[Congressional Record Volume 140, Number 117 (Thursday, August 18, 1994)]
[Senate]
[Page S]
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 SECURITY ACT

  The PRESIDENT pro tempore. The Senator from Alaska will be recognized 
following the reading of the bill, which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 2351) to achieve universal health coverage, and 
     for other purposes.

  The Senate resumed consideration of the bill.

       Pending:
       Mitchell amendment No. 2560, in the nature of a substitute.
       Daschle amendment No. 2564 (to amendment No. 2560), to 
     improve the access of individuals in rural areas to quality 
     health care.

  The PRESIDENT pro tempore. The pending business is S. 2351. The 
pending question is on amendment No. 2564, which amendment is open to 
amendment in the second degree. Of course, the underlying bill is open 
to amendment in two degrees.
  The Senator from Alaska is recognized.
  Mr. STEVENS. Mr. President, is there a time agreement on this 
amendment?
  The PRESIDENT pro tempore. There is not.
  Mr. STEVENS. Thank you.
  Mr. President, I have taken some time to review the Mitchell proposal 
for health care reform, and have concluded that it comes up short when 
weighed against the need of my Alaska constituents.
  Alaskans tell me to take care of the people who have fallen through 
the cracks, and for the rest, to find ways to hold down price increases 
for them.
  I do not, however, want to speak about only what I am opposed to. I 
intend to discuss what I am in favor of in terms of health care reform, 
also.
  Significant progress could be made on health care with reform 
measures on which most of us already agree. We actually agree more than 
we disagree. Many of us want to act now on the best proposals to cover 
the uninsured. Funding for those proposals, I believe, is the major 
problem.
  Bills have been introduced which promise expanded benefits and 
greater Federal taxpayer support. But there is no way I feel those 
promises can become a reality without destroying the taxpayers who 
support the system now.
  One of my greatest concerns is for the small business community. In 
our State, small business is the major part of our economy. I think 
that is true throughout our Nation. Small businesses are really where 
the jobs are. In 1990, there were 12,843 businesses in Alaska. 12,433 
of those were small businesses; 88 percent of those small businesses in 
Alaska had fewer than 20 employees.
  I believe it is unfair to expect these small business men and women 
who are struggling to survive now to bear the increased taxes and costs 
of this bill. There are few opportunities for today's young Alaskans to 
carve out a homestead from the wilderness. There are fewer and fewer 
areas of employment in our declining economy which those young Alaskans 
can hope to enter.
  In our State, the average age is 28.9, Mr. President. If these young 
people stay in our State, they take marginal and seasonal jobs and 
cannot pay ever-increasing taxes to support expanded benefits for the 
population as a whole and for those who are unemployed.
  Alaska is a primarily resource-driven State. This administration's 
policies, unfortunately, primarily in the Interior Department and the 
Forest Service, have limited our State's responses to unemployment for 
our own citizens. In most areas, Alaska will have great difficulty in 
maintaining current services, such as schools, child protection, and 
environmental protection, as our resource income declines. We continue 
to see fishing, timber, tourism, and oil as the backbone of our 
economy--some mining--but there are consistent, difficult problems in 
covering those employed in those areas with health insurance.
  I have talked to a great number of individuals, Alaskans and non-
Alaskans, about the problems, and I find most people want for 
themselves and their employees the best of what our health system can 
bring now. They want to take care of themselves and their families, 
obviously.
  So that Alaskans and all Americans can achieve that goal, I believe 
that any health care bill we pass must include the elements that we 
have already agreed to, basically: Every American should be able to 
obtain health insurance even if he or she has a preexisting medical 
condition. If a person changes jobs, that person should be able to 
transfer his or her medical insurance with them to the next job and 
should not lose insurance if they do not get a job immediately. Illness 
or loss of a job should not be a reason for canceling insurance. Every 
American should be able to choose his or her doctor or hospital, to the 
greatest extent possible. People, even in remote villages of my State, 
like Holikachuk or Shishmaref, should have access to both a doctor and 
a hospital, even if there are no doctors or hospitals in those 
villages.
  Mr. President, I will show to the Senate now an overlay of my State 
on the Nation. It shows the locations of the villages and highways in 
Alaska. You will note that the highways are predominantly in the south 
central area and connect to Canada. There are no highways or roads 
anywhere in the rest of the State that connect the villages. As I have 
mentioned, in the villages out on the west coast, residents can only 
commute by air into the medical centers of our State. I am concerned 
that the Mitchell bill does not adequately address the needs of 
Alaskans--the small business men and women and their employees. These 
include Natives and rural residents. They have to fly hundreds and even 
thousands of miles across that enormous State of ours to get the 
medical attention.
  Mr. President, my colleagues have heard me speak in the past about 
how Alaska is unique, and I think it is, and that different solutions 
are necessary for our problems, and that our problems probably are not 
shared anywhere else in the United States. I tried to discuss this with 
Mrs. Clinton when she came to visit the Republicans on the issue of 
health care, and I indicated to her that if her bill would address 
health care access in Alaska, real health care access, I would support 
her bill. Her answer made it clear to me that she did not understand 
what I meant. I am sorry that is the case. But she responded to me that 
to deal with our transportation problems in Alaska--as I say, they are 
critical to real health care access in my State--we should raise the 
premiums.
  Alaska, unlike many other rural areas in the country, is a high-cost 
area. This is largely because of transportation, as I earlier 
mentioned, to these very remote areas in our State. We must transport 
every commodity by air to these rural areas. Even bricks and mortar and 
hay for horses are transported to those areas by air. And they are 
transported to the remote sites for the construction of housing units 
for the Native people in those areas. It is all done by air. We must 
use aircraft to deliver the bulk U.S. mail, mail that is trucked to the 
communities of even the rural States in the south 48.
