[Congressional Record Volume 140, Number 11 (Tuesday, February 8, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: February 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
CBO HEALTH REFORM REPORT
Mr. DOLE. Mr. President, I want to take just a moment to talk about
the CBO report today from the Congressional Budget Office. I know my
colleague from New Mexico has analyzed it very carefully.
I congratulate the CBO Director, Mr. Reischauer, because I think they
did put together a very objective and an comprehensive analysis under
very difficult circumstances.
Make no mistake about it. The Congressional Budget Office report
today confirms what many of us have been saying all over the country
for the past several months and a lot of people have suspected,
Democrats and Republicans: The Clinton health care plan calls for
multi-billion-dollar doses of deficit spending and Government control.
And that is a fact, at least a fact according to CBO.
I think what the CBO report really does is say you have to start down
this road very carefully. You cannot just say, ``Oh, these are the
numbers. We have had it checked by all the outside experts. This is
it.''
I am not certain whether these numbers are accurate, even. Neither is
the Senator from New Mexico. And I doubt if Mr. Reischauer would take a
pledge that these numbers are totally accurate.
The one thing we have to insist on in the health care debate, as we
start voting on health care, is that we get it right, because around
this place in a major piece of legislation, if you do not get it right,
it may take 20 years to correct it. I think we have to take a look at
all the other plans and give them the same scrutiny the Clinton health
care plan has received.
I think it was particularly significant that when the President
talked about health care last year in a joint session of Congress, he
said we ought to take the CBO numbers. He has made the Congressional
Budget Office his official budget scorekeeper. In my view, that is one
reason their analysis is so important.
We have had a lot of glossing over, a lot of smoke and mirrors in
health care: ``Oh, it is going to save all kinds of money.''
The President also glossed over the fact that the central component
of his health care reform financing plan--$1.4 trillion in mandated
health care premiums paid by employers to Government-controlled
alliances--is essentially a tax on employers. And that is what we have
been saying. It is a tax. When the Government, by law, forces you to do
something or to pay something, to pay some money, that is a tax. And,
of course, the President tried to hide all this by moving it off
budget. He would not have to face up to it.
Now, CBO says you have to put the whole plan on budget and that new
benefits in the budget plan constitute a massive new $1.4 trillion
entitlement program--another entitlement program by a President who
said we ought to take a look at entitlement programs before they get
out of hand.
The CBO does not call it taxes, but they say the mandated receipts
are, ``receipts to the Federal Government.''
I guess you could have asset sales, that would be a receipt to the
Federal Government. But most people think of receipts to the Federal
Government as taxes, tax receipts. So we have this new tax. We passed a
$262 billion tax increase last year. It just seems to me the final
point would be, as the President says in his budget, if we adopt his
health care plan we are going to save roughly $60 billion over 6 years.
And one day later--we get the budget on Monday, on Tuesday we get the
CBO report and they say we are going to add to the deficit, $70
billion. Who knows whether that is right? It could be $700 billion? Who
knows? Is could be $60, $70, $100-and-something billion, but you take
the $60 billion savings and $70 billion increase, that is a swing of
$130 billion.
So it seems to me the Congressional Budget Office has done the right
thing, the only thing they could do, and they performed a service.
Finally, I would say I am not advocating we do not do anything. This
does not mean we ought to preserve the status quo. This does not mean
we ought to not do anything in health care. It means we ought to take a
look, take a hard look, and have long, long, serious hearings and
debate around here before we just buy a pig in a poke, any pig in a
poke, whether it is the President's plan or anybody else's plan,
Republican or Democrat. We want health care reform. There are very
serious problems in America in health care. But we want to make certain
when we address this issue that we do it the right way.
Because, again, the bottom line is, if we do not do it the right way,
many Americans all over America are going to suffer the consequences.
It will take us years to fix it. I guess we just have to look before we
leap.
I think today, with the CBO analysis as discussed by the
distinguished Senator from New Mexico earlier, it pretty much blends
into a piece that appeared in last week's Washington Post. In fact, it
was January 30. It happened to be a piece by the Senator from New
Mexico [Mr. Domenici], ``How Can the Administration Leave the Health
Care Plan Off the Budget?'' I think Mr. Reischauer must have read this
piece in the Washington Post. I am happy he read it and I am happy with
the report. But as I said before, I am not just talking about the
President's plan. All plans ought to have the same scrutiny--every
plan. My plan--I do not have a plan--if I had a plan, anybody else's
plan.
I thank the Senator from New Mexico and thank my colleague from Ohio
for yielding.
I ask unanimous consent to have Senator Domenici's op-ed piece
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Washington Post, Jan. 30, 1994]
The Big Budget Lie--How Can the Administration Leave the Health Care
Plan Off the Budget?
(By Pete V. Domenici)
On Feb. 7, President Clinton is scheduled to submit his
first real budget. What is in that budget will be, in one
important way, less interesting that what is left out: the
full budget impact of the president's sweeping proposals for
reforming the country's health care system.
How the health care plan is reflected in the federal budget
is more than an academic question. The administration's
insistence that the plan's mandated premiums and benefits not
be displayed as federal taxes and spending is ample testimony
to the large political and practical consequences.
Excluding the reforms from the budget will not only obscure
the health care debate for the American people, it will also
establish a dangerous precedent: the enactment of major new
federal programs with no apparent impact on taxes, spending
or the debt. Indeed, the decision could determine whether the
federal budget continues to be a meaningful document at all.
