[Congressional Record Volume 142, Number 50 (Thursday, April 18, 1996)]
[Senate]
[Pages S3503-S3569]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HEALTH INSURANCE REFORM ACT
The PRESIDING OFFICER. Under the previous order, the Senate will now
proceed to consider S. 1028, which the clerk will report.
The assistant legislative clerk read as follows:
A bill (S. 1028) to provide increased access to health care
benefits, to provide increased portability of health care
benefits, to provide increased security of health care
benefits, to increase the purchasing power of individuals and
small employers, and for other purposes.
The Senate proceeded to consider the bill, which had been reported
from the Committee on Labor and Human Resources with an amendment to
strike all after the enacting clause and inserting in lieu thereof the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Health
Insurance Reform Act of 1995''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY
Subtitle A--Group Market Rules
Sec. 101. Guaranteed availability of health coverage.
Sec. 102. Guaranteed renewability of health coverage.
Sec. 103. Portability of health coverage and limitation on preexisting
condition exclusions.
Sec. 104. Special enrollment periods.
Sec. 105. Disclosure of information.
Subtitle B--Individual Market Rules
Sec. 110. Individual health plan portability.
Sec. 111. Guaranteed renewability of individual health coverage.
Sec. 112. State flexibility in individual market reforms.
Sec. 113. Definition.
Subtitle C--COBRA Clarifications
Sec. 121. COBRA clarifications.
Subtitle D--Private Health Plan Purchasing Cooperatives
Sec. 131. Private health plan purchasing cooperatives.
TITLE II--APPLICATION AND ENFORCEMENT OF STANDARDS
Sec. 201. Applicability.
Sec. 202. Enforcement of standards.
TITLE III--MISCELLANEOUS PROVISIONS
Sec. 301. HMOs allowed to offer plans with deductibles to individuals
with medical savings accounts.
Sec. 302. Health coverage availability study.
Sec. 303. Sense of the Committee concerning Medicare.
Sec. 304. Effective date.
Sec. 305. Severability.
SEC. 2. DEFINITIONS.
As used in this Act:
(1) Beneficiary.--The term ``beneficiary'' has the meaning
given such term under section 3(8) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(8)).
(2) Employee.--The term ``employee'' has the meaning given
such term under section 3(6) of
[[Page S3504]]
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(6)).
(3) Employer.--The term ``employer'' has the meaning given
such term under section 3(5) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(5)), except that
such term shall include only employers of two or more
employees.
(4) Employee health benefit plan.--
(A) In general.--The term ``employee health benefit plan''
means any employee welfare benefit plan, governmental plan,
or church plan (as defined under paragraphs (1), (32), and
(33) of section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002 (1), (32), and (33))) that
provides or pays for health benefits (such as provider and
hospital benefits) for participants and beneficiaries
whether--
(i) directly;
(ii) through a group health plan offered by a health plan
issuer as defined in paragraph (8); or
(iii) otherwise.
(B) Rule of construction.--An employee health benefit plan
shall not be construed to be a group health plan, an
individual health plan, or a health plan issuer.
(C) Arrangements not included.--Such term does not include
the following, or any combination thereof:
(i) Coverage only for accident, or disability income
insurance, or any combination thereof.
(ii) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers compensation or similar insurance.
(vi) Automobile medical payment insurance.
(vii) Coverage for a specified disease or illness.
(viii) Hospital or fixed indemnity insurance.
(ix) Short-term limited duration insurance.
(x) Credit-only, dental-only, or vision-only insurance.
(xi) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
(5) Family.--
(A) In general.--The term ``family'' means an individual,
the individual's spouse, and the child of the individual (if
any).
(B) Child.--For purposes of subparagraph (A), the term
``child'' means any individual who is a child within the
meaning of section 151(c)(3) of the Internal Revenue Code of
1986.
(6) Group health plan.--
(A) In general.--The term ``group health plan'' means any
contract, policy, certificate or other arrangement offered by
a health plan issuer to a group purchaser that provides or
pays for health benefits (such as provider and hospital
benefits) in connection with an employee health benefit plan.
(B) Arrangements not included.--Such term does not include
the following, or any combination thereof:
(i) Coverage only for accident, or disability income
insurance, or any combination thereof.
(ii) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(iii) Coverage issued as a supplement to liability
insurance.
(iv) Liability insurance, including general liability
insurance and automobile liability insurance.
(v) Workers compensation or similar insurance.
(vi) Automobile medical payment insurance.
(vii) Coverage for a specified disease or illness.
(viii) Hospital or fixed indemnity insurance.
(ix) Short-term limited duration insurance.
(x) Credit-only, dental-only, or vision-only insurance.
(xi) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
(7) Group purchaser.--The term ``group purchaser'' means
any person (as defined under paragraph (9) of section 3 of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002(9)) or entity that purchases or pays for health
benefits (such as provider or hospital benefits) on behalf of
two or more participants or beneficiaries in connection with
an employee health benefit plan. A health plan purchasing
cooperative established under section 131 shall not be
considered to be a group purchaser.
(8) Health plan issuer.--The term ``health plan issuer''
means any entity that is licensed (prior to or after the date
of enactment of this Act) by a State to offer a group health
plan or an individual health plan.
(9) Participant.--The term ``participant'' has the meaning
given such term under section 3(7) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1002(7)).
(10) Plan sponsor.--The term ``plan sponsor'' has the
meaning given such term under section 3(16)(B) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(16)(B)).
(11) Secretary.--The term ``Secretary'', unless
specifically provided otherwise, means the Secretary of
Labor.
(12) State.--The term ``State'' means each of the several
States, the District of Columbia, Puerto Rico, the United
States Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands.
TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY
Subtitle A--Group Market Rules
SEC. 101. GUARANTEED AVAILABILITY OF HEALTH COVERAGE.
(a) In General.--
(1) Nondiscrimination.--Except as provided in subsection
(b), section 102 and section 103--
(A) a health plan issuer offering a group health plan may
not decline to offer whole group coverage to a group
purchaser desiring to purchase such coverage; and
(B) an employee health benefit plan or a health plan issuer
offering a group health plan may establish eligibility,
continuation of eligibility, enrollment, or premium
contribution requirements under the terms of such plan,
except that such requirements shall not be based on health
status, medical condition, claims experience, receipt of
health care, medical history, evidence of insurability, or
disability.
(2) Health promotion and disease prevention.--Nothing in
this subsection shall prevent an employee health benefit plan
or a health plan issuer from establishing premium discounts
or modifying otherwise applicable copayments or deductibles
in return for adherence to programs of health promotion and
disease prevention.
(b) Application of Capacity Limits.--
(1) In general.--Subject to paragraph (2), a health plan
issuer offering a group health plan may cease offering
coverage to group purchasers under the plan if--
(A) the health plan issuer ceases to offer coverage to any
additional group purchasers; and
(B) the health plan issuer can demonstrate to the
applicable certifying authority (as defined in section
202(d)), if required, that its financial or provider capacity
to serve previously covered participants and beneficiaries
(and additional participants and beneficiaries who will be
expected to enroll because of their affiliation with a group
purchaser or such previously covered participants or
beneficiaries) will be impaired if the health plan issuer is
required to offer coverage to additional group purchasers.
Such health plan issuer shall be prohibited from offering
coverage after a cessation in offering coverage under this
paragraph for a 6-month period or until the health plan
issuer can demonstrate to the applicable certifying authority
(as defined in section 202(d)) that the health plan issuer
has adequate capacity, whichever is later.
(2) First-come-first-served.--A health plan issuer offering
a group health plan is only eligible to exercise the
limitations provided for in paragraph (1) if the health plan
issuer offers coverage to group purchasers under such plan on
a first-come-first-served basis or other basis established by
a State to ensure a fair opportunity to enroll in the plan
and avoid risk selection.
(c) Construction.--
(1) Marketing of group health plans.--Nothing in this
section shall be construed to prevent a State from requiring
health plan issuers offering group health plans to actively
market such plans.
(2) Involuntary offering of group health plans.--Nothing in
this section shall be construed to require a health plan
issuer to involuntarily offer group health plans in a
particular market. For the purposes of this paragraph, the
term ``market'' means either the large employer market or the
small employer market (as defined under applicable State law,
or if not so defined, an employer with not more than 50
employees).
SEC. 102. GUARANTEED RENEWABILITY OF HEALTH COVERAGE.
(a) In General.--
(1) Group purchaser.--Subject to subsections (b) and (c), a
group health plan shall be renewed or continued in force by a
health plan issuer at the option of the group purchaser,
except that the requirement of this subparagraph shall not
apply in the case of--
(A) the nonpayment of premiums or contributions by the
group purchaser in accordance with the terms of the group
health plan or where the health plan issuer has not received
timely premium payments;
(B) fraud or misrepresentation of material fact on the part
of the group purchaser;
(C) the termination of the group health plan in accordance
with subsection (b); or
(D) the failure of the group purchaser to meet contribution
or participation requirements in accordance with paragraph
(3).
(2) Participant.--Subject to subsections (b) and (c),
coverage under an employee health benefit plan or group
health plan shall be renewed or continued in force, if the
group purchaser elects to continue to provide coverage under
such plan, at the option of the participant (or beneficiary
where such right exists under the terms of the plan or under
applicable law), except that the requirement of this
paragraph shall not apply in the case of--
(A) the nonpayment of premiums or contributions by the
participant or beneficiary in accordance with the terms of
the employee health benefit plan or group health plan or
where such plan has not received timely premium payments;
(B) fraud or misrepresentation of material fact on the part
of the participant or beneficiary relating to an application
for coverage or claim for benefits;
(C) the termination of the employee health benefit plan or
group health plan;
(D) loss of eligibility for continuation coverage as
described in part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et
seq.); or
(E) failure of a participant or beneficiary to meet
requirements for eligibility for coverage under an employee
health benefit plan or group health plan that are not
prohibited by this Act.
(3) Rules of Construction.--Nothing in this subsection, nor
in section 101(a), shall be construed to--
(A) preclude a health plan issuer from establishing
employer contribution rules or group participation rules for
group health plans as allowed under applicable State law;
(B) preclude a plan defined in section 3(37) of the
Employee Retirement Income Security Act of
[[Page S3505]]
1974 (29 U.S.C. 1102(37)) from establishing employer
contribution rules or group participation rules; or
(C) permit individuals to decline coverage under an
employee health benefit plan if such right is not otherwise
available under such plan.
(b) Termination of Group Health Plans.--
(1) Particular type of group health plan not offered.--In
any case in which a health plan issuer decides to discontinue
offering a particular type of group health plan, a group
health plan of such type may be discontinued by the health
plan issuer only if--
(A) the health plan issuer provides notice to each group
purchaser covered under a group health plan of this type (and
participants and beneficiaries covered under such group
health plan) of such discontinuation at least 90 days prior
to the date of the discontinuation of such plan;
(B) the health plan issuer offers to each group purchaser
covered under a group health plan of this type, the option to
purchase any other group health plan currently being offered
by the health plan issuer; and
(C) in exercising the option to discontinue a group health
plan of this type and in offering one or more replacement
plans, the health plan issuer acts uniformly without regard
to the health status or insurability of participants or
beneficiaries covered under the group health plan, or new
participants or beneficiaries who may become eligible for
coverage under the group health plan.
(2) Discontinuance of all group health plans.--
(A) In general.--In any case in which a health plan issuer
elects to discontinue offering all group health plans in a
State, a group health plan may be discontinued by the health
plan issuer only if--
(i) the health plan issuer provides notice to the
applicable certifying authority (as defined in section
202(d)) and to each group purchaser (and participants and
beneficiaries covered under such group health plan) of such
discontinuation at least 180 days prior to the date of the
expiration of such plan; and
(ii) all group health plans issued or delivered for
issuance in the State are discontinued and coverage under
such plans is not renewed.
(B) Application of provisions.--The provisions of this
paragraph and paragraph (3) may be applied separately by a
health plan issuer--
(i) to all group health plans offered to small employers
(as defined under applicable State law, or if not so defined,
an employer with not more than 50 employees); or
(ii) to all other group health plans offered by the health
plan issuer in the State.
(3) Prohibition on market reentry.--In the case of a
discontinuation under paragraph (2), the health plan issuer
may not provide for the issuance of any group health plan in
the market sector (as described in paragraph (2)(B)) in which
issuance of such group health plan was discontinued in the
State involved during the 5-year period beginning on the date
of the discontinuation of the last group health plan not so
renewed.
(c) Treatment of Network Plans.--
(1) Geographic limitations.--A network plan (as defined in
paragraph (2)) may deny continued participation under such
plan to participants or beneficiaries who neither live,
reside, nor work in an area in which such network plan is
offered, but only if such denial is applied uniformly,
without regard to health status or the insurability of
particular participants or beneficiaries.
(2) Network plan.--As used in paragraph (1), the term
``network plan'' means an employee health benefit plan or a
group health plan that arranges for the financing and
delivery of health care services to participants or
beneficiaries covered under such plan, in whole or in part,
through arrangements with providers.
(d) COBRA Coverage.--Nothing in subsection (a)(2)(E) or
subsection (c) shall be construed to affect any right to
COBRA continuation coverage as described in part 6 of
subtitle B of title I of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1161 et seq.).
SEC. 103. PORTABILITY OF HEALTH COVERAGE AND LIMITATION ON
PREEXISTING CONDITION EXCLUSIONS.
(a) In General.--An employee health benefit plan or a
health plan issuer offering a group health plan may impose a
limitation or exclusion of benefits relating to treatment of
a preexisting condition based on the fact that the condition
existed prior to the coverage of the participant or
beneficiary under the plan only if--
(1) the limitation or exclusion extends for a period of not
more than 12 months after the date of enrollment in the plan;
(2) the limitation or exclusion does not apply to an
individual who, within 30 days of the date of birth or
placement for adoption (as determined under section
609(c)(3)(B) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1169(c)(3)(B)), was covered under the
plan; and
(3) the limitation or exclusion does not apply to a
pregnancy.
(b) Crediting of Previous Qualifying Coverage.--
(1) In general.--Subject to paragraph (4), an employee
health benefit plan or a health plan issuer offering a group
health plan shall provide that if a participant or
beneficiary is in a period of previous qualifying coverage as
of the date of enrollment under such plan, any period of
exclusion or limitation of coverage with respect to a
preexisting condition shall be reduced by 1 month for each
month in which the participant or beneficiary was in the
period of previous qualifying coverage. With respect to an
individual described in subsection (a)(2) who maintains
continuous coverage, no limitation or exclusion of benefits
relating to treatment of a preexisting condition may be
applied to a child within the child's first 12 months of life
or within 12 months after the placement of a child for
adoption.
(2) Discharge of duty.--An employee health benefit plan
shall provide documentation of coverage to participants and
beneficiaries whose coverage is terminated under the plan.
Pursuant to regulations promulgated by the Secretary, the
duty of an employee health benefit plan to verify previous
qualifying coverage with respect to a participant or
beneficiary is effectively discharged when such employee
health benefit plan provides documentation to a participant
or beneficiary that includes the following information:
(A) the dates that the participant or beneficiary was
covered under the plan; and
(B) the benefits and cost-sharing arrangement available to
the participant or beneficiary under such plan.
An employee health benefit plan shall retain the
documentation provided to a participant or beneficiary under
subparagraphs (A) and (B) for at least the 12-month period
following the date on which the participant or beneficiary
ceases to be covered under the plan. Upon request, an
employee health benefit plan shall provide a second copy of
such documentation to such participant or beneficiary within
the 12-month period following the date of such ineligibility.
(3) Definitions.--As used in this section:
(A) Previous qualifying coverage.--The term ``previous
qualifying coverage'' means the period beginning on the
date--
(i) a participant or beneficiary is enrolled under an
employee health benefit plan or a group health plan, and
ending on the date the participant or beneficiary is not so
enrolled; or
(ii) an individual is enrolled under an individual health
plan (as defined in section 113) or under a public or private
health plan established under Federal or State law, and
ending on the date the individual is not so enrolled;
for a continuous period of more than 30 days (without regard
to any waiting period).
(B) Limitation or exclusion of benefits relating to
treatment of a preexisting condition.--The term ``limitation
or exclusion of benefits relating to treatment of a
preexisting condition'' means a limitation or exclusion of
benefits imposed on an individual based on a preexisting
condition of such individual.
(4) Effect of previous coverage.--An employee health
benefit plan or a health plan issuer offering a group health
plan may impose a limitation or exclusion of benefits
relating to the treatment of a preexisting condition, subject
to the limits in subsection (a)(1), only to the extent that
such service or benefit was not previously covered under the
group health plan, employee health benefit plan, or
individual health plan in which the participant or
beneficiary was enrolled immediately prior to enrollment in
the plan involved.
(c) Late Enrollees.--Except as provided in section 104,
with respect to a participant or beneficiary enrolling in an
employee health benefit plan or a group health plan during a
time that is other than the first opportunity to enroll
during an enrollment period of at least 30 days, coverage
with respect to benefits or services relating to the
treatment of a preexisting condition in accordance with
subsections (a) and (b) may be excluded, except the period of
such exclusion may not exceed 18 months beginning on the date
of coverage under the plan.
(d) Affiliation Periods.--With respect to a participant or
beneficiary who would otherwise be eligible to receive
benefits under an employee health benefit plan or a group
health plan but for the operation of a preexisting condition
limitation or exclusion, if such plan does not utilize a
limitation or exclusion of benefits relating to the treatment
of a preexisting condition, such plan may impose an
affiliation period on such participant or beneficiary not to
exceed 60 days (or in the case of a late participant or
beneficiary described in subsection (c), 90 days) from the
date on which the participant or beneficiary would otherwise
be eligible to receive benefits under the plan. An employee
health benefit plan or a health plan issuer offering a group
health plan may also use alternative methods to address
adverse selection as approved by the applicable certifying
authority (as defined in section 202(d)). During such an
affiliation period, the plan may not be required to provide
health care services or benefits and no premium shall be
charged to the participant or beneficiary.
(e) Preexisting Condition.--For purposes of this section,
the term ``preexisting condition'' means a condition,
regardless of the cause of the condition, for which medical
advice, diagnosis, care, or treatment was recommended or
received within the 6-month period ending on the day before
the effective date of the coverage (without regard to any
waiting period).
(f) State Flexibility.--Nothing in this section shall be
construed to preempt State laws that--
(1) require health plan issuers to impose a limitation or
exclusion of benefits relating to the treatment of a
preexisting condition for periods that are shorter than those
provided for under this section; or
(2) allow individuals, participants, and beneficiaries to
be considered to be in a period of previous qualifying
coverage if such individual, participant, or beneficiary
experiences a lapse in coverage that is greater than the 30-
day period provided for under subsection (b)(3);
unless such laws are preempted by section 514 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1144).
SEC. 104. SPECIAL ENROLLMENT PERIODS.
In the case of a participant, beneficiary or family member
who--
[[Page S3506]]
(1) through marriage, separation, divorce, death, birth or
placement of a child for adoption, experiences a change in
family composition affecting eligibility under a group health
plan, individual health plan, or employee health benefit
plan;
(2) experiences a change in employment status, as described
in section 603(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1163(2)), that causes the loss of
eligibility for coverage, other than COBRA continuation
coverage under a group health plan, individual health plan,
or employee health benefit plan; or
(3) experiences a loss of eligibility under a group health
plan, individual health plan, or employee health benefit plan
because of a change in the employment status of a family
member;
each employee health benefit plan and each group health plan
shall provide for a special enrollment period extending for a
reasonable time after such event that would permit the
participant to change the individual or family basis of
coverage or to enroll in the plan if coverage would have been
available to such individual, participant, or beneficiary but
for failure to enroll during a previous enrollment period.
Such a special enrollment period shall ensure that a child
born or placed for adoption shall be deemed to be covered
under the plan as of the date of such birth or placement for
adoption if such child is enrolled within 30 days of the date
of such birth or placement for adoption.
SEC. 105. DISCLOSURE OF INFORMATION.
(a) Disclosure of Information by Health Plan Issuers.--
(1) In general.--In connection with the offering of any
group health plan to a small employer (as defined under
applicable State law, or if not so defined, an employer with
not more than 50 employees), a health plan issuer shall make
a reasonable disclosure to such employer, as part of its
solicitation and sales materials, of--
(A) the provisions of such group health plan concerning the
health plan issuer's right to change premium rates and the
factors that may affect changes in premium rates;
(B) the provisions of such group health plan relating to
renewability of coverage;
(C) the provisions of such group health plan relating to
any preexisting condition provision; and
(D) descriptive information about the benefits and premiums
available under all group health plans for which the employer
is qualified.
Information shall be provided to small employers under this
paragraph in a manner determined to be understandable by the
average small employer, and shall be sufficiently accurate
and comprehensive to reasonably inform small employers,
participants and beneficiaries of their rights and
obligations under the group health plan.
(2) Exception.--With respect to the requirement of
paragraph (1), any information that is proprietary and trade
secret information under applicable law shall not be subject
to the disclosure requirements of such paragraph.
(3) Construction.--Nothing in this subsection shall be
construed to preempt State reporting and disclosure
requirements to the extent that such requirements are not
preempted under section 514 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1144).
(b) Disclosure of Information to Participants and
Beneficiaries.--
(1) In general.--Section 104(b)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(1))
is amended in the matter following subparagraph (B)--
(A) by striking ``102(a)(1),'' and inserting ``102(a)(1)
that is not a material reduction in covered services or
benefits provided,''; and
(B) by adding at the end thereof the following new
sentences: ``If there is a modification or change described
in section 102(a)(1) that is a material reduction in covered
services or benefits provided, a summary description of such
modification or change shall be furnished to participants not
later than 60 days after the date of the adoption of the
modification or change. In the alternative, the plan sponsors
may provide such description at regular intervals of not more
than 90 days. The Secretary shall issue regulations within
180 days after the date of enactment of the Health Insurance
Reform Act of 1995, providing alternative mechanisms to
delivery by mail through which employee health benefit plans
may notify participants of material reductions in covered
services or benefits.''.
(2) Plan description and summary.--Section 102(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1022(b)) is amended--
(A) by inserting ``including the office or title of the
individual who is responsible for approving or denying claims
for coverage of benefits'' after ``type of administration of
the plan'';
(B) by inserting ``including the name of the organization
responsible for financing claims'' after ``source of
financing of the plan''; and
(C) by inserting ``including the office, contact, or title
of the individual at the Department of Labor through which
participants may seek assistance or information regarding
their rights under this Act and the Health Insurance Reform
Act of 1995 with respect to health benefits that are not
offered through a group health plan.'' after ``benefits
under the plan''.
Subtitle B--Individual Market Rules
SEC. 110. INDIVIDUAL HEALTH PLAN PORTABILITY.
(a) Limitation on Requirements.--
(1) In general.--With respect to an individual desiring to
enroll in an individual health plan, if such individual is in
a period of previous qualifying coverage (as defined in
section 103(b)(3)(A)(i)) under one or more group health plans
or employee health benefit plans that commenced 18 or more
months prior to the date on which such individual desires to
enroll in the individual plan, a health plan issuer described
in paragraph (3) may not decline to offer coverage to such
individual, or deny enrollment to such individual based on
the health status, medical condition, claims experience,
receipt of health care, medical history, evidence of
insurability, or disability of the individual, except as
described in subsections (b) and (c).
(2) Health promotion and disease prevention.--Nothing in
this subsection shall be construed to prevent a health plan
issuer offering an individual health plan from establishing
premium discounts or modifying otherwise applicable
copayments or deductibles in return for adherence to programs
of health promotion or disease prevention.
(3) Health plan issuer.--A health plan issuer described in
this paragraph is a health plan issuer that issues or renews
individual health plans.
(4) Premiums.--Nothing in this subsection shall be
construed to affect the determination of a health plan issuer
as to the amount of the premium payable under an individual
health plan under applicable State law.
(b) Eligibility for Other Group Coverage.--The provisions
of subsection (a) shall not apply to an individual who is
eligible for coverage under a group health plan or an
employee health benefit plan, or who has had coverage
terminated under a group health plan or employee health
benefit plan for failure to make required premium payments or
contributions, or for fraud or misrepresentation of material
fact, or who is otherwise eligible for continuation coverage
as described in part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1161 et seq.) or under an equivalent State program.
(c) Application of Capacity Limits.--
(1) In general.--Subject to paragraph (2), a health plan
issuer offering coverage to individuals under an individual
health plan may cease enrolling individuals under the plan
if--
(A) the health plan issuer ceases to enroll any new
individuals; and
(B) the health plan issuer can demonstrate to the
applicable certifying authority (as defined in section
202(d)), if required, that its financial or provider capacity
to serve previously covered individuals will be impaired if
the health plan issuer is required to enroll additional
individuals.
Such a health plan issuer shall be prohibited from offering
coverage after a cessation in offering coverage under this
paragraph for a 6-month period or until the health plan
issuer can demonstrate to the applicable certifying authority
(as defined in section 202(d)) that the health plan issuer
has adequate capacity, whichever is later.
(2) First-come-first-served.--A health plan issuer offering
coverage to individuals under an individual health plan is
only eligible to exercise the limitations provided for in
paragraph (1) if the health plan issuer provides for
enrollment of individuals under such plan on a first-come-
first-served basis or other basis established by a State
to ensure a fair opportunity to enroll in the plan and
avoid risk selection.
(d) Market Requirements.--
(1) In general.--The provisions of subsection (a) shall not
be construed to require that a health plan issuer offering
group health plans to group purchasers offer individual
health plans to individuals.
(2) Conversion policies.--A health plan issuer offering
group health plans to group purchasers under this Act shall
not be deemed to be a health plan issuer offering an
individual health plan solely because such health plan issuer
offers a conversion policy.
(3) Marketing of plans.--Nothing in this section shall be
construed to prevent a State from requiring health plan
issuers offering coverage to individuals under an individual
health plan to actively market such plan.
SEC. 111. GUARANTEED RENEWABILITY OF INDIVIDUAL HEALTH
COVERAGE.
(a) In General.--Subject to subsections (b) and (c),
coverage for individuals under an individual health plan
shall be renewed or continued in force by a health plan
issuer at the option of the individual, except that the
requirement of this subsection shall not apply in the case
of--
(1) the nonpayment of premiums or contributions by the
individual in accordance with the terms of the individual
health plan or where the health plan issuer has not received
timely premium payments;
(2) fraud or misrepresentation of material fact on the part
of the individual; or
(3) the termination of the individual health plan in
accordance with subsection (b).
(b) Termination of Individual Health Plans.--
(1) Particular type of individual health plan not
offered.--In any case in which a health plan issuer decides
to discontinue offering a particular type of individual
health plan to individuals, an individual health plan may be
discontinued by the health plan issuer only if--
(A) the health plan issuer provides notice to each
individual covered under the plan of such discontinuation at
least 90 days prior to the date of the expiration of the
plan;
(B) the health plan issuer offers to each individual
covered under the plan the option to purchase any other
individual health plan currently being offered by the health
plan issuer to individuals; and
(C) in exercising the option to discontinue the individual
health plan and in offering one or more replacement plans,
the health plan issuer acts uniformly without regard to the
health status or insurability of particular individuals.
(2) Discontinuance of all individual health plans.--In any
case in which a health
[[Page S3507]]
plan issuer elects to discontinue all individual health plans
in a State, an individual health plan may be discontinued by
the health plan issuer only if--
(A) the health plan issuer provides notice to the
applicable certifying authority (as defined in section
202(d)) and to each individual covered under the plan of such
discontinuation at least 180 days prior to the date of the
discontinuation of the plan; and
(B) all individual health plans issued or delivered for
issuance in the State are discontinued and coverage under
such plans is not renewed.
(3) Prohibition on market reentry.--In the case of a
discontinuation under paragraph (2), the health plan issuer
may not provide for the issuance of any individual health
plan in the State involved during the 5-year period beginning
on the date of the discontinuation of the last plan not so
renewed.
(c) Treatment of Network Plans.--
(1) Geographic limitations.--A health plan issuer which
offers a network plan (as defined in paragraph (2)) may deny
continued participation under the plan to individuals who
neither live, reside, nor work in an area in which the
individual health plan is offered, but only if such denial is
applied uniformly, without regard to health status or the
insurability of particular individuals.
(2) Network plan.--As used in paragraph (1), the term
``network plan'' means an individual health plan that
arranges for the financing and delivery of health care
services to individuals covered under such health plan, in
whole or in part, through arrangements with providers.
SEC. 112. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS.
(a) In General.--With respect to any State law with respect
to which the Governor of the State notifies the Secretary of
Health and Human Services that such State law will achieve
the goals of sections 110 and 111, and that is in effect on,
or enacted after, the date of enactment of this Act (such as
laws providing for guaranteed issue, open enrollment by one
or more health plan issuers, high-risk pools, or mandatory
conversion policies), such State law shall apply in lieu of
the standards described in sections 110 and 111 unless the
Secretary of Health and Human Services determines, after
considering the criteria described in subsection (b)(1), in
consultation with the Governor and Insurance Commissioner or
chief insurance regulatory official of the State, that such
State law does not achieve the goals of providing access to
affordable health care coverage for those individuals
described in sections 110 and 111.
(b) Determination.--
(1) In general.--In making a determination under subsection
(a), the Secretary of Health and Human Services shall only--
(A) evaluate whether the State law or program provides
guaranteed access to affordable coverage to individuals
described in sections 110 and 111;
(B) evaluate whether the State law or program provides
coverage for preexisting conditions (as defined in section
103(e)) that were covered under the individuals' previous
group health plan or employee health benefit plan for
individuals described in sections 110 and 111;
(C) evaluate whether the State law or program provides
individuals described in sections 110 and 111 with a choice
of health plans or a health plan providing comprehensive
coverage; and
(D) evaluate whether the application of the standards
described in sections 110 and 111 will have an adverse impact
on the number of individuals in such State having access to
affordable coverage.