  To serve our Indian Aleut and Eskimo villages, we must import doctors 
and nurses from residential centers like Anchorage and Fairbanks, again 
by air. And they must take all of their equipment and their belongings 
with them. And when their temporary duties are over, we transport them 
back, because they are unable to have the facilities in each of these 
villages to deal with the people who live there and, of course, they 
must go back to their families who are either in the medical centers of 
Alaska, or somewhere on the west coast.
  We have no medical or dental schools in Alaska. We do not have 
academic health centers, and we have difficulty in attracting and 
retaining specialists. For that reason, Alaska cannot support health 
care reform approaches which prevent the training of additional 
specialists in areas that we need very critically--trauma surgeons, for 
instance, or specialists who will work with developmental disabilities. 
We are especially interested in expansion of training opportunities for 
nurse practitioners and physician assistants. We need them very much in 
our rural communities. Their importance to rural health care has been 
proven over and over again.
  Labor and supply costs are high in our State. It is not surprising 
that we are unable to attract providers of any kind to stay in these 
communities of 50 to 100, or even 500, particularly, if those 
communities do not have housing, running water, flush toilets, and the 
normal amenities of life in America.
  Hard as it may be to believe, more than 200 of our rural communities 
lack water and sewer facilities--adequate ones, that is.
  We have now developed an approach that generally works for Alaska and 
which the General Accounting Office, in 1993, acclaimed as ``a creative 
approach for Alaska.'' The distinguished occupant of the chair has 
helped me frame that approach over the years, and I am proud of it. It 
is the Community Health Aide Program. We call that the CHAP Program. 
CHAP employs residents of Native villages. Some of them may have only a 
seventh- or eighth-grade education.
  After a few weeks of training, the community health aides serve, in 
most instances, as the sole medical provider in their community, and 
those funds available to them are provided through the subcommittee 
that the distinguished occupant of the chair has chaired in the past 
and still chairs and the Appropriations Committee which he chairs.
  These community health aides, through the Indian Health Service, are 
provided a detailed manual. They are given a telephone connection to 
nurses or nurse practitioners or doctors or physician assistants who 
are in the nearest hub, the nearest center, and that is good if the 
weather does not knock the power out, that gives them both the 
telephone access and ability to operate their clinics.
  They cope with all the tragedy that these rural communities 
experience--injuries and death due to alcohol abuse, chronic diseases 
such as tuberculosis and diabetes; high rates of lung and cervical 
cancer; self-inflicted ailments due to tobacco, or misuse of alcohol or 
inhalants; and drownings and hyperthermia and fetal alcohol syndrome 
and disease. Burns are a constant problem because many of these 
communities do not have adequate fire protection. A community health 
aide in one of those villages deals with that full spectrum of the 
health care delivery.
  While the Mitchell bill includes many of the same rural provisions 
which the Dole bill has, it does not include those provisions that are 
critical to Alaska.
  Those seek to address the critical issue of transportation--and real 
access to health care--in a place such as our State.
  Many primarily rural States will have the problem that they are low-
cost States and expansion of new or even existing technology will be 
limited by this bill. That is also a serious problem for Alaska, even 
though we are a high-cost State. Many areas of Alaska are now just 
getting basic technology. Some have just gotten access to an x-ray 
machine. Some of our health facilities are housed in old tuberculosis 
sanitariums built in the fifties.
  The Mitchell bill, I feel, will stop the progress of medical 
technology in my State and force us into yesterday's medicine. It is 
unlikely that any rural village will ever see a CAT scan machine or MRI 
machine, equipment we take for granted now in urban areas like 
Washington, DC, or even Anchorage, AK. I question under the Mitchell 
bill whether Alaska will ever receive the technology it will need and I 
believe those rural citizens deserve.
  I recall many years ago when the senior Senator from Massachusetts 
asked us to consider legislation on the subject of CAT scanners. My 
concern then was whether Alaska would get a CAT scan, or if they would 
be rationed on the basis of population. That was the suggestion early 
in that debate.
  When I survived a plane crash in 1978, it was a CAT scan that told 
physicians then that I did not need brain surgery, an operation I 
surely would have had if the CAT scan had been rationed by population.
  We cannot have technology rationed on the basis of population. 
Rationing of care continues to be my recurrent nightmare after my own 
experience. Our population between 570,000 and 580,000 approaches one 
individual per square mile. Our land area is 586,412 square miles, 365 
million acres. I show that to the Senate, that vast area, how it 
spreads from coast to coast and from north to south as far as the 48 
States' circumference is concerned.
  The implication of this legislation before us is that resources would 
be distributed on a population basis. We must examine how we approach 
the distribution of resources that provide medical technology and 
innovation, and that is particularly true in the area of telemedicine. 
We must examine how we treat States and communities with academic 
health centers and those who have none and ask, for those who have none 
how we can get the technology to them. The wrong approach to health 
care reform will be the difference between access to new standard 
therapy and diagnostic procedures and the lack of access for rural and 
less populated areas for a long time to come.
  I ask the Senate if we really have a commitment to medical research 
and infrastructure development in this bill. The Indian Health Service 
proposals in the Mitchell bill I believe are not what the Indian 
community had hoped for. They are not what was recommended by the 
Committee on Indian Affairs.
