key provisions, dubbed NEWAs and parity. House 
     members have informally agreed to drop their insistence on 
     exempting small insurance pools called NEWAs (multiple 
     employer welfare arrangements) from state regulation. This is 
     good news for consumers, because otherwise MEWAs would not 
     have to comply with state mandates that require plans to 
     offer such essential procedures as mammography screenings and 
     newborn infant care.
       The other compromise has been on so-called parity, the 
     Senate bill's requirement that mental illnesses be covered as 
     fully as physical health conditions. The new language instead 
     simply calls for more study. Given the Senate bill's fuzzy 
     definition of what constitutes ``mental illness,'' there is 
     certainly a need to look at studies before drafting further 
     legislation.
       The real stickler is medical savings accounts, or MSAs. 
     These would allow Americans covered by high-dedcutible 
     ``catastrophic'' insurance (a deductible of $1,500 for 
     individuals, $3,000 for families) to make tax-free 
     contributions to private accounts and either use that money 
     to pay medical expenses or roll it over into IRAs or pension 
     plans.
       The basis idea behind the MSAs is sound: to encourage 
     ordinary citizens to assume some of the responsibility for 
     the country's spiraling health care costs (expected to reach 
     $1 trillion by the end of this year). But large, national 
     consumer groups like Citizen Action have argued reasonably 
     that the MSA provision, being pushed primarily by House 
     Republicans with the backing of the American Medical Assn., 
     would encourage the wealthy, who could afford to pay high 
     deductible, to opt out of low-deductible or comprehensive 
     plans, thus raising the costs for everyone else, and could 
     tempt the presumably healthy to avoid wellness checkups that 
     might save them money in the short term but could raise their 
     medical costs down the line.
       The only politician on the Hill powerful enough to persuade 
     the Republicans to accept a compromise on MSAs--such as Sen. 
     Edward Kennedy's notion of testing them in key states--is 
     Dole. The presumptive Republican presidential candidate has 
     much to gain from marshaling his formidable negotiating 
     skills, for he insisted on a workable compromise when it 
     became clear that Clinton's health care bill was doomed. The 
     presdient stands to gain as well, for in his State of the 
     Union address he declared passage of a compromise health bill 
     a top priority. Both have much to lose if they don't get 
     behind this bill in the coming week, but given the bill's 
     indispensable provisions, the sorest loser may be the average 
     American.
                                                                    ____


                [From the New York Times, May 30, 1996]

