[Congressional Record Volume 142, Number 92 (Thursday, June 20, 1996)]
[House]
[Pages H6684-H6688]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        MEDICAL SAVINGS ACCOUNTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of May 
12, 1995, the gentleman from Washington [Mr. McDermott] is recognized 
for 60 minutes as the designee of the minority leader.
  Mr. McDERMOTT. Mr. Speaker, my colleague from Illinois, Mr. Hastert, 
has talked recently, very briefly, about the fact that there is a 
health reform act which is before the Congress and which I think in 
this instance we both agree is important. It has provisions which allow 
people to take their insurance from one place of employment to another, 
that is portability. It prohibits the use of preexisting conditions to 
bar people from insurance, but unfortunately it is probably not going 
to pass the House of Representatives; and it is about that issue that I 
would like to talk.
  The Republican health care bill contains provisions granting 
substantial tax incentives for medical savings accounts. Despite the 
fact that there is no public clamor for them, Republicans are obsessed 
with medical savings accounts.
  Now, the Republicans in the House want us to believe that MSA's are 
the way to expand patient choice and to control health care costs, when 
in my opinion nothing could be further from the truth. The only things 
that are known for sure about MSA's is that they will provide lavish 
tax breaks for the healthiest and wealthiest in our society and that 
this will cause the cost of health care insurance to increase, making 
it more difficult and less affordable for employers to offer adequate 
health insurance.

  I want to start at the beginning, because we talk about MSA's. I am 
not sure how many Members of the House, how many members of the general 
public really understand what the proposal really amounts to. MSA's are 
nothing more than tax-favored savings accounts for health care 
expenses, coupled with a high deductible health insurance policy. Under 
the MSA proposal which the House Republicans have advanced, health 
insurance for qualified employers either directly or through their 
employers are allowed to contribute yearly tax-exempt amounts to an 
MSA, a medical savings account, up to a specific ceiling. The ceilings 
in the House bill are $2,000 for an individual and $4,000 for a family.
  The first question every American has to ask themselves is, do I have 
$4,000 that I can put into this medical savings account, money out of 
my pocket that I am going to put into that savings account. To be 
qualified to have an MSA, all a taxpayer needs to have beyond that 
money is to have coverage through a high deductible insurance plan.
  This way people could use their money in the MSA. They have the high 
deductible. If they spend up to $10,000 or up to $3,000, whatever the 
deductibility is, then they would be covered by the insurance. But the 
first $3,000 or first $10,000, whatever that deductible is, is the 
responsibility of the individual patient. They have to come up with it.
  They had this medical savings account that they can put up to $4,000 
in. And when they have medical expenses, they can take that money out 
and pay the medical expenses toward the deductible which would get up 
to $3,000.
  The problem with this latest insurance fad is that MSAs will do two 
things. They will destroy the health insurance market as it currently 
exists, and they will be an immense drain on the Federal Treasury 
during a time

[[Page H6685]]

when Congress is supposed to be focused on reducing the national debt.
  First, I want to talk about what MSA's are going to do to the current 
health insurance market and the premiums of those people who are 
covered by traditional health insurance. The general principle of 
health insurance is to spread the health care expenses across large 
groups of people to protect each of us from being bankrupted by 
unanticipated health care costs. Under today's insurance system, the 
premiums of younger and healthier workers subsidize the higher health 
care spending of less healthy, middle aged and older workers.