  My concern with the initial proposals concerning the Indian programs 
offered by the administration was that those programs could not be 
supported by the resources that have been available in the past under 
the Interior appropriations bill. In particular, I was advised that the 
Federal Indian Health Insurance Fund to which third party insurance 
dollars and appropriated funds would be contributed was not adequate to 
implement the policies we want to provide for Native Americans, but 
that still remains in the majority leader's bill.
  It is my belief that we cannot raise expectations beyond what we can 
afford to fulfill, and all too often those expectations are raised in 
rural, less populated areas and left unfunded because Federal health 
dollars flow disproportionately to the heavily populated areas.
  I believe we must keep in place the system which works and which has 
been a safety net for American Indians and Alaska Natives on 
reservations and in villages in my State and keep it in place until we 
have a proven new system that also works.
  I have compassion for the Indians in urban areas. In the past, they 
have not received medical resources because of our historic 
distribution system based upon reservations. But we cannot expand our 
resources into new missions and new places if we cannot keep the 
commitments we have already made. We have already promised to provide 
basic medical service, including the construction and renovation of 
critical medical facilities in North American Indian communities, and 
in Native American communities.
  Alaskans have consistently supported two areas of what we call 
supplemental benefits which we have been unable to provide as quickly 
as we would like. One of those areas is patient travel, which I 
mentioned before. The other is sanitation.
  In Alaska, travel to a medical facility may cost more than the care 
that one goes to the medical facility to get. For many Alaska 
communities, the Indian Health Service in Alaska used to pay emergency 
travel expenses to a health facility, often to an Indian Health Service 
facility. But the IHS only provides one-way fares. If a village wanted 
to see its family member come back to the community after discharge 
from the hospital, residents had to raise funds to return the patient 
home. We still have that problem. It is made more acute when there is 
an emergency transfer of a patient from the village to the hub 
community where a regional hospital exists. Doctors in that hospital 
decide whether a more sophisticated medical approach is needed. Travel 
then becomes necessary from that regional hospital to the flagship of 
the Indian Health Service in Anchorage, the Alaska Native Medical 
Center.
  Patient travel expenses come from contract care funds in the Indian 
Health Service. Using those funds for travel takes money away from 
patient care, and that is not an answer to access. Diminishing the 
amount of patient care funds in order to provide patient access is not 
an answer for health care in rural Alaska.
  Alaska's problem with sanitation is an issue that a number of my 
colleagues here in the Senate are aware of and have worked on with me 
through work on the appropriations subcommittees or the full committee 
or through service on the Indian Affairs Committee or the relevant 
authorizing committees in dealing with sanitation problems.
  The Indian Health Service has told us that providing clean water and 
sanitation facilities is the most significant and necessary public 
health expenditure in Alaska. Health care access requires a health 
clinic have clean water and sanitation facilities. To expect those 
clinics to function without these basics makes health care reform 
meaningless in rural Alaskan communities.
  So I ask the Senate to refuse to eliminate the Federal systems which 
are the safety net in my State until we know whether these reform 
proposals for health care work.
  Throughout this debate on health care, we have heard a lot of 
laudatory comments about the Federal Employees Health Benefits Program 
and deservedly so. I think I have served on the committee having 
jurisdiction over the Federal Employees Health Benefits Program longer 
than any other Member of the Senate. The FEHB Program is part of an 
American health care system that works. It provides affordable quality 
health care to over 9 million Federal employees, retirees, and their 
dependents.
  The FEHB Program, this Federal employee program for health care, is 
the largest medical plan in the United States.
  It is not perfect. OPM works continually with carriers and 
participants to improve this system and the benefits offered through 
its customer satisfaction service, annual call letters, and its 
oversight. But the program has had more than its share of successes and 
deserves to be recognized as a basic success in health care insurance.
  The FEHB Program has been successful in holding down costs--over the 
last 12 years, the program's average premium cost per person rose 
approximately 3.5 percent less than private sector premiums for large 
businesses. The system holds down growth in costs by forcing insurers 
to compete for customers by providing the best service at the lowest 
premiums.
  The program provides flexibility through its annual open season, 
which allows individuals and families to change their policy to adjust 
to changing circumstances. And, the FEHB Program gives its participants 
the ability to choose the health care plan which is offered that is 
best for them.
  Every enrollee has a choice among many health plans with varying 
levels of benefits and premiums. It has benefits that I believe we all 
would agree should be included in health care reform.
  For example, FEHB includes the ability with copayment or deductibles, 
to choose one's own physician; it basically insures everyone, 
regardless of preexisting condition; and there is no cancellation of 
FEHB insurance for catastrophic illness.
  Rural areas, particularly like Alaska, need the flexibility of health 
plans which provide options to meet individual and family needs.
  Unfortunately, instead of serving as a model for reform, the FEHB 
plan would be drastically changed by the Mitchell plan.
  The Mitchell bill essentially attempts to turn the program into an 
almost monolithic single-payer plan, to the detriment of Federal 
employees, retirees, and dependents.
  Ultimately, it challenges the very viability of the plan itself. 
Rather than treating the plan, as I believe it should be, as a large 
employer plan, and preserving it as a model to judge the effectiveness 
of new plans for employees, retirees, and dependents, the debate has 
now turned to how to open up FEHB. I do believe that people throughout 
the United States have told us they want a medical reform bill that 
gives every American a right to get a plan as good as FEHB. But I do 
not think I have heard from anyone that we ought to destroy FEHB in 
order to try to accomplish that.

  Instead of a straightforward repeal of the program, as was proposed 
in President Clinton's health care reform bill, the Mitchell bill would 
repeal the FEHB Program by overwhelming it.
