Republicans and Democrats negotiating a health insurance reform plan cleared a major hurdle last week when they agreed on a program to spur the growth of controversial medical savings accounts.
Sen. Nancy L. Kassebaum (R-Kan.), who along with Sen. Edward Kennedy (D-Mass.) authored the plan, said the MSA agreement "should clear the way for final congressional approval within the next few days." The pact will permit negotiators to meet to iron out differences between the House- and Senate-passed versions of the health insurance reform plans.
But several thorny issues remained to be settled before a final vote.
Among the contentious issues to be resolved is whether the Justice Department should be required to give providers considering joint ventures guidance on whether a transaction would violate federal laws. Clinton administration officials say they lack the resources to look at every deal before it happens. However, providers say that if federal officials want to support integrated networks, "advisory opinions" are needed to ensure that health systems don't run afoul of the law.
Democrats also are seeking to reopen negotiations on a Senate provision that would require health plans to offer the same level of benefits for mental health conditions as for other services. In a GOP health insurance bill released earlier this year, the mental health parity provision had been stripped in favor of a commission that would study the issue.
After months of bitter haggling over MSAs, legislators settled last week on a pilot program that would make the accounts available to workers in companies with fewer than 50 employees and to self-employed individuals.
MSAs are private accounts people can tap to pay for limited medical expenses. Republican advocates say they offer a market-oriented solution to controlling healthcare costs. Democratic opponents contend the accounts would draw the young and healthy out of traditional insurance programs, leaving the government to pay for sicker patients.
Under the compromise plan, MSA contributions would be tax-deductible. Anyone opening an MSA would purchase a high-deductible insurance policy to cover expensive procedures. The minimum deductible for a family policy would be $3,000 a year, and the maximum would be $4,500. Families could make tax-free contributions of up to 75% of their deductible each year. For individual policies, the minimum deductible would be $1,500 and the maximum $2,250, and participants could make annual contributions of 65% of their deductible. Money later withdrawn and not spent on healthcare would be taxed.
One of the key sticking points was how large an MSA experiment was needed to ensure a fair test. In the end, lawmakers settled on a maximum of 750,000 insurance policies. Congress' Joint Committee on Taxation estimates that about two people would be covered under each policy, said Kenneth Kies, committee chief of staff.
In addition to those who work in small companies and the self-employed, anyone who is uninsured could purchase a catastrophic insurance policy and open an MSA. However, according to Kies, the number of uninsured participating is expected to be minimal.
The MSA pilot project would last four years, after which Congress would have to vote to expand the program to large employers. Anyone who had already enrolled in an MSA could continue in the program, Kennedy said. Kennedy and Rep. Bill Archer (R-Texas), chairman of the House Ways and Means Committee, announced the agreement last week after a round of meetings.