  This is a continuous subsidy cycle. We have been doing it for years 
in this country. The last 50 years with our health insurance, the 
younger workers have put in, the older workers have used more of it. 
The younger workers of today will someday be relying on the workers who 
follow them to continue that process.
  MSA's destroy that traditional concept of insurance by enabling 
millions of younger healthy people to opt out of this inadvisable 
subsidy.
  With the availability of MSA's younger healthy workers could opt out 
of the main insurance pool by choosing to take the cheaper catastrophic 
coverage and keep the unused cash in that MSA as a tax-free savings to 
be withdrawn at a later date.
  A study by the Urban Institute estimates that, if just 20 percent of 
workers switch to MAS's, the premium cost for the those workers who 
want to keep their present low deductible health insurance, if you have 
a policy today with a $200 deductible or $300 deductible, that is a low 
deductible. If you want to keep that and 20 percent of the policy 
holders go into MSA's, the cost of insurance would rise by 60 percent 
for those people who stay in traditional coverage.
  Now, what happens then? Well, it is obvious. Some individuals may no 
longer be able to afford traditional health insurance and businesses 
will have two choices: either abandon the low cost, low deductible 
policy or lower their workers' salaries to pay for it.
  I brought a couple charts here because it is easy or it is easier to 
sometimes work with a chart. I want to talk about employer A and 
employer B. Employer A is a situation that does not exist. You have 
five employees, one, two, three, four, five, and they all have the same 
medical experience last year; they each cost $3,000 in health care 
bills. Total cost, $15,000.
  The employer who is buying their policy is spending $16,000 to cover 
them for their health insurance at an average cost of $3,200 per 
patient or per employee.
  This is a hypotentical. There is no company where everybody in the 
company spends the same amount. What is more real is employer B. Nice, 
young, strong person, no problems, did not spend a dime last year. Next 
person had a throat infection, had a X-ray, had some penicillin, spent 
$600.

                              {time}  1830

  Next person broke their arm. It costs them $1,000. The third person 
had a complicated pregnancy, and that cost $4,000 in health 
expenditures, and the last person in the employment had cancer and 
spent $9,000.
  Now if you add those figures up, you come to the same $15,000.
  Now the employer is paying $16,000 for the insurance. It is an 
average of $3,200 per year. Obviously, the young person's insurance is 
subsidizing the person who got cancer or the person who had a pregnancy 
that was complicated or the person that had diabetes or the person that 
had anyone of a number of things. These people who spent very little 
are actually subsidizing the other people. That is the idea of 
insurance.
  We have the same idea with fire insurance. We all pay property taxes, 
we put the money into the treasury, they fire firemen, they buy fire 
engines, they build fire stations, and we hope that our house never 
burns down. We do not want to spend one single dime on our house. We 
hope that we do not have a fire and have to have the fire trucks come 
and put out the fire and spend a lot of money.
  The idea of insurance is that we do not know what is going to happen 
to us in life, and we pool our money to take are of those of us who 
require some kind of care. It is absolutely the way insurance has 
always worked.
  Now, with this idea of a MSA, you can see that the person who has 
spent nothing last year--this person spent nothing last year, so they 
figure let me put this money that I have got into a medical savings 
account, it is tax free, and I am not going to need any of it, and some 
day I could use it tax free. It is tax-free money. It is great for a 
young person who is healthy and strong and does not figure anything is 
going to happen to him. The next person spent $600 last year; MSA 
sounds pretty good to them. They did not spend $3,200. So they go into 
the MSA, the third person goes into the MSA, and the employer is left 
only with two people to say:
  Well, I want the old account, I want to cover my expenditures because 
we got this complicated pregnancy, and we got now a child with a birth 
defect, and we are not sure how much this is going to cost, it is going 
to be a big expenditure, we do not want to be stuck with having to come 
up with $3,000 or $5,000 or $10,000 a year in that high-cost deductible 
insurance, we want the present plan.