  The Mitchell bill would open up the FEHB Program to welfare 
recipients, employers with fewer than 500 employees, the self-employed, 
and the unemployed. To maintain contact with those people, Mr. 
President, who are not Federal employees, throughout this country would 
require a bureaucracy almost as large as the Federal Government itself.
  The reason that the Federal Employees Health Benefits Program works 
is the Federal Government is a very large employer. The Mitchell bill 
will not treat the Federal Government as a large employer anymore. It 
seeks to treat the Federal Employees Health Benefits Program as a 
series of very small employers throughout the United States.
  Initially under the Mitchell plan, Federal employees and non-Federal 
participants would be in separate risk pools, which is intended, 
apparently, to protect Federal employees from sharp increases in 
premiums. But the pools will soon be merged, creating a massive new 
system.
  I want to read what the Mitchell bill specifically states so there is 
no disagreement about it. The Mitchell bill would eliminate this model 
plan in 10 years. It says specifically:

       The Office of Personnel Management shall implement rules to 
     blend after January 1, 2005, the premiums for FEHB plans 
     offered through purchasing cooperatives to Federal employees 
     and community-rated individuals in each community-rated area.

  What that means is, after 2005, the FEHB plan that is offered through 
these purchasing cooperatives and the FEHB plan offered by the Federal 
Government as employer will merge.
  The Mitchell bill eliminates the model FEHB plan in 10 years.
  The merging of the risk pools will expose Federal employees to sharp 
increases in premiums. This problem is made even more difficult by the 
fact that there is no estimate of the number, age, or medical condition 
of people who may opt to join the plan. That, of course, will depend in 
large part on the premiums for the non-Federal entrants, which will not 
be set until January 1997, although they are free to enter the pools 
immediately.
  However, we can make some estimates of the number of entrants by 
using Medicaid figures.
  The Medicaid population alone this year is approximately 34.6 million 
people. But not all Medicaid recipients would turn to the FEHB Program. 
Four million Medicaid recipients who are over the age of 65 also 
participate in Medicare and use Medicaid only as a supplement.
  Another 5.5 million Medicaid recipients are blind or disabled, 3.7 
million of them receive SSI benefits and would be excluded from the 
FEHB Program by the Mitchell bill. That is probably because the risk 
that would be added to the pool by that high-cost group would 
dramatically drive up health care costs and premiums for both the 
employee and the employer.
  Let me explain that that is a vital concern to us also, because when 
you look at the children with fetal alcohol syndrome in the villages, 
we are talking about some of the people who would be excluded from the 
benefits of this plan. That leaves almost 27 million people who could 
potentially join the FEHB Program from Medicaid alone. And that number 
does not include individuals who are uninsured, self-employed, or whose 
employers choose to participate in this system.
  The potential for increase in the number of people in the FEHB 
Program is four to five times the size of FEHB now and, as I said, that 
is the largest system in the United States today.
  In addition to the problems of the sheer size of the system the 
Mitchell plan would create, the plan has the potential to wreak havoc 
with the premiums of Federal employees.
  As I said, The FEHB Program is currently experience-rated, with 
premium rates based on the entire group. It is not a community-rated 
system.
  Under the Mitchell plan, the move to community rating will have a 
devastating impact on Federal employees in high cost areas, such 
as Alaska. And it will have an increasingly devastating impact on the 
Federal taxpayer who pays 72 percent of the cost of that plan.

  The premiums of most FEHB fee-for-service plans, such as the Blue 
Cross&Blue Shield plan, which covers 40 percent of all FEHB 
participants, are not currently affected by local costs.
  But beginning in 2005, Federal employees and retirees will pay the 
same community-rated premiums as non-Federal employees.
  That means that Federal employees working in Alaska will pay higher 
premiums than Federal employees with the exact same health care plan 
living in low-cost areas in the south 48. The costs to the taxpayers, 
as their employer, will similarly go up. As I said, 72 percent of those 
increased costs will be paid by the taxpayers.
  Look at the average cost of the various health care services around 
the country. They demonstrate the impact that community rating will 
have on the Federal employees health benefits system, particularly the 
employees.
  According to the Health Insurance Association of America Source Book 
on Insurance Data, the average cost of a semiprivate hospital room in 
the country costs $297 in 1990, with cost varying from $215 in South 
Carolina to $407 in Alaska and $456 in Connecticut. Now that is 1990.
  In 1990, the average cost for an inpatient surgical procedure was 
$980, but it rose as high as $1,348 in Alaska and $1,400 in Maryland.
  Under the Mitchell plan, the disparity among Federal employees' 
premiums increase when risk is added to the pool through the inclusion 
of millions of potentially high cost, non-Federal participants and the 
costs to the taxpayers for the FEHB plan will similarly go up 
dramatically.
  I do not know why we cannot recognize that the Federal Government is 
a major employer and, as such, the taxpayers who support that system 
should have the advantages that any other major employer should have.
  At the same time, premium costs will vary substantially from State to 
State and the pool then becomes subject to community rating.
  Now, another problem in the Mitchell bill arises from the use of the 
phantom or ``Big Six'' formula. And I think this is one of the most 
difficult things for some people to really dig into.
  By law, OPM must now use a formula based on what is known as the Big 
Six plans' premiums to set the Government's contribution--the 
taxpayer's contribution--for employee health insurance.
  The Government contribution to each enrollee's premium is an amount 
equal to 60 percent of the average of the high option premiums for the 
Big Six Plans.
  The Big Six average is currently calculated using the premiums for 
the six plans.
