[Congressional Record Volume 145, Number 43 (Thursday, March 18, 1999)]
[Senate]
[Pages S2935-S2936]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. INHOFE:
  S. 657. A bill to amend the Internal Revenue Code of 1986 to expand 
the availability of medical savings accounts, and for other purposes; 
to the Committee on Finance.


             MEDICAL SAVINGS ACCOUNT EXPANSION ACT OF 1999

  Mr. INHOFE. Mr. President, I am pleased to rise today to introduce 
the Medical Savings Account Expansion Act of 1999. There has been much 
said recently regarding the need to reform health care. I agree with 
many of my colleagues that health care is indeed in need of serious 
reform. However, the nature and the scope of reforms are open to 
debate.
  During the health care debate of 1996, the Congress focused its 
efforts on attempting to provide the uninsured with insurance. Included 
in the legislation, Congress created a demonstration project in order 
to test the effectiveness of Medical Savings Accounts. However, in 
establishing the demonstration project, the Congress created numerous 
legislative roadblocks to the success of Medical Savings Accounts.
  As we are all aware, Medical Savings Accounts combine a high 
deductible insurance policy and tax exempt accounts for the purpose of 
providing health care. MSA holders use these accounts to purchase 
routine health care services. When account holders spend all of the 
funds in their account and reach their annual deductible, their health 
insurance policy kicks in. If they don't spend all the money in the 
account, they get to keep what's left, plus interest for the following 
year.
  The creation of Medical Savings Accounts was the result of a 
bipartisan coalition that many in the Senate worked long and hard to 
achieve. Medical Savings Accounts are really based on a simple 
principle that should be at the heart of the health care reform, that 
being, empowering people to take control of their own health care 
improves the system for everyone. Expanding MSAs is one small, but 
important, step in that regard. Providing individuals with an incentive 
to save money on their health care costs encourages them to be better 
consumers. The result is much needed cost control and consumer 
responsibility.
  Mr. President, I think as the Congress begins to discuss health care 
reform this year, we must move away from the debate on the regulation 
and rationing of health care and focus our energies on providing health 
care to the uninsured. Instead of concentrating our efforts on reforms 
that will likely result in less health care, we should be trying to 
expand the opportunity for health care. At the same time, we must do so 
in a cost effective and market oriented way. MSAs meet that goal.
  According to the General Accounting Office, more than 37% of the 
people who have opted to buy an MSA under the 1996 law were previously 
uninsured. That bears repeating; people who have previously been 
uninsured, are now buying health insurance. We need to make it possible 
for more people to obtain health care insurance. Now, compare those 37% 
of previously uninsured who now have health insurance with the 
projected 400,000 people who would lose their current health insurance 
if the Congress does something that would raise current health 
insurance premiums by just one percentage point and the argument 
becomes even stronger to expand the use of MSAs.
  Mr. President, the legislation I am introducing today does just that, 
it makes Medical Savings Accounts more readily available to more people 
by eliminating many of the legislative and regulatory roadblocks to 
their continued success. The GAO report referred to earlier, points out 
that one of the key reasons why MSAs have not been as successful as 
originally thought is the complexity of the law.

  Let me touch on a just few of the problems my legislation addresses. 
First is the scope of the demonstration project. Mr. President, I 
believe we should drop the 750,000 cap and extend the life of the 
project indefinitely. The 750,000 cap is merely an arbitrary number 
negotiated by the Congress. By lifting the cap and making MSAs 
permanent, we will be allowing the market to decide whether MSAs are a 
viable alternative in health insurance. The cap

[[Page S2936]]

