[Congressional Record Volume 140, Number 111 (Thursday, August 11, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           HEALTH CARE REFORM

  Mr. PRESSLER. Mr. President, all of us are very concerned about 
helping those Americans without health insurance. We want to ensure 
that they get insurance benefits. In my State a survey in one of our 
leading newspapers found that about 75 percent of our people were 
satisfied with the present health insurance and health care system. 
This does not mean that people do not want any change. Rather, it means 
they only want us to fix that which is broken.
  I lived in England many years ago as a student, and I found that 
there were people unhappy with the health care system there. There are 
people unhappy with the health care system in Canada, in Germany. There 
is no perfect way to deliver those kinds of services and have everybody 
happy.
  The point is we have the best health care system in the world, and 
the one that produces the most new drugs and the most new medical 
procedures. I think we should move very cautiously before we change the 
basic type of health care system we have. That does not mean we do not 
need to improve things in certain areas.
  Now, the President and the First Lady have done a good job of raising 
this subject. They deserve a great deal of credit. What happens in most 
of their seminars and meetings is that three or four people who have 
suffered from great health problems are showcased. We sympathize with 
those people who suffered. We would like to solve their problems. 
Everybody leaves the room and the meeting, and the implication is that 
everybody's problems would be solved if we just passed the Clinton 
health care plan or the Mitchell health care plan.
  But that is not true. There is much misunderstanding about what is in 
these bills, and it is part of my purpose to try to increase the 
understanding.
  For example, the health bill, according to the Washington Post, the 
Mitchell bill, the 1,410 page bill--and this is as reported in the 
Washington Post--``would create dozens of new Federal and State 
agencies. They would have untested authority to centralize, reorganize, 
monitor and enforce the way medical care is bought, sold and, to a 
lesser extent, practiced in this country.''
  In other words, we are setting up Government health insurance, and we 
should remember that, because that is exactly what it is.
  I cite another article from the Philadelphia Inquirer. ``Health bills 
increase taxes of middle class.'' According to the Philadelphia 
Inquirer, this is one of the largest tax increases aimed at the middle 
class in American history. ``The bottom line,'' it says, ``most people 
who now have generous health-insurance plans would end up paying more 
for reduced benefits, said Joseph Walshe, a benefits specialist with 
the Coopers & Lybrand accounting firm.

       Families in the $50,000 annual income range may see their 
     insurance costs rise by several hundred dollars per year, 
     Walshe said; actual costs would vary depending on a host of 
     individual circumstances.