(2) Notice of intent.--If, within 6 months after the date
of enactment of this Act, the Governor of a State notifies
the Secretary of Health and Human Services that the State
intends to enact a law, or modify an existing law, described
in subsection (a), the Secretary of Health and Human Services
may not make a determination under such subsection until the
expiration of the 12-month period beginning on the date on
which such notification is made, or until January 1, 1997,
whichever is later. With respect to a State that provides
notice under this paragraph and that has a legislature that
does not meet within the 12-month period beginning on the
date of enactment of this Act, the Secretary shall not make a
determination under subsection (a) prior to January 1, 1998.
(3) Notice to state.--If the Secretary of Health and Human
Services determines that a State law or program does not
achieve the goals described in subsection (a), the Secretary
of Health and Human Services shall provide the State with
adequate notice and reasonable opportunity to modify such law
or program to achieve such goals prior to making a final
determination under subsection (a).
(c) Adoption of NAIC Model.--If, not later than 9 months
after the date of enactment of this Act--
(1) the National Association of Insurance Commissioners
(hereafter referred to as the ``NAIC''), through a process
which the Secretary of Health and Human Services determines
has included consultation with representatives of the
insurance industry and consumer groups, adopts a model
standard or standards for reform of the individual health
insurance market; and
(2) the Secretary of Health and Human Services determines,
within 30 days of the adoption of such NAIC standard or
standards, that such standards comply with the goals of
sections 110 and 111;
a State that elects to adopt such model standards or
substantially adopt such model standards shall be deemed to
have met the requirements of sections 110 and 111 and shall
not be subject to a determination under subsection (a).
SEC. 113. DEFINITION.
(a) In General.--As used in this title, the term
``individual health plan'' means any contract, policy,
certificate or other arrangement offered to individuals by a
health plan issuer that provides or pays for health benefits
(such as provider and hospital benefits) and that is not a
group health plan under section 2(6).
(b) Arrangements Not Included.--Such term does not include
the following, or any combination thereof:
(1) Coverage only for accident, or disability income
insurance, or any combination thereof.
(2) Medicare supplemental health insurance (as defined
under section 1882(g)(1) of the Social Security Act).
(3) Coverage issued as a supplement to liability insurance.
(4) Liability insurance, including general liability
insurance and automobile liability insurance.
(5) Workers' compensation or similar insurance.
(6) Automobile medical payment insurance.
(7) Coverage for a specified disease or illness.
(8) Hospital or fixed indemnity insurance.
(9) Short-term limited duration insurance.
(10) Credit-only, dental-only, or vision-only insurance.
(11) A health insurance policy providing benefits only for
long-term care, nursing home care, home health care,
community-based care, or any combination thereof.
Subtitle C--COBRA Clarifications
SEC. 121. COBRA CLARIFICATIONS.
(a) Public Health Service Act.--
(1) Period of coverage.--Section 2202(2) of the Public
Health Service Act (42 U.S.C. 300bb-2(2)) is amended--
(A) in subparagraph (A)--
(i) by transferring the sentence immediately preceding
clause (iv) so as to appear immediately following such clause
(iv); and
(ii) in the last sentence (as so transferred)--
(I) by inserting ``, or a beneficiary-family member of the
individual,'' after ``an individual''; and
(II) by striking ``at the time of a qualifying event
described in section 2203(2)'' and inserting ``at any time
during the initial 18-month period of continuing coverage
under this title'';
(B) in subparagraph (D)(i), by inserting before ``, or''
the following: ``, except that the exclusion or limitation
contained in this clause shall not be considered to apply to
a plan under which a preexisting condition or exclusion does
not apply to an individual otherwise eligible for
continuation coverage under this section because of the
provision of the Health Insurance Reform Act of 1995''; and
(C) in subparagraph (E), by striking ``at the time of a
qualifying event described in section 2203(2)'' and inserting
``at any time during the initial 18-month period of
continuing coverage under this title''.
(2) Election.--Section 2205(1)(C) of the Public Health
Service Act (42 U.S.C. 300bb-5(1)(C)) is amended--
(A) in clause (i), by striking ``or'' at the end thereof;
(B) in clause (ii), by striking the period and inserting
``, or''; and
(C) by adding at the end thereof the following new clause:
``(iii) in the case of an individual described in the last
sentence of section 2202(2)(A), or a beneficiary-family
member of the individual, the date such individual is
determined to have been disabled.''.
(3) Notices.--Section 2206(3) of the Public Health Service
Act (42 U.S.C. 300bb-6(3)) is amended by striking ``at the
time of a qualifying event described in section 2203(2)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this title''.
(4) Birth or adoption of a child.--Section 2208(3)(A) of
the Public Health Service Act (42 U.S.C. 300bb-8(3)(A)) is
amended by adding at the end thereof the following new flush
sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this title.''.
(b) Employee Retirement Income Security Act of 1974.--
(1) Period of coverage.--Section 602(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)) is
amended--
(A) in the last sentence of subparagraph (A)--
(i) by inserting ``, or a beneficiary-family member of the
individual,'' after ``an individual''; and
(ii) by striking ``at the time of a qualifying event
described in section 603(2)'' and inserting ``at any time
during the initial 18-month period of continuing coverage
under this part'';
(B) in subparagraph (D)(i), by inserting before ``, or''
the following: ``, except that the exclusion or limitation
contained in this clause shall not be considered to apply to
a plan under which a preexisting condition or exclusion does
not apply to an individual otherwise eligible for
continuation coverage under this section because of the
provision of the Health Insurance Reform Act of 1995''; and
(C) in subparagraph (E), by striking ``at the time of a
qualifying event described in section 603(2)'' and inserting
``at any time during the initial 18-month period of
continuing coverage under this part''.
(2) Election.--Section 605(1)(C) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1165(1)(C)) is
amended--
(A) in clause (i), by striking ``or'' at the end thereof;
(B) in clause (ii), by striking the period and inserting
``, or''; and
(C) by adding at the end thereof the following new clause:
``(iii) in the case of an individual described in the last
sentence of section 602(2)(A), or a beneficiary-family member
of the individual, the date such individual is determined to
have been disabled.''.
[[Page S3508]]
(3) Notices.--Section 606(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1166(3)) is amended by
striking ``at the time of a qualifying event described in
section 603(2)'' and inserting ``at any time during the
initial 18-month period of continuing coverage under this
part''.
(4) Birth or adoption of a child.--Section 607(3)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1167(3)) is amended by adding at the end thereof the
following new flush sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this part.''.
(c) Internal Revenue Code of 1986.--
(1) Period of coverage.--Section 4980B(f)(2)(B) of the
Internal Revenue Code of 1986 is amended--
(A) in the last sentence of clause (i) by striking ``at the
time of a qualifying event described in paragraph (3)(B)''
and inserting ``at any time during the initial 18-month
period of continuing coverage under this section'';
(B) in clause (iv)(I), by inserting before ``, or'' the
following: ``, except that the exclusion or limitation
contained in this subclause shall not be considered to apply
to a plan under which a preexisting condition or exclusion
does not apply to an individual otherwise eligible for
continuation coverage under this subsection because of the
provision of the Health Insurance Reform Act of 1995''; and
(C) in clause (v), by striking ``at the time of a
qualifying event described in paragraph (3)(B)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this section''.
(2) Election.--Section 4980B(f)(5)(A)(iii) of the Internal
Revenue Code of 1986 is amended--
(A) in subclause (I), by striking ``or'' at the end
thereof;
(B) in subclause (II), by striking the period and inserting
``, or''; and
(C) by adding at the end thereof the following new
subclause:
``(III) in the case of an qualified beneficiary described
in the last sentence of paragraph (2)(B)(i), the date such
individual is determined to have been disabled.''.
(3) Notices.--Section 4980B(f)(6)(C) of the Internal
Revenue Code of 1986 is amended by striking ``at the time of
a qualifying event described in paragraph (3)(B)'' and
inserting ``at any time during the initial 18-month period of
continuing coverage under this section''.
(4) Birth or adoption of a child.--Section 4980B(g)(1)(A)
of the Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new flush sentence:
``Such term shall also include a child who is born to or
placed for adoption with the covered employee during the
period of continued coverage under this section.''.
(d) Effective Date.--The amendments made by this section
shall apply to qualifying events occurring on or after the
date of the enactment of this Act for plan years beginning
after December 31, 1996.
(e) Notification of Changes.--Not later than 60 days prior
to the date on which this section becomes effective, each
group health plan (covered under title XXII of the Public
Health Service Act, part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974, and section
4980B(f) of the Internal Revenue Code of 1986) shall notify
each qualified beneficiary who has elected continuation
coverage under such title, part or section of the amendments
made by this section.
Subtitle D--Private Health Plan Purchasing Cooperatives
SEC. 131. PRIVATE HEALTH PLAN PURCHASING COOPERATIVES.
(a) Definition.--As used in this Act, the term ``health
plan purchasing cooperative'' means a group of individuals or
employers that, on a voluntary basis and in accordance with
this section, form a cooperative for the purpose of
purchasing individual health plans or group health plans
offered by health plan issuers. A health plan issuer, agent,
broker or any other individual or entity engaged in the sale
of insurance may not underwrite a cooperative.
(b) Certification.--
(1) In general.--If a group described in subsection (a)
desires to form a health plan purchasing cooperative in
accordance with this section and such group appropriately
notifies the State and the Secretary of such desire, the
State, upon a determination that such group meets the
requirements of this section, shall certify the group as a
health plan purchasing cooperative. The State shall make a
determination of whether such group meets the requirements of
this section in a timely fashion. Each such cooperative shall
also be registered with the Secretary.
(2) State refusal to certify.--If a State fails to
implement a program for certifying health plan purchasing
cooperatives in accordance with the standards under this Act,
the Secretary shall certify and oversee the operations of
such cooperatives in such State.
(3) Interstate cooperatives.--For purposes of this section,
a health plan purchasing cooperative operating in more than
one State shall be certified by the State in which the
cooperative is domiciled. States may enter into cooperative
agreements for the purpose of certifying and overseeing the
operation of such cooperatives. For purposes of this
subsection, a cooperative shall be considered to be domiciled
in the State in which most of the members of the cooperative
reside.
(c) Board of Directors.--
(1) In general.--Each health plan purchasing cooperative
shall be governed by a Board of Directors that shall be
responsible for ensuring the performance of the duties of the
cooperative under this section. The Board shall be composed
of a broad cross-section of representatives of employers,
employees, and individuals participating in the cooperative.
A health plan issuer, agent, broker or any other individual
or entity engaged in the sale of individual health plans or
group health plans may not hold or control any right to vote
with respect to a cooperative.
(2) Limitation on compensation.--A health plan purchasing
cooperative may not provide compensation to members of the
Board of Directors. The cooperative may provide
reimbursements to such members for the reasonable and
necessary expenses incurred by the members in the performance
of their duties as members of the Board.
(3) Conflict of interest.--No member of the Board of
Directors (or family members of such members) nor any
management personnel of the cooperative may be employed by,
be a consultant for, be a member of the board of directors
of, be affiliated with an agent of, or otherwise be a
representative of any health plan issuer, health care
provider, or agent or broker. Nothing in the preceding
sentence shall limit a member of the Board from purchasing
coverage offered through the cooperative.
(d) Membership and Marketing Area.--
(1) Membership.--A health plan purchasing cooperative may
establish limits on the maximum size of employers who may
become members of the cooperative, and may determine whether
to permit individuals to become members. Upon the
establishment of such membership requirements, the
cooperative shall, except as provided in subparagraph (B),
accept all employers (or individuals) residing within the
area served by the cooperative who meet such requirements as
members on a first-come, first-served basis, or on another
basis established by the State to ensure equitable access to
the cooperative.
(2) Marketing area.--A State may establish rules regarding
the geographic area that must be served by a health plan
purchasing cooperative. With respect to a State that has not
established such rules, a health plan purchasing cooperative
operating in the State shall define the boundaries of the
area to be served by the cooperative, except that such
boundaries may not be established on the basis of health
status or insurability of the populations that reside in the
area.
(e) Duties and Responsibilities.--
(1) In general.--A health plan purchasing cooperative
shall--
(A) enter into agreements with multiple, unaffiliated
health plan issuers, except that the requirement of this
subparagraph shall not apply in regions (such as remote or
frontier areas) in which compliance with such requirement is
not possible;
(B) enter into agreements with employers and individuals
who become members of the cooperative;
(C) participate in any program of risk-adjustment or
reinsurance, or any similar program, that is established by
the State;
(D) prepare and disseminate comparative health plan
materials (including information about cost, quality,
benefits, and other information concerning group health plans
and individual health plans offered through the cooperative);
(E) actively market to all eligible employers and
individuals residing within the service area; and
(F) act as an ombudsman for group health plan or individual
health plan enrollees.
(2) Permissible activities.--A health plan purchasing
cooperative may perform such other functions as necessary to
further the purposes of this Act, including--
(A) collecting and distributing premiums and performing
other administrative functions;
(B) collecting and analyzing surveys of enrollee
satisfaction;
(C) charging membership fee to enrollees (such fees may not
be based on health status) and charging participation fees to
health plan issuers;
(D) cooperating with (or accepting as members) employers
who provide health benefits directly to participants and
beneficiaries only for the purpose of negotiating with
providers; and
(E) negotiating with health care providers and health plan
issuers.
(f) Limitations on Cooperative Activities.--A health plan
purchasing cooperative shall not--
(1) perform any activity relating to the licensing of
health plan issuers;
(2) assume financial risk directly or indirectly on behalf
of members of a health plan purchasing cooperative relating
to any group health plan or individual health plan;
(3) establish eligibility, continuation of eligibility,
enrollment, or premium contribution requirements for
participants, beneficiaries, or individuals based on health
status, medical condition, claims experience, receipt of
health care, medical history, evidence of insurability, or
disability;
(4) operate on a for-profit or other basis where the legal
structure of the cooperative permits profits to be made and
not returned to the members of the cooperative, except that a
for-profit health plan purchasing cooperative may be formed
by a nonprofit organization--
(A) in which membership in such organization is not based
on health status, medical condition, claims experience,
receipt of health care, medical history, evidence of
insurability, or disability; and
(B) that accepts as members all employers or individuals on
a first-come, first-served basis, subject to any established
limit on the maximum size of and employer that may become a
member; or
(5) perform any other activities that conflict or are
inconsistent with the performance of its duties under this
Act.
(g) Limited Preemption of Certain State Laws.--
[[Page S3509]]
(1) In general.--With respect to a health plan purchasing
cooperative that meets the requirements of this section,
State fictitious group laws shall be preempted.
(2) Health plan issuers.--
(A) Rating.--With respect to a health plan issuer offering
a group health plan or individual health plan through a
health plan purchasing cooperative that meets the
requirements of this section, State premium rating
requirement laws, except to the extent provided under
subparagraph (B), shall be preempted unless such laws permit
premium rates negotiated by the cooperative to be less than
rates that would otherwise be permitted under State law, if
such rating differential is not based on differences in
health status or demographic factors.
(B) Exception.--State laws referred to in subparagraph (A)
shall not be preempted if such laws--
(i) prohibit the variance of premium rates among employers,
plan sponsors, or individuals that are members of a health
plan purchasing cooperative in excess of the amount of such
variations that would be permitted under such State rating
laws among employers, plan sponsors, and individuals that are
not members of the cooperative; and
(ii) prohibit a percentage increase in premium rates for a
new rating period that is in excess of that which would be
permitted under State rating laws.
(C) Benefits.--Except as provided in subparagraph (D), a
health plan issuer offering a group health plan or individual
health plan through a health plan purchasing cooperative
shall comply with all State mandated benefit laws that
require the offering of any services, category or care, or
services of any class or type of provider.
(D) Exception.--In those States that have enacted laws
authorizing the issuance of alternative benefit plans to
small employers, health plan issuers may offer such
alternative benefit plans through a health plan purchasing
cooperative that meets the requirements of this section.
(h) Rules of Construction.--Nothing in this section shall
be construed to--
(1) require that a State organize, operate, or otherwise
create health plan purchasing cooperatives;
(2) otherwise require the establishment of health plan
purchasing cooperatives;
(3) require individuals, plan sponsors, or employers to
purchase group health plans or individual health plans
through a health plan purchasing cooperative;
(4) require that a health plan purchasing cooperative be
the only type of purchasing arrangement permitted to operate
in a State;
(5) confer authority upon a State that the State would not
otherwise have to regulate health plan issuers or employee
health benefits plans; or
(6) confer authority upon a State (or the Federal
Government) that the State (or Federal Government) would not
otherwise have to regulate group purchasing arrangements,
coalitions, or other similar entities that do not desire to
become a health plan purchasing cooperative in accordance
with this section.
(i) Application of ERISA.--For purposes of enforcement
only, the requirements of parts 4 and 5 of subtitle B of
title I of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1101) shall apply to a health plan purchasing
cooperative as if such plan were an employee welfare benefit
plan.
TITLE II--APPLICATION AND ENFORCEMENT OF STANDARDS
SEC. 201. APPLICABILITY.
(a) Construction.--
(1) Enforcement.--
(A) In general.--A requirement or standard imposed under
this Act on a group health plan or individual health plan
offered by a health plan issuer shall be deemed to be a
requirement or standard imposed on the health plan issuer.
Such requirements or standards shall be enforced by the State
insurance commissioner for the State involved or the official
or officials designated by the State to enforce the
requirements of this Act. In the case of a group health plan
offered by a health plan issuer in connection with an
employee health benefit plan, the requirements or standards
imposed under this Act shall be enforced with respect to the
health plan issuer by the State insurance commissioner for
the State involved or the official or officials designated by
the State to enforce the requirements of this Act.
(B) Limitation.--Except as provided in subsection (c), the
Secretary shall not enforce the requirements or standards of
this Act as they relate to health plan issuers, group health
plans, or individual health plans. In no case shall a State
enforce the requirements or standards of this Act as they
relate to employee health benefit plans.
(2) Preemption of state law.--Nothing in this Act shall be
construed to prevent a State from establishing, implementing,
or continuing in effect standards and requirements--
(A) not prescribed in this Act; or
(B) related to the issuance, renewal, or portability of
health insurance or the establishment or operation of group
purchasing arrangements, that are consistent with, and are
not in direct conflict with, this Act and provide greater
protection or benefit to participants, beneficiaries or
individuals.
(b) Rule of Construction.--Nothing in this Act shall be
construed to affect or modify the provisions of section 514
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1144).
(c) Continuation.--Nothing in this Act shall be construed
as requiring a group health plan or an employee health
benefit plan to provide benefits to a particular participant
or beneficiary in excess of those provided under the terms of
such plan.
SEC. 202. ENFORCEMENT OF STANDARDS.
(a) Health Plan Issuers.--Each State shall require that
each group health plan and individual health plan issued,
sold, renewed, offered for sale or operated in such State by
a health plan issuer meet the standards established under
this Act pursuant to an enforcement plan filed by the State
with the Secretary. A State shall submit such information as
required by the Secretary demonstrating effective
implementation of the State enforcement plan.
(b) Employee Health Benefit Plans.--With respect to
employee health benefit plans, the Secretary shall enforce
the reform standards established under this Act in the same
manner as provided for under sections 502, 504, 506, and 510
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1132, 1134, 1136, and 1140). The civil penalties
contained in paragraphs (1) and (2) of section 502(c) of such
Act (29 U.S.C. 1132(c)(1) and (2)) shall apply to any
information required by the Secretary to be disclosed and
reported under this section.
(c) Failure To Implement Plan.--In the case of the failure
of a State to substantially enforce the standards and
requirements set forth in this Act with respect to group
health plans and individual health plans as provided for
under the State enforcement plan filed under subsection (a),
the Secretary, in consultation with the Secretary of Health
and Human Services, shall implement an enforcement plan
meeting the standards of this Act in such State. In the case
of a State that fails to substantially enforce the standards
and requirements set forth in this Act, each health plan
issuer operating in such State shall be subject to civil
enforcement as provided for under sections 502, 504, 506, and
510 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1132, 1134, 1136, and 1140). The civil penalties
contained in paragraphs (1) and (2) of section 502(c) of such
Act (29 U.S.C. 1132(c)(1) and (2)) shall apply to any
information required by the Secretary to be disclosed and
reported under this section.
(d) Applicable Certifying Authority.--As used in this
title, the term ``applicable certifying authority'' means,
with respect to--
(1) health plan issuers, the State insurance commissioner
or official or officials designated by the State to enforce
the requirements of this Act for the State involved; and
(2) an employee health benefit plan, the Secretary.
(e) Regulations.--The Secretary may promulgate such
regulations as may be necessary or appropriate to carry out
this Act.
(f) Technical Amendment.--Section 508 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1138) is
amended by inserting ``and under the Health Insurance Reform
Act of 1995'' before the period.
TITLE III--MISCELLANEOUS PROVISIONS
SEC. 301. HMOS ALLOWED TO OFFER PLANS WITH DEDUCTIBLES TO
INDIVIDUALS WITH MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Section 1301(b) of the Public Health
Service Act (42 U.S.C. 300e(b)) is amended by adding at the
end the following new paragraph:
``(6)(A) If a member certifies that a medical savings
account has been established for the benefit of such member,
a health maintenance organization may, at the request of such
member reduce the basic health services payment otherwise
determined under paragraph (1) by requiring the payment of a
deductible by the member for basic health services.
``(B) For purposes of this paragraph, the term `medical
savings account' means an account which, by its terms, allows
the deposit of funds and the use of such funds and income
derived from the investment of such funds for the payment of
the deductible described in subparagraph (A).''.
(b) Medical Savings Accounts.--It is the sense of the
Committee on Labor and Human Resources of the Senate that the
establishment of medical savings accounts, including those
defined in section 1301(b)(6)(B) of the Public Health Service
Act (42 U.S.C. 300e(b)(6)(B)), should be encouraged as part
of any health insurance reform legislation passed by the
Senate through the use of tax incentives relating to
contributions to, the income growth of, and the qualified use
of, such accounts.
(c) Sense of the Senate.--It is the sense of the Senate
that the Congress should take measures to further the
purposes of this Act, including any necessary changes to the
Internal Revenue Code of 1986 to encourage groups and
individuals to obtain health coverage, and to promote access,
equity, portability, affordability, and security of health
benefits.
SEC. 302. HEALTH COVERAGE AVAILABILITY STUDY.
(a) In General.--The Secretary of Health and Human
Services, in consultation with the Secretary, representatives
of State officials, consumers, and other representatives of
individuals and entities that have expertise in health
insurance and employee benefits, shall conduct a two-part
study, and prepare and submit reports, in accordance with
this section.
(b) Evaluation of Availability.--Not later than January 1,
1997, the Secretary of Health and Human Services shall
prepare and submit to the appropriate committees of Congress
a report, concerning--
(1) an evaluation, based on the experience of States,
expert opinions, and such additional data as may be
available, of the various mechanisms used to ensure the
availability of reasonably priced health coverage to
employers purchasing group coverage and to individuals
purchasing coverage on a non-group basis; and
(2) whether standards that limit the variation in premiums
will further the purposes of this Act.
[[Page S3510]]
(c) Evaluation of Effectiveness.--Not later than January 1,
1998, the Secretary of Health and Human Services shall
prepare and submit to the appropriate committees of Congress
a report, concerning the effectiveness of the provisions of
this Act and the various State laws, in ensuring the
availability of reasonably priced health coverage to
employers purchasing group coverage and individuals
purchasing coverage on a non-group basis.
SEC. 303. SENSE OF THE COMMITTEE CONCERNING MEDICARE.
(a) Findings.--The Committee on Labor and Human Resources
of the Senate finds that the Public Trustees of Medicare
concluded in their 1995 Annual Report that--
(1) the Medicare program is clearly unsustainable in its
present form;
(2) ``the Hospital Insurance Trust Fund, which pays
inpatient hospital expenses, will be able to pay benefits for
only about 7 years and is severely out of financial balance
in the long range''; and
(3) the Public Trustees ``strongly recommend that the
crisis presented by the financial condition of the Medicare
trust fund be urgently addressed on a comprehensive basis,
including a review of the programs's financing methods,
benefit provisions, and delivery mechanisms''.
(b) Sense of the Committee.--It is the Sense of the
Committee on Labor and Human Resources of the Senate that the
Senate should take measures necessary to reform the Medicare
program, to provide increased choice for seniors, and to
respond to the findings of the Public Trustees by protecting
the short-term solvency and long-term sustainability of the
Medicare program.
SEC. 304. EFFECTIVE DATE.
Except as otherwise provided for in this Act, the
provisions of this Act shall apply as follows:
(1) With respect to group health plans and individual
health plans, such provisions shall apply to plans offered,
sold, issued, renewed, in effect, or operated on or after
January 1, 1996; and
(2) With respect to employee health benefit plans, on the
first day of the first plan year beginning on or after
January 1, 1996.
SEC. 305. SEVERABILITY.
If any provision of this Act or the application of such
provision to any person or circumstance is held to be
unconstitutional, the remainder of this Act and the
application of the provisions of such to any person or
circumstance shall not be affected thereby.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, Congress has spent significant time
during the past 4 years debating comprehensive health care reform and
major reforms to the Medicaid and Medicare Programs. While we have
filled pages of newspapers and the Congressional Record and hearing
records, our actions have not equaled our words.
Meanwhile, many American families worry about the availability,
portability, and cost of their own health care coverage.
The health insurance problem is not merely one of perception. The
health care market continues to transform itself. An example is the
rapid movement toward managed care. At the same time, the number of
uninsured and underinsured Americans has continued to climb. There are
now over 40 million Americans without health insurance, and that number
continues to grow.
Over 1 million working Americans have lost health insurance in the
last 2 years alone, and over 80 million Americans have preexisting
conditions that could make it difficult for them to maintain health
coverage when they change jobs.
The current health insurance system provides too little protection
for individuals and families with health problems and makes it too
difficult for employers, particularly small employers, to obtain
adequate coverage for their employees. It also locks people into jobs
out of fear they will lose their health care coverage if they change
jobs or if they lose their jobs.
Let me remind my colleagues that Federal law preempts States from
providing portability to the majority of Americans who get their
coverage through so-called self-insured health plans. Therefore, only
Congress, only the Federal Government, can guarantee insurance
portability and an end to job lock. That is one of the main reasons all
major organizations representing the States have endorsed S. 1028.
The Health Insurance Reform Act before the Senate today passed the
Senate Labor and Human Resources Committee in August by a unanimous
vote. It now has 65 cosponsors, 27 Republicans and 38 Democrats. It is
clear that, if this bill were to come to a vote in its current form, it
would have more than enough votes to overcome any potential filibuster.
The House of Representatives already has passed legislation containing
health insurance reform similar to S. 1028.
Moreover, the bill has been endorsed by a wide range of
organizations, including the National Governors' Association, the
National Association of State Insurance Commissioners, the Consortium
for Citizens with Disabilities, Small Business United, the National
Association of Manufacturers, the National Federation of Independent
Business, the U.S. Chamber of Commerce, the American Medical
Association, American Hospital Association, Families USA, Consumers
Union, the American Association of Retired Persons, and the AFL-CIO.
The portability provisions of this bill are even supported by many
health insurers, including the American Association of Health Plans,
Aetna, Prudential, Cigna, United Healthcare and the Blue Cross and Blue
Shield Association, which is the largest health insurance carrier in
the individual market.
Doctors, hospitals, insurers, HMO's, large business, small business,
organized labor, and consumer groups all support the bill before us
today. When one looks at the history of health care reform and the
difficult tradeoffs and policy choices that must be made, that fact
alone, I suggest, is remarkable.
The majority of these organizations have made clear that their
support is conditioned on S. 1028 remaining free of contentious
amendments.
We have a historic opportunity to pass limited, but real, health
reform for the American people. We must not squander this opportunity
by expanding the scope of this bill. The lessons of the past are clear.
If we try to do too much, we will fail to do anything.
This bill is too important to people who may not have a voice in the
Halls of Congress by any major organization, but who will be helped
tremendously by this legislation. People like Tom Hall, a retired
construction worker and farmer from Oklahoma City.
After 30 years of being covered by his employer, Tom started his own
company and tried to buy an insurance policy for his family. However,
the same insurer that had covered him while he was employed turned him
down. Several years later, he did find an insurance policy that covers
everything but his preexisting heart condition.
Mr. Hall testified before our committee, and it was very powerful
testimony in its own significant way. Clearly, Mr. Hall would be
protected by the group-to-individual portability provisions of this
bill.
There are other families who would benefit. One is from Herndon, VA.
A daughter who has cerebral palsy is excluded from coverage for at
least 12 months every time the husband, Robert, changes jobs. While
they have waited for these preexisting conditions to expire, they have
had to pay both COBRA coverage and coverage under the new employer
plan.
Mr. President, I also visited with a young woman who is an employee
of the U.S. Senate. She has cancer. Her husband is completing his
graduate work, and they hope to move to Florida. She is afraid to leave
the coverage she has under her Federal employees health insurance for
fear if they move to Florida, she may not be able to get insurance
which would cover her because of her having cancer.
These are just some examples of people who would be helped directly
by this legislation.
Only a year after President Clinton waved his veto pen and said he
would not sign any bill that did not contain universal coverage, the
President now says he will sign this carefully targeted health
insurance portability bill. We should take him up on that offer.
The bill before us today does not achieve universal coverage. It is a
far cry from the comprehensive health reform proposals that were
considered by Congress only in the last Congress. However, it would
immediately and measurably improve the lives of millions of Americans.
Through sensible, market-based reforms, the Health Insurance Reform
Act would, first, limit the ability of insurers and employers to impose
exclusions for preexisting conditions; second, prevent insurers from
dropping coverage when an individual changes jobs or family members
become sick; and third, help small companies gain more purchasing clout
in the marketplace.
Despite its limited scope, the General Accounting Office estimates
that the Health Insurance Reform Act would
[[Page S3511]]
help at least 25 million Americans each year, and the Congressional
Budget Office predicts that it would do so without any cost to the
American taxpayers.
Mr. President, I do not know whether it is 25 million. I do not know
if it is 10 million or if it is 5 million. What matters is each and
every one of us in this U.S. Senate knows someone it would help. And if
it only helps those few that we know even, it would be well worth
positive consideration on the floor of the Senate.