  The first five plans of the Big Six in FEHB are: the Blue Cross/Blue 
Shield high option, two employee organization plans--Government 
Employees Health Association [GEHA] and mail handlers--and two HMO's 
with the highest number of enrollees--the Kaiser Health Plan of 
Northern California and the Kaiser Health Plan of Southern California.
  The sixth part of the Big Six formula is a fictitious premium based 
on Aetna's 1989 premium updated by the annual change in the premiums of 
the five remaining Big Six plans.
  Aetna withdrew from FEHB as an underwriter in 1989. Since Aetna's 
withdrawal, this mathematical formula replaced Aetna in the 1990 
through 1998 calculations.
  The Big Six formula was recently reauthorized through 1998, primarily 
to get the plans through health care reform with the assumption that 
this would be reevaluated.
  But the Big Six formula would continue to be used to set premiums for 
Federal enrollees under the Mitchell bill.
  It would continue the Big Six fictitious formula to establish the 
hypothetical premiums which are used to calculate the Federal 
Government's employer contribution to FEHB plans.
  I am told there is real concern among the carriers that the Big Six 
formula may not be workable under the Mitchell plan, particularly with 
a standardized benefit plan.
  Remember, there are a series of options now under FEHB; there is no 
standardized plan. And the merging of risk pools--there are a series of 
pools to be created by the Mitchell bill, some of them Federal 
employees, some of those who enter by being employees who select the 
plan, some unemployed, and others who can come into this FEHB Program 
now. And the blending of those premiums will take place in 2005.
  At that time there is no escaping the conclusion the cost to the 
taxpayers will go up, the cost to the Federal employees will go up, and 
there will be no real benefit to the others in the process. They belong 
primarily in the pools of their own communities. They would benefit 
more in the long run by being in those communities.
  The FEHB Program in this bill will be unworkable, as with many other 
provisions in the Mitchell bill, the provisions mandate change now, but 
will determine the details later.
  As the saying goes: ``The devil is in the details.'' These are issues 
that cannot wait.
  We ought to know the details now. We ought to know how our premiums 
are going to be figured for the FEHB entrants who come in from the 
public at large into this large pool who are not employees of the 
Federal taxpayer.
  The Mitchell bill will place more and more individuals in the FEHB 
plans.
  My major concern is that carriers will drop out of the old FEHB plan, 
rather than be forced to accept potentially high-cost, community rated 
applicants in the new Mitchell pools.
  Mr. KENNEDY. Will the Senator yield for a question?
  Mr. STEVENS. I will yield when I finish my statement.
  FEHB under the Mitchell bill, will be an uncertain program which will 
be destabilized when the separate pools are merged in 2005. Carriers 
will have no incentive to participate in an uncertain plan which has no 
future. At most, FEHB has a maximum 10-year shelf life under the 
Mitchell bill.
  I understand that some concern has been expressed in the past that 
the modest and incremental expansion of the FEHB Program to employees 
of certain small businesses included in the Dole bill might destabilize 
the FEHB plan premiums.
  Think of that, the Dole bill, which has a modest access to the FEHB 
plan for the employees of some small businesses, has been criticized 
already. The enormous, enormous expansion in the Mitchell bill has 
really not been examined at all.
  The Dole FEHB Program provisions, to me, are far preferable to the 
sweeping and dramatic changes in the Mitchell plan, which I believe 
would ultimately lead to the collapse of the FEHB Program. It certainly 
leads to the demise of it and a future for FEHB that is uncertain when 
these pools are merged in 1995.
  Another issue that concerns me deeply is whether cost containment and 
managed care will ever be viable in our State of Alaska because of 
Alaska's geographic uniqueness.
  In addition to the access and cost containment problems I have 
mentioned, I want to discuss some of the other concerns that I have 
with the Mitchell bill.
  Specifically, the Government would set price controls which will 
unfairly burden Alaskans. Under the plan, health insurance premiums 
growing faster than the reference premium would be taxed at 25 percent.
  The Congressional Budget Office has stated that ``few, if any, areas 
would meet that test more than the first year or two, because the 
reference premiums would be constrained to grow far more slowly than 
the expected growth of health insurance premiums.'' This is from page 
12 of the CBO's preliminary analysis of Senator Mitchell's health 
proposal.
  This means that some Alaskans and other Americans will be taxed at 25 
percent on some portion of their health care package, because their 
premiums will exceed the premium that the Mitchell bill determines is 
reasonable for the country as a whole.
  Senator Mitchell's health plan also includes an employer mandate that 
will drive jobs out of Alaska and other States that fall below 95 
percent coverage. This is on page 14 of the CBO report. Employers would 
be required to pick up half the cost of employee health insurance 
plans. These are the small employers.
  The Congressional Budget Office reported that the cost of this 
mandate would drive businesses out of States which have the mandate 
into States that do not have the mandate.
  The mandate is triggered by the failure to achieve 95 percent 
coverage and by definition we will never exceed 95 percent because of 
the geographic area that we have to cover in the State.
  Alaska, with approximately 13,000 businesses, many low-income 
families, and high uninsured rates, is one of the States which will 
likely fall below the 95-percent coverage target. Alaska businesses 
will emigrate to States without the mandate.
  With unemployment rates higher than 20 percent in some remote 
villages, Alaska cannot afford to lose any small businesses and the 
jobs they provide.
  Although estimates are not yet available for the Mitchell bill, the 
National Federation for Independent Business estimates that 6,532 jobs 
would be lost in Alaska in the Clinton health plan were adopted. 
Another 38,297 workers would have reduced wages and/or benefits.
  Under the Dole plan individuals would not lose their jobs, income, or 
benefits, because the Dole plan does not impose a mandate on businesses 
or individuals.