  Mr. President, I have long felt that my principal job here is to 
represent the middle class. Of course, we are concerned about the very 
rich and the very poor, and we want to take care of the very poor and 
help them. But most people that I represent are middle-class Americans. 
You do not get any medals, I guess, for representing the middle class 
or being in the middle class, but the point is this health care bill is 
a massive tax increase for the middle class.
  The Philadelphia Inquirer article lists four major new taxes on the 
middle class. First of all, it would ``impose a new tax on health 
insurance premiums--2 percent in the House bill and 1.75 percent in the 
Senate plan.'' Most middle-class Americans have their own health 
insurance premiums, so most middle-class Americans would be paying that 
new tax.
  Second of all, the bill ends ``current tax breaks for `flexible 
spending accounts' in so-called cafeteria-style benefit option plans. 
This probably would affect more ordinary taxpayers than any other 
proposed tax change.'' That is another heavy tax on the middle class.
  Third, there is ``a 25 percent penalty tax on `high cost' insurance 
plans that `would be difficult to implement' and `might be considered 
inequitable.''' That is another tax on the middle class.
  Finally, there is an ``extension of the Social Security tax on non-
wage income to owners of `S corporations,' a tax category of service 
businesses.''
  So the point I am trying to make here is that the middle class' taxes 
are going to be substantially increased in this bill, and that should 
be understood. The very rich will pay the same increase, but it will be 
incrementally much smaller. But to a family of four on an income of 
$40,000- to $50,000 a year, that is a heavy tax increase on a 
percentage basis. And we should not apologize about representing people 
who make $30,000- or $40,000 a year or $50,000 a year. They are 
American citizens. They deserve representation. They should be told 
what is in this bill. It is a major tax increase on middle-class 
Americans, those Americans who take care of themselves, those Americans 
who obey the laws, pay their taxes, and carry out the duties of 
citizenship in this country. I think that has been overlooked, where 
the incidence of this tax increase falls. These new taxes fall on the 
middle class.
  I know there is very little sympathy in this Chamber from some of my 
friends for the middle class. To be very wealthy is very fashionable. 
To help the very poor is compassionate and you get awards and medals 
for it. But everybody forgets about the middle class, those people out 
here who are working, doing their jobs, who insure themselves, take 
care of themselves and their families, contribute to their communities. 
And this bill hits them hardest. It punishes the middle class. I think 
we should look at the new taxes that are in it and see if this is what 
we really want.
  Also, we must take a very careful look at the dozens of new Federal 
and State agencies that are being created, because once these new 
agencies are created there will be 98,000 new Federal employees and we 
all know what happens when there are new Federal employees--it keeps 
growing and growing and growing. And again, the taxpayers of America 
must pay.
  It has been said that our country is something like a wagon. There 
are only so many people pulling the wagon. Some people must ride in the 
wagon because they are handicapped or they are disadvantaged or they 
are poor. But more and more people are getting of the philosophy that 
they will ride in the wagon rather than pull the wagon. We are 
penalizing those people who pull the wagon--the backbone of our 
country. The way the taxes are built in this health care bill, the way 
the taxes will fall, they fall the hardest on the hardworking, honest, 
middle-class people of this country. And I make no apologies about 
standing up and speaking for them because I do not think they are 
spoken for enough.
  Now, this bill is put forth that it is going to solve all the 
problems and that somehow it is free. There is a tendency here to 
promise all these things in 1998 and the year 2000 and 2002. The 
balanced budgets are being promised, and the President talks about the 
benefits and the other goodies. But we really do not have good CBO 
figures. How much is it going to cost? Yesterday, we had a resolution 
in the Senate saying we should have the CBO figures, real budget 
figures before we act on such a major piece of legislation.
  The American middle-class taxpayer is being locked into a heavy load 
of taxes on a whole series of promises that are going to come into 
effect.
  Now, none of these taxes will come into effect until after the next 
Presidential election. That is another phenomena of this bill. If the 
President and the people advocating this health care reform were 
sincere and they thought we needed it, they should make it effective 
today. People would know what the rate of taxation would be during the 
next Presidential election. They are not going to find out because it 
very carefully takes us beyond 1996. It takes us on to 1998. Indeed, 
the biggest taxes come into effect in 2002, the employer mandates. By 
that time, we will have had two Presidential elections.
  So what this Congress is doing is putting a burden on future 
generations. It is promising people a whole bunch of things that are 
not going to be delivered until 2002, but meanwhile the taxes are 
creeping in. And it is doing it without a budget estimate, which is 
just absolutely amazing. So that is not a good management way to do 
business.
  I have frequently been a critic of Congress because of the way we do 
our business and how we are organized. But we should have a budget 
estimate before we go into something like this. If we are going to 
increase people's taxes, we should tell them how much and when. Those 
are some of the things that we must do.
  Mr. President, I ask unanimous consent to place the article from the 
Washington Post about the dozens of new Federal and State agencies into 
the Record, and also from the Philadelphia Inquirer titled ``Health 
bill increase taxes of middle class.'' This is from a very liberal 
paper that is writing that. I do not usually cite liberal papers, but 
when they write the truth I do.
  There being no objection, the articles were ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Aug. 7, 1994]

          Health Bills May Have No Substitute for Bureaucracy

                            (By Dana Priest)