I believe the legislation has achieved broad consensus for two main
reasons. First, it is narrowly focused. It does not contain employer
mandates, mandatory purchasing alliances, new taxes or new
bureaucracies. Instead, the legislation focuses only on those areas
where broad bipartisan agreement existed during the health care debate
in the 103d Congress and where State insurance reforms have
demonstrated the ability to work.
Second, the legislation was crafted with a significant input from
consumers, insurers, businesses, hospitals and doctors. It is carefully
attuned to the rapidly changing private health care market.
The Health Insurance Reform Act is not without some detractors. We
have worked closely with the health insurance industry, and insurers
generally support the bill. For example, the Health Insurance
Association of America submitted testimony in favor of the vast
majority of the bill's provisions. However, some continue to raise
concerns about one provision of the legislation that is designed to
help individuals and families who have played by the rules to maintain
health coverage if they lose their job or leave a job to work for an
employer that does not offer coverage.
I believe, however, that this provision strikes a careful balance
between the need to provide consumers access to individual coverage and
the need to protect the fragile individual insurance market.
The Health Insurance Reform Act would provide access to individual
insurance only for those who have maintained prior continuous coverage
under an employer-sponsored health plan for at least 1\1/2\ years, who
have exhausted their COBRA benefits, and who are ineligible for
coverage under another group policy.
Moreover, S. 1028 contains no restrictions on premiums. There are
many who wish that it did, and it leaves broader reforms, such as
guaranteed issue for individuals who have not had prior coverage,
guaranteed issue for self-employed and portability between individual
health plans to the States.
As a result, the bill requires individuals to pay into the system
before being able to use its provisions for continued health coverage.
This group-to-individual portability provision is carefully
circumscribed precisely to avoid potential premium increases and
adverse selection problems that could result from broader individual
market reforms.
The American Academy of Actuaries, the Congressional Budget Office,
the Rand Corp., the Hay Huggins Group and other credible independent
actuaries have confirmed that this narrow provision would have only a
minimal impact on the cost of health coverage in the individual market.
There are some who have vastly exaggerated what the premium increase
would be, but those that I have mentioned are sources that have no ax
to grind in this area and whose reliability on projections are totally
objective.
The substitute goes even further. It expressly provides that if a
State has adopted or adopts in the future a high-risk pool or other
means of allowing individuals to maintain health coverage, that State
law or program will apply in lieu of the group-to-individual
portability provision contained in the bill.
Instead of preempting State reforms that are working or prescribing a
one-size-fits-all solution from Washington, S. 1028 allows each State
to fashion individual market solutions that are appropriate for
individuals in that State. This is another reason why both the
Governors and the State insurance commissioners support the bill.
Mr. President, I think we all know those who would be helped by this
legislation, as I said. The Health Insurance Reform Act does not strike
out in a bold new direction, but it is a positive step forward that
will help reduce barriers to health coverage for millions of working
Americans. It is also an opportunity to demonstrate to the American
people that Republicans and Democrats can work together to address
their most serious concerns regarding health care.
As Robert Samuelson stated in his column on April 17 in the
Washington Post:
The virtue of this proposal is its modesty. There is
nothing wrong with constructive tinkering. We've had enough
of grand reforms, which promise much and deliver little.
However, if enacted, it would provide a little extra peace of
mind for those who have already had employer-paid insurance.
He concludes:
This legislation isn't exciting but then again good
government often isn't.
Mr. President, it may not be exciting, but let me tell you, if you
know one person this legislation would help, it is, indeed, exciting.
I yield the floor.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER (Mr. Inhofe). The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, I want, first of all, as we begin the
consideration of the legislation which can make such an extraordinary
difference to millions of our fellow citizens in this country, mention
at the outset my great respect, and I think the respect all of us in
the Senate should have, for the chairperson of our committee of the
Labor and Human Resources Committee.
I can remember going back the last time that the Senate was
considering major legislation--we have had other legislation in the
meantime--the comprehensive legislation that we considered now some 2
years ago. During that period of time, Senator Kassebaum was tireless
in trying to find some common ground. We had some areas of agreement.
We were unable, obviously, to get to the full measure of agreement
during those considerations. But I think all of us who were a part of
that effort knew that Senator Kassebaum was trying to find the areas of
common ground on which we could move forward. At the end of the
consideration of that legislation, I can remember a conversation that
we had.
In her typical manner, she expressed a very compelling view that we
should not let the issues of health care fall by the wayside and that
we ought to try to look through the various proposals that had been
considered at that period of time and that we ought to try to piece
what we could together that could make an important difference for the
American people and see if we could not work out a bipartisan effort.
It was really from that initiative and from that energy that she has
spent hour after hour after hour in small meetings, large meetings,
hearings, in visiting with various interested members of our committee
and other Members of the Senate, and really helped in developing this
legislation. In an extraordinary committee action, we were able to
bring all the members and get a unanimous vote in support of this
legislation, which is really an extraordinary achievement and
accomplishment at any time. It certainly is now in this Congress, which
in many instances has had more contentious debates and less agreement
on many public policy issues.
But in this area, it is really a result of her own particular skills
and talents and energy and strong commitment that we are here today
with the extraordinary support that she has mentioned in regard to both
Republicans and Democrats. I think all Members of the Senate,
obviously, who know her and know her perseverance pay tribute to her
extraordinary leadership on this issue.
I certainly at the outset of this debate and discussion acknowledge
that and pay tribute to it. I think when the history of health policy
is written, her imprint on not just this legislation but on so many
other measures of health will be very, very much recognized, as it
should be. It has been a personal pleasure to have the chance to work
with her. I know all the members of the committee feel the same way.
Mr. President, the legislation we are considering today will end many
of the most serious health insurance abuses and provide greater
protection to millions of families. It is an opportunity we cannot
afford to miss.
[[Page S3512]]
The abusive practices addressed by this bill create endless,
unnecessary suffering. Millions of Americans are forced to pass up
opportunities to accept jobs that would improve their standard of
living or offer them greater opportunities because they are afraid they
will lose their health insurance. Many others have to abandon the goal
of starting their own business because health insurance would be
unavailable to them or members of their families.
Children who age out of their parents' policies often find themselves
unable to obtain their own insurance if they have any significant
health problems. Early retirees can find themselves uninsured just when
they are entering the years of highest health risks.
Other Americans lose their health insurance because they become sick
or lose their job or change their job, even when they have faithfully
paid their insurance premiums for many years.
With each passing year, the flaws in the private health insurance
market become more serious. More than half of all insurance policies
impose exclusions for preexisting conditions. As a result, insurance is
often denied for the very illnesses most likely to require medical
care. The purpose of such exclusions is reasonable to prevent people
from gaming the system by purchasing coverage only when they get sick,
but current practices are indefensible.
No matter how faithfully people pay their premiums, they often have
to start over again with a new exclusion period if they change jobs or
lose their coverage. And 81 million Americans have conditions that
could subject them to such exclusions if they lose their current health
care coverage. Sometimes the exclusions make them completely
uninsurable.
Insurers impose exclusions for preexisting conditions on people who
do not deserve to be excluded from the coverage they need. Sometimes
insurers deny coverage to entire firms if one employee of the firm is
in poor health or exclude that employee from the coverage. In other
cases, entire categories of businesses with millions of employees are
red lined out of coverage.
Even if people are fortunate enough to gain coverage and have no
preexisting condition, their coverage can be canceled if they have the
misfortune to become sick, even after paying premiums for years.
Robert Frasher from Mansfield, OH, works for an employer who offers
health coverage to employees, but the insurance company will not cover
him. Why? Because he has Crohn's disease.
Jean Meredith of Harriman, TN, and her husband Tom owned Fruitland
USA, a mom-and-pop convenience store. They had insurance through their
small business for 8 years until Tom was diagnosed with non-Hodgkin's
lymphoma, and their insurance company dropped them. When the Merediths
asked why, they were told they were no longer profitable insurance
risks. Without health insurance, Tom Meredith had to wait a year to get
the surgery he needed. After spending $60,000 of his own funds, his
cancer recurred and he died of cancer about a year ago. Tom Meredith
might still be alive today if he had not been forced to wait that year.
One of the most serious consequences of the current system is job
lock. Workers who want to change jobs to improve their careers or
provide a better standard of living for their families must give up
that opportunity because it means losing their health insurance. A
quarter of all American workers say they are forced to stay in a job
they otherwise would have left because they are afraid of losing their
health insurance.
Diane Bratten, from Grove Heights, MN, her family had insurance
through Diane's employer. Because of a history of breast cancer--now in
remission--Diane and her family will not be able to get decent coverage
if she decides to change jobs or is laid off.
The legislation that Senator Kassebaum and I have introduced will
address these problems effectively. The Kassebaum-Kennedy Health
Insurance Reform Act is a health insurance bill of rights for every
American and for every business as well. The legislation contains many
of the provisions from the 1994 health reform debate which received
bipartisan support, such as an increased access to health insurance,
increased portability, protection of health benefits for those who lose
their jobs or want to start their own business, and greater purchasing
power for individuals and small businesses.
Those who have insurance deserve the security of knowing that their
coverage cannot be canceled, especially when they need it the most.
They deserve the security of knowing that if they pay their insurance
premiums for years, they cannot be denied coverage, be subjected to a
new exclusion for a preexisting condition when they change jobs, join
another group policy, or when they need to purchase coverage in the
individual market. Businesses, especially small businesses, deserve the
right to purchase health insurance for their employees at a reasonable
price.
Our Health Insurance Reform Act addresses these fundamental flaws in
the private insurance system. The bill limits the ability of insurance
companies to impose exclusions for preexisting conditions. Under the
legislation, no exclusion can last for more than 12 months. Once
someone has been covered for 12 months, no new exclusion can be imposed
as long as there is no gap in coverage, even if someone changes jobs,
loses their job, or changes insurance companies.
The bill requires insurers to sell and renew group health policies
for all employers who want coverage for their employees. It guarantees
renewability of individual policies. It prohibits insurers from denying
insurance to those moving from group coverage to individual coverage.
It prohibits group health plans from excluding any employee based on
health status.
The portability provisions of the bill mean that individuals with
coverage under a group health plan will not be locked into their job
for fear that they will be denied coverage or face a new exclusion for
a preexisting condition. These provisions will benefit at least 25
million Americans annually, according to the General Accounting Office.
In addition, the provisions will provide greater security for the 131
million Americans currently covered under group health plans.
The bill will also help small businesses provide better and less
expensive coverage for their employees. Purchasing cooperatives will
enable small groups and individuals to join together to negotiate
better rates in the market. As a result, they can obtain the kind of
clout in the marketplace currently available only to large employers.
The bill also provides great flexibility for States to meet the
objective of access to affordable health care for individuals who leave
their group health plans.
During the debate on health reform in the last Congress, even the
opponents of comprehensive reform urged Congress to pass at least the
reforms that everyone supported--portability of coverage, guaranteed
availability of coverage, and limitations on exclusions for preexisting
conditions. These are exactly the provisions included in this bill.
Senator Phil Gramm, over 2 years ago said:
We can fix the system and make it possible for people to
change jobs without losing their health insurance. Every one
of the proposals that has been made to reform health care--
every single bill--has a provision that would make it
possible for people to change jobs without losing their
insurance.
Majority Leader Dole, in his statement on the floor of the Senate in
August 1994 said this:
We will be back . . . And you can bet that health care will
be near the top of our agenda. . . . There are a lot of plans
and some have similarities. Many of us think we ought to take
all the common parts of these plans, put them together and
pass that bill.
Here is our chance. This is the bill.
The Health Insurance Reform Act is a modest, responsible, bipartisan
solution to many of the most obvious abuses in the health insurance
marketplace today. The bill was approved by the Senate Labor and Human
Resources Committee last August by a unanimous vote of 16 to 0. It is
similar to proposals made by President Clinton in his recent balanced
budget plan.
The measures it includes are also virtually identical to provisions
of legislation offered by Senator Dole in the last Congress--
legislation supported by virtually every Republican Member. Sponsors
range from the most conservative Members of the Senate to the most
liberal--because these reforms
[[Page S3513]]
represent simple justice. They are not issues of ideology or
partisanship.
Support for the bill by outside groups is equally broad. Almost 200
groups have expressed their support. These include business
associations like the chamber of commercve, National Small Business
United, the National Association of Manufacturers, the ERISA Industry
Committee, and the Association of Private Pension and Welfare Plans.
The AFL-CIO has endorsed the program, so that on this issue business
and labor are united. The program is also supported by the National
Governors' Association and the National Association of State Insurance
Commissioners, who believe the legislation represents an appropriate
balance between Federal and State responsibilities.
Responsible insurance companies support this bill, including the
insurance companies in the Alliance for Managed Care, the American
Association of Health Plans, Phoenix Life Insurance Co., the Blue
Cross/Blue Shield Association, and other insurance companies. Blue
Cross and Blue Shield are the largest carriers in the individual
insurance market. The American Association of Health Plans has millions
of individual subscribers. These responsible companies know that the
insurance system is broken and needs to be fixed.
The Independent Insurance Agents of America--the largest association
of agents in the country--sees the tragedies created by the current
system every day. They support this bill.
Doctors, hospitals, and other health providers see those tragedies as
well, and they support the legislation. It has been endorsed by the
American Medical Association, the American Hospital Association, and
over 44 medical specialty societies. This bill also enjoys the support
of a number of the consumer groups that understand the need for
legislation so well, including the Consortium for Citizens with
Disabilities, and Consumers Union.
In fact, the only opposition to this legislation comes from those who
profit from the abuses in the current system.
In his State of the Union Address last January, President Clinton
challenged Congress to pass this bill. Now that the legislation has
been brought to the floor of the Senate, I believe it will pass
overwhelmingly--unless some in the Senate insist on following the
Republican majority in the House of Representatives by addressing
controversial and harmful provisions like medical savings accounts,
federalization of multiple employer welfare arrangements, Federal caps
on malpractice awards, repeal of MediGap rules protecting senior
citizens against profiteers, or provisions making it more difficult to
combat the waste, fraud and abuse in the current Medicare and Medicaid
Programs. Almost all of the 200 groups that support the legislation
have urged the Senate to pass a clean bill, without these controversial
amendments.
These objectionable provisions of the House bill may serve the
special interests, but they have no place in this legislation. Their
adoption will almost certainly kill this bill, and destroy the hopes of
millions of Americans for the kind of modest but effective reform that
leaders of both parties have supported in the past.
Medical savings accounts, which are included in a major amendment to
be offered later in this debate are particularly objectionable. They
are opposed by virtually every credible health policy expert. They
attract the healthy and wealthy, and add up to an unjustified $1.8
billion Federal giveaway to those who need it the least. They are a
gift to the insurance companies with the worst record of abusive
practices--a poorly disguised reward for millions of dollars of
campaign contributions. And by pulling the healthiest individuals out
of the conventional insurance market, they will raise premiums for
everyone else, including those who need coverage the most.
In fact, the Congressional Budget Office concluded that, ``In the
long run, the existence of any type of catastrophic plus MSA option
that would be attractive to a large number of people could threaten the
existence of standard health insurance.''
Members of the Senate who are serious about insurance reform should
vote against all controversial amendments--including medical savings
accounts. Senator Kassebaum and I have agreed that we will vigorously
oppose all such amendments--even those that we might support under
other circumstances. The Democratic leader, and many other Senators of
both parties have joined us in this pledge. This is a test of the
Senate's seriousness and ability to put the interest of the American
people ahead of the special interests.
This legislation is not comprehensive health reform. It will not
solve all the problems in the current system. But it is a constructive
step forward--a step that will help millions of Americans. I urge its
adoption.
Mr. President, if we are looking for just a shorthand explanation of
what the legislation achieves, effectively, it is the Health Insurance
Reform Act, the health insurance bill of rights. It guarantees that
your insurance cannot be taken away because you, first, lose your job;
second, change your job; third, become sick; or, fourth, start your own
business. It protects against unfair preexisting conditions exclusion
which affect millions of American citizens who virtually have no
control over those preexisting conditions. In an important way it
increases the purchasing power of small businesses so that they will be
able to provide health insurance to the millions of Americans who work
in small businesses and have no coverage at this time.
This is a modest bill, an important bill. It deserves overwhelming
passage. It deserves, most importantly, to become law. Every day that
we delay the legislation, there are other fellow citizens in this
country that continue to be unable to get the kind of protections that
they need and that they deserve. Hopefully, we will have overwhelming
bipartisan vote on this legislation.
Mr. President, I see a number of our colleagues that will be
speaking. I just hope that those that do have amendments--we hope there
are not many of those--will make their amendments available to us at
the earliest possible time so we can have a chance to review those
amendments and to see what disposal we can make of them.
Privilege of the Floor
Mr. KENNEDY. Mr. President, I ask unanimous consent that members of
the staff, four fellows, Lauren Ewers, Susan Castleberry, Sara Thom,
and Anna Marie Murphy, be granted privileges of the floor during the
debate on health insurance reform.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. KASSEBAUM. Mr. President, I ask unanimous consent that Anne Rufo
and Kevin McShane be extended floor privileges during the duration of
the debate.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. KASSEBAUM. Mr. President, I want to express my appreciation to
Senator Kennedy for his thoughtful statement. He is one who has been
involved in health care issues for many, many years and cares deeply
about it. He would, I am sure, like to have expanded this bill much
further. But we worked hard to construct, as he mentioned, something
that we felt could be passed and could be approved by the widest number
in both the U.S. Senate and the House of Representatives. So I have
greatly appreciated his leadership in the Labor and Human Resources
Committee, as we have worked hard and constructively on both sides of
the aisle in the committee, as well as on the floor, to bring this to
fruition today.
One who has been a great asset in working with us is the Senator from
Tennessee, who is waiting to speak. Not only has he been an exceptional
legislator on this issue, he comes to it also with an expertise that
the rest of us do not have--as a renowned cardiologist. So we have
valued his willingness to be very engaged in this issue.
I have greatly appreciated his help on the Labor and Human Resources
Committee as the ranking member. Senator Kennedy and I have worked
together to achieve this bill we are presenting today.
I yield the floor.
Mr. FRIST addressed the Chair.
The PRESIDING OFFICER. The Senator from Tennessee is recognized.
Mr. FRIST. Mr. President, I rise to congratulate Senators Kassebaum
and Kennedy for introducing what I consider to be a fair, balanced,
focused, and excellent bill that will be to the
[[Page S3514]]
benefit of over 25 million Americans. I welcome this opportunity to
focus today on the Health Insurance Reform Act.
The bill before us provides protection for some 25 million Americans,
who, each year--it is a rolling number--are at risk for becoming
uninsured. Too many Americans today have to live each day with that
fear of the loss of health insurance for preexisting illness--for
example, if they have heart disease or if they have a stroke--and for
the lack of insurance portability when they move from one job to
another job.
I commend Senator Kassebaum for her leadership in crafting this
legislation because it truly is balanced, bipartisan, and focused.
There has been much misinformation and misunderstanding of what the
provisions in this bill truly accomplish. Its objectives are very well-
defined, very specific.
I reject the notion that this bill, in any way, resembles, as has
been alleged, or is similar to President Clinton's very large, massive,
failed health care plan. This bill is very different and should not be
confused with the President's. This bill contains the very provisions
which had broad, very bipartisan support throughout the entire health
care debate.
The bill before us today proves that we can move forward
incrementally, rationally, step by step, to fix the problems in our
health care system today--without a massive Federal Government takeover
of the entire delivery system.
I am a physician, and as we talk about this bill and as we look at
the provisions of this bill, I see those faces of hundreds--in fact,
even thousands--of patients who I have had the opportunity to serve in
the past. Too many of those faces, when I picture them, are faces of
terror, of fear, that one day they will lose the insurance they have,
which they have purchased and that they have been a player in
purchasing, historically, that they will lose it, and that it will be
taken away simply because they want to change jobs or leave a group
plan, leave an insurance plan to go out and set up their own business.
As the only physician in this body, I do feel a very special
responsibility to speak out loudly, clearly, and forcefully in support
of those very practical solutions and patient protection when the
Senate considers matters dealing with these challenging issues of
health care. Each time I make a decision in this body regarding health
care legislation, I apply some very stringent tests that go back to my
experience as a physician delivering care to individuals, one on one,
who need that care, who depend on that care for their quality of life
and for their well-being.
In my practice as a heart and lung transplant surgeon, I shared daily
the obstacles that patients face. They tell you about that every day in
your office. For example, after a patient receives a new heart, has a
heart transplant, and after they are ready to return to the work force
and productive lives, there is a huge barrier there today, a barrier
that, once we remove it with this bill, will allow that individual to
live a more productive life, a life more fulfilling, a better quality
of life. When I give a person a new heart today, the next day they
start asking questions because they are petrified that they are not
going to be able to go back to their old job, to go back and get
insurance if they decide to change jobs.
They get trapped in a current situation for the rest of their lives
because of this lack of portability of insurance coverage. The cost of
their care, by no fault of their own, restricts their freedom of
movement within the workplace.
I cannot help but to think back to last July during our Labor and
Human Resources Committee when a man from Oklahoma, Tom Hall, testified
before us. He reminded me so directly of the hundreds of patients who
have told me this same story. He was denied individual coverage because
of what we call a preexisting heart condition. But it was denied by the
same insurer that he had insurance with for the last 30 years. It was
denied because he wanted to go out and start his own company. The
insurance company who he had worked with for 30 years--the same person,
the same condition--when he wanted to go out and start his own company,
initially denied that insurance. Eventually, yes, he got that
insurance. But, remember, he had a heart condition. He got that
insurance, but it did not cover his heart condition.
Well, this bill will address that. It passed the Labor Committee
unanimously and is currently supported by well over half of the U.S.
Senate. It limits exclusions for preexisting medical conditions, it
guarantees renewability of health coverage, and it reduces this concept
of job-lock--being locked in a job--by making health insurance coverage
portable from one job to another. In other words, when this bill
becomes law, people like Tom Hall will no longer be locked into jobs
or prevented from starting their own businesses for fear of losing
their health coverage.
As a doctor, there is nothing worse than having a patient tell me
that he or she cannot afford health care due to denial of coverage by
an insurance company. Tragically, over 1 million working Americans have
lost health insurance over the last 2 years. Over 80 million Americans
have preexisting conditions of some sort that could make it difficult,
if not impossible, for them to maintain coverage when they change jobs.
Many of these people are willing to pay the insurance premiums. In many
cases, those insurance premiums could be costly. But they cannot find
coverage at any price.
As a physician and as someone who is a real advocate of the free
market system, I find this unacceptable, unconscionable. People who are
willing to play by the rules--and again, this bill addresses people who
currently have insurance coverage, who have paid in, or had their
employer pay in, and have coverage. These are people who have played by
the rules in the system. These people should not be denied the
opportunity to lead productive lives.
I applaud Majority Leader Dole, who has a long record of support for
health care reform, for bringing this bill to the Senate floor. It is
important to debate, and it is important for us to take this step and
vote on this legislation.
Before I entered the public service as U.S. Senator a year and a half
ago, the Senate had already debated and even passed provisions almost
identical to this bill--debated and passed. Unfortunately, as the scope
of many of these bills grew larger and larger, the support for the
overall bill dwindled. As a result, we are here today still debating
those long-awaited insurance reforms.
In closing, while this bill is not a cure-all--and we should not
pretend it to be a cure-all, but it is a good first step--it is
incremental, it is straightforward, it is rationale, it is focused, and
it is direct. The bill will correct many of those imperfections in the
market that we have today for health insurance.
I am confident that this Congress will be the one--this Congress will
be the one--to deliver these much-needed reforms.
I thank the President. I yield the floor.
Mr. ROCKEFELLER addressed the Chair.
The PRESIDING OFFICER. The Senator from West Virginia.
Privilege of the Floor
Mr. ROCKEFELLER. Mr. President, I ask unanimous consent that Greg
Jones, a legislative fellow in my office, be allowed privileges of the
Senate floor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROCKEFELLER. Mr. President, I want to congratulate the Senator
from Tennessee for the remarks just made. There is really an
extraordinary synergy between Senator Kassebaum and Senator Kennedy
which has produced this legislation. It is interesting.
I was home last week in my State, and I was talking about this bill.
As I talked, a lot of the feelings that a lot of us had 2 or 3 years
ago began to come back. When the larger comprehensive health
legislation failed, it was just pulled to the ground by Harry and
Louise, special interests, and other things, there may be a feeling out
there in the land that, well, since that did not pass, I guess things
must be going better. Of course, that is not true. Things are really
worse. The system is in worse condition than it was at that time, and
people, I think, increasingly know that.
I think what we have to do is wait for a renewed demand, a broader
demand, a broader anger on the part of the American people so that they
will speak to
[[Page S3515]]
us with more clarity than happened in the last go-around and we can
respond. But in the meantime, Senator Kassebaum and Senator Kennedy saw
an opportunity to take certain very specific and important parts of
this problem and solve them, and they did so in a way which was so
successful and so agreeable that the vote was unanimous from that
committee. The Labor and Human Resources Committee has a reputation for
having a good deal of bipartisanship. But it is also a committee where
there are sharp differences of views and, therefore, the unanimity of
the vote I think is a very, very good sign for the Health Insurance
Reform Act of 1995.
I think that we have to be fully aware that people in this country
desperately want and thoroughly deserve the security that health
insurance will not disappear the way it does now. The Senator from
Tennessee was talking about how he could see that fear in people's
faces. I am not a physician, but I hear that constantly in my State of
West Virginia. When it disappears, it disappears cruelly. It disappears
without warning. It disappears often because people are simply just
laid off because of downsizing or because of other economic factors. It
always affects, it seems, millions of hard-working men and women,
people who are playing by the rules every day. I think today is our
chance to really do something. I think we can do our job for the West
Virginians, for the South Dakotans, the Kansans, and other Americans
everywhere who are out there doing their job but still fear the loss of
health insurance.
Health insurance is a little bit like air. Sometimes you take it for
granted. All of a sudden it is not there. You panic very quickly, and I
think a lot more Americans are doing that. Some people, in fact, are
estimating--a lot of people are--that by the year 2000, which is really
only 3-plus years off, that 50 percent of Americans who work for a
living--not 50 percent of Americans but 50 percent of Americans who
work for a living--will not have health insurance.
So, this problem just continues to get worse and worse. Yet, the
Labor and Human Resources Committee has made a substantial improvement
if we are able to pass this bill and if we can do it without
controversial amendments. I will have more to say about that as the day
goes along.
I have, frankly, waited for this day for a long, long time, and I am
filled with a sense of gratitude and a sense of relief that we are
finally, as a body, going to do something which is meaningful. If
everything really goes well, we may do this by the end of the night or
tomorrow night. But the point is we really have a chance to do this.
I do not know of a great deal of criticism about this bill on the
part of my colleagues. Relatively few people on the outside are
criticizing it, and, therefore, I have a good feeling about it.
The so-called Kassebaum-Kennedy bill, the Health Insurance Reform
Act, would establish some of the most fundamental and far-reaching
changes in health insurance since the creation, in fact, of Medicare
and Medicaid in 1965. I, therefore, again salute the two Senators, the
chairman and the ranking member, for their really inspiring bipartisan
partnership in crafting and advancing this very important legislation.
I think we all remember, as I indicated--it seems like a long time ago,
but it really was not--that there was a mighty debate in this body
about guaranteeing health insurance for every man, woman, and child in
this country. I believe that must still be the goal and the vision for
America. I believe that as strongly as I did at the time. I believe in
that even more strongly as I watch what is happening to more and more
people as they lose their health insurance even though they are
working.
Mr. President, that comprehensive effort at that time to reform our
country's health care system was stopped. But, again, the problems of
losing health insurance continue. That is why in a sense we have won,
through the good work of Senator Kassebaum and Senator Kennedy, we have
won another chance to enact something which is really meaningful in the
way of health care reform. The people of our States are still writing,
calling, visiting, and asking for help. I am going to do whatever I can
to make sure that we do not let this opportunity pass us by--that we
will not fail on this and that we will make a real difference in
people's day-to-day lives.
That is why we simply have to also exercise restraint and not kill
this bill with extra baggage. It is tempting, but it cannot happen.
Amendments, whether they are well-intentioned or not, which are
controversial will have the effect of bringing this bill down, and we
all know that. We have to be very careful as we go through this
exercise that we do not accept controversial amendments.
I think this bill is going to solve some really horrible problems for
real people. So why would we accept controversial amendments which we
might otherwise support, as the Senator from Massachusetts said, when
it could pull down the chance to do something really good for a lot of
people?
During debate on comprehensive health care reform several years ago,
many of my colleagues--especially those on the other side of the
aisle--said repeatedly that we should only enact those health reforms
on which there is a strong bipartisan consensus and support. Well, here
we have it. Here we have that piece of legislation. That is the precise
description of this bill, S. 1028, which is before us today. It was so
carefully crafted by the chairman and the ranking member; it came out
of the committee by unanimous vote; it is a bill which should be sent
to the President for his signature, and I am certain, although one
never knows, that he would sign it.
Loading up this bill with extraneous provisions which will please
certain special interests but only delay enactment of health reform
just does not make any sense at all. So, Mr. President, I intend to
join the floor managers of this bill and Minority Leader Daschle in
opposing any controversial amendment that will delay enactment of this
bill--any controversial amendment, even if it means voting against
amendments that, as I have indicated and so have others, have merit on
their own and I would fight to enact in other terms and other
circumstances. We cannot be distracted from the basic purposes of this
bill, which are terribly important.
Almost 40 million Americans lack basic health coverage today. It is
going up about a million plus every year, Mr. President. It has been
doing that regularly, and it will continue to do that, perhaps at an
accelerating rate. One cannot be sure. Most of the people who are not
lucky enough to have health insurance, with cards in their wallets or
back pockets, are in fact the people we revere and honor in this body,
and that is they are the hard-working, middle-class families who are
victims of layoffs and downsizing or just plain profit gouging.
This country offers the best health care in the world. Nobody has
ever denied that. It is terribly true. Unfortunately, that health care
continues to be beyond the reach of too many of our fellow citizens who
do not deserve that lot in a country that is as outstanding and great
as ours.