  The person with cancer the same way. They say:
  Hey, look. I have got a big problem. I do not know how this is going 
to turn out. But I cannot go with--I know this medical savings account; 
I am going to spend every dime in that thing, and I am going to wind up 
paying more money out of my pocket.
  If those three people opt out of the pool, now the employer looks. He 
has got $13,400 to pay between these two people. He has to buy a policy 
for $14,000. For two people he is paying $7,000 apiece. And you say, 
well, what happened to these people here? Well, let me show you what 
the problem with this whole proposal is.
  The employer was spending $3,200 on each one of his employees, and he 
could, if he is the best--this is the best says scenario--if it was the 
best employer in the world, he would say, well, I spent $3,200 on him 
one way, I will spend $3,200 on him this way. A high-cost deductible 
insurance policy with a $3,000 deductible; in other words you, the 
individual, are responsible for the first $3,000 out of your pocket; 
that kind of policy costs $2,000 a year. So the employer says:
  Well, I will buy one of those for everybody. That will cost me 
$10,000, $2,000 for each one of my employees. Now, I still got $1,200, 
and I will put that $1,200 into their medical savings account.
  So now this person says, well, I can put up to $2,000. If I got more 
money in my pocket, I will put it in there. If I do not have more 
money, I will try and live off that $1,200 that my boss put in there, 
and that boss would spend--in effect, he would spend $16,000 just as he 
spent before. He spends exactly the same amount.
  Now, why would an employer offer this to an employee? Well, there is 
no reason to. It is going to cost him the same whether he offers 
standard insurance as we know it today, with a risk pool with everybody 
in it, or offering these MSA's. And the gentleman from Illinois [Mr. 
Hastert] was correct. It is possible for employers to offer MSA's 
today.
  Now let us look at why in a worst-case scenario an employer might 
think it was a good idea to offer a MSA. He has $3,200, and he says to 
himself, well, I am going to buy him that deductible, that $3,000 
deductible, high-deductible plan, that catastrophic insurance. So 
$2,000 apiece for five of them is $10,000. And then he says, why should 
I put anything in their medical savings account? Nothing in the House 
proposal from the Republicans requires him to put in anything; nothing 
in there, absolutely nothing.

  So the person who once had a policy that covered everything and had a 
$200 deductible now has a $3,000 deductible and has to reach into his 
own pocket for his family and put his own $4,000 in here. The employer 
who offers this program, this high-deductible plan, is saving $6,000 a 
year simply by saying:
  Hey, I will buy everybody a high-deductible plan, and then you can 
open a medical savings account, and you will then be stuck for 
everything up to and including that $3,000.
  Now, if you think about this, you can begin to see why people wonder 
where this is all going to come out. MSA's are very bad health policy. 
The extremely

[[Page H6686]]

high-deductible insurance coverage associated with MSA's of at least 
$1,500 for an individual and $3,000 for a family will encourage some 
patients to delay the necessary care and ignore preventive measures. If 
you put money in a MSA, it is tax free up there, and you say, well, if 
I spend it, it is my own money; I do not think I will go to the doctor.
  Now, if you have high blood pressure and you should go to a followup 
visit to the doctor, you say, well, I do not think I am going to go. So 
you wind up having a stroke because you did not control your high blood 
pressure, and at that point you spend $3,000 in deductible plus 
whatever beyond that under this high-deductible plan. It is bad health 
care; not only fiscal policy, but bad health care.
  Now, the opponents of MSA's believe that this will lead to 
unnecessary acute care and higher overall costs because people do not 
do prevention because they are trying to keep that money in that 
account, they do not want to go to the doctor, they can stay away, and 
they are not going to get prevention at all. In addition, between the 
amount of money an individual has in their MSA and the level at which 
the catastrophic policy kicks in could yield tremendous financial 
difficulties for many unsuspecting families and individuals.
  If you take this first person--you remember this young person who did 
not spend any money last year--young people tend to think they are 
never going to get sick. I got a couple of kids. They think they are 
going to live forever without trouble, but I got one who is a skier. If 
you get in a skiing accident, break your leg, and it costs you 10 
grand, you suddenly have gone from zero to 1 grand here with nothing in 
that account to cover it unless you have taken the money out of your 
own pocket and put it in there. All the deductibles are on you up to 
$10,000.