       President Clinton and members of Congress last week hailed 
     the Senate Democratic leadership's health bill as a vast 
     improvement over the bureaucracy-laden 1,462-page plan 
     produced by the White House.
       But the 1,410-page bill proposed by Senate Majority Leader 
     George J. Mitchell (D-Maine) also would create dozens of new 
     federal and state agencies. They would have untested 
     authority to centralize, reorganize, monitor and enforce the 
     way medical care is bought, sold and, to a lesser extent, 
     practiced in this country.
       New bureaucracy is unavoidable in legislation that sets out 
     to tackle the job of reforming the health care system, which 
     makes up one-seventh of the economy, policy analysts say.
       ``While it appears as more bureaucracy, it's actually less 
     than the current system,'' said David Kendall, a health 
     policy expert with the Progressive Policy institute, a 
     conservative Democratic think tank. ``Having one purchasing 
     group buying insurance for 1 million people is a lot more 
     efficient than having 10,000 employers do it.''
       Even so, the Mitchell bill substitutes government 
     bureaucracy for private in some instances, challenging states 
     and federal agencies to set up new agencies with complex 
     responsibilities never before performed on the same scale by 
     public or private enterprise.
       The Mitchell bill would require states to enforce complex 
     new insurance industry laws designed to prevent companies 
     from discriminating against the old and sick.
       It would obligate states to verify that health plans had 
     the ability to care for patients in the way the law requires 
     and were financially sound.
       And it would force states to monitor the transfer of 
     billions of dollars in insurance premiums paid by employers 
     and individuals to private insurers.
       States also would set up at least three new, multibillion-
     dollar government subsidy programs for low-income people. One 
     would be for people temporarily unemployed. Another would be 
     for low-income pregnant women and children. The third would 
     be for hard-to-reach low-income groups like the homeless.
       In addition, states would have to dismantle Medicaid, the 
     current federal-state health insurance program for the poor, 
     and give money to those same people to buy private insurance.
       Moreover, the states would be asked to collect new data in 
     each community on patient care, health spending and on the 
     functioning and efficiency of health plans. The data would be 
     used to compile a report card on each health plan that 
     consumers would use to select a plan every year. it also 
     would be used by each insurance company to set standard 
     prices in each community.
       ``It's so much at one time,'' said Raymond C. Scheppach, 
     executive director for the National Governors' Association. 
     ``You're trying to build a very different delivery system at 
     the same time there's a new low-income program. and then you 
     have to worry about waste, fraud and abuse because you're 
     reshuffling so much money.''
       Mitchell's requirement that states collect insurance and 
     health data, for example, also would be necessary to make 
     sure no health plan collapsed financially. This could occur 
     if a disproportionately large number of sick people enrolled 
     in one particular plan.
       To protect against this possibility, states would be 
     required to do something called ``risk adjustment,'' a task 
     no one has carried out successfully anywhere on a large 
     scale. It involves figuring how much more one particular 
     health plan spent because it had more sick people than the 
     average plan in a given community and then giving it money to 
     make up the difference attributable to the disparity.
       In Mitchell's bill, large companies allowed to keep their 
     own health plans would be required to contribute toward the 
     overall cost of health care for people in the community 
     beyond their employees. Senate aides believe large companies 
     would be required to pay less than a 1 percent payroll tax.
       The Congressional Budget Office recently said, ``The 
     feasibility of developing and successfully implementing such 
     a mechanism in the foressable future is highly uncertain.''
       Proponents of the Democratic leadership bills argue the new 
     bureaucracies are a necessary part of fixing the health care 