As both Senator Kassebaum and Senator Kennedy said, this bill before
us today will not solve all of the problems in the health care
marketplace. I think it was Senator Kassebaum who said that the so-
called guarantee issue, or guaranteed coverage, for that matter, for
every man, woman and child in this country has not diminished. The bill
is not going to solve it.
I still believe it is a fundamental right for each and every one of
us, not just for those who can afford it or are healthy enough to keep
insurance companies profitable. But again, the machinery of our health
care system is breaking down, and this bill helps substantially. If we
cannot therefore enact a complete overhaul, if we are not going to be
able to do that in this session, we must enact the individual fixes and
the individual reforms that will at least keep the engine of this
system running.
Evidence of this need for an overhaul of our health care system is
everywhere. It is found in the emergency rooms of our public hospitals,
collapsing under the demand of the growing millions who need medical
treatment but cannot pay for it. It is found in our schools where far
too many children go without immunization and preventive care. It is
found in the rooms of our nursing homes with so many residents
[[Page S3516]]
being uprooted from their homes and neighborhoods because of their
inability to afford community-based alternatives. They are forced onto
Medicaid. They are institutionalized because their savings have been
exhausted, and on and on.
Mr. President, individuals and families go uninsured for several
reasons. Often health insurance coverage is simply not available, or
what is available is not affordable. The effect is the same. Health
insurance often lapses after a worker is laid off and COBRA extensions
that affect certain larger industries have expired.
Entrepreneurs who leave their jobs to start their own businesses,
which is what we glory in America--IBM used to have it all and then
people started going out and creating all kinds of other things. That
is what we do in America. We are a country of entrepreneurs.
Entrepreneurs who have to leave their jobs or want to leave their jobs
to start their own companies because they think they have a better idea
are sometimes unable to convert their group health insurance policies
to an individual health plan, and, even more tragic, insurance coverage
is often terminated by an insurer just when that insurance policy is
needed the most, when an individual or a family member experiences a
really serious, devastating illness or disability.
How reliable is a guarantee, so to speak, of health coverage when the
health plan issuer acts in its own self-interest or cuts the safety
line by either terminating a policy or increasing the premiums beyond
the ability of the individual to pay, thus, in effect, accomplishing
the same end--cutting that person off.
The Health Insurance Reform Act of 1995 makes significant strides to
address each of these two problems, and that is why it is such a good
bill and needs to be passed. The Health Insurance Reform Act will
strengthen the safety net for millions of Americans by improving
portability and security of private health insurance, especially in the
small group and the individual insurance markets. I support this bill
because I personally have heard the stories of hundreds of West
Virginians who have fallen between the cracks of our health care
system.
Mr. President, I wish to just give three personal examples that I
know of and then end with a statement from the White House.
Mr. President, I want to start--and these are all people who would be
helped by this bill, and the examples are so many--with one Norma
Schoppert, who lives in Piedmont, WV--not large, near the top of our
State. Several years ago, she developed diabetes. Lots of people do.
When her husband was working, Mrs. Schoppert was covered by the health
plan offered by his employer. That is understandable. But then he
retired in 1991 and became eligible for Medicare. When that happened,
she was able to extend her own health insurance coverage for 3 years
because of the COBRA provisions that affected his health insurance, and
thus she was able to pay monthly premiums of $354 and continue full
health insurance coverage under COBRA for 3 years. But that only lasted
from 1991 to 1994, those 3 years.
Mrs. Schoppert was offered an individual policy when her COBRA
extension expired at a monthly premium, Mr. President, of $1,800. So
you understand the effect, $354 in the COBRA extension, $1,800 without
it. In effect, obviously, she could not pay that. She could not afford
to pay this amount, so she has now no medical coverage at all. And
unless the system is reformed, she will have to go without insurance
until she qualifies for Medicare, which is still 3 years away.
Now, Mr. President, that means, as the Senator from Tennessee
indicated, 3 more years of anxiety, 3 more years of fear, worrying
about the risk of losing everything that she and her husband worked all
of their lives to build. And we say that sentence so easily; it just
rolls off our tongue. But these are gigantic tragedies in the lives of
real people.
Second example. Juanita Taylor of Elkins, WV. Just a few years ago,
she was a hard-working employee at Davis & Elkins, which is the local
private college, but then she developed multiple sclerosis. She kept
right on working, struggling to overcome the advancing weakness that
her illness caused her. When she was, in fact, really too weak to meet
the demands of her job, she lost her job and eventually the health
insurance that had provided.
Her neighbors and her friends pitched in to help her pay for a
wheelchair, so that she could stay connected and involved with her
community, so that her morale would be better.
Those friends and neighbors told me that she was forced to pay out-
of-pocket costs of $1,000 per treatment to help slow the advance of her
multiple sclerosis. How many people can pay $1,000 per treatment?
Although she now has Medicare, her medical expenses ate up all of her
savings. Juanita Taylor courageously faced and fought a ravaging
disease, only to be victimized by a system that cared more about how
much money she had in her pocket than it did, quite honestly, about her
health condition.
But the final story, and the saddest one of all, it seems to me,
comes from Falling Waters, WV, which is in Berkeley County. In 1990,
Walter McPeak and his wife, Karen, were granted custody of Mr. McPeak's
two sons, Anthony and Thomas. They wanted these boys. Both the boys
have severe hemophilia and hepatitis, as well as the social and the
emotional difficulties that come from living in constant fear that even
the slightest injury could result in terrible trauma or instant death.
At the time the boys came to live with them, both Walter and Karen
McPeak were employed in high-paying management jobs. Together they
earned a little over $80,000. But their employer's health plan would
not issue coverage for Anthony or for Thomas. Their need for special
clotting factors and other treatments means medical costs of several
thousands of dollars each week.
So it was not long before the McPeak family had used up all of their
savings. They had to sell their house and then they sold their first
car, and then they sold their second car, but still the costs climbed
and there was no help in sight. When they tried to apply for Medicaid--
which you can imagine they did not want to have to do--because Medicaid
would have helped pay for their sons' treatments, they were told that
their family income was too high for the boys to be eligible for SSI,
which would automatically make them eligible for Medicaid.
So, what choice did Walter and Karen McPeak have to make? In order to
qualify the boys for SSI, which was their moral and parental
responsibility, they gave up their management jobs, both of them, over
$80,000 a year, and took minimum wage, unskilled jobs so their income
would not exceed allowable limits for them to qualify for SSI and hence
Medicaid.
This is a tragedy and this is a travesty. It should never happen in
America. Anthony and Thomas got health insurance; yes, they did. But
the McPeaks lost their savings, their home, their car, their jobs,
probably a good deal of self-esteem--although not on a moral basis; and
their employers, of course, lost two highly skilled managers. So we
must pass health insurance reform in the form of this bill.
The bill we are considering is not a perfect solution and nobody has
made that claim. But it will go a long way toward ensuring that working
Americans and their families are able to keep the health insurance that
they have, if they lose or if they change jobs. This legislation will
mean that families like the McPeak's, who have children with special
needs, will have the protection and have the security of insurance
coverage. And it will mean that talented and hard-working individuals
with new and creative ideas, entrepreneurs, will be free to go out and
start their own businesses, because of this reform bill, without the
fear of losing their health insurance.
Again, I thank and congratulate Senators Kassebaum and Kennedy for
their enormous leadership that gives us this historic--and it is
historic--chance to do something that Americans deserve and want so
badly. I conclude with a statement of administration policy. This is
just for the edification of the membership.
I read from the administration's latest statement of administrative
policy:
Certain provisions included in the House-passed bill are so
controversial and so potentially damaging to the health care
system that they jeopardize enactment of the insurance reform
that Americans want signed
[[Page S3517]]
into law this year. Specifically, the inclusion of amendments
that, one, provide for medical savings accounts, MSA's; two,
deregulate multiple employer welfare arrangements--MEWA's;
three, impose federally defined caps on punitive and
noneconomic medical malpractice awards; four, undermine
Medicare fraud and abuse efforts; and, five, weaken the ban
on the sale of duplicative insurance policies to the Medicare
beneficiaries, would call into question the seriousness of
the commitment of the Senate to health insurance reform this
year.
The administration views such provisions as an effort to
undermine a bipartisan consensus on health reform. If such
amendments are adopted, they would create a grave risk to the
passage and enactment of this bipartisan legislation.
Mr. President, I yield the floor.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
Mr. KENNEDY. Mr. President, I thank my friend and colleague from West
Virginia for an excellent presentation on the current legislation and
also for his really extraordinary leadership on the whole health care
issue. As he mentioned, he was right in the vanguard of leaders when we
debated the more comprehensive program over a year ago. I think he is
tireless, as a member of the Finance Committee, in pursuing good health
care policy. So I thank him for his comments. I am very hopeful he will
be involved during the course of debate on this measure, because he
brings great interest and knowledge to his comments.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, I second those observations. Senator
Rockefeller has cared for a long time, as well, about a wide breadth of
health issues, particularly as regards to children. I ask unanimous
consent that the Senator from New Mexico [Mr. Domenici] be added as the
66th cosponsor of the bill before us.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. KASSEBAUM. The next speaker is the leader of the Republican
health care task force. Senator Bennett has been a very, very strong
and constructive Member of the Senate, working with health care issues.
I have certainly valued his advice and support in this endeavor.
The PRESIDING OFFICER. The Senator from Utah.
Mr. BENNETT. Mr. President, I thank the Senator from Kansas for her
kind and generous words. It has been an interesting odyssey for me to
get involved in the health care issue. It came up in the 1992 campaign,
when I ran for the Senate in the first instance. I must confess, the
first time the question came up I was pretty much stumped for any kind
of an answer as to what we ought to do on health care. I do not like
being stumped for an answer, so I have plunged into this issue ever
since I have been in the Senate, and the more I get into it, the more
certain things become clear.
One of the things that is very clear is that we need insurance reform
now. It is something we can do now. And we should be careful not to
attempt a complete overhaul of the system just to get insurance reform.
That was one of the errors, in my view, that was made strategically by
the President of the then majority party in the last Congress.
I always said, and repeat again, that the President deserves credit
for having raised this issue. It is such a thorny issue that the
instinct of most politicians is to flee from it. I learned in the days
when I was working with the Congress, before I came here, that all you
needed to do in order to defeat a bill was, not convince Congress that
it was a bad bill, all you had to do was convince them that it was a
controversial bill and they would flee from the controversy. So I
salute the President and have always done so, since coming to the
Senate, for his courage in raising the issue.
But in the last Congress, I seriously departed from the President
because of his insistence that the entire system had to be fixed at
once with a single bill and a single Congress. I thought that was the
height of arrogance and, ultimately, it proved to be impossible.
I remind people that the Clinton health care plan was not voted down
in the 103d Congress. It simply died, collapsed of its own weight, and
a vote was never taken on it because it could never be put together in
such fashion that it was ready for a vote.
So I commend the Senator from Kansas and the Senator from
Massachusetts in their willingness to say, ``Let's step aside from the
attempt to do everything in a single bill. Let's pick out the most
pressing problems and see if we can address those.''
Those of us who tried to put forth this strategy in the last Congress
were attacked as incrementalists, and we were denounced as being
insufficiently compassionate and concerned. I do not know anybody in
this body who is more compassionate and more concerned than the Senator
from Kansas. I stand now to say that the incremental approach that we
proposed in the 103d Congress is now bearing fruit in the 104th,
primarily due to her leadership and her compassion and her concern. So
I am delighted to be a cosponsor of the bill and to participate in this
debate.
I do have to make a few general observations, however, before I get
into talking about this bill, so that people who have heard me on
health care in the past will know that I have not abandoned those
observations.
I believe that we have the system that we have in the country today
primarily because of the tax laws in this country. We have a system
that is distorted, for a whole series of reasons. Not to go through the
whole litany but to, again, lay down certain principles so that I am
not accused of abandoning them, we have not one health care system in
this country but two.
The first one is the delivery system, and it is run by doctors and
nurses and hospital administrators and researchers and research
hospitals and foundations and all of the rest of it, and it is
dedicated to delivering the finest health care medical result for our
citizens as possibly can be.
The second system is the payment system, and it is run by insurance
companies and adjustors and, to a very large extent, the Federal
Government. Forty percent of the health care bills in this country are
paid by the Federal Government.
The payment system, to a certain extent and certainly to a larger
extent than is proper, in my view, distorts the delivery system.
Delivery system decisions are made on the basis of payment system
decisions, and that is where we get into all of the difficulty, in my
view.
If we could devise a way that the delivery system goes forward with
the focus primarily on producing the best medical result for the
patient, undistorted by the payment system, we would have the ultimate
circumstance.
If I may give us an example--I realize it is not perfect, but it is
one we ought to look at--I have been in Shriners hospitals. The
Shriners raise every dollar that they spend for health care, which
means that they do not interface with a single insurance company or a
single Government bureaucrat. They simply raise the money to pay the
bill for the kids, and they make the decision as to what will be done
in a Shriners hospital solely and entirely on the question of medical
need.
Here is the result of not having to deal with insurance companies or
the Government at the Shriners Hospital in Salt Lake City: The cost per
day, per-bed night, or whatever the appropriate medical term is, in the
Shriners Hospital in Salt Lake City is $95. What could we do in medical
costs if the per-night cost in a hospital were $95 for every 24-hour
period?
The administrative costs of running the Shriners hospital system are
4 percent, which means that 96 percent of every dollar they raise to
take care of the medical needs of these kids goes to the kids and only
4 percent goes to administration.
That is what happens when you do not have to deal with an insurance
company or with the Government bureaucrat. That is the goal for which
we should aspire somewhere out there to clean up the enormous costs and
complexity of the system in which we are engaged.
I think the answer to that lies in restructuring our tax laws in the
way we deal with health insurance. That is a speech I have given
before; it is not a speech I will give today, but I lay that down
because I do not want anyone who is listening to me to think that for
one moment I have abandoned that as my ultimate goal: To get to the
circumstance where we clear up the enormous complexities that now beset
the whole health care issue.
[[Page S3518]]
That having been said then, Mr. President, let me address S. 1028 and
my support for it. As I said at the outset, I believe in the
incremental approach. I believe that when you are dealing with a
trillion dollars' worth of economic activity, trying to fix it all at
once with a single piece of legislation is a major mistake, and I think
we learned that lesson in the 103d Congress.
The most pressing issue for most Americans is the question of job
lock, the question of insurance through the employer keeping people
tied to a particular employer or to a particular job.
During the campaign, whenever this came up, I had a little exercise I
would go through, and it never failed to produce exactly the same
result. As people would turn to me and say, ``What is the biggest
problem with health insurance,'' I would answer with a question. I
would say, ``How many of you here know of someone--either yourself, a
member of your family, or friend--who is locked in a job he or she
hates because he or she is afraid to lose health insurance?''
I would just sit back and watch the hands go up, and they would
always go up in sufficient number around the room to make my point:
That portability of health insurance is, for most Americans concerned
with this issue, the No. 1 challenge, and portability of health
insurance is at the core of S. 1028.
If we can make it possible for people to ultimately control their own
destiny and not be under the control of their employer, then we have
solved the problem for many, many Americans.
I am not one who subscribes to the statistics about the tremendous
number of uninsured. I point out that for most of the uninsured, they
are just passing through that category. I give this example.
In my own family, I have a son who, when he turned 24, went off the
family policy. The insurance company says he should be through with
school at age 24. I said, ``I agree with you he should be through with
school at age 24, but he's not, so what do we do?''
Well, I called him up and said, ``Jim, go down to the student health
center and sign up for the student health policy at the University of
Southern California.''
He said, ``Sure, dad, I'll take care of that.''
Those of you who have children know that it took about 6 months for
him to finally get around to taking care of that. During that 6-month
period, he was one of those statistics of the uninsured. He had gone
off my policy because he was too old to be a dependent and he had not
gotten around to signing up with the other, and so he ended up in that
statistical pool of the uninsured.
Frankly, it is not my son, Jim, we are worried about here. It is the
people who, in that statistical pool, have a real problem.
I raise that only because I think it is unfair to use the huge
statistical number of 37 or 40 million or whatever it may be, to try to
highlight the problem that is really severe and significant for roughly
a third or even a quarter of that number. But the people who are in
that quarter, the 10 million, whatever, have real problems, and this
bill addresses those problems.
We should understand that this terror of losing health insurance that
has caused job lock can become more than just a personal problem for
the individual involved. It can have consequences throughout the entire
economy.
The Senator from West Virginia spoke about the entrepreneurs who
leave a secure business to go start another one. I have been one of
those entrepreneurs and had the experience of walking out of a secure
company where I had health insurance, being told, ``OK, you have COBRA
coverage for 18 months, and in that 18-month period, good luck in
lining up some other kind of health insurance.''
I was able to line up another kind of health insurance for me, but
discovered a very difficult problem. My secretary, who left with me
when I left the company to start my own activity, was also covered by
COBRA, and in that COBRA period while we were putting together a health
insurance plan for our little tiny company--just the two of us; we were
the only two employees--she came into my office one day and said she
had to see a doctor, she was not feeling well. She came back from the
appointment and said, ``I have a brain tumor. It is operable. It can be
handled, but the problem of dealing with it is going to take a
timeframe longer than the 18 months of COBRA. What are we going to
do?''
I will not bore the Senate with the details. We were able to solve
the problem. We were able, through the State of Utah and some of the
things that it does on health insurance, to find an insurance pool that
would accept her. But I saw firsthand how difficult that can be. People
who are normal and healthy and have no problems at all in the 18-month
period of COBRA are suddenly faced with this kind of circumstance.
So that is why I have joined in cosponsoring S. 1028. It is focused
on a single problem. It is not an attempt to solve all of the issues
simultaneously and thereby get gummed up in all of the challenges that
face our health insurance and health care problems. It deals with the
most pressing problem for most Americans who fall in this category. It
does so in such a way that it does not close the door to the kinds of
solutions I want to see down the road. It does not close the door to
the kind of tax reform that I think will ultimately bring us the
ultimate health care solution.
So, for those who say, ``Well, Senator Bennett, you have been a voice
for the entrepreneurial approach, the market approach, and don't
endorse anything until you can restructure everything,'' I say, we have
not got that luxury. We have to deal with the problem of job lock, the
problem of portability of health insurance as quickly as we can, even
as we have these other discussions for the solution a long way down the
road.
Again, Mr. President, I congratulate the Senator from Kansas for her
leadership and her tenacity. I say, as I have said before, that the
loss of her membership in this body will be keenly felt. She brings an
aura of civility and intelligence, combined with a tenacity and a sense
of steel in her back that sometimes her pleasant exterior will cause
people to misjudge. We have been honored with her service in the
Senate. I think this will be a monument to her service in the Senate. I
am delighted to be one of those who raises a voice in support of that
concept. Mr. President, I yield the floor.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER (Mr. Frist). The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, I would like to express appreciation
to the Senator from Utah, who gave such a very thoughtful opening
statement, I think, by example, showing concretely why the provisions
of this bill are important. I know that the majority leader, the senior
Senator from Kansas, has also over the years been cognizant of the very
things that Senator Bennett, as the leader of the Republican health
care task force, spoke so eloquently and sincerely about. I am very
appreciative.
Mr. DOLE. Mr. President, I understand there are a number of my
colleagues who wish to make opening statements. I just want to indicate
that I am prepared to offer the so-called tax amendment. We are trying
to get some agreement that is acceptable on both sides as far as a
motion to strike one provision of that. So I ask unanimous consent
that, following opening statements, I be recognized to offer the
amendment.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. CHAFEE. First of all, I would like to thank the distinguished
Senator from Vermont for permitting me to go ahead of him. I know he
has been waiting. I assured him my statement would be brief, so I am
going to be held to that.
Mr. President, I would like to take this opportunity to reaffirm my
support for the Kassebaum-Kennedy health reform legislation. The
sponsors of this legislation have worked for a number of years to enact
reforms in the private insurance market. I applaud them for their
considerable efforts in bringing this legislation to the floor.
It is interesting to note this legislation is quite similar to that
which Senator Durenberger first presented in
[[Page S3519]]
the Finance Committee, as I recall, or perhaps in the Labor Committee
several years ago. Although he has left the Senate, I think he would be
pleased to know we are making progress with the legislation he was so
involved with.
In the wake of attempts in recent years to completely overhaul our
health care system, this legislation has been characterized, as the
distinguished Senator from Utah noted, as incremental. It has been
criticized as even meager. But I urge my colleagues, as the Senator
from Utah noted, not to underestimate the importance of this
legislation.
One of the major failings of our health care system in this country
is the difficulty thousands of Americans face each year when they
change jobs or look for new jobs. But they find they cannot change jobs
because they will no longer be eligible for health insurance. This is
what is known in the trade as ``job lock.'' This problem for many
Americans would be addressed under the Kassebaum-Kennedy bill. Insurers
would be required to offer coverage, with no preexisting condition
exclusions, for those moving from one group plan to another or from a
group plan to an individual plan.
I expect, Mr. President, we will see many amendments to this
proposal, many of which I have supported in the past. Though laudable,
these additional provisions could jeopardize the more immediate and
important goal of enacting insurance market reforms. Those of us who
worked to enact health care reform 2 years ago know all too well the
consequences of attempting to do too much with respect to health care
reform. We failed to enact comprehensive health care reform in 1994.
You try to do too much and you end up getting nothing. We have been
through that experience, Mr. President, not only with the health care
measure that we tried in 1994, but in other efforts in the past.
In the last 2 years, over a million Americans lost their health
insurance coverage. Although this proposal, the Kassebaum-Kennedy
proposal, does not include many of the health reforms which I advocated
2 years ago, I strongly support its enactment as a sound first step
toward reform and improvement in our Nation's health care system.
So I congratulate the two principal cosponsors of this legislation
and am delighted to be listed as a cosponsor myself. I thank the Chair.
Mrs. KASSEBAUM. I thank the Senator from Rhode Island. He, too, has
been a long-time worker in the vineyards of health care, a staunch
leader in the last Congress to find some answers and to bring people
together to present health care reform. I value his support in helping
us work through the language in this bill.
Mr. JEFFORDS addressed the Chair.
The PRESIDING OFFICER. The Senator from Vermont.
Privilege of the Floor
Mr. JEFFORDS. Mr. President, first, I ask unanimous consent that
Theresa Stathas, a fellow in my office, be granted the privilege of the
floor for the duration of the consideration of S. 1028.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. JEFFORDS. Mr. President, I rise today in support of the
Kassebaum-Kennedy bill. Before I do that, I want to express my deep
appreciation for the efforts that were put in, in 1994, by Senator
Chafee, in trying to reach a consensus on what we can do to move health
care forward. We worked long and hard, many of us, and the issues which
we are involved with today in S. 1028 were some of those which gave us
the greatest concern.
I also want to thank Senator Bennett for his work with the Republican
task force on health care. His work has been invaluable to us as we
move forward to try and find, again, the kind of consensus that is
necessary to get us good health care reform. What a refreshing
experience it is to have Senator Frist with us, who has given us the
invaluable knowledge of a practicing physician, who kept us from going
too far astray in our efforts. It is wonderful that we have this kind
of a coalition. Senator Rockefeller, who I have worked with, also, is
so helpful in the health care reform area.
I am beginning to feel confident that we will do something
constructive here in health care reform, and hopefully it will happen
in the next few days. Of course, my chairman and my ranking member,
Senator Kennedy, who both have shown outstanding leadership in getting
our committee to come out 16 to 0 on a bill, this is a miracle in
itself. I am deeply appreciative of all their efforts.
I rise in support of the Kassebaum-Kennedy Health Insurance Reform
Act. If we send this legislation to the President, the 104th Congress
will be remembered in history for taking the first steps toward real
market-based health care reform. Market reform is not as easy as it may
sound, for the simple reason you must take into consideration the
State's responsibility for regulating insurance versus the Federal
responsibility for regulating ERISA, employee benefit plans.
That word, ERISA, is one that troubles many. The reason it troubles
people is because there is not much there. We have the authority and
the responsibility to provide good health care conditions for the self-
funded plans, but we have exempted the self-funded plans from State
regulations. That is why we are here today and why this is an important
move forward.
Finding the right balance between insurance regulation and employee
benefits, while trying to incrementally reform the market, is something
like mastering the Rubic's cube. Just when you think you have all the
sides lined up, you find out one square is out of place. Last August,
the Labor and Human Resources Committee lined up that Rubic's cube and
it all seemed right with the world.
As I mentioned, in a unanimous 16 to 0 vote, the committee voted
favorably on S. 1028, the Health Insurance Reform Act of 1995. I must
commend the chairman and the ranking member for that incredible feat.
It is not an easy task putting together a health care reform bill that
every member of the committee can vote for, but it happened. The Health
Insurance Reform Act makes great strides in addressing many of the
problems in the insured market and also begins to level the playing
field in the self-funded ERISA market by apply the same national rules
to both segments of the marketplace.
Chairman Kassebaum's approach from the beginning was to build a bill
around two areas of consensus--portability and elimination of
discriminatory treatment of preexisting condition rules. The Kassebaum-
Kennedy bill provides Americans the security of knowing that their
health insurance will be portable from job to job and that all people
who have insurance today will be able to purchase affordable insurance
tomorrow even if they get sick. That is a critical phrase--even if they
get sick, or change or lose their jobs.
This is accomplished by converting the rules in today's insurance
market which reward excluding people into rules where health plans can
take all comers. There is a tendency to want to exclude sick people,
naturally. You make more money if that happens. This will step in and
say, ``Hey, no.'' S. 1028 provides much-needed improvements at the
national level, but at the same time allows States the flexibility they
need to move ahead in their own reform efforts.
As we attempt to make coverage more widely available, we must also
not lose sight of affordability, particularly in a market where
employers and individuals are not mandated to purchase insurance. We
must be very careful as we reform the insurance market, because if we
are not, reforms that we hope will reduce costs and improve access may
do just the opposite.
How is this possible? Today, over 92 percent of the people who have
private health coverage are part of a group--92 percent are part of a
group. Most of these people get it through their employer under an
ERISA health benefit plan. The key concern regarding ERISA is the risk
segmentation that occurs in the private market due to the preemption
clause. ERISA preemption effectively blocks States from regulating most
employer-based health plans. ERISA preempts States from being in this
area.
Although many employers still purchase health coverage from a State-
regulated health insurer that is subject to State insurance regulation,
employer plans that cover 44 million people have elected to self-fund
and avoid
[[Page S3520]]
the State insurance laws. These laws deal with financial solvency,
market conduct, benefit coverage, and premium taxes. States impose
taxes on insurers for general revenues, as well as for financing
specific programs like State guaranty funds and high-risk pools.
Preemption made a lot of sense 20 years ago when the multistate
employers and unions were looking for a way to offer uniform benefits
to employees throughout the country. Most of the plans were offered
through insurers. Most of the plans were offered through insurers. As
States started to weigh down the insured market with mandated benefits,
employers saw self-funding as a means of flexibility and plan design.
These are two reasons why employers have left the insured
marketplace. In a preliminary report I just received from GAO, the
estimated additional costs of these mandated benefits range from a high
in Maryland of 22 percent additional cost and low in Iowa of 5 percent.
Mr. President, I ask unanimous consent that excerpts of the GAO
preliminary estimate be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
General Accounting Office,
Washington, DC, April 15, 1996.
Hon. James M. Jeffords,
U.S. Senate.
Washington, DC.
Dear Senator Jeffords: The Congress is considering
proposals intended to enhance the availability of health
insurance. This debate has led to specific questions about
the state regulation of health plans, including mandated
benefit laws. In particular, you asked us to provide
information on--
1. state requirements affecting fully insured health plans
and how they compare with federal requirements affecting
self-funded health plans,
2. the number of states that have enacted particular
mandated benefit laws,
3. estimates of the costs of mandated benefits in
particular states, and
4. the extent to which commonly mandated benefits are
provided by self-funded health plans that are exempt from
state laws.
This letter provides interim information based on our
ongoing work for you on the factors affecting the costs of
state health insurance regulation. As part of this effort, we
interviewed officials from the National Association of
Insurance Commissioners (NAIC); several state insurance
commissions; and national organizations representing
actuaries, health insurers, and self-funded employers. We
reviewed documents and used data provided by these groups as
well as available studies on mandated benefits. In addition,
we included and updated information from previous GAO reports
on state insurance regulation and the Employee Retirement
Income Security Act of 1974 (ERISA). Our review was conducted
between January and March 1996 in accordance with
generally accepted government auditing standards. We
expect to issue a report to you later this year that will
provide a more detailed analysis of the factors affecting
the costs of state health insurance regulation.
results in brief
We found that states have an average of 18 mandated
benefits that health insurers must cover but the number of
mandated benefits varies from a low of 6 in Idaho to a high
of 39 in Maryland. However, assessing the costs of mandated
benefits is difficult because their impact varies depending
on state laws and employer practices. Published studies
provide a range of cost estimates. For example, a recent
study found that Virginia's mandated benefits accounted for
about 12 percent of claims costs; earlier studies estimated
that mandated benefits in Maryland cost 22 percent of claims
and in Iowa cost 5 percent of claims. In general, cost
estimates are higher in states with more mandated benefits
and in states that mandate more costly benefits, such as
mental health services and substance abuse treatment. We also
found that self-funded health plans often offer similar
benefits, even though they are exempt from state-mandated
benefit laws. For example, a survey by KPMG Peat Marwick
found that a large percentage of self-funded health plans
offer benefits similar to those mandated for health insurers
in many states.
regulatory framework depends on whether a health plan is fully insured
or self-funded
While states are able to regulate health insurance, state
regulation does not directly affect everyone with private
health coverage. ERISA preempts states from directly
regulating employer provision of health plans. This results
in a very different regulatory framework depending on whether
an employer purchases its health care coverage from an
insurer that the state regulates or self-funds its health
plan is not directly affected by state regulation.\1\
States focus their regulation on the financial soundness of
insurers and their market conduct, including benefit
coverage. In addition, states impose taxes on insurers for
general revenues as well as for financing specific programs.
While federal requirements include fiduciary and other
responsibilities, in many other areas no federal requirements
exist for self-funded health plans that are comparable to
state requirements for health insurers. In particular, self-
funded health plans are exempt from state laws that mandate
insurers to include coverage for specific benefits. Table 1
companies the requirements that fully insured and self-funded
health plans must meet.
