House bill won't push medical savings accounts for feds

Two House members plan to release a bill as early as this week on patients' rights that will not contain a controversial provision requiring the Federal Employees Health Benefits Program (FEHBP) to offer medical savings accounts (MSAs) to its members, according to Capitol Hill sources.

Reps. Charlie Norwood, R-Ga., and John Dingell, D-Mich., are plotting a last-ditch effort to reach a compromise on the politically volatile issue of patients' rights. The two plan to release a bill as early as this week that they hope will garner enough support to force the hand of the Republican leadership before the end of the current legislative session.

The exclusion of a mandate that FEHBP offer MSAs to its members represents a victory for groups representing government workers.

Several employee organizations have opposed the mandate, contained in two different Senate-passed Patients' Bills of Rights, indicating they would push for a veto of any bill containing a federal MSA requirement. House members from the Washington area, including Republicans Frank Wolf and Tom Davis of Virginia and Connie Morella of Maryland, blocked the provision from the House version at the behest of these organizations.

MSAs allow individuals to put aside, tax-free, an amount equal to the deductible on so-called "catastrophic" insurance coverage required to open an account. Once the deductible-either $1,000 or $2,000 depending on the plan chosen-has been reached, the catastrophic policy covers the remaining health care expenses.

"We are worried that healthy people will jump to these accounts, raising the premiums for those who remain behind in traditional FEHBP plans," explained Didier Trinh, legislative director of the Federal Manager's Association. "Premiums have been going up every year as is."

The National Association of Retired Federal Employees (NARFE) has also opposed inclusion of mandatory MSAs for the government workforce. Beyond the concerns cited by Trinh, they fear that the accounts will provide a perverse incentive for employees to skimp on medical care for themselves and their families.

"MSAs are unlike any other health care product out there, in that they offer the potential of a cash balance at the end of the year," noted Dan Adcock, legislative analyst for NARFE. "They also distort the concept of risk sharing in insurance. These plans may save the younger and healthier federal employees money in the short run, but if they want affordable, predictable premiums, it is to their benefit not to have medical savings accounts as an option."

The Norwood-Dingell plan will closely resemble a bill passed by the House last October, of which the two were also co-sponsors. Changes will focus on insulating small employers from liability under lawsuits brought by aggrieved insurees.

The concern was one of several that led Senate Republicans to twice pass what reform advocates label "watered-down" versions of the legislation enacted by the House.

Most recently, Senate Majority Whip Don Nickles, R-Okla., succeeded in attaching his version of a Patients' Bill of Rights to the Labor-HHS appropriations bill on June 29. The amendment, which contained mandatory federal MSAs, passed by a 51-47 party-line vote. President Clinton has threatened to veto the bill should it reach his desk with the Nickles amendment attached.

Expansion of private-sector access to medical savings accounts is seen as valuable leverage in breaking the current stalemate on patients' rights legislation. Forty-four senators have signed a letter indicating their support is contingent on an extension of the existing MSA program, the authorization for which will expire at the end of this year. The accounts have widespread support among Republicans in general, as they embody two of the party's core principles: fiscal prudence and individual choice.

Moreover, White House negotiators feel conceding on the issue will allow them to placate Republicans without losing much ground on the issue overall.