[Congressional Record Volume 140, Number 83 (Monday, June 27, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 27, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           HEALTH CARE REFORM

  Mr. BENNETT. Mr. President, the issue of health care reform has been 
the top issue before the Congress. Indeed, as I listen to some of my 
more senior colleagues, they suggest it is perhaps the top issue to 
come before this Congress during their service and perhaps even--not to 
put too fine a point on it--in the history of the Nation, because we 
are talking about a bill that will create a social entitlement of a 
size unknown.
  We spent a good part of last year in this body talking about 
entitlements and the impact of entitlements on the budget, and the 
possibility that entitlements could indeed break the budget and force 
the country on the verge of bankruptcy. It is perhaps not overstating 
the matter, therefore, to say that health care that would create a huge 
new entitlement, is, indeed, one of the most serious social issues that 
we have ever debated within this body.
  We are talking about regulating one-seventh of the total economy. Our 
transportation system is not that big. Our communications system is not 
that big. We do not have public utilities that are that big. Nothing 
approaching the size and complexity of this issue has ever come before 
us.
  Given the importance of that, I have decided before I entered into a 
final vote on this matter that I had better do my homework, and I have 
tried to do that. I have talked to my constituents in town meetings all 
over my home State. I have talked to people outside of my home State. I 
have spent time with the various think tanks and study groups across 
the ideological spectrum, listening to their arguments--some of them in 
favor of a single-pay system, some of them in favor of alliances, some 
of them violently opposed to these things. I spent hours with the 
lobbyists who come to see us, presenting their points of view on this 
issue, including the lobbyists from the White House. Indeed, I have 
probably spent as much time with the White House lobbyist as I have 
with any individual lobbyist. And I have spent time with my colleagues. 
Senator Chafee, on the Republican side, has held breakfasts every week 
to discuss health care and I have attended whenever possible. We have 
gone off on retreats and talked about it. I have spent time with my 
Democratic colleagues, talking about it, trying to understand the 
complexities of this issue.
  Now that the time has come that we are nearing a vote, I think I need 
to rise and report what I have found and where I stand on this 
particular issue. This is what I have found.
  First, there is, indeed, a problem. Our health care system needs 
fixing. Those who say, ``Oh, minor tune ups'' are wrong, in my view. 
President Clinton deserves credit for forcing the Nation to confront 
this basic fact. Indeed, others have talked about it and have worked 
around the fringes of it, but President Clinton is the one who has 
looked the issue in the eye and forced us to confront the seriousness 
of this problem. Whatever passes, whatever ultimately happens will be a 
tribute to President Clinton's courage. And as a Republican Senator I 
want to add my personal tribute to his willingness to confront this 
particular challenge.
  Second, a major reason why there is a problem in health care is the 
fact that market forces do not work in health care. In order to 
operate, a market requires informed and empowered consumers and we do 
not have either one in the health care system. We are not informed as 
consumers because we do not have the proper medical training. When a 
doctor says, ``You need a procedure,'' I cannot confront him and 
challenge him and say, ``No, doctor, that is too expensive, I would 
prefer something else,'' the way I can challenge a used-car salesman. 
So the market does not work on the information side.
  The market does not work on the empowered side. I am not empowered, 
as a consumer, to control my own destiny. Why is that? Because the 
health care coverage that I receive in the form of an insurance policy 
is determined by my employer. I do not get to decide what is in that 
policy. My employer decides.
  Oh, you say, in the Government you have your choice. Yes, I have my 
choice of those plans that the employer--in this case the Federal 
Government--has decided would be good for me to make. When people say 
to me, we wish we could all have the health care plans that you in the 
Senate have, my response is, I wish I could have the health care plan I 
had before I came to the Senate, because I had a better plan prior to 
coming to the Senate. But because my current employer does not endorse 
that plan, I do not have that choice.
  So as I say, market forces do not work because we do not have an 
informed consumer and we do not have an empowered consumer.
  How did we get into this mess? You can go all the way back to the 
Second World War, and you will find that in one of its periodic 
attempts to repeal the law of supply and demand, the Government, in its 
wisdom, said we will enforce wage-and-price controls throughout the 
economy.
  You have a booming economy. You are an employer, Mr. President, and I 
am your employee. Somebody offers me a job at a higher wage than you 
can pay and you cannot match it; the Government has forbade you from 
matching it. So you say to me: ``Tell you what I'll do, Mr. Bennett. 
I'll keep you as my employee. Instead of giving you a wage raise, which 
is illegal, I'll buy a health insurance plan for you, and that means I 
am increasing your compensation by the amount of the worth of that 
plan, but it will not be charged as a wage increase and this is the way 
I will get around wage controls.''
  So we started down the road of tying health coverage to the employer; 
we started down the road of giving the employer the right to determine 
what health care coverage the employee would have.
  If I am right, the principal thing that is wrong with the system is 
that the market does not work. What is the solution? I have referred to 
the Second World War and how we got into our circumstance. If the 
Government caused the problem, the Government can solve the problem, 
and the solution is this, Mr. President: We must take the control of 
the health care payment system away from the employer and put the 
control in the hands of the individual consumer. Simply put, Mr. 
President, we must trust the American people.
  The Clinton plan does not do this. The plan that we have received 
from President Clinton, from his wife, and from Ira Magaziner, and the 
others who have worked with him, does not break the link between 
employer ownership of health care policies. On the contrary, it cements 
it and perpetuates it. Market forces will never appear under the 
Clinton plan, which is why the Clinton plan will never achieve the 
kinds of savings that politically are being advertised.
  The Clinton people themselves know this. There has been a recent book 
published that is the buzz of Washington. It is called ``The Agenda'' 
by Robert Woodward. Everybody is all abuzz because it shows that the 
decisionmaking process in the White House is untidy. My reaction to 
that is the decisionmaking process in every White House is untidy. Why 
is this news?
  But within the book, there is news. And the news is, with respect to 
health care, that the Clinton advisers realize that wage-and-price 
controls are necessary for them to be able to claim the kinds of 
savings they are talking about.
  If I may take you to page 122 of the Woodward book and quote, 
referring to Ira Magaziner, the principal author and architect of the 
Clinton health care plan. The book says:

       Magaziner said they had to consider some form of price 
     controls on health care costs. He did not like explicit 
     Government controls and knew all the arguments against them. 
     He preferred to let competition in the marketplace set costs, 
     but they needed health savings, and for the Government to 
     clamp on controls by fiat would be more certain to pull in 
     savings in the near future. The administration could not 
     continue to allow health care costs to skyrocket while they 
     wrote their detailed plans.
       There was silence around the table. No one favored the 
     controls, but no one seemed to want to speak up. Who was 
     going to fall on the sword first? Alice Rivlin stepped 
     forward and ripped the notion hard. ``Nixon had tried price 
     controls and they failed,'' she said. ``An intricate health 
     care system would require equally intricate price controls, a 
     complicated task that would take weeks or months to figure 
     out.'' Her remarks started an avalanche. Laura Tyson wondered 
     how price controls might be put in place. ``How would the 
     Government gather the data? How would doctors and hospitals 
     and others report? It probably would take a year to 18 months 
     to implement even short-term price controls,'' she said, 
     ``and that would presumably be the point at which full reform 
     would begin and price controls supposedly not be needed.''
       Alan Blinder said that one of the first messages from the 
     new Democratic administration should not be to put one one-
     seventh of the American economy under the command and the 
     control of the Federal Government. That would only reinforce 
     the notion that Democrats didn't like free markets. Hillary 
     was noncommittal.