TABLE 1.--COMPARISON OF RELEVANT STATE AND FEDERAL PROVISIONS AFFECTING
FULLY INSURED AND SELF-FUNDED HEALTH PLANS
------------------------------------------------------------------------
State insurance ERISA provisions
regulations affecting self-
affecting fully funded health
insured health plans plans\1\
------------------------------------------------------------------------
Financial requirements:
Licensing............... States license No comparable
insurance companies requirements.
and the agents who
sell insurance to
ensure that
companies are
financially sound
and reputable and
that agents are
qualified.
Financial solvency...... States set standards No solvency
for and monitor requirements but
financial fiduciary duty to
operations of act in a prudent
insurers to manner solely in
determine whether the interests of
they have adequate plan participants
reserves to pay and beneficiaries.
policyholders'
claims. States
restrict how
insurers invest
their funds.
Rate reviews............ States review and No comparable
approve rates to requirements.
ensure that they
are both reasonable
for consumers and
sufficient to
maintain the
solvency of
insurance companies.
Some states regulate No comparable
insurer rating requirements.
practices in the
small group market
to determine the
factors insurers
may use in setting
premiums\2\.
Market conduct requirements:
Plan benefit coverage States review and Disclosure
and description. approve insurance requirements to
policies to make provide summary
sure that they are plan description to
not vague or participants and
misleading and to the Department of
ensure that they Labor. No
meet state requirements to
requirements, such provide specific
as mandatory benefits.
benefit provisions.
Consumer protections and States monitor Plan must reconsider
complaints. insurers' actions denied claims at
to make sure that participant's
they are not request. States
engaging in unfair have no authority
business practices to pursue consumer
or otherwise taking complaints
advantage of regarding self-
consumers by funded plans.
investigating their Department of Labor
complaints, has responsibility
answering for complaints
questions, and regarding self-
conducting funded health
educational plans.
programs.
Small group reforms..... Most states require States are preempted
insurers selling to from applying small
small employers to group reforms to
accept and renew self-funded health
employees who want plans.
health insurance
coverage, establish
short waiting
periods for
preexisting
conditions, and
require portability
of coverage even
when an individual
changes jobs or
insurers\2\.
Tax requirements:
Premium taxes........... States assess States are preempted
premium taxes on from assessing
insurers. premium taxes on
self-funded health
plans.
Guaranty funds.......... States assess States are preempted
insurers to finance from requiring self-
guaranty funds that funded health plans
provide financial to participate in
protections to guaranty funds.
enrollees who have
outstanding medical
claims in the case
of an insurer
insolvency.
High-risk pools......... Some states assess States are preempted
insurers to finance from requiring self-
losses in high-risk funded health plans
pools that provide to participate in
health coverage for high-risk pools.
individuals who
otherwise had been
denied health
coverage due to a
medical condition.
------------------------------------------------------------------------
\1\ ERISA requirements apply to all private employer and union health
plans, including fully insured and self-funded health plans. See
Employer-Based Health Plans (GAO/HEHS-95-167, July 25, 1995). While
states are preempted from regulating self-funded health plans
directly, some states regulate third-parties that provide
administrative services for self-funded health plans and stop-loss
insurance carriers that reimburse self-funded health plans for claims
that exceed a predetermined threshold.
\2\ For a listing of states that have enacted these reforms, see Health
Insurance Regulation: Variation in Recent State Small employer Health
Insurance Reforms (GAO/HEHS-95-161FS, June 12, 1995).
number and type of mandated benefits adopted by states vary
On average, states have enacted laws mandating about 18
specific benefits. As shown in figure 1, 15 states have over
20 mandated benefits while 9 states have 10 or fewer
mandates. Maryland (39), Minnesota (34), and California (33)
are the states with the highest number of mandated benefits.
In contrast, Idaho has only 6 mandated benefits; Alabama,
Delaware, Vermont, and Wyoming each have 8 mandated
benefits.\2\
States most frequently mandate coverage for preventive
treatments like mammograms and well-child care or for
treatment of mental illness or alcohol and drug abuse. (See
table 2.) In addition, states often require coverage for some
types of providers like optometrists and chiropractors.
States typically mandate that insurers cover specific
benefits in all plans sold, whereas some states merely
mandate that each insurer make this service available in at
least one plan that it offers. In some cases, the mandates
are limited to particular types of plans such as health
[[Page S3521]]
maintenance organizations or group insurance plans.
TABLE 2.--COMMONLY MANDATED BENEFITS
------------------------------------------------------------------------
Number of States
-----------------------------
Cover Offer Total
------------------------------------------------------------------------
Treatment-related:
Mammography screening................. 42 4 46
Alcoholism treatment.................. 23 16 39
Mental illness........................ 15 16 31
Well-child care....................... 21 4 25
Drug abuse treatment.................. 13 10 23
Pap smear............................. 17 0 17
Infertility treatment/in vitro
fertilization........................ 12 2 14
Temporomandibular joint disorders..... 11 3 14
Off-label drug use.................... 13 0 13
Maternity care........................ 11 2 13
Breast reconstruction following
mastectomy........................... 9 2 11
Provider-related:
Optometrists.......................... 46 1 47
Chiropractors......................... 43 3 46
Psychologists......................... 42 0 42
Podiatrists........................... 38 0 38
Social workers........................ 26 0 26
Osteopaths............................ 21 0 21
Nurse midwives........................ 15 0 15
Physical therapists................... 14 0 14
Nurse practitioners................... 13 1 14
------------------------------------------------------------------------
Source: NAIC, Compendium of State Laws on Insurance Topics: Mandated
Benefits (Kansas City, Missouri: NAIC, 1995).
studies vary in their estimates of the costs of mandated benefits
Studies conducted in several states between 1987 and 1993
provide varying estimates of the costs associated with
mandated benefits. (See table 3.) Among the most recent, the
Virginia State Corporation Commission has required insurers
to report cost and utilization information annually for each
of the mandated benefits in the state. Overall, the
commission reports that Virginia's mandated benefits
accounted for about 12 percent of group health insurance
claims in 1993. An earlier study in Maryland, the state with
the most mandated benefits, estimated that mandated benefits
represent 22 percent of average claims costs in 1988. At the
other extreme, a 1987 study in Iowa estimated that the
potential costs of introducing several commonly mandated
benefits would be about 5 percent of claims costs.
TABLE 3.--STUDIES OF THE COSTS OF MANDATED BENEFITS IN SELECTED STATES
------------------------------------------------------------------------
Percent of
total
State Year claims
costs
------------------------------------------------------------------------
Maryland......................................... 1988 22.0
Massachusetts.................................... 1990 18.0
Virginia......................................... 1993 12.2
Oregon........................................... 1989 8.1
Wisconsin\1\..................................... 1989 7.9
Iowa\2\.......................................... 1987 5.4
------------------------------------------------------------------------
\1\ Includes six mandated benefits: alcohol and other drug abuse
treatment, chiropractic care, diabetes care, home health care, skilled
nursing facility care, and kidney disease treatment.
\2\ The study in Iowa examined potential costs of six commonly mandated
benefits, including mental health, alcohol and drug abuse,
podiatrists, optometrists, registered nurses, and physical therapists.
Iowa has not adopted all of these mandates; according to the Blue
Cross and Blue Shield Association, Iowa's current mandates are
mammography screening, well-child care, chiropractors, dentists,
registered nurses, optometrists, and diabetic education.
To some extent, the differences in the cost estimates
reported by the various studies are related to the number of
mandated benefits included in each state. For example, the
studies that showed the highest estimated costs were for
Maryland and Massachusetts, states that have more mandated
benefits than most states. Thus, these cost estimates cannot
be generalized to other states.
While the studies report varying cumulative costs in
different states, they generally agree that several specific
mandated benefits account for a large share of the additional
costs. In particular, mental health and substance abuse
are often cited as the most costly mandated benefits
whereas other commonly mandated benefits, such as
mammography screening, account for fewer than 1 percent of
costs. Furthermore, in some cases, mandated benefits
covering services offered by some alternative types of
providers, such as nurse midwives, may reduce costs
because they substitute for more costly forms of care.
However, some provider mandated benefits may also increase
the demand for services, thereby increasing costs. For
example, while chiropractic services may be a less
expensive alternative for some treatments, mandating their
coverage may also lead to increased use.
One limitation of most studies on mandated benefits is that
they have examined the impact of mandated benefits on claims
costs, which does not necessarily capture the actual effect
on employers' costs. In particular, multistate employers note
that varying state-mandated benefits result in additional
administrative cost. Employers that purchase health insurance
must modify their plans to meet these differences in state-
mandated benefits. Furthermore, employers are concerned that
mandated benefits limit their flexibility in designing the
most cost-effective health benefit plan to best meet the
needs of their employees.
self-funded health plans often cover benefits commonly mandated by
states
The actual cost impact of mandated benefits to employers
also depends on whether the employer offers a comprehensive
or limited health plan, which in turn is often related to the
size of the employer. Many of the commonly mandated benefits
are often offered by employers, even those who self-fund and
are not subject to the state mandates. In general, large
employers are more likely to self-fund their health plans and
also tend to offer more comprehensive benefits than small
employers. For small employers, who typically purchase fully
insured health plans and are less likely to offer health
coverage at all, mandates may impose claims costs for
benefits that they otherwise might not have covered.
Studies have shown that self-funded health plans typically
offer many of the benefits that are commonly mandated by
states for fully insured health plans. For example, as shown
in figure 2, a KPMG Peat Marwick survey of employer benefits
among all firm sizes indicates that self-funded health plans
are more likely to offer well-child care outpatient alcohol
treatment, outpatient drug treatment, mental health benefits,
and chiropractic care than fully insured health plans. This
survey also reports similar patterns for other benefits that
are not typically mandated, including prescription drugs,
adult physicals, and dental benefits.\3\ Similarly, a survey
of Wisconsin insurers also found that: ``self-funded health
plans provide at least as many of the managed benefits as
insured health plans and in some cases provide more generous
coverage.''
This result may partially be due to the tendency of large
employers to both self-fund and offer more comprehensive
benefits.
Although self-funded plans often offer the same types of
benefits as are commonly mandated by states for insurers,
they may include features that differ from the requirements
of state mandates. For example, state mandates generally
specify a minimum number of days of care that insurers must
cover for inpatient mental health care. One employer
association indicated that many employers prefer designing
more flexible mental health benefits; for example, requiring
case management rather than specifying a limited number of
days of care. Thus, even though 97 percent of self-funded
plans offer inpatient mental health care services, all these
plans would not meet the state requirement for fully insured
health plans.
Assessing the cost differences between self-funded and
fully insured health plans resulting from mandated benefits
is difficult. To the extent that self-funded health plans
offer benefits that are similar to state-mandated benefits,
they do not have lower claims costs due to their exemption
from state-mandated benefit laws. For less commonly offered
benefits, such as in vitro fertilization, self-funded
employers would face additional claims costs if they were
required to meet the state mandates.
Please contact me at (202) 512-7119 or Michael Gutowski,
Assistant Director, at (202) 512-7128 if you or your staff
have any questions. Other major contributions to this letter
are John Dicken and Carmen Rivera-Lowitt.
Sincerely yours,
Jonathan Ratner,
Associate Director,
Health Systems Issues.
footnotes
\1\ ERISA preemption effectively blocks states from
regulating most employer-based health plans, but it permits
states to regulate health insurers. The majority of employers
purchase health coverage from a third-party insurer that is
subject to state insurance regulation. However, for plans
covering about 44 million people in 1993 the employer chose
to self-fund and retain at least some financial risk for its
health plan. Because these self-funded health plans are not
deemed to be insurance, ERISA preempts them from insurance
regulation and premium taxation. For a fuller discussion of
the regulatory differences, see Employer Based Health Plans
(GAO/HEHS-95-167, July 25, 1995).
\2\ The calculation of the number of mandated benefits
includes requirements that insurers provide or continue
coverage for specific populations, such as dependent
students, as a mandated benefit. Thus, the number of mandated
benefits per state includes these requirements as well as
treatment-related and provider-related mandated benefits. See
Blue Cross and Blue Shield Association, State Legislative
Health Care and Insurance Issuers: 1995 Survey of Plans
(Washington, D.C.: Blue Cross and Blue Shield Association,
1995) for a list of mandated benefits for each state.
\3\ The data in figure 2 represent the percentage of covered
workers in conventional health plans. KPMG Peat Marwick
reports similar findings for workers in preferred provider
organizations and point-of-service plans that are either
self-funded or fully insured. KPMG Peat Marwick is currently
examining to what extent these differences in the rates of
benefits coverage among self-funded and fully insured health
plans can be explained by differences in firm size and
premium levels.
Mr. JEFFORDS. Because the employer frequently pays a significant
portion of the premium, a large majority of the eligible employee--both
young and old, sick and healthy--choose to enroll in an employer-
sponsored plan. Since so many people participate in group plans, the
average per employee price of coverage stays relatively low and remains
affordable for each employee, since the insurance risk is spread over a
large pool of people.
The individual market, on the other hand, contrasts in many ways from
the group market. For instance, those who buy individual health
insurance pay the entire premium out of their own pockets, whereas, in
most cases, a business picks up most of the tab. If an individual buys
it, it is out of his own pocket. Not only do the people receive no
subsidy from the employer, they also do not receive the same tax
advantages afforded to employer-sponsored health plans. This is a
critical difference. Therefore, costs to the individual is a major
concern. When individuals leave a group coverage situation
[[Page S3522]]
and decide not to purchase in the individual market, it is because they
cannot afford it or because they are healthy and have decided they do
not need the coverage and do not want to pay the amount of money they
would have to pay.
The individual market is so price sensitive, as prices go up, healthy
and less costly people leave the market, causing the prices to continue
to spiral upward. This vicious cycle makes it inevitable that
individual coverage will become less affordable for hundreds of
thousands, if not millions, of Americans.
What is the solution? We must encourage purchasing cooperatives in
the individual and small group market. Group purchasing is the first
tool to bring down costs of individuals. The key concern regarding
ERISA is the risk of segmentation.
I was very pleased when Senators Kassebaum and Kennedy included in
the health plan purchasing coalition section my own bill which I
offered with Senator Nunn, S. 1062. I believe that the key to making
health insurance more affordable for individuals and small employers is
properly designed voluntary group purchasing arrangements.
Employer group purchasing is not in the concept. Many employers have
been pooling funds and contracting with entrepreneurs to offer health
benefits to their employees at reduced rates for many years through
something defined as multiple employer welfare arrangements, referred
to as MEWA's, under ERISA. A MEWA is an arrangement where two or more
employers group together to purchase health benefits. The more that
group together, the lower the per employee cost or employer cost.
While a number of MEWA's form important gaps in our health care
system, some MEWA administrators have taken advantage of the confusion
as to who bears responsibility for regulatory oversight, the Feds or
the States. It is very, very confusing. They have been able to create
and run ponzi schemes, designed to take premium payments with no
intention of covering any major health claims. My esteemed cosponsor of
S. 1062, Senator Nunn, led the effort to uncover the corruption of
fraudulent MEWA's when he chaired the Senate Permanent Committee on
Investigations. He was instrumental in drafting the section of the bill
that addresses MEWA reform. It is important. I bring it up, also, as I
will mention later, because of what is in the House bill.
The bill Senator Nunn and I introduced makes clear, once and for all,
that the States are responsible for regulating all MEWA's. Therefore,
the number of States that have moved forward in this area will no
longer have to be involved in costly litigation, using precious State
resources, to prove they are regulated.
I must say, I am very concerned about the way the House bill handles
the group purchasing in the small group market. First, continuing to
segment the market by creating different rules for insured and self-
insured MEWA's is a mistake.
Second, giving the Department of Labor the additional responsibility
of now being the insurance regulator for all self-insured MEWA's takes
away a current State responsibility and hands it over to the Federal
Government. This seems totally inconsistent with the philosophy and
fiscal reality of less Federal Government and more responsibility for
the States. I think we should be careful when we are looking at this in
the conference committee.
Requiring purchasing cooperatives to offer only fully insured
products, as in the case of S. 1028, is a much better solution.
Although the group purchasing section of the Kassebaum-Kennedy bill is
good, I hope we will be able to improve upon it in conference with the
House. I hope we can take the lead from Governor Whitman accomplished
in New Jersey. She saw the need to look at the impact overburdened
State-mandated benefits laws can have in a small group market and
developed a variety of distinct benefit packages that small employers
can choose to purchase for their employees. This strikes me as a
critical step at expanding health care coverage.
Fixing what is broken in our current health insurance system should
be what is accomplished in this year of incremental reform. Although I
believe the Kassebaum-Kennedy bill is a good bill, I believe it can be
a great one. That is the main reason Senator Simon and I plan to offer
an amendment that would raise lifetime limits, caps, to $10 million. We
want to ensure that this bill lives up to its basic promise. What good
does it do to pass a law that prevents insurers from excluding
individuals with preexisting conditions if you let employers set
lifetime caps at $50,000--which is probably 1 day or 1 week for those
people--to meet the needs of those conditions?
It is critically important, in my mind, that we make sure that we
make this remain a good bill and that we pass a good bill. I will
mention that I offered this amendment in committee, and they said at
that time that we wanted to come out with a 16 to 0 bill. This was the
step that people have to understand--that I would not offer this in
committee, but I said I would offer it on the floor. There was some
concern raised about having amendments to this bill. But I point out
that this is important to the bill in order to make it work.
This is not an extraneous amendment, unrelated to the purpose of the
bill. If we do not prevent insurers from reducing lifetime caps, then
we have the very likely situation where they will reduce the caps if
they have to take sick people in. If we do that, we will have lost the
great benefit of what we are trying to do today.
Let me talk about the lifetime cap amendment. In a letter I received
from the American Academy of Actuaries addressing my amendment, they
stated:
. . . this amendment is unlike State mandates that require
coverage of specific medical services. This is a Federal
mandate that appears to greatly increase the security
provided plan participants by raising their potential
benefits to $10 million.
This is also important. CBO has estimated that premiums would only
increase by 0.16 of a percent, while at the same time reducing Federal
and State expenditures in the Medicaid Program. So what we would do is
to prevent the horrendous situation we have now.
How do you take care of the sick people in this country that have an
insurance policy that has a lifetime cap? What happens? You reach the
cap and then you have to, under the present situation, drain all your
resources until you are poor. And then you apply for Medicaid, and you
are eligible for Medicaid. I want to point out that I think that is a
terrible way to handle things.
I also point out that other information that we have received from
reputable organizations has backed us up in the fact that this is a de
minimus cost to most employers, and it is a huge benefit to the Federal
budget. The National Taxpayers Union has said that the net savings
could be as much as $2 billion in Federal savings and $3 billion in
State and local savings by just passing this amendment, at a very
minimal cost to employers.
As U.S. Senators, we have the peace of mind in knowing that our
health insurance will be there if a catastrophic illness or injury
strikes one of our families. In our plan, there is no cap. Anything can
be covered. In a large number of HMO's, there are no lifetime caps, and
in some other group policies there are no lifetime caps. So I want to
focus your attention on that. Hopefully, in the time before I offer the
amendment, you will learn more about this and agree with us.
For now, I would like to, once again, commend both Senators Kassebaum
and Kennedy for bringing this bill to the floor of the Senate. I urge
my colleagues to vote for its passage. I am hopeful that when we
finally do get to my amendment, you will keep in mind that what we will
do will be almost an unmentionable expense to most employers, but will
save people from incredible experiences of having to go through
bankruptcy in order to get health care coverage, and also will allow us
to reduce the cost of Medicaid to State, local, and Federal Government.
Mr. President, I yield the floor.
Mr. KERREY addressed the Chair.
The PRESIDING OFFICER. The Senator from Nebraska is recognized.
Privilege of the Floor
Mr. KERREY. Mr. President, I ask unanimous consent that Karen
Davenport, a fellow in my office, be allowed privileges of the Senate
floor during our debate and consideration of S. 1028.
[[Page S3523]]
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KERREY. Mr. President, I rise to support the Kassebaum-Kennedy
bill, S. 1028. I believe it is a long-overdue change. As the Senator
from Rhode Island and others have said already, it is regarded by some
as very incremental. I regard it as one of those very important pieces
of legislation.
Earlier, we enacted a piece of legislation, ironically, that Senator
Kassebaum actually took the lead on last year, which consolidated the
job training programs and gave the States a lot more flexibility in
designing their own programs. I said at the time that I thought this
law was the second most important thing we could take up this year
because we know, with certainty, that it is going to effect some 20
million people. It does not cost the taxpayers any money. It does make
a change of the law, the Federal law and will alter the way the market
works. But it is not the first time that we have interfered with the
health care market.
One of the most expensive interferences that we have with the health
care market is that we allow health insurance to be deducted with
offsets against FICA by employers, as well. It is a very important
deduction, but it also must be seen by citizens as an interference with
the market because it is for upper income people in particular. For
people like myself, if I am buying private health insurance, it
provides me with a substantial subsidy.
It has been a very important way to allow people who otherwise would
not be able to purchase health insurance to buy it. So it is not as if
this kind of action is without precedent. There is no doubt that close
to 21 million Americans will be positively affected by this. They will
be able to purchase with their own money health insurance, and still in
many cases it is going to be quite high. But nonetheless they are going
to have an opportunity to buy it. They are not going to be denied the
opportunity to purchase. It does not obliterate the high-risk pool
States like Nebraska. We started one when I was Governor. It does not
affect States that worked on this for years to try to provide some way
to have all of us share a bit of the risk.
This bill, as I see it, is designed to accommodate or rather
radically change the economy where we are seeing a lot of downsizing,
particularly in larger corporations. You have individuals that are
covered by group policies from those corporations. They will find
themselves very quickly running out of their benefits and having to
purchase individual policies. And very often they find themselves faced
with the inability to make the purchase. This law will basically say we
are all going to share the risk of that in the marketplace so that
these individuals can make the purchase. As has already been pointed
out, nearly 25 percent of all working Americans who have private sector
jobs have job lock as a result of the lack of portability and the lack
of ability to be able to purchase with preexisting conditions. Nearly
3.8 million American workers lost their jobs in March. It is a rather
substantial paradox that it has become a fact of life that even at a
time when the economy continues to grow, even as we have a recovery
underway, that we have layoffs that are close to the same number that
were occurring during the last recession that we experienced in the
early 1990's. Thus, this change in the law accommodates rather
substantial change in our economy.
One of the things that a lot of us who are older--I am 52--sometimes
fail to recognize is that the cost of health care as it has gone up has
changed the way people in the market, working people and particularly
younger people, face health care expenditures. For example, when my
babies were born 20 and 19 years ago I was able to pay cash for them. I
did not insure against the risk of having a baby because it was a
relatively modest amount of money. You paid for it out of pocket. It
was not considered to be a big deal. Today you need to be insured
because the normal delivery is expensive. But almost any extended stay
in the hospital can put a young family in a great deal of financial
distress.
That is just one of many, many examples that one could cite; a very
relevant example because it is a rather common experience. There are 4
million live births a year in the United States, and an awful lot of
those births are in families that are uninsured. This will make it more
likely that those families will have insurance and have coverage.
It certainly will not get us to where I would like to see us; and,
that is, at a point where every single American and legal resident
knows with certainty that they have insurance. I hope this is a first
step.
I will support Senator Kassebaum's and Senator Kennedy's request to
vote against all amendments. I believe that this bill needs to go
across in an amendment-free fashion. I do not know if I ever stated
what Senator Kassebaum is going to support. But I believe this bill is
too important for me to be supporting, as Senator Jeffords earlier
indicated, an amendment that I would under normal circumstances
support. I will vote against that amendment because I believe the bill
needs to be clean and clear. It came out of the Labor Committee with
unanimous support. We have an opportunity to help 21 million Americans.
I think it is very important, in spite of my respect for the Senator
from Vermont and admiration for him personally, as well as my normal
inclination to vote for that amendment. I believe an amendment-free
strategy is the right one to adopt.
Mr. President, one of the things that I think we need to do as we
move toward universal coverage--and I hope that is the goal--we spend
$400 billion a year in Federal direct spending in tax benefits for
health care. We spend a sufficient amount. If we would change the way
eligibility occurs, one of the things we have to do in order to be able
to get there is we all have to face the true cost of health care and
very often we do not. Somebody else is paying for it. The insurance
company is paying for it--the Government. So we really do not worry
about whether or not the bill is high or the bill is low. The more that
we can face that cost directly and understand that, if we do not have
the resources to pay for it--it is paid for out of an insurance pool,
paid for with Medicaid or Medicare, somebody else is essentially paying
our bills--the more that we can face that fact the more likely it is
that we will move quickly to a point where, if you are an American or
legal resident, you will know for certainty that you have health
insurance.
This morning June O'Neill, the Director of the Congressional Budget
Office, appeared before the Senate Budget Committee and laid down a
rather stark warning; that is, even if the President's budget or the
Republican budget were adopted, we still have not controlled the growth
of entitlement programs. I say that to colleagues because I think once
we get beyond the Presidential election we are going face in 1997 a
really rather difficult fact. And I believe June O'Neill laid it out
for us this morning; that is, we have commitments on the mandatory side
that are going to make it difficult for us to fund education, to fund
transportation, to fund defense, to fund space, to fund law
enforcement, and to fund all sorts of other things that are going on.
Unfortunately, very often that occurs because people believe that they
have a right to something, that they have a benefit that actually is
paid up, the money is all there, and it is set aside for them--no
problems, do not worry about it--when in fact that is not the case.
It gets back, it seems to me, to a problem that we have whether it is
the tax deductibility, or whether it is Medicare part B. There is sort
of a sense that somebody else is paying for it. Why should I have to
worry about it? As a consequence, we just are not engaged personally as
we ought to be in trying to control the cost of health care, and as a
result, it seems to me, it is difficult for us to take the next step.
So again I want to say how much I really appreciate very much and
applaud the determination of the Senator from Kansas, and the Senator
from Massachusetts. They and the Labor Committee voted this out
unanimously, and 21 million Americans will be affected positively.
Taxpayers will not be on the hook for this thing. It has been measured.
It will cost no more than 2 percent in premiums across the country and
with reasonable changes in the law given what is happening out in the
marketplace.
[[Page S3524]]
I hope this body will pass it as quickly as possible and get it on to
the President for his signature.
I yield the floor.
Mr. JEFFORDS. Mr. President, I want to comment briefly on the
comments of the Senator from Nebraska about my amendment. I point out
that, unlike all of the other amendments, this one is very relevant to
this bill and will improve the bill. It is not extraneous to it. If we
do not keep track of what the lifetime caps are, then this bill will be
a mockery because, if we require the insurers to take sick people on,
one way of getting out of that is to reduce the lifetime caps so that
as soon as they come in they are out the other end. It was offered in
committee with the understanding that it would be brought forward at
this time.
I just wanted to bring that to the Senator's attention and hope that
I will make an exception to his decision in that regard.
Mr. President, I yield to the Senator from Iowa.
Mr. GRASSLEY addressed the Chair.
The PRESIDING OFFICER (Mr. Santorum). The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I am very glad that this debate is
taking place before this body. Having had an opportunity on two
separate occasions to push concepts similar to what is in this
legislation to accomplish the same goal in maybe not exactly the same
way, I am glad that we are here today and that there is a bipartisan
effort to get this legislation passed. I think being truly bipartisan
is a continuation on these issues of guaranteeing some health insurance
to people who can afford it--things that we have tried to accomplish
before in a bipartisan fashion.
I respect Secretary of Treasury Bentsen because when he was chairman
of the Senate Finance Committee he had proposals which I think were
bipartisan with the ranking Republican at that time included in H.R.
11, a major tax bill. And those health insurance provisions went
through without any debate on the floor of this body because they were
accepted as things that should be done. To see that happen was
good. Obviously, President Bush vetoed that bill because he did not
like the tax provisions that were in it.
Then, if you remember the next step, there was a fairly bipartisan
effort to make these provisions part of basic law. It was during the
health care reform debate of 1993 and 1994. They were relatively
noncontroversial provisions of much more controversial efforts by the
Clinton administration to have the Government totally dominant in the
delivery of health care in America and do it through a provision that
we called employer mandates, meaning every employer, large or small,
would have to provide health insurance to their employees.
Of course, that came down to total defeat in 1994 because the middle
class and the small business people of America woke up to a couple of
things: First, that small-business America could not afford an employer
mandate because they could not pass it on to their consumers like big
corporations can do; second, middle-class, taxpaying people saw their
rates going up, or if their rates did not go up the services that they
received from the health care industry and from the health insurance
industry would have gone down.
You remember that was part of a big effort we had in 1993 and 1994
where we were going to insure everybody. Obviously, when there is 13 or
14 percent of the people who do not get insurance and a large
percentage of them that cannot afford it, somebody is going to pay.
There is no doubt about it. There is no free lunch in our system of
doing business in America.
The middle class saw this problem, that we were trying to reduce the
coverage, affordability and quality of health care to middle class
working America as we were trying to solve the problems of the 13 or 14
percent of the American people who did not have any health insurance.
Of course, it only took about 3 or 4 months until working, taxpaying
American citizens found out what Congress was proposing to do, and they
turned against the Clinton health care proposal.
Then that message really did sink in to the President of the United
States because after the November election in 1994, when the
Republicans took over the Congress, the President said he was not going
to attempt to have that complete overhaul of the American health care
provisions he incorporated in his 1993 and 1994 proposals, and that if
he was going to do anything it was going to be done incrementally.
So you have a President, thankfully, waking up to the realities of
what grassroots America wants, particularly what middle class America
wants, they liked their health care plans and wanted to keep them from
being diluted. You have the President waking up to that reality, on the
one hand, and then you have Republicans who had accepted these
noncontroversial parts of the President's health care provisions, the
noncontroversial parts, being debated in this Chamber today, which
bring together the bipartisan efforts that are going to make this
legislation very successful.