  So, if you break your leg and it costs you $10,000 and you have 
nothing in your MSA, it is all out of your pocket. And people do not 
think in those terms, young people, so they would opt for this MSA, get 
hooked in, and suddenly wind up with a debt they never anticipated.
  MSA's and high-deductible insurance policies that accompany them 
often can and will define the medical services differently, making it 
easy for some individuals to exhaust their money in that MSA on things 
like vision and dental care that are not counted toward the deductible 
on the high-deductible plan.
  So you could have $4,000 in your MSA, spend it on all kinds of 
medical expenses and then have something bad happen to you and find out 
that you spent $4,000, but the deductible policy does not count any of 
that. So then you have to pay another $3,000 in deductible before you 
are eligible for your insurance plan. There is no connection between 
what you spend the money from your medical savings account on and what 
is accepted or counted by the insurance policy.
  People will have to read the insurance policy when they spend money 
out of their MSA to see does this count against my deductible or does 
it not, and if you figure you are healthy and this is no problem, you 
are not worried about that.
  But unfortunately, young people get leukemia, young people get 
Hodgkin's disease, young people have all kinds of things happen to 
them. In fact, middle-aged people who are in good health--you know, as 
45 you are going like a bandit, and all of a sudden something comes, 
the heart attack, and suddenly you go from being healthy and strong and 
running a marathon and whatever and winding up in a hospital needing 
coronary bypass surgery which has cost you $30,000 or $40,000. Suddenly 
things change dramatically, and you got to remember how much you got in 
there and how much you paid in your deductible.
  The connection between those two is not there, and the Republicans 
are unwilling to write that in as a protection for the consumers, that 
if you spent this money, it counted against your deductible. They did 
not want to do that; they wanted to leave that vague so that the 
insurance companies over here with those high deductibles could define 
what was covered and what was not.

  Now, if this happens to individuals, they could be faced with 
hundreds of thousands of dollars of unreimbursed medical costs for 
which they are simply unprepared.
  To make matters worse, there is no requirement in this House proposal 
that employers deposit any money into these employers' MSA's. There is 
no requirement. People have to be very careful when their employer 
comes and says:
  Hey, would you like an MSA? I am going to buy you a catastrophic plan 
and then you can put your money in this MSA. That will qualify you. I 
will buy you this so that will qualify for an MSA.
  But there is no requirement they put a single dime in there, so all 
of the $4,000 for a family or the $2,000 for an individual is the 
responsibility of the employee. They could simply, the employer could 
simply, pocket the savings, which is what he does in this instance in 
the worst-case scenario.
  Most health insurance policies today operate on the principle that 
the employer buys the policy for the employee and the employee is 
responsible for all the costs below the deductible that is the $200 or 
$300 and then any required copays. MSA's are an incentive for employers 
to offer no-insurance insurance because there is no limit on how high 
the deductible can be. There is nothing to stop an employer from 
offering his employees a health care plan with a $10,000 deductible.
  I am a physician. The American Medical Society sent us out a proposal 
that is one of these high-deductible plans with a $10,000 limit. Now, 
maybe doctors can go for that; I mean, maybe they could, but how many 
of the rest of America could do that? And that is the issue that you 
have to be careful of in thinking about how great MSA's are. The 
employer is not required to put a single thin dime into the medical 
savings account. That is your responsibility. They may put some in if 
they are really good people, or they may say this is free money, I am 
putting it back in my pocket, you put it in, Mr. Employee. Now, even if 
the employer made contributions to his employees' MSA's, there is still 
a large coverage gap.
  To compound that lack of coverage, under a high-deductible plan, once 
an employee meets the new higher deductible, there is no requirement in 
the House bill that the high-deductible policies be required to cover 
100 percent of medical expenses.

