Medical Savings Accounts (MSA's)

May 18, 1999

ISSUE:

On Thursday, May 20, the Senate Committee Finance is scheduled to mark up tax provisions to be added to S. 326, the GOP leadership's managed care reform bill. These tax provisions include an expansion of the Medical Savings Accounts (MSA's) demonstration project for the under 65 populations to a broader constituency. It is unclear at this juncture whether this expansion will be limited to participants in the Federal Employees Health Benefits Program (FEHBP), all persons under 65, or to lift the ceiling on the Medicare MSA's demonstration project. Nonetheless, any expansion would harm consumers, especially the most vulnerable sick and low income consumers.

ACTION:

Stop the Senate Committee on Finance from expanding Medical Savings Accounts. The Senate Finance Committee is scheduled to hold this hearing to expand MSA's on Thursday, May 20. Action is needed now!

Call members of the Senate Committee on Finance and request to speak to their legislative assistant on health.

The message is:

I oppose expanding Medical Savings Account (MSA's) because they can drive up premiums substantially - 60 percent or more in traditional health insurance plans.

Many consumers with high deductible catastrophic plans may be deterred from getting cost-saving preventive and early care, facing a financial barrier before coverage begins.

The high deductible catastrophic health insurance policies attached to MSAs are not required to be comprehensive so as to ensure that critical services such as mental health benefits, maternity coverage, and HIV/AIDS treatment is provided.

Therefore, I urge the Senator to vote against any effort to expand MSA's. We firmly believe that Congress should look at mechanisms for expanding health insurance coverage to the 43 million Americans that are the uninsured problem. Instead of making health care more affordable, they drive up costs for those remaining with traditional coverage while exposing many MSA enrollees to high out-of-pocket costs.

Members of the Senate Committee on Finance:

Republicans:
William Roth, (Del.) - Chair
John Chafee, (R.I.)
Phil Gramm, (Tex.)
Chuck Grassley, (Iowa)
Orrin Hatch, (Utah)
James Jeffords, (Vt.)
Trent Lott, (Miss.)
Connie Mack, (Fla.)
Frank Murkowski, (Alaska)
Don Nickles, (Okla.)
Fred Thompson, (Tenn.)

Democrats:
Daniel Moynihan, (N.Y.) - Ranking member
Max Baucus, (Mont.)
John Breaux, (La.)
Richard Bryan, (Nev.)
Kent Conrad, (N.D.)
Bob Graham, (Fla.)
Robert Kerrey, (Neb.)
Charles Robb, (Va.)
John Rockefeller, (W.Va.)

You can reach your lawmakers by calling the U.S. Capitol switchboard at (202) 224-3121.

BACKGROUND:

Medical Savings Accounts first launched as an experimental program in the 1996 Health Insurance Portability and Accountability Act of 1996, were approved by Congress only after a series of important restrictions were added. These restrictions limited the number of policies, set a range for deductibles, tailored their tax advantage and excluded large companies from participating.

As part of the Patients Bill of Rights legislation to reform the managed care industry, the Senate is seeking to greatly expand the use of this insurance product. All limits on the number of policies would be removed, every employer would be permitted to offer them and the significant tax advantages would be added.

A large scale MSA program will mean a myriad of problems of the health care marketplace, according to Gail Shearer, of the Consumers Union, who priced the cost of the expansion to taxpayers at $4 billion over ten years. Among them are that MSA's:

Split the healthy from the sick.
Give large tax breaks to the wealthy, while working families lose.
Replace traditional $250 deductibles with $2-4,000 deductibles.
Drive up costs, by over 60 percent if one in four healthy Americans enroll.
Give a tax break to bad health care policies which have no guarantees of comprehensive benefits, pregnancy benefits or coverage for illnesses like AIDS.

Currently 70 national groups oppose expansion of Medical Savings Accounts, among them are: AIDS National Interfaith Network; American Federation of State, County, and Municipal Employees; American Federation of Teachers; American Nurses Association; American Public Health Association; Consumers Union; Families USA; Justice for All; National Asian Pacific Center on Aging; National Association of Public Hospitals; National Black Women's Health Project; National Education Association; National Farmers Union; National Mental Health Association; National Puerto Rican Coalition; National Parent Network on Disabilities; and The Association for the Care of Children's Health.

GENERAL ASSEMBLY GUIDANCE:

203rd (1991) G.A. resolution on "Christian Responsibility and a National Medical Plan" recommends that until a national medical plan is instituted, to "protect uninsured persons, especially those with low or fixed incomes, from erosion of health care benefits or an increase in cost of health care benefits."