                      Mr. Dole's Health-Care Task

       Bob Dole says he wants to pass health-care reform before he 
     steps down as majority leader and leaves the Senate next 
     month. The task will not be easy. Bills passed by the House 
     and Senate would perform a valuable service by requiring 
     insurers to offer coverage to workers who lost or quit their 
     jobs, a requirement known as portability, though nothing in 
     these modest bills guarantees that coverage would be 
     affordable for individual workers. But Congress is hung up 
     over three ideology-laden provisions added to one bill or the 
     other. Mr. Dole has yet to resolve the wrangling.
       The House bill would enshrine a favorite conservative 
     remedy, the so-called medical savings accounts. The bill 
     would provide a tax break for money deposited into these 
     special accounts and the money would be used to pay routine 
     medical bills. The owners of these accounts would cover their 
     large medical bills by buying a high-deductible, or 
     catastrophic, policy.
       Proponents say the accounts will discourage wasteful care 
     because individuals will be aware of each dollar they spend. 
     But the accounts will probably do little to discourage waste 
     because an overwhelming percentage of medical expenditures 
     are accounted for by the 15 percent or so of the population 
     that rack up huge bills and therefore are well beyond the 
     deductible of their catastrophic policies. Even worse, 
     medical savings accounts will siphon healthy patients out of 
     the market for traditional coverage, leaving a concentrated 
     pool of sick applicants who will be forced to pay sky-high 
     rates for ordinary coverage.
       Mr. Dole knows he cannot push the savings accounts, which 
     conservatives love as a government-free solution to health 
     reform, past a Presidential veto. Some in his party are 
     willing to settle on a demonstration project. Demonstration 
     projects of an untested idea make sense. But President 
     Clinton ought to be wary. For a demonstration project to 
     provide a valid test, it would need to last at least six 
     years--enough time to watch how healthy people who own the 
     accounts react when they become sick. Will they junk 
     catastrophic coverage? will they save money after sick years 
     balance out healthy years? Will they forgo preventive care, 
     driving them to high-cost specialists? Shorter periods would 
     not suffice because more than 85 percent of the population 
     are healthy at any one time and would not need to dip far 
     into their tax-subsidized deposits.
       Another obstacle to compromise concerns purchasing pools, a 
     sensible way for small employers to join to negotiate 
     discounts with hospitals and physicians. The Senate would 
     encourage such small-employer pools, but keep them under 
     strict state regulation. The House bill would unwisely create 
     loopholes through which small employers could escape 
     government oversight, even state monitoring of solvency and 
     grievance procedures.
       The third obstacle is the Senate's well-meaning provision 
     to require insurers to cover mental illness on a par with 
     other conditions. Americans do need adequate coverage of 
     mental illness. But the hastily adopted provision would 
     create major economic problems that will probably doom the 
     measure to defeat. The provision is likely to boost insurance 
     costs by as much as 10 percent and drive employers to drop 
     coverage of 400,000 workers.
       The Senate is right that health-care policies should 
     include adequate coverage of mental illness. But the proper 
     way to achieve that goal is for Congress to appoint a 
     commission to come up with a cost-effective package of 
     federally defined basic health benefits. Piecemeal mandates, 
     conceived in haste, are likely to produce unintended adverse 
     consequences.
       The only bill that has a realistic chance of passing 
     Congress and getting past the White House is one that sticks 
     close to the Senate bill but forgoes mental-health parity 
     until another day. This is an obvious compromise for Mr. Dole 
     to seize.
                                                                    ____


                     [From the Dallas Morning News]

    No Cure-All, Medical Savings Accounts Present a Flawed Solution

                          (By Lisa McGiffert)

       Two time-tested adages come to mind when I hear about 
     medical savings accounts:
       If it sounds too good to be true, it probably is.
       The devil is in the details.
       Empowering people to make their own health care choices and 
     cutting wasteful spending are worthwhile goals. But medical 
     savings accounts are a misguided attempt at health care 
     reform.
       Although the concept being proposed to lawmakers stands to 
     enrich the coffers of some major insurance companies, it has 
     the potential to limit access to health care for millions of 
     Americans and to cost taxpayers billions of dollars.
       Medical savings accounts will provide little help to the 
     vast majority of families that are excluded from insurance 
     because of pre-existing conditions or modest means.
       Nevertheless, the idea is being sold by insurance lobbyists 
     as a market-based solution for controlling health care costs. 
     It is attracting attention both among Texas lawmakers and in 
     Congress.

[[Page S6272]]