                              {time}  1845

  So you have put your $4,000 into the MSA and you spend it and that 
pays your deductible; so now your insurance plan kicks in, at what, 70 
percent of the cost, 80 percent of the cost? Who knows? The Republicans 
were not willing to demand that once you had spent this money on your 
medical savings account, that then the insurance had to cover 100 
percent. They gave the insurance companies the latitude to say, well, 
we will cover you up to 80 percent.
  So you have now spent $4,000 here, and then you come and your bill is 
$100,000. If you have a bone marrow transplant at the Hutchinson Cancer 
Center in Seattle, it will cost you $120,000. So you spend the $4,000. 
Now your deductible, that is covered, your $3,000 is covered, so then 
the plan coverage kicks in; $4,000 from $120,000 is $116,000, of which 
you are going to get 80 percent paid by the insurance company. You pick 
up 20 percent, or 30 percent, or whatever. There is no consumer 
protection on these catastrophic plans whatsoever.
  The Republicans have based their arguments that MSAs will bring more 
economic efficiency to the health care market on the false premises, 
and my dear friend, the gentleman from Illinois [Mr. Hastert] said it; 
he said that patients, individuals will have the tools they need, the 
ability to bargain shop for health care.
  Maybe it is because I have been a physician and have seen what kinds 
of situations bring people into the health care system, but buying 
health care is not like shopping for groceries. You do not go in there 
kind of cool and say, shall I have this avocado or this avocado, or 
shall I buy this breakfast food or that breakfast food, or this steak 
or that steak, or this loaf of bread. When you are in the ambulance on 
the way to the hospital, you are in no condition to be shopping for how 
you are going to spend the money in your medical savings account or 
anything else that happens to you.

[[Page H6687]]

  When their own money is at stake, some people might not rush to the 
doctor at the first sign of a cold, so health care spending can be 
reduced marginally. You can say, well, I am sniffling, I do not think I 
need to go to the doctor, because I would have to take it out of my 
medical savings account. You can make some marginal changes.
  But the fact is, the indisputable fact about medical expenditures is 
that 70 percent of all health spending is done on 10 percent of 
Americans who are seriously sick. These Americans have heart attacks, 
AIDS, cancer, complicated pregnancies, liver disease, diabetes, 
whatever. Catastrophic insurance will cover their health care costs, so 
the MSA concept will have no impact whatsoever on 70 percent of the 
health care spending in this country, because most of the money, 70 
percent, is on 10 percent. They blow the roof off the costs.
  In addition to being an example of an extremely poor health care 
policy, because it does not encourage people for prevention or follow-
up care, MSAs are really a thinly veiled scheme to provide lavish tax 
breaks for the wealthy. While the lower- and middle-class workers in 
this country who are worried about their wages, who are worried that 
their paycheck has not gone up significantly since 1970, they are 
getting the same amount of buying power today; in fact, less than they 
had in 1970. They could be hurt by the widespread use of MSAs, as I 
have already described, because the premiums will go up. If the young 
and healthy leave, the premiums for the rest of the folks are going to 
go up, but MSAs will benefit the wealthiest Americans who can afford to 
pay all of their medical expenses below the high deductibles for 
catastrophic health plans.
  If you make $100,000 or $200,000 a year, $3,000 is not very much. 
Certainly it is a significant amount of money, but if you make $30,000 
a year, which is around the average income, $35,000 in this country, 
$3,000, $4,000 for paying that deductible is 10 percent of your income. 
Three percent to somebody making $100,000 is 3 percent. That is the 
difference.
  Wealthy people have a little extra in their pocket, and they can pay 
these deductibles. They have money to put in the MSA out of their own 
pocket. There is no doubt that the promise of these generous tax-
sheltered personal savings will draw the healthy and wealthy 
individuals into MSAs. In fact, in my mind, it would be better to call 
the MSA ``medical sheltering accounts.''
  MSAs offer a number of new tax sheltering opportunities that make it 
very attractive to people in higher income brackets. Some of these 
generous tax benefits include an exclusion from income for employer 
contributions; if your employer is paying for it, I do not have to pay 
the taxes as an individual; a personal deduction for independent 
contributions, so as an individual, if I am rich and can put it in, I 
get a deduction.