  The Mitchell plan also discriminates against self-employed 
individuals by allowing only a 50-percent deduction for health 
insurance premiums. In 1992, there were approximately 27,000 self-
employed workers in Alaska.
  The fishing industry, our largest employer, includes thousands of 
self-employed fishermen who would lose out under the Mitchell bill.
  Alaskans and all Americans will be hit hard by the 17 new taxes or 
tax increases included in the Mitchell plan.
  Every middle-income family will have to pay $500 in new taxes. Based 
on three taxes alone: the 1.75 percent tax on all health insurance 
premiums; the 25 percent excise tax on excess premiums; and the State 1 
percent tax on premiums to cover State administrative costs.
  This does not even include the other tax increases such as tobacco, 
hollow point bullets, and Medicare that are included in the bill. In 
contrast, the Dole bill includes no new taxes or tax increases.
  Over the past few days and weeks the Senate has spent a great deal of 
time discussing the merits and shortcomings of both the Mitchell and 
Dole plans.
  I have made a careful analysis of the provisions contained in both 
bills and based on the health care needs of Alaskans, I have concluded 
that the Dole plan goes further in meeting those needs in Alaska than 
does the Mitchell bill.
  Let me, in closing, comment specifically on the pending health care 
amendments. I am disappointed that the Members from the other side of 
the aisle, members of the Senate Rural Health Caucus, did not work with 
those of us on this side of the aisle in the caucus on a bipartisan 
package for these amendments. We have had a rural health care caucus on 
a bipartisan basis. I appreciate the fact that the Democratic group saw 
fit to adopt a provision from the Dole plan that they added to their 
package. The States of Alaska, Montana, and Wyoming I think ought to be 
described as frontier rather than rural; although rural can be in any 
area in the country and our needs sometimes coincide with the Midwest 
and rural States. But sometimes they are vastly different.
  We have not yet suggested convening a frontier caucus. I do not know 
whether there is a phone booth big enough for us. But I suggest the 
Western States group in which both parties are represented and the 
health care caucus in which both parties are represented could have 
done a better job to present a bipartisan approach to rural health care 
amendments.
  In particular, Alaska's issues differ from those of nearly every 
other rural State because of the high-cost environment. The rural 
caucus is dealing with a low-cost environment. We in Alaska are dealing 
with problems and costs associated with geography and the related 
transportation issues.
  As I said before, we are a young population. The average age is 28.9. 
The typical rural health economy that exists relies heavily on 
Medicare. As a result, those of us from Alaska have supported Medicare 
provisions for rural areas which did not as directly benefit our State 
of Alaska because we recognized there is diversity in the rural areas 
and we look to this core group of the Senate Rural Health Caucus to 
support Alaska when it has specific provisions when they are probably 
not relevant to other rural States.
  As I say, many of these provisions in this package--and I generally 
tend to support the package--we recognize they are needed for the 
States that are represented by the Senators who have presented these 
provisions.
  Let me point out that the Dole bill recognized that Medicaid 
provisions for Alaska were 25 percent higher. The Dole bill had 
specific provisions allowing Alaskans to require insurers marketing in 
Alaska to include emergency and nonemergency, medically necessary 
transportation to health care and needed diagnostic procedures in any 
policy marketed in the State. That would be up to the State if it 
wished to do so.
  We also included in the Dole bill rural infrastructure and 
development formulas which recognize Alaska's higher costs and extreme 
distribution problems and that the land base is a factor because of 
transportation.
  I do hope, as we review this rural health care package, that there 
will be consideration given, as the final bills are put together, to 
the unique needs of our State. Our people have unique needs that need 
to be met, and I hope to see they are met.
  If the Senator from Massachusetts has a question for me, I will be 
pleased to respond.
  Mr. KENNEDY. Mr. President, I thank the Senator from Alaska. As I was 
listening to the Senator from Alaska, I gather then since we, as 
Members of Congress, have the Federal employees health insurance 
program, that under the Senator's position you are not prepared to 
include the American people in the same kind of program that we have 
and, as the majority leader has suggested, will be effectively open 
immediately to all Americans, and then with the blending of the 
programs, all Americans will have the same plan available to them as we 
have. Am I right?
  I have difficulty understanding why. If we do nothing at all, we are 
still going to have ours as Members of Congress and the Senate. There 
has not been a Member of this body who has been willing to give up all 
of their Federal employee health benefits. That is the fact of it.
  I am just wondering why the Senator from Alaska is reluctant to 
include all Americans into the same kind of plan, to have what we have.
  Mr. STEVENS. Mr. President, if the Senator will allow me to answer, 
apparently the Senator from Massachusetts did not hear me.
  Mr. KENNEDY. I heard you.
  Mr. STEVENS. I said I have no problem at all creating a plan similar 
to FEHB for all Americans. You are saying ``the same kind of plan.'' 
The trouble with the Mitchell bill is it puts them in the same plan.
  Mr. KENNEDY. That is exactly----
  Mr. STEVENS. I still have the floor, and I will answer the Senator. 
The difference is that the model, which is a good model and which could 
be used for a plan for all Americans, is to be blended in with a plan 
that is uncertain, that has no possibility of any kind of rating, and 
which is going to impose risk; that we feel the carriers will leave the 
old plan, the FEHB plan because of the uncertainty of all of these new 
entrants into it.
  I encourage the Senator to look at the FEHB plan as a model--and I 
urged that. As a matter of fact, the Heritage Foundation, to its great 
credit, first proposed to create a plan for all America based upon 
FEHBP. That system is a viable system. It is possible. But we have 
ratings, we have experience in the FEHB plan. We ought to use it as a 
yardstick to measure any plan.
