Note- These letters/articles were written in a prior year, however, they 
provide good sample language that you can use.

Press Release

 July 22, 1998
                                       Contact: 202/462-6262
                                       Gail Shearer, sheaga@consumer.org,
                                       Kathleen McShea, mcshka@consumer.org
                                       Consumers Union Washington, DC Office
  
                                     
How Would You Spend Four Billion in Healthcare Dollars?
          Consumers Union: Expanding Medical Savings Accounts a "Poison Pill"

WASHINGTON – The GOP plan to balloon the failed Medical Savings Account (MSA)
experiment is a poison pill designed to kill the Patients Bill of Rights, 
according to Gail Shearer, Director of Health Policy Analysis at the Washington
Office of Consumers Union.  "It is time to recognize Medical Savings Account’s 
for what they are – a marketplace flop, a mechanism that drains the Treasury 
and benefits the health at the expense of the sick," Shearer told a public forum
hosted by the House Democratic Working Group on Wednesday.  "We strongly urge 
the Congress to remove poison pills such as expanded Medical Savings Accounts
 from legislation that is designed to improve the quality of health care provided
through managed care."

MSA’s 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 their version of a Patients Bill of Rights legislation to reform the
managed care industry, the Republican party is seeking to greatly expand the use
of this insurance product. All limits on the number of policies are removed, 
every employer is permitted to offer them and the significant tax advantages are 
added.

A large scale MSA program will mean a myriad of problems for the health care
marketplace, according to Shearer, 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 $2-4000 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

A better way to spend limited health care dollars would be to put more kids
who have no health care insurance under the umbrella of the Medicaid program,
according to Shearer. Each uninsured person who buys an MSA costs taxpayers
$3600, while each additional uninsured child put under Medicaid costs $1178, 
by her calculations.

********

June 10, 1997 

Medical Savings Accounts -- A Poison Pill for Medicare

By Gail Shearer, Director, Health Policy Analysis, Consumers Union, Washington,
D.C.


Congress is currently pounding out the details of the budget reconciliation bill.
As they work, many Members are waxing eloquent about cutting the costs of Medicare
and reducing the deficit. At they same time, they are putting medical savings 
accounts into Medicare -- an option that will cost taxpayers at least $2 billion,
and lower the quality of health care provided to Medicare recipients. As usual 
with these supposed cost-cutting schemes, consumers who can least afford it will
lose the most.

Who is pushing for these medical savings accounts? Doctors, who stand to gain 
limitless extra fees that they currently are not allowed to charge Medicare 
recipients and insurance companies who stand to make profits off the nation's
seniors.

Medical savings accounts have two parts: a high-deductible health insurance
policy (the deductible in the current proposal is as high as $6,000), and 
tax-advantaged savings accounts. Sounds good until you look at the details.

Most Medicare beneficiaries are healthy and cost Medicare just a little. The
average Medicare beneficiary had Medicare costs of about $5,000 in 1996. But
the average hides a wide variation. The healthiest 90 percent of beneficiaries
had costs of about $1,400. The reason Medicare costs are high is that the 
sickest 10 percent had average costs of about $37,000.

MSAs will separate the healthy from the sick The introduction of MSAs into 
Medicare will create financial incentives for the healthiest half (or even 
more) of beneficiaries to accept a high-deductible-policy, with cash that
can grow in a savings accounts. The result for the less healthy is alarming:
there will be billions less dollars available to pay their costs.  Instead
of pooling funds to care for the sick, a substantial chunk of Medicare dollars
will help the healthy build up investment accounts.

Medicare beneficiaries and baby boomers who hope to one day become Medicare
beneficiaries will suffer if Medicare MSAs are introduced. Congress should
reject Medicare MSAs and should focus its attention on taking steps to ensure
the long-range viability of Medicare. But if Congress insists on heading down
this dangerous path, it should at least take steps to minimize the damage.

Some of the ways that Congress could reduce the harm from Medicare MSAs:

First, require budget neutrality. Right now proponents of MSAs admit that they
will cost taxpayers at least $2 billion.  Reject any MSA design that would 
drain the federal treasury. Don't make contributions to MSAs or MSA investment
earnings tax deductible. Limit payments to MSA plans to an individual's Medicare
payments for the prior years, to prevent insurance companies from cherry picking
the healthy.

Second, make sure that MSA funds are used for health care costs. The fear is that
MSAs will become yet another tax-shelter for the rich. Don't let MSA funds be 
withdrawn for non-health care uses. Require that MSA funds left after a person 
dies do not go to his or her heirs, but to the Medicare trust fund.

Third, build consumer safeguards into the MSA high deductible health insurance 
policies. Deductibles should be limited in level to $1,500 to $2,250 for individuals,
just as Congress overwhelmingly endorsed in the bipartisan 1996 Kassebaum-Kennedy
health insurance bill. These levels reduce the problem of the selection of the very
best risks into MSAs, and help protect moderate income seniors from high out-of-
pocket costs.

Cap individuals' out-of-pocket expenses at $3,000, with the insurance policy paying
all costs after the maximum is met.  Private policies should be watched and banned
from anti-consumer practices that make coverage unavailable or unaffordable to high-
risk individuals. Benefits should be standard and comprehensive, starting with 
traditional Medicare benefits and adding prescription drugs. And doctors' fees 
should be limited to levels allowed in the traditional Medicare program.

Finally, Congress should end the demonstration if the MSAs harm the Medicare program.
Congress set up one MSA demonstration last year, and now they want to launch this one
before Americans have had a chance to see that MSAs really don't make sense.

The future viability of the Medicare program and its ability to provide health care
for America's senior citizens and disabled are at stake. Congress should not include
a provision that destroys Medicare's quality of care and solvency for future generations.

*************