[Congressional Record Volume 140, Number 96 (Thursday, July 21, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 21, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           HEALTH CARE COSTS

  Mr. GRAMM. Madam President, for the last 10 days I have been talking 
about health care. I want to continue that process today. I started 
yesterday by focusing on cost, the untold part of the story.
  For anyone who heard my speech yesterday, the point I was making was 
that in this whole debate about health care, relatively little debate 
has occurred on the issue of cost. I talked at some length yesterday 
about the so-called moderate plan which has come out of the Senate 
Finance Committee. While there has been endless discussion of the 
benefits that will be provided to the 110 million Americans--almost 
half the population of the United States--who will get Government-
funded health care under the Finance Committee bill, and while there 
has been a great deal of focus on the benefits, there has been 
relatively little discussion of the cost.
  Most Americans would be shocked to discover that under the Senate 
Finance Committee bill there is not one but two taxes on health 
insurance. Every American will pay an excise tax on his or her 
insurance premiums. At a time when the whole debate is supposed to be 
about holding down the cost of premiums, we are going to be debating 
next week a health care plan that has an excise tax that every American 
family will have to pay, raising the cost of its insurance. Most people 
will also be shocked at the fact that that bill imposes a 25-percent 
tax on 40 percent of all American families who have the best health 
insurance benefits.
  My point is that we are not having a balanced debate on health care, 
because we go on endlessly about the benefits and nobody is talking 
about the two excise taxes on health insurance benefits--no one is 
talking about the increase in the Medicare tax. These are very real 
costs that are involved. If we are going to have a rational debate, we 
have to tell the American people the truth.
  The truth is that there is a set of benefits being promised, but 
along with those benefits are very substantial taxes that are being 
imposed, and middle-class Americans--under the Senate Finance Committee 
bill, which is the health care bill that will come to the Senate floor 
for a vote--are going to be paying two new taxes on their health 
insurance benefits, one of them a 25-percent tax. That is something 
that should give us pause.
  But today I want to talk about another problem in the debate about 
cost, and that is a problem that people are not being leveled with. 
This is the whole issue of employer mandates. When you ask the American 
people if it sounds like a good idea to have employers pay for your 
health insurance, not surprisingly--since there are many employees and 
relatively few employers--the almost universal answer is, ``Yes.'' In 
fact, we all want benefits to be paid for by somebody else.
  What is interesting to me is that there is an extensive body of 
research on who actually pays for employer-provided benefits. I am 
going to be referring, today, to a study by the Congressional Budget 
Office, and I want to remind my colleagues that this is not Phil Gramm 
speaking. This is the Congressional Budget Office. The Director of the 
Congressional Budget Office is appointed by the Democratic chairman of 
the Budget Committee in the House and the Democratic chairman of the 
Budget Committee in the Senate. And the whole foundation, on this issue 
of employer mandates, comes from studies done by the House Ways and 
Means Committee, studies that were used in the Clinton campaign and the 
``Putting People First'' document that the President himself used in 
his campaign.
  The point I want to make is that everybody knows when you make 
employers provide benefits, the employees actually pay for the 
benefits. Everybody knows that. Every study shows it. But what is 
happening is, for political purposes in this debate, a myth is being 
perpetuated that employers can be forced to provide a benefit and it 
does not affect the worker's wage.
  I want to give you a couple of quotes --three of them--on the issue 
of employer-provided benefits. As I am saying this, just think about 
health care benefits provided by the employer. This is the 
Congressional Budget Office, in their study on the tax treatment of 
employer-based health insurance. This is a Democratic study. The first 
quote is this:

       An often overlooked point is that the employer share of the 
     cost of ``employer provided'' health insurance is ultimately 
     passed on to workers in the form of lower wages and 
     reductions in fringe benefits other than health insurance.

  Second quote:

       Why must employers pass on their share of health insurance 
     premiums to workers? The answer is that in a competitive 
     industry, employers must pass on those costs in order to stay 
     in business* * *for that reason, employers adjust 
     compensation to the level needed to stay in business.

  The last quote:

       At least in the long run, then, the employer is simply 
     acting as the employee's agent. The employee--not the 
     employer --pays for health insurance.

  Madam President, this is not me talking. This is the Congressional 
Budget Office. The Director is appointed by the Democratic chairman of 
the House and Senate.
  Why is this relevant? It is relevant because when talking about the 
9.5-percent payroll tax that funds the Clinton health care plan, at 
least in part, we are perpetuating a myth that everybody knows is a 
myth. The myth is that the employer is actually paying for these health 
insurance benefits, when everybody knows, when every study shows, that 
ultimately the employee is going to pay these costs in terms of lower 
wages and reductions in other fringe benefits.
  So the relevant question is, Are employees willing to pay a 9.5-
percent tax on their wages to have the Government take over and run the 
health care system? I think the answer to that question is no. 
Especially when you look at the fact that under the President's plan, 
43.5 percent of all workers who currently have private health insurance 
will be paying more for a Government-run system than they are paying 
for private health insurance.
  So, as we talk about this debate, let me express my frustration. My 
frustration is this. If we want to make an informed decision, we have 
to tell the American people the truth. If people really believe that 
the Government ought to take over and run the health care system, that 
we ought to have a Government-run system, and that it ought to cover 
everybody, I think logic and honesty dictate that we tell the American 
people how we are going to pay for it; that we actually have a viable 
program to pay for it.
  I want to conclude with two points:
  First, employer mandates ultimately are passed on to workers, and we 
are talking about lowering wages of American workers to pay for these 
benefits. Maybe American workers support that. I do not believe they 
do. But we ought to tell them the truth.
  Second, we all know, based on the initial studies, that every one of 
these health care plans is grossly underfunded--grossly underfunded. 
That allows us in the debate to promise all of these glorious benefits 
without having to say how we are going to pay for them. We cannot have 
a rational debate, nor can we serve the public interest, unless we are 
willing to be honest with people and say, ``Here is what the Government 
is going to give you, but here is what the Government is going to take 
away from you.''
  I want to warn my colleagues as we enter into this debate--because we 
are shooting with real bullets--if we have the Government take over the 
health care system, we are not going to be able to go back and take 
those promises back. I do not believe we are ever going to be able to 
pay for it, and we are setting ourselves up for a financial disaster.
  At least let us tell the American people the truth as to what these 
programs are going to cost as we enter into this debate next week. If 
we do that, we will make better law, people will end up being happier, 
and at least if a mistake is made, we can say to the American people, 
``Well, we told you the truth.''
  I yield back the remainder of my time.
  The PRESIDING OFFICER. The Senator's time has expired.

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