  Mr. President, Alice Rivlin was right. Laura Tyson was right. Alan 
Blinder was right. Price controls have never worked, do not work and 
will never work. Any bill that is founded on the forlorn hope that this 
time they just might work will produce dislocations in the economy that 
will be ruinous to us all.
  Again, even the understanding of this began to dawn on some of 
President Clinton's people. Going back to the Woodward book, on page 
120, it says:

       During the transition, a 16-member team had sent an 84-page 
     health care reform memo to Clinton warning that reform would 
     be expensive and its actual cost would hinge on the extent to 
     which you employ short-term price controls. It listed four 
     options for proceeding. Each one included an analysis of 1996 
     election politics and each forecast a dreary road ahead.

  And then, a little later on the same page, referring to James 
Carville, the President's primary political consultant:

       This was serious, Carville realized. After the meeting, 
     Carville told Magaziner, ``I now see this as real. When I do 
     a campaign and foul up, someone just loses. But if you foul 
     up, you foul up the country.'' Magaziner just rolled his 
     eyes.

  I should note for the sake of historic accuracy, Mr. President, that 
in the book, Mr. Carville does not use the word ``foul.'' He has 
another verb which I understand is improper for me to use on the Senate 
floor.
  The Clinton plan and its clone, the Kennedy plan, are, in my view, 
poison. They are based on the assumption that the only way they can 
work is through Government-imposed price controls. They must be 
defeated even at the cost of gridlock. Yes, filibuster if that is what 
it takes. This Senator is prepared to engage in that to see to it that 
neither of these plans comes to be law.
  And to my friends on the Democratic side of the aisle who wish to 
lambaste us for talking about gridlock and filibuster, I say the 
American people are with us on this one. The latest poll shows that 70 
percent of the American people are willing to wait until next year for 
health care reform if they are convinced that that is what it takes in 
order to get it right. It is more important that we do it right than 
that we do it now.
  How did the Clintons go so far astray? They had a 500-person task 
force to go through all of the data and sift through all of this and 
give them guidance as to how this plan should be put together.
  Once again, it is clear from the Woodward book that the task force 
was window dressing. The Clinton people already had their minds made up 
before the task force was convened. Quoting once again from ``The 
Agenda'':

       On Friday, February 5--

  February 5, Mr. President, this is less than a month after Mr. 
Clinton's inauguration, before he has come to the Congress with his 
proposals.

       On Friday, February 5, Bob Rubin sent a short memo to the 
     President saying that the economic team was going to meet 
     over the weekend to discuss Hillary and Ira Magaziner's 
     desire to incorporate health care reform into the economic 
     plan.

  Mr. President, we passed the economic plan in this body well over a 
year ago. We passed it under reconciliation, and one of the ideas that 
arose during that time was the possibility that it be included in 
reconciliation so that it not be subject to a filibuster. The 500-
person task force was window dressing; it was giving lipservice to 
receive input from other places. On the 5th of February, they already 
knew what it was they were going to propose.
  I said that the solution was to trust and, therefore, empower the 
American people on health care. How do we do that? As I said, the 
Government created the employer control of health care in the first 
place, back in the Second World War. The Government can uncreate it by 
changing the tax laws now. Today, compensation for a worker comes in 
two forms: Taxable and untaxable--the the wages that are reported on 
your W-2 form that are taxable and the benefits that the employer 
deducts as part of his payroll costs that are untaxable. But make no 
mistake, both of these are compensation to the individual. It makes no 
difference to the employer whether the compensation is in one category 
or the other. There are costs he has to pay and costs he can deduct in 
either case. But the difference is to the employee because the employee 
currently has no control over how the nontaxable portion is spent.