So I just wanted to give that background before I express my words of
support for and cosponsorship of this very important piece of
legislation, because the American people for the last 6 or 7 years, as
expressed by this history I just gave you, believe it is high time
Congress passed legislation which provides basic health insurance
protections for individuals and small businesses. The Kassebaum bill is
our opportunity to respond to these concerns.
This bill would assure greater portability of health insurance for
individuals. It would limit the ability of insurers to deny health
insurance coverage because an individual has a preexisting condition.
It would require insurers to offer health insurance to individuals who
have lost jobs and seek such insurance. And it would require insurers
to issue health coverage to individuals who want to purchase insurance
for their employees on a group basis.
The bill defers to health insurance reforms passed by the States.
This is very important for my State of Iowa, because in my State we
have enacted a very good health insurance reform law. It went into
effect on April 1 just past.
Enactment of the Kassebaum bill should not disrupt the reforms that
are going on in my State. So, in my State, Iowans would continue to
receive health insurance under the terms of the Iowa reforms.
I thank Senator Kassebaum and her very capable staff for working with
me and my staff and with some of the Iowans who helped put together the
Iowa reforms. The modifications Senator Kassebaum will offer to her
bill would help make sure that Iowa and similar State reforms would not
be disrupted when this bill is enacted. As a consequence of these
changes, Iowa, and probably several other States should be able to
carry out their own reforms without undue interference from the Federal
level.
For States which have not implemented their own reforms, this bill
would then reform both the group and the individual health insurance
markets in those particular States. As I said earlier, these reforms
would respond to some of the most pressing problems encountered by
small businesses and individuals when they need health insurance.
For the group market, this bill would require insurers who offer
group health plan coverage to offer such coverage to all groups that
apply. This would prohibit insurers from denying health insurance
coverage to employers whose work force the insurer believes is not
healthy enough to insure.
Next, the Kassebaum bill would require insurers to offer coverage to
all individuals in a group without regard to their health status. This
would prohibit insurers then from denying coverage for an individual
member of a group plan based on that individual's health status. This
legislation would require insurers to renew group health plans at the
option of the employer. Renewal may not be denied for reasons of health
status of those in the plan. Thus, an insurer would not be able to
refuse to renew a health insurance plan to a group based on changes in
the health profile of the individual.
This legislation would limit an insurer's ability to deny coverage
for preexisting conditions to 12 months. This waiting period would be
reduced by 1 month for every month during which an individual was
continuously covered under a prior health plan. Thus, Mr. President, an
individual who had maintained continuous coverage for 12 months could
not be denied coverage because of preexisting conditions.
[[Page S3525]]
I think it is simple to say, Mr. President--as far as I can tell--the
provisions I have just outlined in this bill, the provisions which
apply to the group health insurance market only, are relatively
unopposed.
This bill would also reform the individual market. This bill would
guarantee the availability of health insurance coverage for individuals
leaving group coverage, who want to get individual insurance coverage,
as long as they have been covered under their previous group plan for
18 months.
If those individuals were eligible for coverage under current Federal
law, and we call that law by the acronym COBRA, these individuals must
have exhausted that coverage before they can be guaranteed coverage in
the individual market. But that is the only requirement that keeps
these individuals from getting insurance.
This legislation would require that health plan insurers renew
individual policies at the discretion of the individual, similar to
group policies being renewed at the discretion of the employer
providing the group policy. Now, without a doubt, there has been a lot
of concern expressed about this provision, and it continues to be
expressed. It continues to be expressed by insurers who operate
primarily in the individual market.
I might say to these companies that I am talking about here, that
have this concern--and I am not going to say that this concern is not
legitimate--but, as far as practical matters are concerned, I want to
remind these companies that if we were to have passed the Clinton
health reform plan of 1993, there would not have been any individual
market out there. These companies would have been out of business. A
lot of the companies in my State that do a majority of group coverage
still have a vast minority of their business in the individual market.
That portion of their market would have been wiped out. I hope these
companies that have some concern about this provision I am speaking
about here realize that they have a lot of friends in this body that
believe in the free market and do not want to hurt individual insurance
coverage. A lot of Americans want individual insurance coverage, not
necessarily because it is better than group, but because that may be
the only way they can have it and get the type of health care that they
want. These companies have that business today because we stopped the
Clinton health care reform plan that would have wiped out individual
insurance coverage for health care.
Now, what do these companies fear? They fear that the group to
individual provisions in the Kassebaum bill would have the ultimate
effect of greatly raising premiums in the individual market and hence,
I suppose, cutting out a lot of their business because some people
might drop it. The marketplace kind of dictates as the price goes up
you sell less of something. So these insurers feel the numbers of
insured are going to go up. Some of them would say the numbers would
increase greatly. But going up greatly, compared to not having any of
this business had these reforms been adopted in 1993, is the difference
between night and day, as far as I can tell.
It is the case that the bill would not forbid health insurers from
rating individuals and charging them a higher premium if such rating
indicates that they are greater health risks than any other
individuals. I would think that would help this problem for these
individual policy companies to some extent. But as far as we can tell
from analysis done by the independent actuaries, the premium price
increases caused by the bill should be very modest.
The analysis done by the health insurers' association, the Health
Insurance Association of America, wants us to believe that the premiums
would increase in the neighborhood of 15 percent. But in making my
decision to support the Kassebaum bill vis-a-vis this problem I am just
describing, I took into consideration the analyses done by independent
actuaries such as the American Academy of Actuaries, and Hay Huggins,
which was done under contract with the Congressional Research Service
at the request of Senator Kassebaum, and even the nonpartisan
Congressional Budget Office. All these found that any premium increases
attributable to the enactment of this legislation should be very
modest, in the range of 1 to 5 percent. The Congressional Budget Office
estimates that this increase would be no more than 2 percent as a
result of the group to individual portability provisions. If this bill
is enacted, it should help provide some peace of mind for a lot of
people.
But we should make it clear to the public what this bill would not
do. As a lot of people have said here already, it would not solve the
problems of those people who cannot afford to have health care
insurance. But that is what the term ``incremental'' meant. When
President Clinton, after the November 1994 election, when the
Republicans gained control of Congress, was asked about health care
reform, he indicated he had learned a lesson from the debate of 1993
and 1994, and he was going to promote the incremental approach.
Basically that means we should provide a marketplace out there so
people who want and can afford health insurance are going to be able to
buy it.
We are going to be able to get a better handle on what the cost is
out there, for those who cannot afford insurance. Maybe we can help
those people without screwing up the best health care system in the
world, which would have been done with the effective Government
takeover of health care, if the Clinton health care proposal had gone
through in 1993.
But peace of mind for this percentage of people that can afford it is
only one goal. That peace of mind should not be enough for everybody to
buy into this, because there are some shortcomings that we have to
admit to the American people. This bill would not completely eliminate
the denial of coverage for every preexisting condition. It would not
require employers to offer insurance to their employees. It would not
provide portability between different individual policies. And it would
not necessarily mean that currently uninsured individuals would have to
be sold a health insurance policy.
It is for these reasons that I support the addition to the bill of
provisions which would increase the tax deductibility of health care
costs for the self-employed. That is not only to pick up a hole that is
in this bill but to also bring some equity to the difference between
the deductibility at 30 percent of health insurance for self-employed
and the 100-percent deductibility for health insurance for employees of
corporations. In my State of Iowa, that is like saying that the farmers
of my State are denied equity when they can only deduct 30 percent of
their health insurance from their income tax, where John Deere, for its
workers, can deduct 100 percent of the cost of insurance for that
corporation.
I support the addition of medical savings accounts. Both the tax
deductibility of health care costs for the self-employed and MSA's,
together, at a minimum should make health insurance more affordable,
improve portability, as well as providing a greater degree of tax
fairness. In any case, if enacted, the bill would be a step forward.
The majority of those who are paying attention to our debate since it
began several years ago very much want to see Senator Kassebaum's bill
enacted. We have been promising these reforms, as I indicated at the
opening of my remarks, since the Bentsen bill passed this body in 1992,
without any debate--indicating, then, that it was the best thing to do.
It was a good thing to do. It was a bipartisan thing to do.
So most of us have been saying since that date in 1992, or years
before that, we could easily enact such reforms as those that are in
this bill. Remember, then, what incremental health reform is.
Incremental reforms were what most Republicans were saying was the way
to go and we have the President of the United States, in November 1994,
saying the same thing. Now we have before us a bill that will deliver
incremental health insurance reform if it is enacted. We should pass
it.
We have before us a bill that will deliver these incremental health
insurance reforms if this bill is enacted--and it will be enacted--and
we should pass it. Thank you.
Ms. MIKULSKI addressed the Chair.
The PRESIDING OFFICER. The Senator from Maryland.
Ms. MIKULSKI. Thank you, Mr. President.
I rise to voice my very strong support for this health insurance
reform.
[[Page S3526]]
This is a tremendous opportunity today to provide greater access to
health care for millions of Americans and their families. The
Kassebaum-Kennedy health insurance bill, of which I am a cosponsor, is
an excellent step in that direction.
This bill will be a great relief for most working Americans. They
will not have to worry about losing their insurance if they change
jobs. Insurance companies will not be able to deny coverage or make it
prohibitively expensive for a preexisting condition.
What this means, Mr. President, is that this bill is a safety net for
working Americans and their families. This legislation will make health
insurance portable and affordable, and it will give a benefit package
that is both reliable and renewable.
I was disappointed that we were not able to enact comprehensive
health insurance reform. After that debate came to a close, I pledged
to continue the fight to reform health care. This is an important step
in that direction, and Senator Kassebaum and Senator Kennedy should be
thanked for their great effort in bringing us this far.
Many Americans have medical histories of preexisting conditions that
make it difficult for them to get insurance coverage. They stay locked
in their jobs and unable to move to improve their standard of living
because they fear they will not be able to get insurance coverage. This
legislation will end job lock. This legislation will end the penalty
for having a preexisting condition, like diabetes. People who work in
small business, especially many women, will now be able to get health
insurance.
The bill before us today goes a long way toward eliminating the
barriers to coverage. For 81 million Americans who have preexisting
medical conditions, insurance companies can no longer exclude them from
coverage.
Millions of Americans will be able to be secure in the knowledge that
if they change or lose their jobs, they will not lose their health
insurance. And for those entrepreneurs who start and work in small
business, this legislation will provide increasing purchasing power for
them and their families.
I am pleased that the bill has the potential to help millions of
women and their families. This legislation will help women who start a
new job with an employer who provides health insurance. A woman will
not be denied insurance for herself and/or family if there is a
preexisting condition. Like when she is pregnant, she will be able to
get immediate coverage for the pregnancy, even if she is already
pregnant. Her newborn or adopted child will receive health insurance
coverage as well.
This bill will stop the terrible practice of denying women insurance
if they are victims of domestic violence. I think that is crucial. This
bill will stop that horrible practice of denying women health insurance
if they are victims of domestic violence.
There is much more that I would like to be able to do to make
insurance coverage affordable, accessible, portable and undeniable. I
would like to see coverage for long-term care, and I would like to see
a comprehensive benefit package for women and children, but this is a
very important step. We have a tremendous opportunity to improve the
lives of many Americans, and I am pleased to support this bill.
Mr. President, I yield the floor.
The PRESIDING OFFICER (Mr. Shelby). The Senator from Wyoming.
Mr. THOMAS. Mr. President, I rise in support of the Kassebaum bill. I
suppose most of us today and on through the night will be saying much
the same thing. We have not all said it yet, so we will have to keep
doing it. But this is a bill that is very important to us, and we ought
to comment on it.
It provides, I think, long-awaited reforms. We have all worked on
health care for a very long time. I have had a particular interest in
rural health care in that the delivery systems in rural States are
necessarily quite different than they are in other States.
This is an incremental move, and I am for that. The portability is
important so that people are not afraid to change jobs. Certainly, not
prohibiting preexisting conditions and allowing small businesses to
form purchasing cooperatives are terribly important. So these are
practical and affordable reforms that we need--really relief from
trying to change the whole system. I think Congress will meet this
challenge.
The Health Insurance Reform Act helps each and every American, more
than any other bill that has passed this year. Wyoming ranchers and
farmers and owners of small businesses and folks in the mineral
industry will no longer be excluded from care they deserve. S. 1028 is
compassionate, and I challenge President Clinton to sign this bill for
the sake of all Americans.
There has been a major shift in the debate, of course, over the last
couple of years. It is historical when you look at how far we have come
since we initially discussed health care reform. No longer are we
considering the Clinton approach to a Government-run system. That was
rejected by Americans, and I think properly so. Instead, we are going
to move incrementally into some commonsense reforms. There will be some
changes, and there have been some changes suggested by the managers,
moving closer to the House proposal, in terms of high-risk pools.
In 1991, my State of Wyoming responded to the health care concerns of
individuals with serious illnesses establishing a State insurance pool,
a high-risk pool allowing States to continue these measures, rather
than be forced to enact other individual insurance reforms. I think
this is very helpful to rural States like Wyoming.
Moving incrementally does not mean keeping every worthwhile proposal
off the table, however. I think we should promote solutions that expand
health care choices and, most of all, in the final analysis, do
something about cost. When you talk about health care, what do you
usually end up talking about? Cost. Availability, of course, then cost.
I happen to favor medical savings accounts. I think this gives the
kind of discipline to health care costs that individuals give when they
are responsible for making some of the decisions.
Self-employed deductibility is fair and equitable, and we should have
done it long, long ago. Eighty percent of that is good. Administrative
simplification, of course. And I believe when we talk about costs, we
ought to concern ourselves with malpractice reform. I do not think
there is any question but what there are substantial costs there.
Mr. President, I have been dismayed that the President is threatening
to veto health insurance reform over some of these provisions. I
believe the veto flies in the face of what the American people want.
As part of the changes that have occurred in Washington last fall, I
am committed to bringing quality health care to rural America, some
equity to rural America, and that is why I have an amendment to offer
that corrects the formula used to set payments for rates under managed
care plans that participate under Medicare. We will see increasing
numbers of managed care plans, and more and more people in Medicare
going into them.
The formula is not fair, the formula is not equitable, and we need to
make some adjustments. To give an example, the payments made in rural
areas of South Dakota are $177 a month. Payments for similar services
in New York are $678 a month based on historical utilization. That
needs to be changed. That is unfair. When we have a program like
Medicare that is treated somewhat uniformly, that is a 367-percent gap,
and we can change that, and I think we should.
The longer these disparities exist, the longer rural seniors will be
left with less health care choices.
So I am in support of this bill. I think it could be stronger. I hope
it is. But I am supporting it. I think we should have this bill. Access
to health insurance is, of course, a little comforting for those who
need it.
Mr. INHOFE. Will the Senator yield?
Mr. THOMAS. Yes, I yield.
Mr. INHOFE. I recall the Senator bringing up and discussing some of
these things that need to be done within our health care system. I
remember so well back when we had the proposal by the President to have
Government take over a system that has been run well but needed some
improvements, we committed ourselves at that time to incremental
improvements.
I think the bill that is before us today is good. But I also think
that the amendments that will be offered, some of the provisions of
which the Senator
[[Page S3527]]
has talked about, are going to make it better. The MSA element of this
bill I think is very significant. You know, this is the only product or
service anywhere in America where it has built in a factor to pay more.
I do not know of anyone in America, that once they pay their deductible
on a health policy, watches what they spend as much as if they were
paying their own money. This is human nature.
I am hoping that this bill that is a good bill, can be made a much
better bill and we can come through and take care of some of the things
that the Senator is talking about. I am particularly interested in some
items that are not going in there. I would like medical malpractice
reform but I also realize that would be a very heavy thing that would
cause it to go down and perhaps cause a veto. I think with these very
moderate and modest reforms that the Senator is talking about, I think
it will be a better bill, better bill for our health delivery system in
America. I applaud the Senator for bringing these up and discussing
them.
Mr. THOMAS. I thank my colleague. Before I sit down, I do want to
compliment the Senator from Kansas. This is the product of a great deal
of work and great deal of leadership and something that we do need to
do. I want to say, however, in closing, that I think we have made some
real progress in the last couple years in the industry, in the private
sector. And even though I think there are some problems that we will
have to deal with as we go about it, managed care has been helpful,
managed care has done something to control prices.
I think more and more people are becoming aware of their
responsibility with regard to payments. I think it is true that third-
party payers have been part of the problem of costs. We can work that
out. So in any event, I rise in support of the basic bill. It
guarantees coverage of the type of insurance particularly important
today, and I compliment the Senator for it. I yield the floor.
Mr. BREAUX addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. I thank the Presiding Officer.
Let me start by saying what I would imagine has already been said a
number of times; that is, to compliment the junior Senator from the
State of Kansas, Senator Kassebaum, and the senior Senator from the
State of Massachusetts, Senator Kennedy, for bringing together a
unique, I think in these times, coalition of Members to support a
major, major legislative effort in one of the most important areas that
this Congress could be dealing with, and that is the health care of the
citizens of this country.
This body is going to miss the Senator from Kansas for her wisdom and
her balance and her willingness to work in a bipartisan fashion to
accommodate the various interests of the Members of this body. It has
been a real pleasure to work with her in the so-called Chafee-Breaux
Group where we have been trying to come together to come up with a
balanced budget. I commend her for her efforts in that regard, but
particularly in bringing this Kassebaum-Kennedy bill to the floor; and,
of course, for the years of tireless service by the senior Senator from
Massachusetts, because he has really been dedicated over the years in
trying to come up with health care legislation that really serves the
needs of the people of this country.
Let me start by saying that this indeed is a large coalition. It is a
large coalition--65 Members of Congress in the Senate alone have
endorsed and have agreed to cosponsor this legislation. So that in
itself is very rare in today's atmosphere of high partisanship that we
see more and more, unfortunately. So anytime you can get a coalition of
65 cosponsors of a major piece of legislation indeed that is very, very
good news.
Let me also say that while the coalition is large, the coalition is
very fragile. It is very fragile because it does not do as much as what
many Members would like to see it do. And there are still things that
this legislation does not do that it should address. It probably does
more than some people would like to see done with requirements from a
Federal level that certain things be required when you sell health
insurance in this country.
But the real accomplishment of the two Senators in bringing this
legislation today to the floor of the Senate is the fact that it is a
large coalition, it is a bipartisan coalition. It does, I think,
accomplish some very important things that need to be done in the area
of health insurance for the people of America.
In my own State of Louisiana there are nearly a million people who
are uninsured, a million people who do not have enough money to buy a
private insurance policy or who earn more than they are allowed to earn
and qualify for Medicaid, the Federal-State health insurance program.
So a million people walk around my State every day--go to work in most
cases every day--but do not know how they are going to treat their
children, their spouses, if they should get seriously ill other than
through the charity of others or the charity of the hospital systems in
my State of Louisiana.
Many people do not have insurance for reasons that are corrected by
this legislation. For instance, there are many people who had insurance
but when they got sick and needed it the most, it was canceled. How
many of us as Members know a family or perhaps a member of our own
families that have had health insurance, but then when they need it the
most, when they get sick, after the illness is over, they get a little
note in the mail from an insurance company that says, ``Well, we're
going to cancel your insurance''? And the only reason they really give
is because you got sick. That was what they bought insurance for in the
first place. If you get sick you have insurance. It takes care of the
hospital and the doctor bills.
But today, unfortunately, in this society we have people who get sick
and then have their insurance canceled just when they need it the most.
So they do not have it today. This legislation, for the first time,
says that you are not going to be able to cancel someone's health
insurance because they got sick--sort of a logical thing I think we
should have done a long time ago. But this legislation does accomplish
that.
The second point is, people, in my State and other States, that have
tried to buy health insurance, and, sometimes, because they have had a
preexisting condition, they are prohibited from buying a health
insurance policy. I do not think that is basically fair. Health
insurance shares the risks. There are a lot of sick people that are in
the insurance pool. There are a lot of well people in the insurance
pool. On balance, the insurance companies make money and people get
health insurance.
That is how the system is supposed to work. So this legislation
addresses the problem of people who have had preexisting conditions and
brings them in a fair fashion into the system in a way that I think
makes a great deal of sense.
The other problem of all those people who do not have health
insurance in my State and, again, in the other 49 States is because
they have had to change a job. And we all know in this mobile society
as people change jobs because of downsizing, or because of changes in
technology, they are able to get a better job through education and
training, they could move on to another field, the problem is that many
people will not change jobs, will not get a better job even if it means
better economic conditions for themselves and their families. Guess
why? Because they will lose their health insurance.
So we have a situation referred to as ``job lock'' where our people
would like to move on to better jobs--or maybe even forced to change to
a new job because of downsizing--and cannot do so because they lose
their health insurance, which is one of the most important things that
the job market can provide. But if you cannot be guaranteed that
coverage you have today will be with you tomorrow when you are in a
different job, well then, people say, ``I'm just going to stay right
here.'' Or if they get laid off and they have to move to another job,
they do so perhaps without any insurance because they are uninsurable
when they move into the new position.
So what we have today through the Kassebaum-Kennedy legislation is a
major, major health reform package which I enthusiastically am a
cosponsor of and congratulate the people who have brought this
monumental piece of
[[Page S3528]]
legislation to us. It will, when it passes, and President Clinton signs
it, be, I think, a shining example of what Congress can do when we are
willing to work in a bipartisan fashion to accomplish something as
monumental as this legislation does.
I know the majority leader has a package of amendments that he is
going to present at a later time. I as an individual Senator and a
member of the Finance Committee looked over a lot of the suggestions in
the proposed amendments that he has submitted. You know, a lot of them
are good ideas. They have not yet worked their way through the
committee. That gives me a little concern about how these new ideas are
going to be paid for. Our staffs are now, as we speak, looking at the
legislation and the series of amendments. I think, by and large, most
of them are pretty good--80 percent tax deductibility for self-employed
people who buy insurance. All the people around the country that are
self-employed, now, can only deduct about 30 percent of their premiums.
With this amendment, you would be able to deduct 80 percent of your
health insurance premiums. I think that is pretty darn good, just like
a company that contributes to a policy can deduct 100 percent of their
contributions. So we should do something for the self-employed people
in this country. That amendment does that.
Penalty-free IRA, individual retirement accounts, withdrawals for
large medical expenses and for the unemployed to pay their health
insurance premiums. That is a good idea. We have talked about that. I
think this should be bipartisan in that amendment. I think that is
good.
My point, as I reach to a conclusion here, is that we have a large
coalition, but it is a fragile coalition. I suggest that if people come
up with amendments that are very controversial, that there is not a
consensus on, or that we have not had hearings on, or amendments that
have not been reported out, like this bill has, by a full committee of
the Senate, that we will run into problems, and we will miss what I
think is a golden opportunity to, in fact, create legislation which
makes a lot of sense for all Americans.
One of the amendments I will just mention is a so-called medical
savings account. This is a classic example of ``if it sounds too good
to be true, it probably is.'' I think that when you look at this
concept--and I found after looking at it--that it, in fact, is too good
to be true and causes problems that greatly outweigh the benefits. It
is not to say that medical savings accounts do not have some benefits;
they do. But I do not think that we are certain enough about those
benefits as opposed to the negative problems that will occur to
automatically accept this provision without a great deal of discussion.
I hope when that amendment is offered we will be able to strike out
that section of the proposed Dole amendment and proceed to pass this
legislation, hopefully with the other amendments that the majority
leader is prepared to offer.
Let me tell you why I think medical savings accounts are a bad idea.
I say, first of all, at one time I thought they were a great idea. At
one time I introduced legislation to create medical savings accounts.
Boy--they sound terrific. I asked my staff--``What is the problem?'' At
the time, we--like many others--did not have the full picture to
understand the problems. Few had analyzed the effects of medical
savings accounts.
The problem was that while it is really terrific for healthy people,
it is not so terrific, in fact, potentially very bad, for people who
are not healthy. If you take, for example, young people--I have four
children who are relatively young and very healthy, thank goodness--a
medical savings account is very attractive for them. Their employer can
contribute money to an account, and they would use that account to pay
for their initial medical bills during the course of the year. If they
did not have to use it at all, they get to keep the money. What a great
deal if you are 20, 25 years old and very healthy.
So, in the past, we had only looked at how it affected one group of
people--healthy, basically young people. A terrific idea for them. What
we failed to look at is how it affected other people who buy insurance
because they may get sick--generally, more elderly people, and people
who do get sick during the course of their life. If they have a very
high deductible policy, as high as $3,000 for a family, they have a
problem, because they will incur medical expenses during the year. If
they have to pay for it out of their pocket, it is a really serious
problem for them. Again, it is not a problem for people who are young
and never have to go to the doctor during the course of the year.
Incentives for the medical savings account have a tendency to suck
out all the healthy people from the insurance pool, put them into a
medical savings account where they will not be using a lot of medical
health care, but leaving behind people who do get sick, who do have to
go to the doctor and do have to go to a hospital during the course of a
year. If the only people remaining in an insurance pool are people who
have to use doctors and hospitals, the risk becomes so great because of
the loss of healthy people, that their premiums would rise so high that
insurance would soon be unaffordable for them as well.
My fear is that while a medical savings account takes care of one
group of people, it causes far greater problems than are justified for
everybody else, which is the vast majority of the remaining people in
this country.
I think at the appropriate time we should set aside the medical
savings account, with an amendment if we have to, look at the other
amendments that Senator Dole has offered, and I think most of them,
from my personal observation, are good. I think we should accept them.
But certainly not the medical savings account at this time.
Let me conclude, once again, saying to Senator Kennedy and Senator
Kassebaum, my congratulations to you for bringing to the Senate a real
opportunity to do real health care reform in 1996. We hope that the
Senate and the House would ultimately pass this legislation, and the
President should sign it.
Mr. FEINGOLD. Mr. President, I rise in support of this bipartisan
health insurance reform bill, a measure that I was pleased to
cosponsor. There are a number of reasons to support this legislation
introduced by my good friends, the Senator from Kansas and the Senator
from Massachusetts.
Let me focus my remarks on ways in which this measure should provide
some meaningful help for one group in particular. That is our Nation's
small businesses.
From existing companies trying to maintain health care coverage to
individuals who are trying to start a small business, this bill
addresses several problems confronting smaller firms trying to provide
health insurance for their employees.
First, Mr. President, and I want to emphasize this, the measure
addresses the barriers often posed by preexisting conditions. An
estimated 81 million Americans have some kind of preexisting medical
condition that could, unfortunately, affect their insurability. The
legislation limits the ability of insurers to impose exclusions for
preexisting conditions.
In addition, the bill requires insurers to sell and renew group
health policies for all employers who want coverage for their
employees, and it prohibits group health plans from excluding any
employee based on health status.
Now, Mr. President, this can be especially helpful to our small
businesses. The problem of getting insurance does not just affect
individuals with preexisting conditions. Whole industries have been
denied coverage by certain insurers because they are not to employ
people who are more likely than others to get sick.
A study by the Congressional Research Service found that several
insurers routinely denied coverage to dozens of different types of
businesses ranging from some of the following: auto dealers, barber
shops, beauty parlors, hotels, lodges, and restaurants. Mr. President,
even businesses and individuals that have health insurance cannot be
sure of maintaining their coverage if illness strikes.
Insurers can, therefore, collect premiums for years and then just
suddenly refuse to renew coverage in individuals or employees who begin
to incur large health care costs. So, requiring insurers to renew
policies can certainly help address that problem. This bill finally
helps move us down this road.
[[Page S3529]]
Mr. President, the bill also guarantees renewability of individual
policies and prohibits insurers from denying insurance to those moving
from group coverage to individual coverage. We know that the inability
to retain health care coverage once somebody leaves a job can trap many
people in the jobs they wish to leave. This is often referred to as
``job lock,'' a problem, according to one survey, that may touch one
quarter of all American workers--individuals that stay in jobs they
would otherwise leave, because they fear losing their health care
coverage.
Mr. President, this job-lock effect has an impact on small business,
as well. Unless you inherit wealth, or maybe win the lottery, the
chances are pretty good that anyone who wants to start a small business
will be somebody's employee--at least as they make the decision to
become a small business person. If you or a member of your family have
any kind of preexisting condition, you may be faced with this job lock.
The inability to get health insurance prevents those individuals from
leaving their existing jobs to start their new business.
Mr. President, I think this barrier has a major impact on our economy
by discouraging new business startups. We all know that small business
is the real foundation of our economy. We have an insurance practice
that discourages people from taking their good ideas and starting new
businesses that will employ many more people. That is a real, real
restraint on the growth of our economy.
Mr. President, finally, I want to commend the authors of this measure
for the provisions that help make it easier for small businesses to
form private, voluntary coalitions to purchase health insurance, and to
also negotiate with providers in health plans.
While the economic power of big businesses has enabled many larger
firms to contain health care costs and improve the quality of health
care for their employees, small businesses continue to see health care
costs climb.
The Senate Labor and Human Resources Committee reported that while
health care costs for large employers declined 1.9 percent in 1994,
small employers saw an average increase of 6.5 percent. This is a very
large discrepancy, and one that really discourages small business at
the same time that larger businesses are benefited.
By providing small employers and individuals with the kind of
economic leverage in the marketplace that is currently enjoyed by large
employers, these provisions should help bring the costs of health
insurance down for small businesses and individuals.
Mr. President, as you know, there are over 50 cosponsors of this
measure, pretty evenly divided between Democrats and Republicans. Of
course, this is an indication of the broad desire for health insurance
reform. But it is also an indication of the care taken by Senator
Kassebaum and Senator Kennedy in crafting a measure that, finally, has
a real good chance of becoming law, at a time of very heightened
political sensitivities on this issue.
Before any measure is enacted, it has to navigate the choppy waters
of each body, a conference committee, going back to each body again,
and, finally, receive Presidential approval.
That is no mean feat at any time, but it is especially difficult in
the political environment of a Presidential election year.
If this bill becomes law, as I hope it will, its enactment would be
in no small part due to the legislative skills of the Senator from
Kansas and the Senator from Massachusetts, and, I might add, to the
fondness and respect many of us in this body have for both of them.
Mr. President, I congratulate my friends, and I yield the floor.