       In Texas, the state Senate Economic Development Committee 
     is studying the potential benefits and liabilities of medical 
     savings accounts. In Washington, Rep. Bill Archer, R-Houston, 
     is authoring legislation on medical savings accounts.
       In a typical medical savings account, a person purchases an 
     individual catastrophic insurance policy (as opposed to a 
     group policy) with a high deductible of, say, $3,000. To pay 
     for health care expenses below that amount, the individual 
     sets up a tax-free medical savings account. After the 
     deductible is met, the catastrophic policy--which can have 
     struck limitations on coverage--becomes effective.
       Medical savings accounts also can be offered by employers, 
     who fund the employee's account and pay for the catastrophic 
     coverage. If you are fortunate enough not to incur medical 
     expenses, you can roll over the year-end account balance, tax 
     free, into the new year. Or you can pocket it, pay taxes on 
     the money and use it for other purposes.
       But medical savings accounts aren't the magic pills 
     envisioned by their promoters. Quite the contrary, they run 
     counter to good health insurance principles.
       Good health policies should:
       Be available and affordable. Medical savings accounts 
     target mostly young, healthy subscribers leaving other 
     health insurance plans with a pool of more expensive 
     subscribers. Some individuals and small employers in those 
     other plans could be forced to terminate their coverage 
     due to the resulting cost increases.
       Even people who choose medical savings accounts run the 
     risk of higher costs. Individuals who gamble on being healthy 
     and guess wrong could face higher health costs after their 
     accounts are depleted and before the catastrophic coverage 
     kicks in or if they need services that are excluded by the 
     plan.
       Offer full benefits with proper consumer protections. 
     Medical savings accounts will be exempt from all mandated 
     state benefits that guarantee protections to consumers, such 
     as requiring policies to include newborns during their first 
     31 days of life and to cover complications of pregnancy just 
     like any other illness.
       Most medical savings account legislation hasn't specified 
     what the policies should cover, opening the door to stripped-
     down, low-value plans. What's more, medical savings accounts 
     will move more people from group policies into individual 
     policies, leaving them with the least consumer-friendly of 
     insurance products.
       Be easy to administer. Most medical savings accounts allow 
     administrative fees for managing the accounts, making them 
     incrative for insurers and bankers but a poor deal for 
     consumers. Under one proposal, consumers could be charged 10 
     percent of the amount in their medical savings accounts.
       Offer a good value for the premium dollar. The sellers of 
     catastrophe insurance plans are betting that medical savings 
     accounts will deliver healthy profits. That is a good bet, 
     considering that only about 12 percent of adults spend more 
     than $5,000 per year on health care. Most medical savings 
     account holders never will have the kind of ``catastrophic 
     illness'' their high deductible insurance plan covers.
       Medical savings accounts represent special-interest 
     legislation at it worst. They have been subject of 
     extraordinary lobbying efforts in state legislatures and 
     Congress. That an idea as flawed as this has gone so far with 
     lawmakers is a tribute to the power of money and influence. 
     What this country needs is major reform that guarantees full 
     health care coverage to everyone, not another junk insurance 
     plan.
       Medical savings accounts are a bad idea.
                                                                    ____


                [From the Baltimore Sun, Apr. 25, 1996]

                 Another Chance for Health Care Reform

       Not since Dorothy skipped up the yellow brick road has 
     Kansas presented anyone quite as appealing as its junior 
     senator, Nancy Landon Kassebaum. As she moves toward the 
     close of a distinguished 18-year legislative career, Senator 
     Kassebaum is co-sponsor (along with Democrat Edward M. 
     Kennedy) of a sensible first-step reform of the nation's 
     health care system.
       Senate passage of the Kassebaum-Kennedy measure by a rare 
     100-0 vote reflects strong popular backing. It would be 
     unforgivable if this measure were encrusted in conference 
     committee with amendments that would lead to its defeat or 
     veto. Mrs. Kassebaum set the right course when she voted 
     against additions she herself favors.
       Americans should spurn complaints that her bill fails to 
     achieve the grandiose transformation proposed by the 
     administration in 1993. President Clinton now acknowledges he 
     ``set the Congress up for failure'' by seeking to do too much 
     too soon and by ``dissing'' Republican alternatives that 
     would have gone much further than the Kassebaum-Kennedy 
     measure.
       Of more immediate concern, however, is whether Kansas' 
     senior senator, presidential hopeful Bob Dole, will also 
     overreach by not sticking with the Nancy Kassebaum approach. 
     He's on the conference committee; she is not.
       The Senate bill is neither incremental nor inconsequential. 
     Some 25 million Americans are caught in ``job lock''--fearful 
     of quitting their jobs because they cannot take their health 
     insurance with them or because they have an existing medical 
     condition that could lead to the denial of a new policy. The 
     pending legislation would guarantee the ``portability'' of 
     such insurance coverage. It would also increase the tax 
     deduction for health insurance costs incurred by some 17 
     million self-employed.
       Against Mrs. Kassebaum's advice, the Senate tacked an 
     amendment to her legislation that would require health 
     insurance coverage of mental as well as physical ailments. 
     This is a laudable concept--one that will someday 
     materialize--but it has drawn fierce opposition from a cost-
     conscious business community.
       Far more partisan is a Republican proposal to allow tax 
     deductions for so-called medical savings accounts. Senator 
     Dole was humiliated last week when five GOP senators combined 
     with Senate Democrats to defeat his effort to add this to the 
     Kassebaum-Kennedy bill. Senator Dole would be well advised to 
     drop this idea, which is in the House bill, rather than make 
     it a veto-bait amendment that would wreck prospects for any 
     health care reform this year. He should, in short, skip along 
     on Nancy Kassebaum's road to realism.
                                 ______