     system and they have designed them in the least disruptive 
     way.
       ``It requires a lot of administrative work, and we don't 
     know whether they can be done, especially by the states,'' 
     Mitchell said at a news conference last week. ``That states 
     have been the laboratories of democracy in health care . . . 
     and the alternative to the states doing it are two: the 
     federal government doing it or doing nothing.''
       Opponents say the bills are another example of government 
     run-amok lawmaking. ``With 17 new taxes and 20 new 
     bureaucracies, the Mitchell plan is enormously irresponsible 
     and expensive,'' said Sen. Don Nickles (R-Okla.).
       Nickles 17 ``new taxes'' include increases in penalties for 
     not complying with proposed new rules and changes in how the 
     tax code treats some health benefits. It also includes some 
     taxes Republicans have championed, such as taxing wealthy 
     Medicare beneficiaries for part of the Medicare benefits they 
     receive.
       Scheppach of the governors' group said states would need a 
     three- to five-years period of phase in the new system before 
     being judged on whether the reforms reduced health spending 
     and provided insurance to more people.
       Under the Mitchell bill, employers in a state that did not 
     reach 95 percent coverage by 2000 might then be required to 
     pay 50 percent of their workers' health insurance. Employees 
     would be required to pay the rest.
       In the Mitchell bill, for example, small businesses that 
     voluntarily pay workers' insurance would no longer have to 
     search out health companies to insure their workers. The 
     company simply would send the money to the health plan or 
     Health Insurance Purchasing Cooperative that it employees 
     choose.
       The cooperatives, new nonprofit agencies monitored by the 
     states, would be responsible for enrolling individuals, 
     collecting and distributing premium payments to health plans 
     and providing consumer information on plans' quality and 
     costs. In regions where no nonprofit organization took on 
     that task, states would be required to run a cooperative for 
     consumers.
       States also would have to offer employees in every 
     community the chance to enroll in the federal employee health 
     program. And if no such program existed in a given region, 
     the federal Office of Personal Management would have to set 
     up and run one there.
       People on all sides of the health care debate critize the 
     massive amount of red tape in the current system. Health 
     experts say paperwork and overhead add 30 percent to the cost 
     of insurance for small businesses. Consumers complain 
     frequently about the paperwork and coverage battles with 
     insurance companies, and standardizing the system requires 
     new regulations. The question is whether the government can, 
     and can be trusted to, oversee a health system in an 
     efficient and cost-effective way. As everything else in 
     health care reform, that will be a much-debated point. ``To 
     us, it's the Clinton alliances all over again,'' said Mary 
     Nell Lehnhard, senior vice president of the Blue Cross Blue 
     Shield Association, referring to the much-maligned insurance 
     purchasing cooperatives in the original Clinton plan that 
     were denounced by all sides.
       In addition to the expanded role for the states, the 
     federal government also would have new responsibilities under 
     the Mitchell plan. It calls for a new National Health Care 
     Cost and Coverage Commission, a seven-member presidentially 
     appointed panel empowered to monitor and recommend ways to 
     cover more people and reduce health spending. It mandates a 
     National Health Benefits Board, also seven members, set up to 
     decide the scope of medical services guaranteed in the 
     standard benefit package each health plan must sell.
       There is the National Council on Graduate Medical 
     Education, which would reorganize medical education so 55 
     percent of the residency students were working in primary 
     care by 2001.
       And there is the National Quality Council, which would set 
     quality standards and performance measurements for health 
     plans. And then, there is the House bill drafted by Majority 
     Leader Richard A. Gephardt (D-Mo.). It contains many elements 
     of the Mitchell plan, plus others.
                                  ____