Mr. WELLSTONE addressed the Chair.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Privilege of the Floor
Mr. WELLSTONE. Mr. President, first of all, I ask unanimous consent
that Dr. Maimon Cohen, a fellow on my staff, have the privilege of the
floor during the pendency of this legislation.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WELLSTONE. Mr. President, I think every Senator who came to the
floor has thanked both Senator Kassebaum and Senator Kennedy for their
fine work. I wish to join in that. I also say to the Senator from
Kansas, who is chair of the Labor and Human Resources Committee, that
along with everyone else, I will miss her. I think she has been a great
Senator for Kansas and for the benefit the country. I mean that
sincerely.
Mr. President, I think this is a very important piece of legislation
for a number of different reasons. I would like to start out talking
about that. I am going to be relatively brief, I say to other
colleagues, who may want to come down to the floor for opening
statements.
I think this is important because, first of all, we will not be able
to have any kind of regulation if we do not do it at the Federal level
because of ERISA exemption--in other words, preemption. In other words,
so many citizens in our States are insured by self-insured plans, and
really it is impossible for States--and Minnesota has run into this--to
pass reforms that, in fact, will help people and cover everyone because
self-insured plans are exempt from that coverage. We ran into this the
other day when we marked up an important piece of legislation that I
hope will come to the floor, where we said, look, you really do not
want to have a family be put in the situation where a mother with a
newborn is told, after 24 hours, regardless of circumstances, ``You are
out.'' I mean, that is something that people in the country do not
think is fair.
But the fact of the matter is that even though my State of Minnesota
has passed such a piece of legislation, saying, no, that is not fair,
there has to be a mother and a doctor and the family in consultation
making decisions about what is good for that mother, about 40 percent
of the citizens in Minnesota would not be covered because they are in a
self-insured plan.
This is an extremely important piece of legislation. I hope it is not
so weighted down with killer amendments that it does not pass. This is
a bipartisan effort, and I think we ought to take this step for one
reason more than any other; it is just a matter of elementary fairness.
I have not seen polls on this, but I think the Senator from Kansas and
the Senator from Massachusetts, and all the rest of us that are
cosponsors, would go forward regardless, but I just bet that 99 percent
of the country would agree with the proposition that if you have paid
your premium on time, just because you now have a bout with breast
cancer, or some other kind of illness, it would be outrageous to all of
a sudden find yourself without coverage, or you should leave one job
and go to another job and not be able to obtain coverage.
Most all Americans just find that to be an outrageous proposition. My
wife, Sheila, has been my teacher when it comes to domestic violence
issues. And with the support of both the Senators from Kansas and
Massachusetts in markup, we have a provision in here that we think is
important dealing with issues of family violence. I wish these issues
were not out there. But we want to make sure battered women are not
battered again. If a woman is beaten up and comes to a hospital with
her children and reports that, which is what she should do, and which
is the first step in being able to leave a very dangerous home--and,
unfortunately, homes are not always the safest places in the world--she
would not find herself without coverage for that condition.
So this is really a piece of legislation that is a matter of basic
fairness. I know GAO has estimated that some 25 million Americans could
benefit. I also want to make the point that most of the uninsured in
our country are uninsured because they cannot afford coverage, not
because they are denied coverage.
So, in other words, we have a piece of legislation that deals with
accessibility and with portability. For those of you listening to the
debate, that means you can go from one job to another and not lose your
coverage or be locked out because of a preexisting condition. We are
not still dealing with affordability. In Minnesota, there are 400,000
Minnesotans without insurance coverage, and 91,000 of them are
children. In the main, that is not because of preexisting conditions,
it is because the families cannot afford the coverage. Nationwide, the
uninsured now number 40 million people.
[[Page S3530]]
I hope that we will get to the point, again, in this Congress when,
in fact, we make sure that every citizen in our country has at least as
good a health care coverage as we have as Senators and Representatives.
This piece of legislation does not do all that, but it is an important
step forward.
One other concern I have, Mr. President--and I just want to make this
point--you cannot do everything in one piece of legislation. I am out
here to support it. I worry a little bit that what might happen is that
the insurance companies might say, ``OK, when you shift from job to
job, or you move from one job and now you want to set up your own small
business, or whatever, we will not deny you coverage because of a
preexisting condition, but we will raise your premium to $8,800 a year
or $9,000 a year,'' in which case, my fear is that it will become
the functional equivalent of preexisting condition discrimination. Let
us hope we have the cooperation of the insurance industry. But I just
flag that as a potential problem.
Last point, Mr. President. I have been doing a lot of work with my
colleague from New Mexico, Senator Domenici. A couple of years ago, we
started a working group on mental health. Both of us, and other
Senators, feel very strongly about this issue. We are working on an
amendment that I think is real important. It is an amendment that would
provide equitable health care coverage for mental illness and substance
abuse services. In other words, what we want to make sure of is that
we, once and for all, put a stop to the discrimination that all too
often takes place in the health care field. We are simply talking about
parity--parity in coverage for physical and mental health and substance
abuse services, and not different co-pay requirements, not arbitrary
caps on visits with physicians or other health care providers. I have
to say that I believe this amendment, which we have worked very hard
on, is an extremely important amendment.
I believe that Senators, regardless of political party--Senator
Domenici and I certainly do not agree on all issues, but we have been
immersed in this issue for several years now. We have seen all of the
ways in which people, who are struggling with these health care
problems, fall between the cracks. We have seen the discrimination. And
this amendment, which will really focus on the importance of parity,
which will make sure there is no discrimination in this area, I think,
is extremely important.
I will have data to bring to the floor. I will talk about some of the
insurance plans right now that do not discriminate and will talk about
why this part is so important. I will talk about the differences it can
make for women and men being able to work, to live lives of dignity,
and to contribute to the community.
But I do look forward at some point in time as we move along with
this piece of legislation to bringing this amendment to the floor with
my colleague, Senator Domenici. Mr. President, I do not know that there
has been another Senator who has been a stronger voice in this area for
those citizens who are struggling with mental illness. The same thing
can be said for his wife Nancy. For Sheila and I, this has emerged as a
professional and a personal friendship. I look forward to being able to
proudly bring this amendment out to the floor with my colleague and
good friend, Senator Domenici, and I hope in the spirit of what I think
is bipartisanship that we will be able to get good, strong support.
I yield the floor.
Mrs. KASSEBAUM. Mr. President, may I respond for a moment to the
Senator from Minnesota, who is a valued member of the Labor and Human
Resources Committee?
When he mentioned the rate increase possibly coming if we do not cap
any of the premiums, I would just say also that we do not preempt
States from doing community weighting or a cap, if a State so desires.
That is one of the flexibilities that I believe is important. It is one
of the reasons we have the strong support of the State insurance
commissioners. That flexibility which has been built into this also has
strong support from the National Governors' Association.
Mr. WELLSTONE. Mr. President, I never argue or disagree with the
chairman of my committee. I think it is a point well taken. I do hope
at the State level we will have in fact that oversight and that
accountability.
Mr. WYDEN addressed the Chair.
The PRESIDING OFFICER. The Senator from Oregon is recognized.
Mr. WYDEN. Mr. President, thank you very much.
Mr. President, I take the floor today to speak on behalf of this
extremely important bill. In doing so, I want to commend the chair,
Senator Kassebaum, and also Senator Kennedy for what I think is exactly
the kind of spirit of bipartisan effort that is needed to produce an
important health bill.
The reason this legislation is very important is it will provide a
new path for upward mobility in American life. I have seen again and
again in my home State--this goes back to the days when I was director
of the Grey Panthers, a senior citizens group at home--I have seen
citizens cut off from economic opportunity because this bill was not
law. You could have, for example, a young person just starting their
career in Oregon. They are working hard. They are committed, doing well
in the marketplace, playing by the rules, and showing the kind of
discipline to get ahead in the work force. But they, in effect, end up
being cut off because they have a medical problem. So, if they hear
about a better job across town, another economic opportunity where they
can make a better wage, they lose out simply because today's insurance
system does not work all that well unless you are healthy and wealthy.
With this legislation, it is going to be possible to make the health
insurance system work for all Americans so that all Americans can get
access to health insurance and get it when they need it most, which is
when they have serious medical problems.
I would like to give special thanks to the chair, Senator Kassebaum,
and to Senator Kennedy for their efforts to work with those of us from
Oregon. Oregon has been one of the States, as the Chair knows, that has
consistently been out in front in terms of health reform. We have done
it with the Oregon Health Plan, for example, innovative in terms of
senior programs, and we have been on the cutting edge with insurance
reform as well. There is a very special State effort supported by
Republicans and Democrats alike at home. We have initiated a number of
important insurance reforms at the State level that we felt had to be
protected. Through the good offices of the chair, Senator Kassebaum,
and Senator Kennedy that has been possible.
I have been notified in writing that the Oregon insurance reforms
that have been initiated on a bipartisan basis are working well
according to the insurance industry, and consumer groups alike are
protected under this legislation.
Finally, Mr. President, let me add that no one should be mistaken
about how much more is left to do in the area of health reform. If I
had my way, for example, a very important, albeit modest, change that
we would add to this legislation would be to open up the national
practitioner data base to the public so that the citizens of this
country could get access to the disciplinary record where the medical
profession has disciplined one of their colleagues. I wrote this law as
a Member of the House of Representatives--again, a statute that has
bipartisan support. Today in that data bank lay thousands and thousands
of names of physicians who have been disciplined formally by
their colleagues, and the American people cannot find out about it.
Senator Boxer has done yeoman work on this issue. A number of our
colleagues on both sides of the floor have approached me on this. If I
had my way, we would be on the floor today including this important
change that would be of benefit to consumers.
But as a number of our colleagues have noted, it is not possible to
get all the way to health reform in America. It is not possible today
to get all of the work done that needs to be done to protect consumers
and to insure universal coverage. But I think it is quite clear that a
major step forward is being taken as a result of the bipartisan work
done by Senator Kassebaum and Senator Kennedy.
I urge my colleagues to support this legislation and then, as it goes
to conference, to reject the number of anticonsumer provisions that
were added in the House. For example, in the House--it seems, again,
incredible
[[Page S3531]]
to see this kind of anticonsumer retreat--the House wants to roll back
the protections for older people who buy policies to supplement their
Medicare care. The late Senator Heinz of Pennsylvania and others fought
for years for this legislation. The House wants to roll it back. The
House wants to roll back the fight against fraud and waste.
So, I hope today that the Senate will vote for this important
bipartisan legislation--it is an important step forward--and then to
reject the legislation in conference coming from the House.
Mr. President, I ask unanimous consent that my letter to Senator
Kennedy on the Oregon reform proposal and his reply to me be printed in
the Record.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
U.S. Senate,
Washington, DC, March 29, 1996.
Hon. Edward M. Kennedy,
Ranking Member, Committee on Labor and Human Resources,
Russell Senate Office Building, Washington, DC.
Dear Senator Kennedy: The development of S. 1028, the
``Health Insurance Reform Act of 1995,'' certainly is one of
the current Congress' most important advances in assuring
access to quality health care. I look forward to the debate
of this significant legislation on the floor of the Senate.
I am, however, concerned that our efforts to extend health
insurance coverage and end ``job-lock'' not impede
significant advances made by individual states in the health
insurance reform arena. One such effort is coming to
culmination in my home state of Oregon, and I write to you
today to inquire if the Oregon reform proposal likely would
be subject to a favorable exemption ruling by the Secretary
under the language of Section 112 of your legislation. The
section's flexibility in this regard will be an important
element in my consideration of the overall legislation.
Embodied by Oregon State Senate Bill 152, our group-to-
individual portability plan was designed by a working group
of state insurance officials, insurance carrier
representatives and health insurance agents. This enacted
state law will extend affordable health insurance coverage by
mandating that all state-regulated group insurance carriers
offer portability plans to persons leaving groups after
having had six months of continuous insurance coverage.
This plan also demands that carriers offer a choice between
both a moderately priced insurance package based on the
average of the State's most popular HMO plans, and a lower-
priced, catastrophic coverage option.
Finally, group carriers that have individual products can
offer them as their portability products as long as they
offer both the prevailing (HMO average-best) and low-cost
options.
The Oregon insurance reform program, due to go into effect
October 1, 1996, with portability plans on the market by
January 1, 1997, has other encouraging elements as well. For
your information, I attach a copy of a March 22, 1996, letter
to me by two members of the working group which produced the
plan. Should you have any questions regarding this letter,
please don't hesitate to contact me, or Steve Jenning of my
staff at 224-1084.
Thank you for your consideration of this matter. I look
forward to working with you on this issue, and on other
important health matters.
Sincerely,
Ron Wyden,
U.S. Senator.
____
U.S. Senate, Committee on
Labor and Human Resources,
Washington, DC, April 18, 1996.
Hon. Ron Wyden;
U.S. Senate,
Washington, DC.
Dear Ron: Based on my understanding of the Oregon plan, it
would clearly meet the requirements for an alternative State
mechanism under the State flexibility mechanism of the
Kennedy-Kassebaum bill. My understanding is that your program
offers a program for all individuals leaving insured group
coverage that allows them to remain in a pool with employed
persons remaining in the entire insured market. For those
individuals leaving self-insured coverage, access to an open
high risk pool meeting the standards of the bill is
guaranteed.
Yours sincerely,
Edward M. Kennedy.
Mr. WYDEN. Mr. President, I yield the floor.
Mr. DeWINE addressed the Chair.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. DeWINE. Mr. President, I would like to say a few words in support
of the pending legislation.
Our distinguished colleagues, the Senator from Kansas and the Senator
from Massachusetts, I believe, have crafted a sensible piece of
legislation that really represents the broadest possible consensus on
health reform that we can achieve at this point.
Back in 1994 when I was a candidate for the U.S. Senate, the
President was trying to get Congress to enact a health reform bill.
That was a health reform bill that went substantially further than the
national consensus on health care would allow. For better or for worse,
the American people made a decision. They made a decision and
determined that they would not support a bill that threatened a large
expansion of Federal involvement in health care. They made the decision
that that simply was not good.
During that debate when I was running for the Senate, I said that the
failure to enact the President's plan did not mean that we would have
to give up on health care reform. And we should not. In fact, what we
should do, as I said at the time we should do, is to try to get a
consensus, that there were things that we could agree on, there were
things that Democrats and Republicans could agree on, liberals and
conservatives. We ought to agree on those things. We ought to put that
into legislation, and we ought to pass it. I think what we have in
front of us today is just that. It is that bipartisan consensus. It is
a consensus of what we can agree on.
There was, going back 2 years ago, a broad agreement on several
aspects of this health care reform--disagreement on some areas but
agreement on others. One of the areas where there clearly was agreement
was on the problem of portability, or the challenge of portability or
the need for portability. Basically, there was agreement on the issue
of letting people who have preexisting conditions get health insurance.
That was very important. Let small businesses form purchasing pools so
their employees could get a better price for health insurance. There
was and is agreement on that.
These are basic mainstream principles. I am happy to say that they
are embodied in the legislation that we have before us today.
The Kassebaum-Kennedy legislation would create major positive changes
in the health insurance market, and it would do so without imposing new
mandates on employers or creating new Government bureaucracies. It
would give workers the flexibility to change jobs without losing their
health insurance coverage. It would protect families from losing their
health insurance if a family member loses his or her job.
Mr. President, according to the General Accounting Office, the bill
would provide health care security to 25 million additional Americans.
This is genuinely a far-reaching health reform that I believe does in
fact preserve the bipartisan support it is receiving in the Chamber. I
am glad today to be able to add my voice in support of this
legislation.
Let me, if I could, turn very, very briefly to another issue, and I
had intended to speak and still intend to speak sometime today or
tomorrow or early next week at length on this, but I wish to take a
minute right now to call my colleagues' attention to this and also the
American people.
Next week is National Organ Donor Awareness Week. I again will speak
at length about this in the future. But the basic facts are that we
lose people every day in this country, 7, 8, 9, 10 people, people who
medical science, medical capabilities could save, but we lose these
people, their families lose them, because they are on a waiting list, a
waiting list to get an organ donor transplant.
They die because, frankly, there simply are not enough organ
donations made in this country every day. The reason that there are not
enough is very simple. It is that too many families, when faced with
life's most horrible tragedy, and that is the loss of a loved one, do
not really know what to do when they are asked whether or not they will
donate their loved one's organ or organs.
I encourage my colleagues and families across the country to talk
about this issue because I am convinced that the vast majority of
American people are caring, loving people who want to help other people
when they can and who, if they think about this for any period of time
at all, will conclude that if, heaven forbid, something traumatic would
happen to them and they would be killed, they would want their organs
to be donated to somebody else, so somebody else could see, so somebody
[[Page S3532]]
else could live, so somebody else could carry on a productive life.
As I said, I will speak more about this at length later. I see my
colleague from North Dakota is present and ready to speak. I am not
going to hold him up at this point. But I just again call my
colleagues' attention to this. National Organ Donor Awareness Week is
next week. It is one of the rare times in public office or in public
debate in this country where, when we talk about an issue, we can help
solve it. It does not cost any money to do it. It is just a question of
getting people to be more aware of the tragedy that occurs every single
day to someone who could be saved, when someone who could remain with
their family and be productive and live a good life dies because other
individuals, not knowing really what to do, make a decision not to
allow their loved one's organs to be donated.
So, Mr. President, I appreciate the Chair's indulgence and my
colleagues' indulgence, and I will today or tomorrow be talking further
at length about this important issue.
I thank the Chair.
Mrs. KASSEBAUM. Mr. President, I should like to recognize first the
valuable work that the Senator from Ohio has done on the Labor and
Human Resources Committee. Senator DeWine has worked hard to help us
get this put together. He was worked hard on all the other health
issues that have come before the committee, and as he mentioned is a
major leader along with Senator Frist on the organ donation issue. So I
appreciate his assistance with the legislation.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I too commend the Senator from Ohio. I
know he has done a great deal of work on the issue of organ donation--
work that I support very strongly. I hope we will advance public
understanding and knowledge about organ donation, not only in this
legislation but in other pieces of legislation as we move forward.
I did want to say as I begin--and I will be very brief since there
are others in the Chamber who wish to speak--I cannot think of two more
able Senators to bring a piece of legislation like this to the floor
than Senator Kassebaum and Senator Kennedy. This Senate will be
diminished when Senator Kassebaum leaves, but she has done outstanding
work on this legislation and she and Senator Kennedy deserves to be
complimented for bringing this to the floor. In my judgment, the
approach we've taken to this legislation--finding the issues that we
all agree on--is the kind of thing we should be doing routinely. I did
not support the Clinton health care plan. I did not cosponsor the
Clinton health care plan because I believed then that it was too
bureaucratic. But he was asking the right questions. We needed to
address health care for two reasons. One, to provide broader access to
health care. And two, to try to do something about the escalating costs
of health care.
I happen to think the proposal that he made was too bureaucratic. It
would have not advanced the solution in both of those areas that I
think was appropriate. But that does not mean we do not have problems
in both areas that we must address. This piece of legislation addresses
one of those. It addresses the issue of access to health care.
Again, this is exactly what we should be doing when we have a
disagreement, a substantial disagreement about a major policy issue.
What we ought to do in those instances is find where is there an area
of agreement, and that is what happened with this legislation.
This legislation addresses the issue of access. It brings together
those varying viewpoints in the Senate into one bill on which we can
all agree that, yes, this advances the issue of access to health care.
That is why I am pleased to have been a cosponsor of the legislation
and am pleased today to speak in favor of it.
The health care system in this country is a remarkable system. You do
not see very many Americans who get sick and decide to get on an
airplane and go to some other country for health care. That would be a
very unusual thing to see. What you see instead is people getting on an
airplane or getting on some other means of transportation and coming to
America to get health care because we have a wonderful system of health
care.
But we have two problems. One, not everyone has access to it, and,
two, its cost is escalating. It has diminished a little bit in recent
years, but it has been escalating double and triple the rate of
inflation every year for many years, and that prices health care out of
the reach of too many of our American citizens.
All of us understand that our health care system is a system that
offers miracles to many Americans--new hips, new knees, cataract
surgery, even heart transplants. The list is endless.
I would suggest that anyone who wonders about where all of this comes
from might go out to the National Institutes of Health. Take a look at
something they have out there called the ``Healing Garden,'' where they
do research on a range of plants and all kinds of other things that
produce all of these wonderful new medicines. They do research on a
whole range of health care issues and develop new surgical techniques
and new approaches.
We have invested a substantial amount of money that has produced
enormous rewards for our society. And with all of those miracles and
all of this wonderful medicine, the two remaining questions are, one,
how do we provide to people more access to this wonderful system, and,
two, how do we bring the cost down so it does not rise out of the reach
of too many American people?
This bill addresses that issue of access--not for everybody, but it
does it in a way that pulls together those things that we agree on.
This includes dealing with the limits on exclusions for preexisting
conditions. This bill is a very modest approach that solves part of
that problem, a major part of that problem, for many of the American
people.
A whole lot of people are locked in their jobs because of this issue
of preexisting conditions. They are unable to move, because if they
move they cannot carry that insurance with them and no other insurance
carrier will pick them up because they have had a preexisting
condition. This piece of legislation deals with that in the right way.
This legislation says to insurance companies: if someone has been a
good customer of yours, buying your policy for years, you cannot drop
coverage simply because that person gets sick. This piece of
legislation also addresses the issue of portability, and does it in
exactly the right way.
So I am pleased that we are here on the floor with this piece of
legislation. It is exactly the kind of thing we ought to do. Instead of
continually talking about what we cannot agree on, we should find the
areas where we can agree to begin moving toward a solution to a
problem. That is exactly what this piece of legislation does.
Let me end where I began, by complimenting the Senator from Kansas,
Senator Kassebaum. This body will be diminished by your leaving at the
end of this year, but you will have left your mark here in many, many
ways. You and Senator Kennedy will have left an indelible mark, if we
can pass this legislation, by advancing this issue of access to a
wonderful health care system to millions and millions of additional
Americans who ought not be left out of the system.
So I compliment Senator Kassebaum and Senator Kennedy for their
diligent work and I hope we can do exactly the same thing on other
issues in the coming weeks. If we disagree, let us figure out where we
disagree, but then let us find the center. We ought to come to the
floor to move toward solving problems, rather than being so intractable
in our own camps and deciding we simply cannot solve problems.
I look forward to casting a final vote, an aye vote on this
legislation. I hope it does not get too loaded down as it moves along.
I hope the Senate will act with some haste to try to move this to a
conference.
I yield the floor.
The PRESIDING OFFICER (Mr. Campbell). The Senator from Idaho, [Mr.
Craig], is recognized.
Mr. CRAIG. Mr. President, I come to the floor this afternoon in
support of the intent of S. 1028. Let me join my other colleagues in
thanking the Senator from Kansas for her work in getting this kind of
health care reform legislation to the floor, and also the
[[Page S3533]]
Senator from Massachusetts for the work that he has done in this area.
Health care in some form has been on the congressional agenda for
several years. It is an important issue, and I hope by the end of this
process we will have a health care insurance reform proposal that will
make health care insurance more accessible and more affordable.
The purpose of S. 1028, the Health Insurance Reform Act of 1995, is
to increase access to health care insurance, improve the portability of
benefits, give people greater security, and increase the purchasing
power of individuals as well as small employers. The bill does this
through a series of insurance market reforms. For example, the bill
would reduce the duration of exclusions for preexisting conditions by
crediting enrollees for maintaining continuous coverage through a
previous employer. Another important component would be the portability
of coverage from a group plan into the individual insurance market.
The bill also includes a proposal that would create new State-based
health insurance purchasing cooperatives, or HIPC's, based on a program
that was included in the Clinton-Mitchell health care reform bill.
These HIPC's are intended to give small businesses and individuals
greater purchasing power in negotiating more favorable rates.
Many Idahoans complain that they are locked into their current jobs
because they fear losing their health care insurance. Several of my
colleagues have been on the floor in the last few hours, giving
examples of this kind of very real problem that Americans face. In some
instances, entrepreneurs avoid starting their own businesses because
they are unsure that they would be able to provide health care
insurance for their families in the way that they were covered under
their current employer. This is a problem that has existed in this
country in an increasing way over the last decade, and it simply needs
to get corrected. This legislation offers that correction.
Another problem commonly raised is that individuals who have had
major illnesses or preexisting conditions cannot obtain coverage if
they change jobs. In other words, once you have a medical record,
insurance companies, by that record, can disallow you coverage for that
problem under a new insurance policy. These kinds of fears are real.
Real life examples are given, and they are faced by individuals and
families every day. The security issue I mentioned, as part of the
intent of this bill, is a very important component of health care
insurance reform.
We must all be mindful that health insurance reform will have an
impact on the marketplace. These kinds of reforms that are being
proposed in this legislation are not without cost. As we cause the
insurance market to change, the marketplace will price itself
differently. In our effort to improve access to health care coverage we
need to be extremely cautious and ensure that there is a minimal impact
on the cost, or the increased costs of insurance, especially in the
individual market.
One thing we can do is to address the issue of cost in this bill. A
number of valuable provisions for addressing these consumer concerns
were included in the Balanced Budget Act. However, that was vetoed by
the President, so they are not yet available to correspond with this
legislation when it becomes law.
Therefore, Mr. President, while I agree on the intent of S. 1028, to
improve access, I do have concern about the issue, of affordability. In
order to fully address access to health care coverage we must look at
affordability. While we create potential flexibility in the
marketplace, if we drive the cost beyond the reach of the individual,
the family or the employer, then what have we solved? What old problems
have we only changed into new ones?
In order to fully address access to health care coverage, we must
look at the whole issue of affordability. There are several key
amendments that I think are going to be offered by the leader which
will help us a great deal in solving this potential problem, such as
increasing tax deductions and implementing medical savings accounts, or
MSA's, as the public has grown to know them. MSA's should be a part of
this bill. That amendment will be offered. I certainly hope the Senate
will respond as they should to the question of affordability, rounding
out this legislation by addressing the cost component.
Title III of this legislation, S. 1028, includes a sense of the
committee language that MSA's should be enacted. If they should be
enacted--and that is what the committee says and what the legislation
says--then why do we not do it? Let me read what the sense of the
committee is.
It is the sense of the committee on Labor and Human
Resources of the Senate that the establishment of medical
savings accounts, including those defined in . . . the Public
Health Service Act . . . should be encouraged as part of any
health insurance reform legislation passed by the Senate,
through the use of tax incentives relating to contributions
to, the income growth of, and the qualified use of, such
accounts.
That is what the legislation says. That is what the law would say.
But, if we do not add an amendment to it, it is fine rhetoric but it
does not address the needs of the American people. And it does not, in
my opinion, create the component of affordability that this Senate must
be responsive to, if we are to bring about this kind of insurance
reform.
I said the language is supportive, but it does not change anything.
Instead of using this bill to speak to the issue, we should be using it
as an opportunity to give consumers this valuable tool to finance
health care costs.
MSA's work much like individual retirement accounts, something that
the consuming public of this country knows about and likes. They are
often coupled with a catastrophic health care policy, but some models
have been conducted in combination with managed care plans. A limited
amount can be deposited annually, usually equaling the amount of the
high deductible. At the end of the year, the unused amount is rolled
into the next year, allowing for savings to accrue.
If an individual does experience a catastrophic illness, savings can
be used to meet the annual deductible, as well as cover any copayment
that may be included as part of the catastrophic plan.
MSA's are portable because they belong to the individual. If we are
reforming health care insurance, why do we not create a vehicle that
provides increased opportunity for individuals to possess health
insurance?
Regardless of your employment status, your MSA's stay with you. So,
the job-lock question is less likely to occur. In addition, savings you
accrue can then be taken with you and used to pay for insurance
premiums if you are between jobs. If you want to start your own
business and step away from an employer who provides insurance, the MSA
stays with you. You can buy your own insurance with it.
It certainly creates tremendous choice and flexibility for the
individual and families, and that is what we are concerned about here,
the freedom of the individual and families to make sure they can
provide for themselves. Health care insurance coverage and MSA's can
play a tremendous role in doing just that.
Because MSA's have a higher deductible and lower premiums, they are a
workable alternative for small employers who currently cannot afford to
provide insurance as a benefit. So they even offer the small employer
greater opportunity to provide health insurance benefits to his or her
employees.
A catastrophic policy and a deposit in an MSA for the annual
deductible are lower in cost than any other type of insurance coverage.
In addition to the lowering of cost to the employer providing
insurance, MSA's provide the beneficiary greater flexibility in how
those health care dollars are spent and limit out-of-pocket exposure.
Finally, because savings can accrue, this is an opportunity to save
over an individual's lifetime for those hefty, late-in-life health care
costs such as long-term care. That is real health care reform. That is
real health care insurance reform.
The cost of long-term care is a big problem that Senators have tried
to deal with on this floor and that certainly the seniors of our
country have faced themselves for a long time. Many of us at our age in
life, who have parents who are nearing a time when they may need long-
term care, all of a sudden begin to factor some of those financial
costs into our own budget, if we are capable of doing so, in caring for
the elderly of our family.
[[Page S3534]]
MSA's could help solve this problem in a generational way if this
Senate and this Congress would simply quit talking about the value of
them and allow them to become available to all Americans.
Mr. President, I have been frustrated by some of the references about
MSA's, that they are an extreme idea that will help only the healthy
and the wealthy. It could not be further from the truth. Rather, I
argue that MSA's are a commonsense response to the current problems of
our health care system, incorporating individual choice and
responsibility. The American people understand that and I think the
American people are ready to use this health care insurance tool in a
way that works to their benefit.
The history of this issue has been one of bipartisan support. In both
the House of Representatives and the Senate, MSA bills have been
cosponsored and supported by Republicans and Democrats alike.
I have a copy of an old ``Dear Colleague'' letter on a bipartisan
bill, S. 2873, the Medical Cost Containment Act of 1992. Mr. President,
I ask unanimous consent that the letter be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
U.S. Senate,
Washington, DC, September 8, 1992.
Dear Colleague: The United States is faced with a crisis in
health care on two fronts: access and cost control. So far,
most of the proposals before Congress attempt to deal with
access but do not adequately address the more important
factor--cost control. We have introduced legislation that
will begin to get medical spending under control by giving
individual consumers a larger stake in spending decisions.