  If you are making $35,000 you might want to put it in, but where are 
you going to get it? Between paying for rent and a car and buying food 
for your family and clothes and trying to help one of your kids go to 
community college, where are you going to get that $3,000? Where are 
you going to get that deduction for independent contributions? It also 
allows tax-free accumulation of interest, exclusion from estate taxes, 
and penalty-free withdrawals from the MSA's at 59\1/2\.
  The reason this bill is here is to give these tax breaks. That is why 
it came though the Committee on Ways and Means. Companies can offer 
this kind of thing today. They can say, hey, look, let us get out of 
the regular insurance plan. I will buy you the high-cost deductible. I 
will put some money in the medical savings account for you. They can do 
it today, but they cannot get these tax breaks today.
  This bill is a tax-break-for-the-rich bill. It is a medical 
sheltering account. Contributions to the MSA's are deductible tax 
purposes when made at the time you put them in, and the amounts in the 
account accumulate tax-free. If this year you put in $4,000, you do not 
spend it, next year you put in $4,000, it just keeps accumulating, and 
all the interest is tax-free. This is similar to the way tax benefits 
are provided for IRA's, the Individual Retirement Accounts, before the 
Congress limited the deductibility of IRA contributions.
  What is interesting about this, it is under the guise of more 
affordable health care that Republicans are pushing MSA's, which do 
nothing for health care whatsoever. They destroy the insurance pool, 
they put people at risk who do not understand how it works, but they 
are a better sheltering device than individual retirement accounts, 
really, for the following reasons: IRA's merely provide deferral of 
your taxes on contributions, but MSA's provide complete tax forgiveness 
when the amount is used for medical expenses.
  No. 2, the IRA provisions contain penalty taxes to force withdrawals 
after age 70 in order to prevent excess accumulations in IRAs. The MSA 
provisions do not include any penalties, so individuals could 
indefinitely accumulate monies in their accounts.
  No. 3, wealthy individuals would have incentives to pay their medical 
expenses from other sources. Since they have $100,000 or $200,000, they 
put the $4,000 in there tax-free, why not pay the health care benefits 
out of something else, because making the payments out of the MSA would 
reduce the amount of assets receiving the favorable tax treatment. Put 
the $4,000 in there, forget about it, it goes up and continues to make 
money, and meanwhile you pay it from other monies that you have. A 
wealthy individual attempting to maximize their tax advantage would be 
likely to use other assets to pay their medical expenses.
  The forth reason is that IRA's are subject to the estate tax. When 
you die, the government looks at your IRA's and says, we are going to 
tax a certain amount. MSA's are not. I really find it difficult to 
think what the rationale for that benefit is. How does exempting funds 
in an MSA from estate tax relate to encouraging tightly targeted 
purchase of health care? What is the relationship between exempting 
from estate tax when you are talking about health care costs?
  There is clearly no connection except to give a break. There is no 
medical policy argument for excluding the MSA's from the estates of the 
holders of these MSA's. People do not need medical self-insurance 
reserves when they are dead, nor do their surviving spouses need their 
accumulated reserves free of tax. This estate tax treatment was not 
inadvertent. It did not just happen. It was elaborately thought out 
because of the phobia many Republicans have and small business owners 
have about estate or transfer taxes.
  The estate tax affirmatively encourages rich people not to use that 
MSA for medical purposes by giving them roughly a 30 percent advantage 
for letting the money accumulate in that account. It becomes really an 
IRA. They are still going to pay their deductible over here out of 
their pocket, but this money is going to go up tax-free and can be 
drawn out tax-free. This provision undermines the credibility, in my 
opinion, of the whole MSA propoal.
  All of thee new tax sheltering opportunities will result in a drain 
on our Federal Treasury at a time when the majority in this House says 
they want to balance the budget. The Joint Tax Committee, House and 
Senate Joint Tax Committee, controlled by the Republicans, both the 
House and Senate, says that MSA's will drain the Federal Treasury of 
more than $2 billion over the next 7 years as the increased savings by 
the wealthy are placed in MSAs and are therefore sheltered from Federal 
taxation.