  Incidentally, the Congress does not have a separate plan. I keep 
hearing that all over. The Federal employees have a plan, and we opted 
to become part of it. No Member is forced to join it. It is all 
voluntary. And some of us do obtain our insurance through one of the 
health plans. I use the Treasury one. I do not know what anyone else 
uses, but I chose to use the Treasury one.
  There are a series of options, as the Senator from Massachusetts 
knows, and those options are unique. Under the Mitchell proposal, there 
will be one option. There will be the basic plan for the United States 
and the FEHB Program. That is no way to compare--and we do not want to 
transition the FEHB plan, which has a series of options, into a single 
monolithic, single-payer plan. That is where we go in 2005. That is 
what the instructions say. Blend them all in 2005.
  Mr. KENNEDY. Give exactly to the American people what we have.
  Mr. STEVENS. No, no, it will not.
  Mr. KENNEDY. That is what that says.
  Mr. STEVENS. It is exactly what the Mitchell plan will give the 
American people. There is a difference.
  Mr. KENNEDY. That is exactly what it said, Senator. You said it very 
eloquently, did you not----
  The PRESIDENT pro tempore. The Senator from Alaska has the floor.
  Mr. STEVENS. I will be glad to yield for a question.
  The PRESIDENT pro tempore. The Senators will address other Senators 
in the third person, not in the second person.
  Mr. KENNEDY. Did you not say after the transition period, in 7 years, 
that effectively the Members of the U.S. Congress and Senate, who are 
members of the Federal employees plan which include 10 million of our 
fellow citizens, that they would be effectively in the same plan that 
would be offered under the Mitchell plan?
  Mr. STEVENS. Mr. President, I say again, at 2005, there will be one 
single, monolithic plan under the FEHB label. It will not be the FEHB 
plan. It will be a community-rated system, not an experience-rated 
system. It will be a plan with one basic medical plan and penalties if 
you do not take that plan, as compared to our plan now which has a 
series of options offered by a series of carriers, many of whom I think 
will leave us as soon as they discover that in 2005 the Mitchell bill 
will merge everyone who is not under a large employer plan into the 
single, monolithic plan under FEHB.
  There will be community ratings, there will be different premiums, 
there will be different premiums for an employee that works for the 
Forest Service in Alaska as compared to one in South Carolina. There 
will even be a different payment for employees of our offices, some who 
work here in Washington and some who work in Alaska. There will be a 
different payment for the Federal Government in Fairbanks as compared 
to Anchorage as compared to Washington.
  The impact of the Mitchell changes on the FEHB plan will be to create 
a single, monolithic, single-payer plan using a single benefit package, 
a national standard benefit package which we do not want.
  We want the options under the Federal Employees Health Benefits 
Program. I would like to see the Nation have a chance to have options 
under a plan similar to the one we have. That will take some doing. It 
will take some time to do that. It will take some infrastructure to 
support bringing all the small businesses in.
  Can OPM, with its current employees, support a plan that would cover, 
instead of 9 to 10 million, 50 to 60 million people, people who have no 
employment connection with the U.S. Government? They are not employees, 
they are not all going to the office everyday, they are not people who 
have an administrative contact.
  We will have to have an enormous cost to support that program. It is 
wrong to do that. It is better to have the people who do not have 
insurance be able to get insurance as people do under the major plans, 
who work for major employers out there in the areas in which they work, 
instead of having us change our experienced national system into a 
community-rated system where every Federal employee must take the plan 
that exists in his or her community and the Federal employees will pay 
into that plan and the employer, the Federal Government, the taxpayers 
will support different premium costs all over the country. This is 
wrong.
  I do not know when the leaders are going to wake up. As I said, to me 
this means the Federal Employee Health Benefits Program has a 10-year 
shelf life. That is, in 10 years, the plan, as we know it, will go. It 
will no longer be experience rated. It will no longer have a series of 
options. It will no longer have an employee option to go in and out of 
plans without impunity, just entirely voluntary. You can come and go.
  Under this system, when you come into it, you will take the national 
benefit plan, the one that is outlined in the Mitchell bill, by 2005. 
Federal employees will have that. It is not that the American public 
will have what we have now, we will have what they have then, if it 
works, and God hope it works. We know this one works.
  I do not want to forecast the demise of FEHB now. I do not want to 
forecast the demise of the Indian Health Service now. I think the 
Federal systems that are working should be preserved until this 
experiment is proven. This is an experiment. This is an experiment with 
one-seventh of the economy of the United States. And it is wrong for us 
to tell the American people, as so many people have, ``We're going to 
give you what we have.'' Wrong. We are going to change what we have in 
the hopes that they might have something better than what they have.
  I say they will have a better system if we use the FEHB as a model, 
if we create a system under the Mitchell bill that will create a plan 
like the FEHB and try to offer some options.
  But the bill itself does not do that, I say to the Senator from 
Massachusetts. The bill does not do that. It does not envision that 
those people who come into the FEHB pools will have available a series 
of options similar to what we have under FEHB. They will have the 
standard benefit option, and if they do not have that, they are going 
to be taxed more. If they have more, they will be taxed more--by 
definition, they cannot get less.
  But that means our Federal employees, when they go into that, will 
have to pay more to get what they have today. Today, we have the best 
plan in the country, if not the world. I think it should be a model for 
America. We have offered time and time again, and the Heritage 
Foundation did, in fact, set forth a plan of transition to just that, 
without increased taxes, without mandates. It can be done. It was 
contained in Senator Nickles' bill, which I cosponsored.