  Let us change that. Let us give the employee tax-free dollars 
deductible to the employer but not taxable to the employee as long as 
the employee spends them on a health care plan of his or her choice. 
Let the individual decide what to do with those nontaxable dollars.
  The individual, therefore, controls and owns the policy and 
affordability in the health care issue goes away because the employee 
takes the policy with him or her wherever the job trail may lead. Cost 
control I believe would be automatic. Problems with preexisting 
condition, of course, would go away along with affordability.
  Why do I think cost control would be automatic? Because the 
individuals would now be measuring the cost to themselves. They would 
not be thinking they were spending other people's money as they do in 
the present circumstance. They could make the decision on their own: Do 
I want this kind of coverage or do I not?
  I believe very quickly we would see individuals beginning to create a 
gap between catastrophic coverage and everyday, routine aches and pains 
kinds of coverage.
  Let me give you an analogy which I realize is imperfect as all 
analogies are but which makes the point. Let me talk about homeowner's 
insurance. Now, in this country there is no Federal mandate that 
everyone have homeowner's insurance. The Government does not interfere 
and require this, and yet every homeowner has it because the market 
forces are so strong that it makes sense for everyone to have it. You 
have virtually universal coverage. What does your homeowner's insurance 
cover?
  Well, in a time of catastrophe--my house burns down--it covers 
everything. My homeowner's insurance will not only replace the house; 
it will replace the carpet; it will replace the dishes and the shelves; 
it will replace the blankets on the beds; it will replace the pictures 
on the wall. I have absolute total coverage.
  There is nothing, however, in my homeowner's policy that covers the 
cost of mowing the lawn or repainting the front door or replacing a 
broken window.
  Now, I suppose I could get a policy like that, but the premiums would 
be astronomically high. Therefore, I choose to take care of those 
things myself and save the premiums.
  I have talked to insurance executives and said: What would happen if 
you provided only catastrophic? And they said: We could cover 
catastrophic insurance for everybody in the country for approximately 
10 percent of the premiums now being paid.
  An individual American faced with that fact would be intelligent 
enough to make the right kind of choice as to how much catastrophic he 
needed, where to draw the line, and where to say this much I will 
cover. If the individuals knew what first dollar coverage costs, the 
individuals would immediately make wise choices as to the size of 
deductibles and copays and the level of insurance that makes sense for 
them.
  Now, moving in this direction, uncoupling the control of health 
insurance from the employer and passing it to the individual by 
changing the tax laws would be true structural and basic reform. 
Indeed, to use the language of the 1992, this would be real change of 
the kind for which President Clinton campaigned. It would require very 
careful study. It would require deliberate implementation over time 
because it is not a quick fix. But it is the right fix.
  Now we come to the legislative situation. As I have said earlier, the 
Clinton bill and the Kennedy bill move entirely in the wrong direction 
in this matter, and I am prepared to fight them as firmly and totally 
as I know how. But it is becoming clear that neither the Clinton bill 
nor the Kennedy bill will be offered. The morning newspaper tells us of 
Senator Moynihan's desire to offer a bill, Senator Chafee and some 
others working to fashion a bill. Senator Dole has indicated his 
willingness to consider offering a bill.
  So we come to the question should we pass one of these bills even as 
we reject the Clinton and Kennedy bill? I have not seen the details of 
them. I have not read them. But I ask this question of every bill that 
comes before us: What is the basic structural thrust of your proposal? 
Is it to perpetuate the notion that the American people cannot be 
trusted to decide their own health care future, that someone else--an 
employer, a Government agency, or a mandatory alliance--must do it?
  If that is the thrust of your bill, I will not vote for it, and I 
would rather have no bill this year than that kind of a bill. However, 
I would say to a Senator offering a bill, if the basic thrust of your 
proposal is for a system that will move us toward the goal of allowing 
market forces to work their will, increasing the freedom of Americans 
to choose for themselves, then, yes, I would be willing to vote for a 
bill that goes in that direction.
  In sum, Mr. President, the health care issue is tortuously complex 
and huge in its implications. The chances that we might produce 
enormously difficult and costly problems if we do it wrong are 
overwhelming. But complex as it is, it can be solved as other complex 
social challenges have been solved throughout our history. Trust 
Americans to make their own individual decisions. That is the key. If 
we do, we will wend our way through the health care thicket as we 
always have when we have made liberty our full star. This has been the 
sum and essence of our success as a people. It will not fail us here.
  I yield the floor.

                          ____________________