and the limited time constraint create a disincentive for insurance 
companies to provide MSAs as an option. The GAO study I cited earlier 
supports this conclusion. The majority of companies who offered MSA 
plans did so in order to preserve a share of the market. The result, 
few, if any, are aggressively marketing MSAs. If Congress is serious 
about testing the effectiveness of MSAs in the marketplace, we must 
free them from unnecessary and arbitrarily imposed restraints.
  Second, under current law, either an employer or an employee can 
contribute directly to an MSA, but not both. The legislation I am 
introducing would allow both employers and employees to contribute to a 
Medical Savings Account. This just makes sense. By limiting who can 
contribute to an individual MSA, the government has predetermined the 
limits of contributions. I think many employers would prefer to 
contribute to an individual's health care account, rather than continue 
the costly, third-party payer system. By allowing both employers and 
employees to contribute to MSAs, we will be giving more flexibility to 
Medical Savings Accounts. That flexibility will allow more people to 
obtain MSAs and undoubtedly contribute to their success.
  One of the arguments frequently made against MSAs is that they are 
for the rich. Certainly that is an understandable conclusion, given the 
fact that we limit who can contribute to MSAs. By lifting the 
contribution restrictions, individuals of all income levels will find 
MSAs a viable health care alternative.
  As I travel throughout Oklahoma, a common complaint is the access to 
quality health care and the rising cost of health care. In my state, 
managed care is not always an option for many people in rural areas. 
However, Medical Savings Accounts are an option for many families 
because MSAs give them the choice to pursue individualized health care 
that fits their needs. These are the sorts of solutions that our 
constituents have sent us to Washington to find. They are not 
interested in more government. In fact, many want less. Yet, all we 
offer them is differing degrees of government intrusion in their lives.
  Mr. President, the debate in the 105th Congress clearly demonstrated 
we are all concerned about access to health care, doctor choice, cost, 
and security. As the debate moves forward in the 106th Congress, I want 
to urge my colleagues to consider alternatives to further big-
government and to be bold enough to pursue them.
  Mr. President, I ask that the full text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 657

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medical Savings Account 
     Expansion Act of 1999''.

     SEC. 2. REPEAL OF RESTRICTIONS ON TAXPAYERS HAVING MEDICAL 
                   SAVINGS ACCOUNTS.

       (a) Repeal of Numerical Limitations and Termination.--
       (1) In general.--Section 220 of the Internal Revenue Code 
     of 1986 (relating to medical savings accounts) is amended by 
     striking subsections (i) and (j).
       (2) Medicare+choice.--Section 138 of such Code (relating to 
     Medicare+Choice MSA) is amended by striking subsection (f).
       (3) Conforming amendment.--Section 220(c)(1) of such Code 
     is amended by striking subparagraph (D).
       (b) Repeal of Restrictions on Individuals Who Have Medical 
     Savings Accounts.--
       (1) In general.--Section 220(c)(1)(A) of the Internal 
     Revenue Code of 1986 (relating to eligible individual) is 
     amended by inserting ``and'' at the end of clause (i), by 
     striking ``, and'' at the end of clause (ii)(II) and 
     inserting a period, and by striking clause (iii).
       (2) Conforming amendments.--
       (A) Section 220(b) of such Code is amended by striking 
     paragraph (4) and by redesignating paragraphs (5), (6), and 
     (7) as paragraphs (4), (5), and (6), respectively.
       (B) Section 220(c)(1) of such Code, as amended by 
     subsection (a)(3), is amended by striking subparagraph (C).
       (C) Section 220(c) of such Code is amended by striking 
     paragraph (4) and by redesignating paragraph (5) as paragraph 
     (4).
       (c) Repeal of Restriction on Joint Employer-Employee 
     Contributions.--Section 220(b) of the Internal Revenue Code 
     of 1986 (relating to limitations) is amended by striking 
     paragraph (4), as redesignated by subsection (b)(2)(A), and 
     by redesignating paragraphs (5) and (6) (as so redesignated) 
     as paragraphs (4) and (5), respectively.
       (d) 100 Percent Funding of Account Allowed.--
       (1) In general.--Section 220(b)(2) of the Internal Revenue 
     Code of 1986 (relating to monthly limitation) is amended to 
     read as follows:
       ``(2) Monthly limitation.--The monthly limitation for any 
     month is the amount equal to \1/12\ of the annual deductible 
     of the high deductible health plan of the individual as of 
     the first of such month.''.
       (2) Conforming amendment.--Section 220(d)(1)(A) of such 
     Code is amended by striking ``75 percent of''.
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to months 
     beginning after the date of enactment of this Act.
       (2) Compensation limit repeal.--The amendments made by 
     subsection (b)(2)(A) shall apply to taxable years beginning 
     after December 31, 1999.

     SEC. 3. REDUCTION IN HIGH DEDUCTIBLE PLAN MINIMUM ANNUAL 
                   DEDUCTIBLE

       (a) In General.--Section 220(c)(2)(A) of the Internal 
     Revenue Code of 1986 (relating to high deductible health 
     plan) is amended--
       (1) by striking ``$1,500'' in clause (i) (relating to self-
     only coverage) and inserting ``$1,000'', and
       (2) by striking ``$3,000'' in clause (ii) (relating to 
     family coverage) and inserting ``$2,000''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2000.
                                 ______