Governing and budgeting are inextricably linked. A budget
determines how much of the private economy will be extracted
for funding public purposes, and how those funds will be
allocated among many competing objectives. It is not only a
policy document, but a historical record book documenting the
successes or failures in achieving the hopes and dreams that
it embodies. As the president stressed in his State of the
Union message, his health reform plan would be a signal
change in American social policy. Excluding it from the
budget process would be an extraordinary violation of well-
established budget principles that have served both
Democratic and Republican presidents and congresses over the
years.
The first principle is that the budget should be
comprehensive, including all federal fiscal activities. This
principle, referred to as the unified federal budget, was
established and affirmed with President Johnson's Commission
on Budget Concepts in 1967.
Even in 1985 and 1989, when the Social Security trust funds
and the Postal Service program were moved ``off-budget'' to
avoid their calculation in the Gramm-Rudman sequester
process, the federal budget presentation showed their
receipts and payments in aggregate budget figures. That
accounting practice continues to this day.
By this measure, there can be no question that the Clinton
health care plan is a federal program and so should be part
of the unified budget.
All the essential ingredients of the president's plan would
be established by federal statute. The roles,
responsibilities and characteristics of the regional health
alliances that administer the program would be determined by
the federal government. Universal health coverage would be
compelled by the federal government. By federal law, every
legal resident of the United States would be required to
participate in the program. The program would go into effect
in every state even without the state's consent.
A new National Health Board would be created to oversee and
regulate the entire system. It would establish requirements
for state plans and approve state health plans. It would
establish a ``national budget for health care spending.'' The
National Health Board would issue federal regulations
governing benefits, procedures, reimbursements and cost-
sharing requirements for qualified health plans, among other
things.
If this isn't a federal spending program, what is?
And yet, the Clinton administration proposes to exclude
from the federal budget roughly $1.4 trillion in health care
spending over the next five years (as estimated by a recent
Lewin-VHI study) that would be subject to federal control.
Over $100 billion of this spending would be from firms that
do not now insure their workers. When expenditures of this
magnitude are excluded, how seriously will anyone take
federal budget controls in the future?
The second well-established principle of federal budgeting,
again from President Johnson's commission, is that
collections arising from the sovereign power of the
government, involving regulations or compulsion, should be
reported as receipts.
The Clinton health care plan would require the regional
health alliances to administer the collection of compulsory
social insurance premiums and use those proceeds to finance
the purchase of medical care. Employer payments are
compulsory; no one can choose not to participate. The
employer's payment to the regional alliance is determined by
a formula based on the ``class of family enrollment'' in the
firm. A limit would be set on the employer's premium payments
not to exceed 7.9 percent of total wages. The alliances would
also be given the authority to borrow money from the
Treasury, should benefits and receipts not match at certain
times. (The image of ``private'' savings and loan
associations with federal guarantees haunts my budgetary
memory!) But none of these transactions would be reflected on
the federal books, presumably on the argument that the
alliances are ``not federal entities.''
It is true that most employers currently provide health
insurance to their employees and, if the plan works as the
administration hopes, they will save somewhat less than $1
billion as a group over the next five years. But even if
those savings are realized on average, the companies and
their employees will lose the control over costs and benefit
choices that they now have under current private employer-
employee voluntary agreements or independently negotiated
business-labor contracts. Except for very large firms, and
then with some limitations, responsibility for determining
benefits and monitoring costs and quality, would be
transferred to the health alliances.
As for employers who do not now provide health insurance to
their workers, they would have to make payments of more than
$100 billion over the next five years to these ``non-federal
alliances.'' Those employers will not be persuaded that these
are not new federal payroll taxes--nor should the public be.
The basic tenet underlying the budgetary principles that
the administration's health plan would violate is that unless
the budget includes all sources of federal revenues and all
types of federally controlled spending--and any gap between
the two--there is no way of measuring the overall impact of
federal activity on the economy. For that reason, when the
Social Security and unemployment programs were created in
1935, the mandatory employer and employee ``contributions''
that financed them were correctly counted as federal
receipts. Thus, the budget identifies for all who want to
know how much the federal government is extracting from the
economy and allocating to those two major social programs.
More recently, Congress bailed out health benefit funds for
certain coal miners in part by mandating that coal companies
pay premiums to two new privately managed funds. Although the
mechanism employed was defined as a private, multi-employer
benefit plan, because this is actually a federal program
compelled by the government's sovereign power it is included
in the federal budget. President Clinton's health care
financing mechanism is virtually identical. The fact that
employer premiums flow to a regional health alliance and not
the U.S. Treasury is no justification for removing them from
the federal books.
As a very simple practical matter, imagine what would
happen if the Clinton health care plan were ``off-budget.''
Congress could raise the 7.9 percent cap on the employer
payroll tax and never show it as a tax increase--in fact, it
would be recorded as a spending cut because it would reduce
the ``on-budget'' federal subsidy payments to the alliances.
Further, Congress could include new health benefits in the
mandated standard insurance plan and those new costs would be
excluded from the budget. Private resources extracted for
public purposes need to be accounted! If that principle is
violated, even for the politically popular objective of
reforming the nation's health care system, the costs will not
only be measured in dollars but in the ability to govern
effectively.
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