[Congressional Record Volume 142, Number 92 (Thursday, June 20, 1996)]
[House]
[Pages H6688-H6689]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE ADVANTAGES OF MEDICAL SAVINGS ACCOUNTS

  The SPEAKER pro tempore (Mr. McIntosh). Under a previous order of the 
House, the gentleman from Iowa [Mr. Ganske] is recognized for 5 
minutes.
  Mr. GANSKE. Mr. Speaker, I have been very interested in listening to 
the discussion by my colleague from Washington concerning medical 
savings accounts. My colleague is a physician and I am a physician 
prior to coming to Congress. I hold a different viewpoint about medical 
savings accounts and I think it is only fair to express some of the 
differences in our opinion.
  One of the criticisms by the opposition to medical savings accounts 
is that they would be for the healthy and the wealthy. I think, quite 
to the contrary, medical savings accounts could function in exactly the 
opposite way. Let me tell my colleagues an anecdote.
  A couple of weekends ago I was flying home from Washington to my 
hometown of Des Moines, IA. I was sitting next to a middle-aged 
gentleman who was asking about how the health care reform legislation 
was coming along. He asked me what I did for a living and I told him I 
was a Congressman. He said, ``Well, I am very interested in medical 
savings accounts. I really hope that medical savings accounts are part 
of the health insurance reform plan.''
  I thought this was a little unusual, for somebody to be so specific 
about a piece of legislation. I said, ``Why are you interested in 
medical savings accounts?''
  Mr. Speaker, he said: ``My wife and I have a 7-year-old boy. We live 
in Minnesota. We have a managed care plan for our health insurance.
  ``We are constantly having struggles providing care for our 7-year-
old boy because he has severe cerebral palsy and he has a lot of 
special health care needs, and we find frequently that our managed care 
company does not allow us to get him the type of care that we think is 
important for him. He has a lot of special needs. We would like to take 
him to centers of excellence. We do not have that leeway.
  ``I will tell you, Congressman, if I had tax equitable treatment for 
medical savings accounts, I would switch into a medical savings account 
just like that, because if I had a medical savings account, this is how 
it would work. I could spend the same amount of money.
  ``Let us say I am spending $5,000 a year for my managed care plan. I 
could purchase a high deductible plan, say with a deductible of $2,500 
or $3,000 a year, for about $2,500. I could then put the other $2,500 
into a medical savings account. I would then draw those funds out of 
the medical savings account to pay the deductible during the year, so 
there would be effectively no out-of-pocket expense for me in 
comparison to the amount that I would be spending for a managed care 
plan. After I would hit the $2,500 of my deductible, I would then be 
into the catastrophic plan.''
  My colleague mentioned how there could be deductibles and things like 
that in those catastrophic plans, and that is true. but most 
catastrophic plans function as major medical plans. That means that 
once they have met their deductible, all of their subsequent costs are 
covered.
  ``That would mean that if, for instance, our 7-year-old boy is 
getting too big now for my wife and I to lift all the time into and out 
of his bed, into the tub, we will need some special lifting equipment, 
we will need to purchase equipment for our van, we might want to take 
him to the Mayo Clinic for some cerebral palsy treatment, we would then 
run up expenses of $2,500. However, we would have that money in the 
account to pay that deductible, so there would be no disincentive for 
us to provide the type of treatment that we need to provide for him.''
  This has been one of the other, I think, myths about medical savings 
accounts; in other words, that people would avoid taking the type of 
prophylactic care that they need. But I will tell my colleagues what 
the advantage of this is, not just in terms of the freedom that it 
would allow people who have special health care needs, but it also 
basically addresses the issue of our rapidly rising health care costs 
in this

[[Page H6689]]

country because it then gets a connection back between the consumer and 
the payer.
  Under traditional third-party coverage, basically we have always felt 
like, ``Well, gee, the insurance company is paying the bill,'' so there 
has been unbridled consumption. If a person has a medical savings 
account where they can pull the funds out of their medical savings 
account to pay their bills, they also will have an increased tendency 
to be a wise consumer.
  So I tell various health care groups, physicians, for instance, that 
quite frankly they may find that they are in a very competitive 
situation now. In the past when the insurance company pays all of the 
bills, nobody tends to look at the bills. But if the payment is coming 
out of the medical savings account, people will tend to look at the 
bills, and this is why.
  Let us say we have a provider on one side of the street who charges 
$25 for an office visit. On the other side of the street the family 
practitioner charges $30. If a person is in a traditional health plan, 
it does not make any difference to them because somebody else is paying 
the bill. But if they have a medical savings account, assuming the 
quality is equal, they are likely to go to the provider who charges $25 
instead of $30 because they get to keep the $5 difference in your plan.
  So there is an incentive now for people to become wise shoppers. 
There is an incentive for people not to over consume, but there is a 
mechanism for people to get the kind of medical care that they need 
because there is a way to pay for it. Even managed care plans in many 
cases today are moving to deductibles in their plans. There needs to be 
a mechanism to pay that deductible or we will have a problem with 
people not getting the kind of care that they want.
  Mr. Speaker, I would just finish by saying there are a lot of 
misperceptions about medical savings accounts. They are not the total 
solution, but many people in this country today have medical savings 
account plans, over 1,000 companies in this country. They are saving 
dollars by it, the people who have the medical savings accounts are 
very happy with it, and quite frankly I think we would find many people 
with special health needs choosing medical savings accounts. I do not 
think they are just for the healthy and the wealthy.

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