[Congressional Record Volume 147, Number 86 (Wednesday, June 20, 2001)]
[Senate]
[Pages S6521-S6522]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Torricelli, and Mr. Craig):
  S. 1067. A bill to amend the Internal Revenue Code of 1986 to expand 
the availability of Archer medical savings accounts; to the Committee 
on Finance.
  Mr. GRASSLEY. Mr. President, today, on behalf of myself and my 
colleague, Senator Torricelli, I am introducing legislation, the 
Medical Savings Availability Act of 2001, which would make the 
availability of medical savings accounts permanent and would make it 
possible for any individual to purchase a medical savings account. Our 
bill would liberalize existing law authorizing medical savings accounts 
in a number of other respects.
  Medical savings accounts are a good idea. They are basically IRAs, an 
idea everybody understands, which must be used for payment of medical 
expenses.
  The widespread use of medical savings accounts should have several 
beneficial consequences.
  They should reduce health care costs. Administrative costs should be 
lower. Consumers with MSAs should use health care services in a more 
discriminating manner. Consumers with MSAs should be more selective in 
choosing providers. This should cause those providers to lower their 
prices to attract medical savings account holders as patients.
  Medical savings accounts can also help to put the patient back into 
the health care equation. Patients should make more cost-conscious 
choices about routine health care. Patients with MSAs would have 
complete choice of provider.
  Medical savings accounts should make health care coverage more 
dependable. MSAs are completely portable. MSAs are still the property 
of the individual even if they change jobs. Hence, for those with MSAs, 
job changes do not threaten them with the loss of health insurance.
  Medical savings accounts should increase health care coverage. 
Perhaps as many as half of the more than 40 million Americans who are 
uninsured at any point in time are without health insurance only for 
four months or less. A substantial number of these people are uninsured 
because they are between jobs. Use of medical savings accounts should 
reduce the number of the uninsured by equipping people to pay their own 
health expenses while unemployed.
  Medical savings accounts should promote personal savings. Since pre-
tax monies are deposited in them, there should be a strong tax 
incentive to use them.
  As I understand it, there are approximately 100,000 MSA accounts 
covering a total of approximately 250,000. I understand also that 
approximately one-third of those who have set up medical savings 
accounts were previously uninsured.
  But medical savings accounts have fallen short of their promise 
because of various restrictions in the authorizing law.
  The present law has a sunset of December, 2001, which has discouraged 
insurers from offering such plans. Current MSA law prohibits around 70 
percent of the working population from purchasing them because purchase 
is limited to the self-employed or to employees of small businesses of 
less than 50 employees.
  The bill we are introducing today would eliminate the restrictions 
that have limited the availability of MSAs: First, it would remove the 
December, 2001, sunset provision and make the availability of MSAs 
permanent; second, it would repeal the limitations on the number of 
MSAs that can be established; third, it stipulates that the 
availability of these accounts is not limited to employees of small 
employers and self-employed individuals; fourth, it increases the 
amount of the deduction allowed for contributions to medical savings 
accounts to 100 percent of the deductible; fifth, it permits both 
employees and employers to contribute to medical savings accounts; 
sixth, it reduces the permitted deductibles under high deductible plans 
from $1,500 in the case of individuals to $1,000 and from $3,000 in the 
case of couples to $2,000; seventh, the bill would permit medical 
savings accounts to be offered under cafeteria plans; and finally, the 
bill would encourage preferred provider organizations to offer MSAs.
  I ask unanimous consent that the 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. 1067

       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 
     Availability Act of 2001''.

     SEC. 2. EXPANSION OF AVAILABILITY OF ARCHER MEDICAL SAVINGS 
                   ACCOUNTS.

