[Congressional Record Volume 140, Number 117 (Thursday, August 18, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 18, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           HEALTH CARE REFORM

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from New Jersey [Mr. Saxton] is recognized for 5 minutes.
  Mr. SAXTON. Madam Speaker, I, too, would like to talk for just a few 
minutes about health care reform and the health care system that we 
have and what is good about it and perhaps what is not good about it.
  And I would like to particularly point out to my friends from the 
other side of the aisle that there is a great deal of good that we have 
done, and I know we all can agree on this in our current health care 
system. Very few people complain about the capabilities that we have, 
very few people complain about the modern facilities and the great 
technology that we have been able to develop in our country. We have 
developed it through the free enterprise system and the system that we 
know as our current immediate care system, medical care system.
  But not everything is good about our medical care system. I would 
like to suggest to my friends that it is really the economics of 
medical care that do not work and the economics of medical care that 
need attention and the economics of medical care that need to be fixed.
  That is what needs attention. The big question for me is, how do we 
fix the economics of medical care without disrupting the great medical 
care system that we currently have. We can cure diseases that we could 
not cure not long ago. We keep people in hospitals less time for 
various procedures than we did not long ago. Doctors are more skilled 
today than they were not long ago. the same goes for other medical 
providers.
  I have traveled a little bit around the world in places where they 
have different types of systems. I would much prefer to take part as a 
patient in our system than anyplace else in the world that I can think 
of. But you are right about one thing: The economics of medical care is 
not working the way it should.
  Our country, as we all have said over and over again, has been 
successful economically because we have a free enterprise system. As a 
matter of fact, 85 percent of our economic system, our free enterprise 
system, works quite well. It is the 15 percent of our economic system 
that is involved with medical care that does not work very well. So the 
real question is, what can we do with that 15 percent of our economy 
that does not work like it should and why is it that it does not work 
the way we would like it to?

  If we look at the activities that take place in our economic system 
generally, we can begin to get a pretty good idea about what makes us 
work. We manufacture goods and we provide services throughout our 
economy, we have activities that involve buying and selling of goods 
and services throughout our economy. That all works. We have marketing 
programs and advertising programs for goods and services, and that all 
works. And that is all part of our free enterprise system. And health 
care fits within those types of activities as well.
  Implicit in all those activities, manufacturing, buying, selling, 
marketing, advertising, and all the other economic activities that we 
take place in, competition is implicit in all of those things that work 
in the 85 percent of our economy that work, competition is implicit in 
all of those activities.
  When we as American business entrepreneurs begin to look at how to 
make a business successful, we look at locations for our businesses, 
because it is important in competition to have the right location. We 
look at the aesthetics of our plan, particularly retail stores, because 
it is important to attract customers, and that is part of competition.
  We have stocks and inventories that are developed. To get the right 
inventory is important because of competition. And we set prices 
fairly, we set prices fairly because of competition.

                              {time}  1850

  Competition is missing today in health care. It is missing for a very 
simple reason. Eighty-three percent of our medical bills, yours and 
mine and all of America's all Americans', is paid by someone other than 
the consumer. We go to our employers and say ``We want to negotiate 
benefits.'' That means we want to negotiate how you, Mr. Employer, are 
going to pay for our health care benefits.
  When we retire, we have a Medicare program that pays for our 
benefits. If we are not wealthy, if we are poor Americans, we have a 
Medicaid program that pays for our benefits. That is right, 83 percent 
of the time, of the services that we receive in medical care, 83 
percent are paid by somebody else, so we don't have to care.
  When we go to the doctors, if the doctor says ``You need four 
tests,'' we don't ask if two will do or if one will do, because 83 
percent of the time we don't have to care. Somebody else pays for it.
  If the doctor says ``This is going to take six visits,'' we don't 
have to ask ``Can't you do it in three?'' because 83 percent of the 
time somebody else is going to pay for it.
  If the doctor says ``You need to go the hospital for a procedure,'' 
we don't have to ask ``Can't we do this as an outpatient?'' because 83 
percent of the time somebody else pays for its.
  There are some ways that we can restore competition to our health 
care system through a variety of programs which will be discussed in 
legislation that I'm going to introduce either before we leave here or 
in September when we come back.
  These will take as there essence principles that are encompassed in 
two dynamic and creative plans I have studied in my home region. The 
first is a program already put in to place at Forbes, Inc.; the second 
is a plan Jersey City Mayor Bret Schundler has enacted for municipal 
employees. Both plans have built-in incentives for employees to select 
as good and as much health care as they need.
  I enclose the statement Mayor Schundler delivered before the 
Republican Joint Economic Committee Forum held August 16.