  Mr. President, I have talked a long time. I will be glad to answer 
any questions if the Senator has any. And I do not want to walk away 
without answering questions.
  Mr. KENNEDY. I would like to, if I could. I know my colleagues are 
here and want to talk about it.
  Then, I am correct that the Senator's position is that he wants to 
maintain the Federal employees program, of which he is a member, of 
which I am a member, all 100 Members of the Senate, and the House and 
10 million Americans, he wants to maintain that as a separate program?
  The effect of the Mitchell bill will be that in 10 years every Member 
of the Congress, every Member of the Senate as well as individuals 
across this country, if they so choose, would also be able to 
participate in the same program.
  Now, as I understand it, the Senator's position is that he wants to 
maintain what we have, and he finds that the idea of having the Federal 
employees program, which has been expanded, supported by the chairman 
of the committee, Senator Glenn, in the Senate, the chairman of the 
committee in the House of Representatives, Mr. Clay, and has even been 
accepted by Senator Roth in a more limited way, who talked about that 
for several years, he wants to make sure that our program, the Federal 
employees program, will be maintained as a separate program and is not 
willing to put us in the same pool as the rest of Americans.
  Mr. STEVENS addressed the Chair.
  Mr. KENNEDY. Is that not the effect of the Senator's position?
  Mr. STEVENS. If I still have the floor--I think I do still have the 
floor.
  The PRESIDENT pro tempore. The Senator from Alaska has the floor.
  Mr. STEVENS. I say to my friend--and he is my great friend, and I 
have great admiration for what he is trying to do--I just wish he would 
listen again. Let me find the section that deals with this.
  Let me tell the Senate and the Senator from Massachusetts, Mr. 
President, that he still does not hear me. I know what we have, and I 
think it is a good plan and I hope we can create another plan that will 
give every American access to the same kind of plan. The Mitchell bill 
does not present the same options for Americans that we have under 
FEHB. It says the ``standard benefit plan.'' Beyond that, let me tell 
you, it also says--and it is what has moved my friends who are the 
leaders of the Federal employees. I am reading from section 1342.

       The Office of Personnel Management shall develop FEHBP 
     supplemental health benefit plans. The Office of Personnel 
     Management shall meet and confer with representatives of 
     Federal employees and annuitants regarding the supplemental 
     services plans and the cost-sharing plans to be offered--
     including premium contributions, if any, to be made by the 
     Federal Government with respect to such plans for Federal 
     employees and annuitants--through a process to be established 
     by the National Partnership Council.
       The Federal Government shall offer FEHBP supplemental 
     health benefit plans developed in accordance with subsection 
     (a) and cost-sharing plans as provided in section 1141 to 
     Federal employees, annuitants, and any other community-rated 
     individual.

  What is that saying, Mr. President? It says after 2005, you merge 
everybody into these plans. You tell the public that they have the same 
plan as everybody else, but you negotiate with the leaders of the 
employees and you give them supplemental benefits that are not under 
this bill to be made available to the public. The most duplicitous 
section is right there, section 1342. It says, contrary to what the 
Senator from Massachusetts says, the public will not be getting what 
the Federal employees will get.
  The Federal employees, after they are downgraded by the Mitchell 
plan, will then be given supplemental benefits. You talk to the labor 
leaders. They will tell you it is the supplemental benefits section 
that tells them, ``Don't worry, boys; we are going to see to it that 
your employees still get what they have got now''--supplemental 
benefits above what the average American has under the health benefit 
plan paid for by small employers.
  I say we could use the FEHB plan as a model. Heritage showed us the 
direction in how that could be done. I have some slight disagreement 
with some of the suggestions they made, but they made basically a good 
suggestion. Take FEHBP as a model, keep it intact, make sure you make 
it work and compare it to these other plans as they develop. Do they 
offer the public the same kind of options, the same freedom that 
Federal employees have, including Members of Congress?
  And the cost to the taxpayer the Senator from Massachusetts forgets 
entirely. As the cost to the employees goes up, the cost to the 
taxpayer maintaining the existing coverage for medical insurance for 
employees will likewise go up. The Federal Government pays 72 percent 
of those costs. So by definition, when they go to community-rated 
policies under carriers in these communities all over the country, 
there will be a difference between what we now get with the bid system.
  Under the ``big six'' formula, whoever comes into the plan gets 
reimbursed, based upon the formula of what the big six provided to 
Federal employees. They take 60 percent of those premiums, and that is 
the average that no carrier under the FEHB program will exceed.
  There is nothing like that in the Mitchell bill for the public. The 
public is not told that. They have said, ``Look, we will bring the 
public into these separate pools and then in 2005 we are going to merge 
them.''
  ``Oh, but don't worry, employees, because when we do merge them, 
section 1342 has special rules for FEHBP supplemental plans. We are 
going to devise a supplemental plan for all Federal employees.''
  Now, I ask you, Mr. President, is that not misleading the American 
people? All I am asking is that we maintain the FEHB Program, make it 
viable, maintain it--it is the lowest possible cost to the taxpayers, 
who are really our employers--and extend that concept out to the 
public, as suggested by Heritage, as suggested by Mitchell, in effect, 
but Mitchell does not do it that way. It leads to the demise of FEHB in 
10 years. The model will be gone. Oh, but the model will then be 
supplemented under plans to be negotiated to keep the support of the 
labor leaders as far as this bill is concerned.
  I think it is wrong, Mr. President.
  I have taken a lot of time of the Senate.
  I yield the floor, Mr. President.
  The PRESIDENT pro tempore. The Senator from New Jersey.

                          ____________________