  What is worse, the Republicans plan to pay for the budget shortfall 
caused by the MSA's by taking billions of dollars out of Medicare. Here 
we are, back to our old friend. We have been saying all along that they 
want to cut $270 billion out of Medicare to pay for their tax breaks. 
Here is one of them. The MSA costs $2 billion, and it is coming out of 
the hides of the health care for senior citizens. That is another 
reason why this medical savings account is not a good idea for the 
American public.
  Mr. Speaker, I find using Medicare as a piggybank to pay for those 
MSA tax schemes is particularly disingenuous, considering the fact that 
the Speaker and the Republicans continue to claim they want to save 
Medicare. They are taking money away from Medicare to pay for this kind 
of scheme.
  I wash that the Speaker or somebody on the Republican side would come

[[Page H6688]]

down here and explain how taking money out of Medicare to pay for MSA's 
helps save Medicare, how taking money away from Medicare is going to 
make it better. I thought the problem was they were short of dough, and 
here they are taking another $2 billion out for this kind of scheme 
that really benefits a very small part of the society.
  It seems very odd to me that by taking the billions from Medicare to 
pay for a tax shelter from which most Americans are priced out of, most 
Americans are not going to be able to put money in that medical savings 
account, but the Speaker and the Republicans are acting in the best 
interests, they say, of the American people and Medicare.
  In addition to robbing Medicare, MSA's will clearly only appeal 
primarily to the wealthy. The Republican-controlled Joint Tax 
Committee, again, and this is not some lefty group way out there, or 
some liberal Democrat group that says this, this is a committee run by 
the Republicans. It is the Joint Tax Committee. It is one of the most 
conservative staffs in the whole Congress.
  They estimate that MSA's will appeal to less than 1 percent of all 
the people in this country who make $30,000 or less a year, even though 
those families make up 50 percent of the country. One percent of half 
the country will be able to take advantage of this, because they do not 
have $4,000 laying around on the dining room table to put into an MSA. 
That is ridiculous. Anybody who would stand out here and seriously 
proclaim this is something that a lot of people can take advantage of 
simply has never had any kind of difficulties with money.
  In contrast to the 1 percent below $30,000, 12 percent of those 
buying MSA's will have incomes over $100,000. Even though those kinds 
of people in this country only make up 5 percent of the taxpayers, they 
will have 12 percent of the benefit.
  Mr. Speaker, all these statistics show that MSA's are biased toward 
the healthy, the ones who do not expect to ever have to use it, or the 
wealthy, because thousands of Americans do not have the thousands of 
dollars to put away each year, and cannot afford to incur the 
substantial out-of-pocket costs that would be created by this medical 
savings account and these high deductibility catastrophic plans.

                              {time}  1900

  On a final note, some consistency needs to be required of 
politicians. Both the chairman of the House Ways and Means Committee 
and the Republican majority leader have condemned the current tax 
structure. They have called for a flat tax: ``We have to get a flat 
tax. Let's get all these deductions, all these tax shelters, let's get 
all of that out. We'll charge everybody a flat 15 percent.'' I think 
the phrase the majority leader used was they want to tear out this 
present system by its roots so it will never come back. Yet when it 
comes to MSA's, they are willing to kill this bill that the Senate 
passed and the House passed by insisting on MSA's because they want to 
milk the current system in every way possible to benefit their wealthy 
constituents.
  If our current tax system is replaced, many of the tax incentives 
that I just outlined under the MSA's will no longer exist. So 1 minute 
they are out here saying ``Let's rip out the system and have a flat 
tax'' and on the next day they are saying, ``We're not going to pass 
health care reform unless you stick MSA's in because it's got big 
benefits for our friends.''
  The House leadership is holding up the enactment of the health care 
bill that Senators Kassebaum and Kennedy put together, simply over this 
issue. The losses that will result from MSA's far exceed the gains. 
MSA's will drain the health insurance pool of the healthiest and 
wealthiest. It will cost the Government more than $2 billion at a time 
when we are supposed to be focusing on balancing the budget.
  MSA's do nothing, absolutely nothing, to address the problems of 
affordable health care. Nothing. They are just another way to give a 
tax break to the wealthy. For the Speaker and the Republicans to 
threaten the passage of the Kennedy-Kassebaum health care bill by 
insisting on the inclusion of MSA's is wrong. It is poor leadership, it 
is bad politics and, worst of all, it is terrible public policy.

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