                [From the Washington Post, June 3, 1996]

                     Senator Dole's Final Business

       Bob Dole has only a few days left in the Senate. How will 
     he spend them? He said last month that he hoped before 
     stepping down to stage one more vote on a balanced budget 
     amendment to the Constitution, even though it's pretty clear 
     that the proposition would fail--as well it should. He has 
     also said that he would like to see to enactment of the so-
     called Kassebaum-Kennedy health insurance bill, meant to help 
     people keep their coverage when they fall ill or are between 
     jobs.
       The latter surely is the better use of his remaining time. 
     The balanced budget amendment is show horse legislation--a 
     deceptive, destructive proposal whose likely effect would be 
     less to balance the budget than to weaken the structure of 
     government by entrenching minority over majority role. The 
     health insurance bill would allow Mr. Dole to leave the 
     Senate having, fittingly, as his last act, accomplished 
     something substantive instead. The bill is a modest step 
     only. It mainly would help the already insured, and not so 
     much with the crushing cost of insurance as by preserving 
     their eligibility for it. But that's a useful thing to do. 
     It's exactly the kind of constructive compromise with which 
     Mr. Dole should want to seal his congressional career.
       To make it into law, however, the bill needs to be kept 
     clean. That means stripping out three provisions, two of 
     which would be downright harmful and one of which would 
     confer a benefit without sufficient examination of its costs.
       The first is a House-passed proposal to subsidize so-called 
     medical savings accounts. Instead of buying conventional 
     health insurance, people would be allowed to accumulate cash 
     tax-free to pay their routine medical bills. The notion is 
     that the country would be better off if people were buying 
     health care more carefully with what they regarded as their 
     own money; the shift from insurance to savings accounts 
     would, according to this view, help to hold down costs. But 
     in fact the effect would be to fracture the insurance market; 
     the healthy, for whom the savings accounts would have 
     greatest appeal, would no longer be in the pool to help pay 
     the bills of the sick, whose costs would rise. Mr. Dole 
     supports the idea, a favorite of conservatives, but the 
     president has rightly said he would veto a bill that 
     contained it; it should be struck.
       The second provision, also in the House bill, would allow 
     insurance pools created to help small businesses and others 
     cut their costs escape state regulation. The pools are a good 
     idea, but not the escape from scrutiny. Among much else, they 
     too should be kept from serving only the healthy and further 
     fragmenting the insurance market. Finally, the Senate bill 
     includes a requirement that insurance plans treat mental and 
     physical illnesses essentially the same; they could no longer 
     ``discriminate'' against the mentally ill by imposing tighter 
     limits on the one than on the other, as most do now. Even 
     health care economists who would like to confer the benefit 
     warn that the effect would be to add to both the cost of 
     insurance and the number of uninsured. The proposal is better 
     intentioned than it is thought through.
       Maybe Mr. Dole can't broker a clean bill like this in the 
     time he has left, and perhaps he doesn't want to. But if he 
     doesn't, it isn't clear who later will. The reputation he has 
     always cherished is that, in the end, he gets things done. 
     Here's a last one well worth doing.

  Mr. KENNEDY. Mr. President, I withhold the remainder of our time.

                          ____________________