       (a) Repeal of Limitations on Number of Medical Savings 
     Accounts.--
       (1) In general.--Subsections (i) and (j) of section 220 of 
     the Internal Revenue Code of 1986 are hereby repealed.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 220(c) of such Code is amended 
     by striking subparagraph (D).
       (B) Section 138 of such Code is amended by striking 
     subsection (f).
       (b) Availability Not Limited to Accounts for Employees of 
     Small Employers and Self-Employed Individuals.--
       (1) In general.--Subparagraph (A) of section 220(c)(1) of 
     such Code (relating to eligible individual) is amended to 
     read as follows:
       ``(A) In general.--The term `eligible individual' means, 
     with respect to any month, any individual if--
       ``(i) such individual is covered under a high deductible 
     health plan as of the 1st day of such month, and
       ``(ii) such individual is not, while covered under a high 
     deductible health plan, covered under any health plan--

       ``(I) which is not a high deductible health plan, and
       ``(II) which provides coverage for any benefit which is 
     covered under the high deductible health plan.''.

       (2) Conforming amendments.--
       (A) Section 220(c)(1) of such Code is amended by striking 
     subparagraph (C).
       (B) Section 220(c) of such Code is amended by striking 
     paragraph (4) (defining small employer) and by redesignating 
     paragraph (5) as paragraph (4).
       (C) Section 220(b) of such Code is amended by striking 
     paragraph (4) (relating to deduction limited by compensation) 
     and by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (4), (5), and (6), respectively.
       (c) Increase in Amount of Deduction Allowed for 
     Contributions to Medical Savings Accounts.--
       (1) In general.--Paragraph (2) of section 220(b) of such 
     Code 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 
     (as of the first day of such month) of the individual's 
     coverage under the high deductible health plan.''.
       (2) Conforming amendment.--Clause (ii) of section 
     220(d)(1)(A) of such Code is amended by striking ``75 percent 
     of''.
       (d) Both Employers and Employees May Contribute to Medical 
     Savings Accounts.--Paragraph (4) of section 220(b) of such 
     Code (as redesignated by subsection (b)(2)(C)) is amended to 
     read as follows:
       ``(4) Coordination with exclusion for employer 
     contributions.--The limitation which would (but for this 
     paragraph) apply under this subsection to the taxpayer for 
     any taxable year shall be reduced (but not below zero) by the 
     amount which would (but for section 106(b)) be includible in 
     the taxpayer's gross income for such taxable year.''.
       (e) Reduction of Permitted Deductibles Under High 
     Deductible Health Plans.--
       (1) In general.--Subparagraph (A) of section 220(c)(2) of 
     such Code (defining high deductible health plan) is amended--
       (A) by striking ``$1,500'' in clause (i) and inserting 
     ``$1,000''; and

[[Page S6522]]

       (B) by striking ``$3,000'' in clause (ii) and inserting 
     ``$2,000''.
       (2) Conforming amendment.--Subsection (g) of section 220 of 
     such Code is amended to read as follows:
       ``(g) Cost-of-Living Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning in a calendar year after 1998, each dollar amount 
     in subsection (c)(2) shall be increased by an amount equal 
     to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which such taxable 
     year begins by substituting `calendar year 1997' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Special rules.--In the case of the $1,000 amount in 
     subsection (c)(2)(A)(i) and the $2,000 amount in subsection 
     (c)(2)(A)(ii), paragraph (1)(B) shall be applied by 
     substituting `calendar year 2000' for `calendar year 1997'.
       ``(3) Rounding.--If any increase under paragraph (1) or (2) 
     is not a multiple of $50, such increase shall be rounded to 
     the nearest multiple of $50.''.
       (f) Providing Incentives for Preferred Provider 
     Organizations To Offer Medical Savings Accounts.--Clause (ii) 
     of section 220(c)(2)(B) of such Code is amended by striking 
     ``preventive care if'' and all that follows and inserting 
     ``preventive care.''
       (g) Medical Savings Accounts May Be Offered Under Cafeteria 
     Plans.--Subsection (f) of section 125 of such Code is amended 
     by striking ``106(b),''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.
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