                Health Bills Hike Taxes of Middle Class

                         (By Robert A. Rankin)

       Washington.--The two main health-reform bills moving 
     through Congress contain several provisions that would raise 
     the taxes of middle-class Americans as a tradeoff for 
     providing universal insurance coverage.
       Every income group would be affected by the most-publicized 
     tax contained in both bills: a 45-cent-per pack increase in 
     the cigarette tax, which would rise to 69 cents per pack by 
     1999.
       But other less-noticed terms largely would hit the middle 
     class. The bills would end current tax breaks for employee 
     health insurance, add taxes on health-insurance premiums and, 
     in the Senate version, slap a 3 percent income tax increase 
     on many small-business owners.
       The bottom line: Most people who now have generous health-
     insurance plans would end up paying more for reduced 
     benefits, said Joseph Walshe, a benefits specialist with the 
     Coopers & Lybrand accounting firm.
       Families in the $50,000 annual-income range may see their 
     insurance costs rise by several hundred dollars per year, 
     Walshe said; actual costs would vary depending on a host of 
     individual circumstances.
       New taxes are never popular, but their proponents say these 
     are necessary to provide universal health insurance to the 39 
     million Americans who lack coverage and to finance standard 
     benefits for everyone.
       The effect on individuals would vary considerably by 
     region, by plan and by the demographic profile of clients 
     sharing in group plans, said Bill Custer, research director 
     for the Employee Benefit Research Institute, a nonpartisan, 
     nonprofit study center.
       In addition to raising the cigarette tax, the plans 
     sponsored by House Democratic Leader Richard A. Gephardt of 
     Missouri and Senate Democratic Leader George J. Mitchell of 
     Maine would:
       Impose a new tax on health-insurance premiums--2 percent in 
     the House bill, 1.75 percent in the Senate plan. While 
     insurers would pay the tax initially, ``it's clear the effect 
     of that tax is either going to be a reduction in benefits or 
     simply passed along [to policyholders] as higher premiums,'' 
     said Custer.
       End current tax breaks for ``flexible spending accounts'' 
     and so-called cafeteria-style benefit option plans.
       This probably would affect more ordinary taxpayers than any 
     other proposed tax change, said Clint Stretch of the Deloitte 
     & Touche accounting firm. Reformers hope to make consumers 
     more aware of the full costs of their health-care spending--
     in hope of encouraging more cost-efficient spending--but this 
     change would pinch the middle class.
       About 40 percent of corporate employees now take advantage 
     of flexible accounts, through which they set aside pre-tax 
     dollars to cover their insurance plan's annual deductible 
     fee, and co-payments for medical services. About 8 percent 
     use cafeteria-style option plans, which let employees use 
     pre-tax dollars either for insurance or other expenses such 
     as child care.
       A family in the 28 percent tax bracket that sets aside $400 
     in a pre-tax ``flex'' account can cut its income tax by $112. 
     Ending that break ``is a tax increase, in effect,'' said 
     Custer.
       He warns that as employers lose their tax incentives to 
     offer such health-care plans, they also may drop the rest of 
     their ``cafeteria'' offerings on the ground that they are 
     more administrative trouble than they are worth.
       Gephardt's chief reform-financing tool is to impose a 
     mandate on employers to pay 80 percent of their employees' 
     health insurance. Economists call this an indirect tax; 
     politicians call it dynamite because business groups oppose 
     it so vehemently.
       To avoid the political explosion from that proposal, 
     Mitchell backed several other taxes, including:
       A 25 percent penalty tax on ``high-cost'' insurance plans 
     that ``would be difficult to implement'' and ``might be 
     considered inequitable,'' as determined by complex formulas. 
     Like the small tax both bills would impose on premiums, 
     insurers also would pass this 25 percent tax along to 
     consumers one way or the other, analysts agree.
       ``A lot of plans will try to keep under the [25 percent] 
     cap by skimping on benefits and other ways to keep costs 
     down,'' said Custer. He said the pace of medical inflation 
     was so hard to restrain that it eventually would push nearly 
     all insurance plans into triggering Mitchell's 25 percent 
     tax.
       Extension of the Social Security tax on non-wage income to 
     owners of ``S Corporations,'' a tax category of service 
     businesses.
       ``A lot of small-business owners are S Corps,'' said Pamela 
     Pecarich, director of tax policy for Coopers & Lybrand. ``For 
     them this is going to be a big hit, because it's a 2.9 
     percent tax on their total income.''
       The biggest taxes in both bills, however, are the ones 
     economists call ``indirect.'' Like Gephardt's employer 
     mandate, these are ``taxes'' because they involve the 
     government confiscating private money for a public purpose.
       Another indirect tax on both bills stems from their deep 
     cuts in Medicare's projects payments to doctors and 
     hospitals.
       Medicare already pays doctors and hospitals less than their 
     true costs for treating the elderly. Doctors and hospitals 
     make up these losses by shifting the unpaid expenses to bills 
     of the privately insured.

  Mr. PRESSLER. Let me also indicate what I am for. Meaningful reform 
must include: malpractice reforms, insurance reforms--making insurance 
permanent and portable, preventing insurance companies from denying 
benefits to individuals with a pre-existing condition, antitrust 
reform, paperwork reduction, reduction of Federal regulation, medical 
savings accounts, tax fairness to the self-employed, and voluntary 
purchasing pools.
  I yield the floor.

                          ____________________