California AAPS Passes MSA Bill

Mark Schiller, MD
Article Type: 
Report from the States
Winter 1997
Volume Number: 
Issue Number: 

It took two years of heavy lobbying in Sacramento (still remembered by many as Willie Browne’s town), but a Medical Savings Account bill sponsored by California AAPS passed on September 30, 1996. Unfortunately, political shenanigans by the Democratic leadership of the Senate have produced a very flawed bill. As usual, the legislature was busy doing nothing (not an altogether bad thing for a legislature to do) until the end of the legislative session, when they are overtaken by a compulsion to pass unread bills and make illogical political compromises just to show they have done something.

Our original bill, Assembly Bill 1758, with bipartisan authors had passed through the Assembly and all of its Senate committees but its ultimate committee. It was held in the Senate Appropriations Committee with all bills that “cost the state money.” It appears the Democratic committee chairman, Patrick Johnston, would only allow the bill to be brought up if it were included in an omnibus tax bill — Senate Bill 38. God only knows what atrocities are being inflicted on Californians in the rest of the tax package. It would take me months to read through all of it carefully, but apparently legislative staffers are superior creatures and can do it in a few hours time. In any event, the MSA section, while changed to align with the Kassebaum-Kennedy bill, remains fairly simple and straightforward, but for one easily overlooked clause of an otherwise unremarkable sentence. This clause states one can only claim a deduction on one’s state taxes for MSAs if one has been allowed a deduction on one’s federal income tax return. In other words, you have to be one of the chosen few, one of the 750,000 individuals allowed to test MSAs according to the Kassebaum-Kennedy Bill. This essentially makes the legislation pointless, because the money in MSAs that are excluded or deducted from one’s income would automatically be treated similarly by the state.

We are told Bill Lockyer, the Democratic Senate President Pro Tem, made it clear the MSA provisions were only going to pass with this stipulation in place. Unfortunately, he had the power to back up his words. As the MSA language didn’t worsen an already bad situation, the Republican backers of the bill, went along with the compromise. The tax package passed the Assembly by 63-1 and the Senate by 37-0. The one-sided votes were no doubt due to the fact few legislators bothered to look at what they voted on during the last days of the session. They were too busy trying to get back home to campaign, so they can “improve” our lives for another two years or so.

We are disappointed by the last minute dilution of our bill. On the other hand, it shows a certain acceptance of the concept of MSAs. We even had a great many, if not a majority, of Democratic legislators support our bill over the last two years. This indicates to us it was better to have passed the law in its current state rather than to not have passed it at all. The current flawed bill is a foot in the door. We’ll just have to try to get the legislators to broaden the scope of the bill next year. Of course, we probably won’t know if that will happen until the very last day of the legislative session again.


Mark Schiller, MD
California Chapter of the AAPS

 Dr. Schiller practices psychiatry in San Francisco, California. His address is 4644 Geary Blvd., Suite 133, San Francisco, CA 94118.

Originally published in the Medical Sentinel 1997;2(1):34. Copyright ©1997 Association of American Physicians and Surgeons.


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