      Health Care Reform Testimony to the Joint Economic Committee

       I'd like to thank Representative Saxton and all the 
     Republican members of the Joint Economic Committee for 
     inviting me to share my thoughts about health care reform in 
     America. This is an important issue that affects every 
     American, and I believe it is vital that we have a thorough 
     public debate before approving my legislation.
       We now have two Democratic proposals before us. The 
     Gephardt bill promises universal coverage by 1999, with 
     employers mandated to pay 80 percent of their employees' 
     health insurance costs. Low income workers would be covered 
     through a huge new entitlement called ``Medicare Part C'', 
     which the New York Times estimates would soon cover over 100 
     million Americans. Make no mistake about it, passing the 
     Gephardt bill means turning over the health care needs of 
     every American to the federal bureaucracy. Anyone who lives 
     in public housing knows how frustrating that will be.
       The Mitchell bill differs only slightly from the Gephardt 
     bill. If we pass it, we don't get Gephardt's government-run 
     health care system until 2002. Clearly, the fundamental 
     difference between Mitchell and Gephardt is that Mitchell 
     pulls the `trigger' a few years further into the future. But 
     both bills are guns aimed at the heart of American medicine.
       Under no circumstances should Congress pass either bill.
       Rather, I propose that Congress should keep what works and 
     reform what does not. President Clinton, Senator Mitchell, 
     and Representative Gephardt believe that our current health 
     care problems arise from market failures, i.e. the failures 
     of a free society. I believe that government failures are the 
     problem. Any health care reform bill should move away from 
     government control and third party payment, and move towards 
     empowering patients to choose their own doctors, make their 
     own decisions, and control their own health care costs.
       Just over two weeks ago, President Clinton came into Jersey 
     City to campaign for his version of reform. He challenged his 
     opponents to come up with a constructive alternative to his 
     bureaucratic quagmire. The alternative has already been 
     offered in both the House and Senate, but the President 
     doesn't want to talk about it. It is a system of refundable 
     tax credits to enable Americans to be able to afford to 
     purchase their own combination of catastrophic health 
     insurance and Medical Savings Accounts (MSAs).
       In Jersey City, I am working to change how we provide 
     health insurance to our workers. Under the Jersey City plan, 
     the City will purchase catastrophic insurance with a $2,000 
     deductible, and then deposit $2,000 into a Medical Savings 
     Account to cover 100 percent of employees' out-of-pocket 
     medical expenses. This money can be used to cover routine 
     physical examinations, which are not covered under most 
     traditional health care policies, and will improve our 
     employees' access to prevention care. But since our employees 
     will get to keep as income any money not spent in the MSA, 
     they will also have an incentive to spend their health care 
     dollars more prudently.
       Through this approach, not only are our employees likely to 
     stay healthier, but they will be able to take some money home 
     on December 31st, and the City will be able to save money 
     too.
       Let me expand on this latter point. First, the City will 
     save money because the combined cost of the catastrophic 
     premiums and the MSA deposits already in the first year will 
     be less than its current health care premiums for its present 
     traditional coverage. (This is because there are immediate 
     administrative savings to be achieved since the insurance 
     carrier really does not have to examine bills closely until a 
     family's expenses exceed $2,000 in a single year.) Second, 
     increased preventative care will make for healthier employees 
     who are a better risk for insurance carriers. Third, there 
     will be reduced cost-shifting when our employees are 
     incentivized to negotiate with their doctors for lower prices 
     and doctors are less like to cost shift onto our employees 
     when they know that our employees will be personally affected 
     by a padded bill. Fourth, because the insured stand to keep 
     money not spent from the MSAs, this plan almost totally 
     eliminates fraudulent claims.
       This plan will work for Jersey City employees just as it 
     has worked for employees of Forbes, Inc., where insurance 
     premiums have dipped almost 30 percent in the first two 
     years. Perhaps more importantly, it can work for Americans 
     nationwide.
       We can create a federal MSA system by replacing the current 
     system of tax deductions for employer-provided health care 
     with a system of refundable tax credits for individually-
     purchased insurance and MSA coverage. This would allow every 
     American, regardless of income or employment status, to buy 
     basic health insurance for less than what we spend as a 
     nation right now.
       Under this plan, all Americans with an income would use 
     their tax credits to buy a health plan for any carrier they 
     choose, whether through their employer, church, or even their 
     bowling league.
       Those who are unemployed or without sufficient income to 
     benefit from a tax credit would receive a voucher to purchase 
     their own health insurance and MSAs in the same way.
       Finally, for that 1 percent of Americans whose severe 
     health problems make them uninsurable, we could establish a 
     very high premium, government subsidized risk pool for basic 
     health coverage.
       This simple plan expands access, contains costs, and 
     maintains quality care. Perhaps more importantly, it enhances 
     freedom. It will give Americans the freedom to leave a job 
     without fear of losing their benefits by detaching health 
     insurance from one's employer, thus eliminating the ``job 
     lock'' so prevalent in our current system. It will free 
     people to get off welfare by eliminating the risk that they 
     will lose medical coverage if they take an entry level job. 
     And it will do all of this without bureaucrats and 
     centralized health boards telling us what treatments shall be 
     covered and when we may get them and from whom.
       It seems that there are two broad sides in this debate: 
     those who want government control over the health care 
     decisions of the American people, and those who want we the 
     people to have the power to make the decisions that could 
     mean our life or death. I believe we should empower the 
     people to choose what is best for their own health.
       President Clinton deserves credit for starting the debate 
     on health care reform. Now we must ensure that change comes 
     in the proper form.
       The President claims it is the moral obligation of 
     government to make sure that every American can obtain 
     affordable health care. I totally agree. But then the 
     President passes the buck. He says to businesses, ``You do 
     it!''
       His approach takes as its foundation every thing that is 
     wrong with the current health care system and builds upon it. 
     The result of his approach will be to increase costs, 
     decrease quality, and very significantly increase 
     unemployment--all serving no interest save for one: that is, 
     expanding opportunities for government bureaucrats.
       My proposal will decrease costs, increase quality, and 
     expand private sector job creation and acceptance. But 
     through the tax credits or vouchers expended, and through the 
     replacement of Medicare and Medicaid with self-purchased 
     private insurance, it will surely reduce government jobs in 
     the federal and state bureaucracies.
       Perhaps this is the reason the President refuses to opt for 
     this approach. He seems to have forsaken being the President 
     of the People, and has chosen instead to be the President of 
     Government. In fact, it seems to me that instead of 
     proactively using government to empower all, including the 
     poor, he is choosing to use government to disempower all--
     including the rich.
       I seriously doubt that the America people will stand for 
     this, and I hope that you will do everything in your power to 
     reject it.
       Thank you again for giving me the opportunity to address 
     the members of this committee, and I ask permission to enter 
     a prepared statement of my remarks and my Wall Street Journal 
     article concerning this subject matter into the written 
     record.
                                                   Bret Schundler,
     Mayor, Jersey City, NJ.

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