We have introduced a bill, the Medical Cost Containment Act
of 1992 (S. 2873), which would allow employers to provide
their employees with an annual allowance in a ``Medical Care
Savings Account'' to pay for routine health care needs. This
allowance would not be subject to income tax if used for
qualified medical expenses. Any money not spent out of a
given year's allowance could be kept by the employee in an
account for future medical needs during times of unemployment
or for long term care. In order to protect employees and
their families from catastrophic health care expenses above
the amount in the Medical Care Savings Account, an employer
would be required to purchase a high-deductible catastrophic
insurance policy.
Unlike many standard third party health care coverage
plans, Medical Care Savings Accounts would give consumers an
incentive to monitor spending carefully because to do
otherwise would be wasting their ``own'' money. That is,
money that they would otherwise be able to save in their
account for future needs.
Once a Medical Care Savings Account is established for an
employee, it is fully portable. Money in the account can be
used to continue insurance while an employee is between jobs
or on strike. Recent studies show that at least 50% of the
uninsured are uninsured for four months or less.
Today, even commonly required small dollar deductibles
(typically $250 to $500) create a hardship for the
financially stressed individual or family seeking regular,
preventive care services. With Medical Care Savings Accounts,
however, that same individual or family would have this
critical money in their account to pay for the needed
services.
We feel that, while the Medical Care Savings Account
concept does not provide the total solution to the crisis in
health care access, it does begin to address the critical
aspects of increasing costs and utilization by consumers.
We hope that you will join us as cosponsors of this
legislation. If you have any questions please contact us or
have your staff contact Laird Burnett of Senator Breaux's
staff.
Sincerely,
John Breaux.
David Boren.
Tom Daschle.
Richard Lugar.
Dan Coats.
Sam Nunn.
Mr. CRAIG. Mr. President, this letter outlines many of the beneficial
aspects of MSA's, or medical savings accounts, in addition. I found it
quite interesting that as part of his pension simplification proposal,
President Clinton would allow withdrawals from individual retirement
accounts for catastrophic health care insurance needs. That is a great
idea. But that is an MSA. Whether Bill Clinton knew it or not, by his
endorsement of this approach, he has, in effect, endorsed medical
savings accounts, and I applaud him for doing so.
Since the healthy-and-wealthy assertions have been made, I want to
take a moment to address this issue, because it is phony, phony, phony.
Anyone who has experienced chronic health problems or a catastrophic
illness realizes how difficult it is to cover out-of-pocket expenses.
If that health care problem is not covered by insurance, you get no
assistance in helping finance the cost incurred. We have people who
have minimal coverage and are making limited incomes, and they cannot
afford the out-of-pocket costs to get across the deductible threshold
to get the benefits of their insurance, in many instances. For families
and individuals on fixed incomes, this is especially problematic.
I had a constituent who expressed to me a frustration that even
though she had great health care insurance, it did not provide
comprehensive dental benefits. She needed to get a tooth capped, which
would cost her at least $500 out of pocket. Her alternative was that
she should live with the discomfort until more serious problems
occurred with the tooth that would be covered by her insurance.
Her frustration was that this was the only health care problem she
had experienced in the last 2 years and the only cost incurred other
than her annual physical and dental checkup. She had not met her
deductible, but would have to find $500 in her monthly budget to pay
for capping a tooth or go take out a loan, if she could qualify, to cap
a tooth and then spread that cost over several months. If my
constituent had an MSA, the $500 would have been covered by funds in
her account.
Medical savings accounts would also benefit individuals with chronic
illnesses, such as diabetes. A few years ago, several individuals who
live with diabetes complained to me that many of the health care costs
they incurred are not covered by insurance. For example, the glucose
testing strips, the syringes for insulin, dieticians or nutritional
services, and the pharmaceuticals are not always fully covered by
insurance but are necessary in order to avoid more expensive,
catastrophic illnesses.
With a medical savings account, a diabetic could pay for these
expenses from his or her MSA. In addition, if they did experience a
catastrophic illness, they would be covered once their high deductible
was met.
Mr. President, some will claim that MSA's will cause people to forgo
needed health care treatment. This is simply not the case. I must say,
while that allegation is made, there is no proof that MSA's would have
that effect. Unlike most health care coverage plans, MSA's give
consumers an incentive to stay healthy because the money you spend is
your own. In addition, they provide access to funds for preventive
health care services which may not be covered by insurance plans.
Let me respond to the other half of the argument that MSA's are just
another tax break for the rich. Working families will benefit greatly
from MSA's. The United Mine Workers of America have a provision similar
to MSA's in their current contracts. Mine workers and other working
families, in my opinion, do not meet the definition of those who claim
this is just for the rich. I think those are hard-working people who
want and need good health care coverage for their families. That is
exactly why the United Mine Workers Union negotiated it with their
employers, because it was something the employers could afford and it
gave those working men and women greater opportunities for coverage.
I must say I grow saddened by the kind of rich demagoguery that is
played on the floor of this Senate on a variety of issues when we try
to expand the base and expand the opportunity for all Americans by
giving tax incentives or tax breaks that allow them to do certain
things beneficial to their well-being.
Mr. President, regardless of income, if you get an MSA and
catastrophic plan from your employer, your employer will be making the
same contribution to your account. In addition, MSA catastrophic plans
are a less expensive option for an employer, especially small
businesses, providing another affordable option for employers who
currently do not provide insurance. That is what insurance reform
should all be about; as I said, to create affordability and to expand
the opportunity for access to this kind of coverage.
Finally, MSA's give lower income individuals an account to draw from
for primary care and other preventive services that otherwise would be
paid
[[Page S3535]]
out of pocket. The out-of-pocket issue to those less fortunate in our
country is a very real issue, Mr. President. In other words, MSA's
eliminate the up-front deductible required with most insurance policies
and provide, in essence, by this very action, first-dollar coverage.
For example, with a traditional employer-provided insurance policy, a
deductible must be reached before the insurance policy kicks in. A low-
income parent with a sick child has to find funding out of his or her
monthly budget to pay for the doctor or for any prescription. With an
MSA, the worry is gone because the money has been placed by the
employer in the MSA. Furthermore, if the problem is catastrophic, once
the deductible is met from funds in the MSA account, the catastrophic
policy provides the coverage.
In most cases, out-of-pocket exposure for individuals with MSA's is
less than with other types of insurance coverage policies. In fact,
low-income families have an opportunity to benefit from the savings
that would accrue in an MSA over time.
Consider the following: Janet earns $13,000 a year. She is 20 years
old and keeps her MSA through to age 60. If her employer deposits
$1,800 a year in her medical savings account and she remains in good
health and spends an average of $250 a year from her MSA, by the age of
60, assuming an 8 percent interest rate per year, Janet would have
$433,661 in her medical savings account. Now, that is an optimum
scenario.
Let me give a more likely one. Under the same scenario, with Janet
experiencing more health problems, and let us say she is spending
$1,000 a year from her medical savings account for health care, she
would still accrue $223,000-plus in her medical savings account by the
time she is 60. That is the opportunity that exists today if this
Senate and this Congress will awaken to what the American consuming
public wants.
Under a traditional fee-for-service HMO-PPO program, Janet would have
health care coverage as long as she stayed with her employer. She would
have to pay her annual deductible out of pocket and a copayment for
service once she met that deductible. At age 60, if she retired, she
would have no health care insurance and no medical savings account.
That is the current law. Even this legislation does not really address
that problem upon retirement, for those individuals who are not yet 65.
Medical savings accounts do.
So, let us change S. 1028 from rhetoric to reality by amending it and
putting medical savings accounts in it. While Janet may not be a real
person, there are plenty of real Janets waiting to benefit from medical
savings accounts.
Mr. President, my home State of Idaho was one of the first States to
implement a statewide MSA program. Early reports and reactions to
Idaho's program have been very, very favorable. Ada County, the largest
metropolitan county in my State, was the first major employer in Idaho
to offer the plan. It is saving the county a lot of money and providing
greater flexibility for county employees. Passing a Federal MSA plan
will enhance what is already a beneficial program in my home State of
Idaho. It will allow our MSA program to be even more effectively used
across the State. In short, Mr. President, passing a federal MSA plan
will enhance what is already a beneficial program in Idaho.
Let me tell you about one of our county commissioners in Idaho who
has been a great advocate of medical savings accounts and was
instrumental in bringing that county on line with an MSA policy once
the State legislature passed the law. Gary Glenn, an Ada County
commissioner, participates in the optional MSA plan, as do about 20
percent of the Ada County employees.
Ada County's medical savings account plan saves taxpayers' dollars,
maximizes patients' choices, and rewards responsible health care
consumption. The benefits to Gary's six-member family are illustrated
in these examples. The county's old indemnity program provided Gary's
family typical coverage, $100 per person deductible, with a maximum of
$300 per family, plus a 20-percent copay. The monthly premium was $494,
of which Gary and his family paid $158 a month.
Under the new MSA, Gary's family has catastrophic coverage with a
$2,000 per person deductible--the maximum per family, though, is
$3,000--and 100 percent coverage or payment above that deductible. The
new monthly premium is $194. Gary still pays $158, but the county pays
$36 per month instead of $336.00 for the old indemnity plan. This is a
dramatic reduction in the overall cost of insurance on a per month
basis. This provides a savings of $3,600 per year. Out of the savings,
the county will deposit $2,100 in Gary Glenn's medical savings account.
Under the old indemnity plan, Gary's family faced a much higher
financial risk. In the worst case, they would be forced to pay $5,100
in deductibles and copays out of pocket and after taxes. Under the
medical savings account, with a $3,000 deductible, no copayment, and
$2,100 in his medical savings account, the most they would have to
spend out of pocket in 1 year would be $900. That is important to
remember. Instead of $5,100 out of pocket, they would spend $900. And
the county is saving literally thousands of dollars as the employer.
In addition, by reducing Gary's out-of-pocket family risk by 82
percent and providing them with maximum flexibility in how they spend
their health care dollars, any portion of the $2,100 deposit in their
account--Gary Glenn's account now--is left to spend on health care,
state income tax-free, or to carry forward and earn interest.
So under the Idaho medical savings account plan in Ada County, the
taxpayers of that county and Gary's family are realizing real benefits.
Mr. President, why cannot we be smart enough to provide that to all
Americans--to give them at least the option, the choice? That is real
insurance reform. That is real flexibility. That is real
portability. MSA's are an idea whose time has come. We ought to do it.
Today, though, in this bill we only offer the rhetoric. I hope the
amendment that will be offered by the majority leader will pass and
become a part of this important law.
Let me say in closing that S. 1028 is a good bill. What I have talked
about is making it a better bill, a more complete reform of the health
care system. Not the adjustments around the edges, but major reform in
a way that fits 21st century Americans. It gives them the freedom of
choice, access, the individual decisionmaking authority, the buying
power they need, and it is effective for all levels of our society, the
poor and the rich alike. That is what it should be about.
Mr. President, I ask unanimous consent that an editorial from the
Idaho Statesman be printed in the Record. The headline says ``Congress
Can Follow County Lead on Medical Savings Accounts.''
This editorial urges this Congress, this Senate, and the President
himself to become modern, to become thinkers and not prohibitors, and
add to this major reform package the concept of medical savings
accounts. I hope we can accomplish that.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Idaho Statesman, Apr. 1, 1996]
Congress Can Follow County Lead on Medical Savings Account
Ada County is leading the way in health-insurance reform by
its use of medical savings accounts. Too bad many Democrats
in Congress and President Clinton are among those most afraid
to follow.
The U.S. House endorsed medical savings accounts Thursday
as part of its legislative package on health care, but the
outcome in the Senate is less certain, especially with
Clinton's threat of a veto looming over the whole bill.
The nation loses if medical savings accounts are stripped
out of the final legislation in a compromise.
As local experience shows, they can be an effective way to
save insurance expenses and give consumers more control over
decisions about their own health care.
Instead of traditional and expensive health-insurance
policies, Ada County buys only catastrophic policies for the
20 percent of its work force signed up for the program. The
savings are put into the accounts of participating
individuals and can be used for routine medical expenses.
The measures in Congress works about the same.
Individuals could make tax-deductible contributions of up
to $2,000 (or $4,000 for families) in a medical savings
account and would be required to purchase a high-deductible
health insurance policy for catastrophic illnesses.
[[Page S3536]]
The system saves money because workers have an incentive to
shop around for medical care. Bargain hunters can motivate
doctors and hospitals to compete, which in turn injects
needed market forces into the health industry.
By eliminating the middle man--insurance companies--the
accounts allow people more direct control of how, when and
where they spend their medical dollars.
Sadly the issue of medical savings account has become
embroiled in partisan politics in Congress. But reforming
health care and giving consumers more options should not be a
partisan issue.
It is simply a matter of giving consumers greater clout as
the nation seeks an improved health-care industry.
Mr. KENNEDY. Mr. President, just for the information of the Senators,
we have been on the legislation since 9:30 this morning, 5 hours, and
we have not had amendments. In the earlier part of the day, I think
both Senator Kassebaum and I were urging our colleagues to come over
and make comments about it. We have been blessed with so many
bipartisan comments on the legislation.
We are expecting an amendment by the majority leader momentarily to
be put down, also a unanimous-consent agreement in the process of being
circulated so we might be able to move toward the consideration, or we
are going to find a situation as the evening time comes that Members
will say, ``Why can we not attend to some of our other responsibilities
in the evening?'' We want to try and accommodate everyone, but we are
open for business. But the first business, we had hoped, would be the
majority leader's amendment, and then to have a good debate on that.
Part of the debate will be on the medical savings account, and we will
address that issue in a more complete way at that time.
I just wanted to at least give some indication to our colleagues
about where we are in the course of the debate.
Mr. SIMPSON. Mr. President, I certainly will not take 10 minutes.
I want to add my voice to the bipartisan chorus of support for S.
1028, the Health Insurance Reform Act. I am proud to say I was an early
supporter of this one. I signed on as a cosponsor back on July 17,
1995, just 4 days after it was introduced by Senator Kassebaum.
I commend her and I commend Senator Kennedy for their determined
efforts to advance this legislation through the Senate in the
politically charged atmosphere of an election year. She has created a
bill that deserves the support of Republicans and Democrats alike.
The provisions of this bill have been well covered--portability,
guaranteeing availability and renewability of coverage, preexisting
medical conditions, and maintaining continuous health coverage, making
it easier for small employers to voluntarily form purchasing
cooperatives--and would bring about changes that a vast majority of us
agree upon.
Even President Clinton, in a dramatic departure from his earlier
proposal for a Government-run health care system, has now embraced
health insurance reforms that are remarkably similar to those which
President George Bush proposed back in 1992. Whatever one might be
attempted to say about the irony of all of that, it clearly indicates
that we now have a unique opportunity to correct the problems that pose
the most serious threat to the health coverage of millions of
Americans.
Though each of us can think of various ways in which we would like to
expand upon the pending legislation, the reality is that the bipartisan
appeal of the bill will be lost if we go too far in amending. I intend
to be very cautious about amendments that are offered for the Senate's
consideration, even in cases where I might support the amendment on its
merits. I say this because I would rather pass legislation that
actually becomes law, even if it is not as far reaching and perfect as
I would like it to be, than to make a legal statement with legislation
that ends up in the great scrap heap of unfinished business--and there
will be plenty of that in this session of Congress, things that stood
on principle and could not get into law because you did not have the
votes to get them into law. Unfinished business--that stack.
When I hold town meetings in Wyoming--I do not know how many of us
still do that; I do--the message I always come away with is that people
are thirsty for action. They are not interested in excuses or rhetoric
or political maneuvers from either party. No matter how clever or
imaginative we are in explaining ourselves, they just do not buy it.
They have had a bellyful of petty partisan squabbles. What they long
for is to see a Congress identify areas of agreement, as Senators
Kassebaum and Kennedy have done with this legislation, and then act in
the best interests of the American people, without agonizing who will
win or who will lose, who will be the top dog, who will be the underdog
when it is finished, or politically, how to simply portray Members of
the other party in the worst possible light.
The pending bill would allow us to do something beneficial, I think,
for millions of Americans who are at most risk of losing their health
coverage. The General Accounting Office reports as many as 21 million
Americans would benefit if preexisting-condition exclusions are waived
for people who maintain continuous health coverage, and, furthermore,
another 4 million would no longer experience job lock if portability of
health insurance is insured.
I believe it is time to move forward, adopt these protections to the
extent that more sweeping measures are needed to make health insurance
more affordable, more accessible. I will help with that. I surely agree
that there is much more we can do.
I worked with Senators Chafee and Breaux on issues of a bipartisan
nature. I think that is very important. Let us consider those items
separately that might serve to bring this down and view them at another
time in such a way that we do not jeopardize the enactment of the
pending bill.
I think what we need, sometimes, is an old-fashioned trait known as
self-restraint. Perhaps we could even adopt self-restraint as the theme
for the next several hours as we consider the bill. It would surely be
an appropriate manner in which to recognize Senator Kassebaum's
tremendous leadership on this issue, and to preserve a thoughtful bill
that will provide important health insurance protections to millions of
Americans.
Finally, I note the senior Senator from North Dakota is not on the
floor. I hope he will have an opportunity to address my remarks. I
admire him. He is a friend. We have worked together. He has come
forward and said that we should put aside our agendas, put aside our
own causes, work in harmony and concert. I hear that, yet I also hear
each and almost every day my good friend from North Dakota stirring up
some issue in some way, usually with a partisan twist. I think that if
we are going to do that, just note the pending business of the Senate
on the calendar. The pending business of the Senate is the illegal
immigration bill. It is not moving simply because the Senator from
North Dakota wishes to place an amendment on it with regard to the
balanced budget and Social Security.
I am not speaking in a partisan way. I have been here before. I
remember my dear friend Senator John Heinz placed amendments on illegal
immigration bills. Even my ranking member has done such heinous
activity from time to time, the Senator from Massachusetts. I have seen
him do that. I am not talking about partisanship. If we are going to do
this--we have a bill that is stalled right now. We will see how long it
will stall out. There are three amendments ready to be voted upon.
Where it is all held up, that bill is held up for a single particular
reason: Because of the Senator from North Dakota, because of an eternal
amendment that he has with regard to Social Security, saying that no
balanced budget can ever be done, and we do not do anything with Social
Security, which is an extraordinary thing in itself because Social
Security is going broke. The people that are telling us it is going
broke are the trustees, the stewards of the system, who are saying the
system will go broke in the year 2020.
So how do you keep ducking it, unless you are just carrying water for
the AARP and the Committee for the Preservation of Social Security and
Medicare and other 800-pound gorillas in that particular Social
Security debate.
So I hope that we will proceed. I say to my friend from North
Dakota--my friend and sometimes adversary--heed thine own advice. I
will be waiting.
Ms. MOSELEY-BRAUN addressed the Chair.
[[Page S3537]]
The PRESIDING OFFICER. The Senator from Illinois is recognized.
Ms. MOSELEY-BRAUN. Mr. President, about 2 years ago, this Congress
blocked attempts to act on comprehensive health care reform. While that
year's effort to achieve the major reforms that are so needed and so
long overdue did not succeed, the problems that led the President to
make that proposal have not disappeared. Far from it.
There are over 40 million Americans without health insurance, and
over 23 million of those are employed. Over a million working Americans
have lost health care coverage over the past 2 years; 60 percent or
more of all Americans currently worry about losing their current health
insurance coverage.
Over the last few years, the rate of private health care cost
increases has dropped substantially, but there are now increasing
concerns about the quality of care. Public health care costs continue
to increase at an unsustainable rate. The case for reform, therefore,
is perhaps even more compelling now than it was 2 years ago when we
first took up this issue.
I am, therefore, proud to be one of the cosponsors of S. 1028, the
Health Insurance Reform Act. It is not the comprehensive reform that we
looked at to begin with, but it is a good and important step in the
right direction. Indeed, this may well be the first step on the road to
reform that everyone can agree upon. I say to the Senator from Kansas
and the Senator from Massachusetts that this legislation is brilliant
in its simplicity, precisely because it cuts to the heart of the issues
that concern the American people most about health care coverage.
Mr. President, in my view, there are four cornerstones of health care
reform: Universal coverage, cost containment, maintaining the quality
of care that we enjoy in this country, and retaining freedom of choice
for the American people in terms of health care delivery and the
providers of health care.
This bill moves us in the direction of universal coverage by keeping
people insured who might otherwise not be. If there is any concern
which everyone has regarding health insurance, it is the trap of
preexisting conditions. All too often, individuals find themselves
excluded from coverage because of a preexisting condition. In some
cases, the individuals themselves are not even aware of the existence
of that preexisting condition.
By limiting exclusions for preexisting conditions, by making health
insurance coverage available for small businesses, and by ensuring
portability and ending job lock, this legislation deals with the
concerns of millions of Americans. It will help to make health
insurance coverage more available for millions of Americans and for
small businesses, help hold down health care costs for Americans, and
further help to expand access to health care. That, in my opinion, is
real reform, or a step in the right direction.
In my own State of Illinois, over 2 million people are currently
without health insurance. This bill will make a critical difference in
their lives and in the lives of similarly situated people all across
our Nation.
Those who are now without insurance are far from the only
beneficiaries of this legislation. For Americans who might want to
leave their jobs and start their own businesses, or who might have to
leave their jobs because of corporate restructuring, but who might have
a preexisting condition or family medical history that would currently
make it difficult or impossible for them to purchase an individual
health policy, this bill will make a huge difference. It will guarantee
their ability to access health insurance.
This bill will also guarantee that small businesses with only a few
employees would not lose their group health care coverage because one
of the people in the group develops a serious health problem, as is the
case now. Moreover, it will make health insurance more affordable for
those small groups, making it more likely that more small businesses
will provide health insurance benefits for their employees.
Families with small children suffering from a serious health problem
will no longer face the prospect of being unable to obtain health
insurance if the child's parent changes jobs, ensuring that the child's
parents are not themselves job locked because of the condition of a
member of the family. It is tough enough for families to deal with
serious health problems affecting one of their children without having
to face the additional problem of losing access to health insurance if
they are laid off or restructured out of their jobs or if they want to
change jobs for a new, perhaps better paying job that could help their
families in other ways.
Women who have had breast cancer or other diseases will no longer
face higher premiums or loss of access to health insurance altogether
if they change jobs once this bill becomes law. And young college
graduates starting their first jobs would not be barred from access to
health insurance simply because they suffer from a childhood ailment or
a continuing disability from an unfortunate accident.
The Health Insurance Reform Act, therefore, represents a practical,
caring set of reforms to deal with the real health care problems facing
so many Americans, based on their everyday realities. It does not
require Americans to radically change their behavior. It does not add
another bureaucracy or a huge new paperwork system. It does not require
new Federal spending or new taxes. It does not create any new unfunded
mandate on State or local governments. At most, it will increase the
costs for private health insurance companies by less than one-quarter
of 1 percent.
This bill is about incremental reform, but real reform nonetheless.
It will help virtually every working American, as well as millions of
Americans who are temporarily out of the work force. The bill itself
will work because it is based on what is actually going on in the world
of real people who need health care.
Mr. President, it is worth thinking a moment about those everyday
realities. Statistics tell us that the average American works at a job
for about 4\1/2\ years. Over the course of a working career, therefore,
an average working American could hold seven or more jobs. That fact
alone makes it all too clear just how important it is for the American
people to have portable health care coverage. That fact alone is a good
indication of how necessary it is to end preexisting condition
restrictions that result in Americans having to pay enormous sums for
new health care policies, losing access to the one they had, or end up
with no access to health insurance at all.
Eighty-one million Americans have preexisting conditions that could
affect their insurability. More than half of all American workers are
enrolled in health insurance plans that impose some form of preexisting
condition exclusion. As I stated earlier, when you consider that most
of us will change jobs several times in the course of a lifetime, the
preexisting condition problem affects virtually every American family.
Mr. President, every American wants and needs health care security.
It is as important to them as retirement security, an objective that
should command absolute consensus in this country. That vision and
importance of retirement security led to the creation of Social
Security. That is why we provide tens of billions of dollars in annual
tax incentives to companies to provide pension plans for their workers.
That is why we support pension plans and retirement programs and
savings.
Health care security is no less essential to the American people than
retirement security, not only because you cannot enjoy retirement if
you are in poor health, but because lack of access to affordable health
care insurance can literally mean bankruptcy. Being able to roll over
your insurance coverage, therefore, is just as important as being able
to roll over pension savings. Maintaining health security deserves the
same level of attention that we give to retirement security, and
measures that protect and enhance that kind of health security deserve
the same kind of consensus support.
Mr. President, the really good news is that so many of our
colleagues--57, in fact--and so many different organizations, and the
President, support this legislation. The American people support this.
Facing the fear of loss of health insurance, facing the preexisting
exclusion, those kinds of uncertainties will be resolved when we take
this step in the direction of incremental reform.
[[Page S3538]]
This legislation has been carefully worked out. It represents a real
compromise by both Democrats and Republicans who support it. I
congratulate the chairman of the Labor and Human Resources Committee,
Senator Kassebaum, and the ranking Democratic member, Senator Kennedy,
for their leadership and for all the hard work they have put into
bringing this bill to this point. As I said earlier, it really is
brilliant in its simplicity. I congratulate them for the bipartisan
nature of this debate so far and for the efforts in bringing us
together as representatives of the American people, whatever political
party, bringing us together to get this badly needed legislation
passed.
If there is one matter that commands consensus, it is what this bill
addresses because it addresses it so brilliantly, in my opinion.
I urge Senators on both sides of the aisle to put aside partisan
differences, put aside other good ideas, and let us move forward and
pass this legislation so that it can be law and so we will have done
the job the American people have every right to expect that we will do.
Thank you very much.
I yield the floor.
Mr. GRAMM addressed the Chair.
The PRESIDING OFFICER. The Senator from Texas, [Mr. Gramm], is
recognized.
Mr. GRAMM. Mr. President, I want to talk about the bill that is
before the Senate and the amendment that Senator Dole will offer on
behalf of himself and others. I will also cosponsor that amendment. I
want to try to explain why it is essential that we have measures which
will promote efficiency and cost savings if we are going to adopt this
bill.
Let me say that making insurance portable and permanent is something
that I support. But I think that, if we are going to be honest with
ourselves, it is very hard to do this with a straight face, which is
what has been done in virtually every speech that has been given on the
floor of the Senate this morning. We are talking about 25 million
Americans who are going to benefit from this bill. This is a number
that has been established independently of the Senate. We all rejoice
in it--25 million beneficiaries of this bill, which is supposedly just
a technical amendment. Yet I would point out to my colleagues, if you
look through this bill, it does not appropriate one penny. It does not
provide one cent.
Now ask yourself, how are 25 million people going to benefit from
this bill, through greater availability of health insurance and lower
prices, if the Government and the Congress which passes this bill are
not providing one single penny? Is it somehow magic that through
Government edict we can bestow billions of dollars of benefits on our
fellow citizens at no cost and no dislocation whatsoever? The answer to
that is clearly no.
I would like to begin by making a prediction. That prediction is, if
we adopt this bill as it is written, at the end of the first full year
of its implementation, the cost of individual private health insurance
policies will rise by a minimum of 10 percent. I also believe that this
is a conservative estimate.
I believe that group policy rates will go up because we are going to
produce, through this effort, several undesirable effects. I want to go
through them to be absolutely sure that anybody who really wants to
understand can do so, and because I think they make the argument for
medical savings accounts and other reforms to try to offset the basic
cost increase that is going to result from this bill as it is currently
written.
First of all, this bill guarantees that if a person wants private
health insurance, they can get it. There may be a delay in the
availability of benefits, depending on where the person works and when
they have private health insurance, but under this bill, anybody who
wants private health insurance at any time, under some circumstances,
can get it. Furthermore, when someone comes into a group plan, no
matter what the state of their health, they cannot be charged more than
any other member of that group and if somebody leaves a private
employer, they must be offered an individual insurance policy.
What is the result of this going to be? It seems to me there are
going to be positive as well as negative results. The entire debate so
far has been about the positive result: 21 million people that do not
have private health insurance will be able to get it, because we are
saying by law that insurance companies must sell it to them. An
estimated 4 million people who are locked into their job because they
fear the loss of their health insurance if they move will benefit since
they will be guaranteed the issuance of health insurance when they
change jobs. These are the positive impacts of the proposed changes.
But it is generally true, in the real world we live in, that not all
impacts of dramatic changes are positive; let me outline some of the
negative impacts.
No. 1, we are going to end up, by guaranteeing availability,
distorting health coverage. Young, healthy people, knowing that they
are going to be able to qualify for private health insurance in some
form--either through a group or as individuals--are going to have a
greater incentive to not obtain the coverage that they have today.
Why do young workers who are basically healthy buy private health
insurance right now? Some might buy it because they are risk averse.
But many buy it because they want to guarantee that in the future, when
they may not be as healthy, they will have locked in their coverage.
What this produces is a balanced distribution of people who are
buying private health insurance--many people who are young and healthy
and who are very modest users of health care as well as many people who
are older and less healthy and who are heavy users of health care are
all buying insurance. Since many young people buy private health
insurance in order to lock in guaranteed health coverage in the future,
to the degree that we mandate that insurance companies sell people
health insurance no matter what the state of their health is, we
eliminate one of the primary reasons that young people buy private
health insurance. So the first negative impact of this bill is the
creation of a new incentive for young people not to buy private health
insurance.
Under this bill we also have some rather extreme provisions. Before I
mention one of them, let me say that I understand, when you are talking
about health care, that it is hard to have a rational debate because
you are talking about sick people who we can all empathize with. But I
think it is important that we understand what we are doing if we are
going to have a real debate in the Senate because, after all, that is
our job--to understand what the implications are and to try to see that
we make a rational decision.
Under this bill, not only will young people with guaranteed ability
at a later point to buy private health insurance have an incentive not
to buy it today, but in designating a series of health benefits for
which there is no waiting period, we create a special class of people
who will buy health insurance when they know they are going to need it,
such as in a pregnancy, and then cancel the policy after they receive
the benefit--only to buy another policy when they are ready to use the
benefit again.
It is very difficult to quantify this, but anyone who read the
article in the April 5 issue of the Wall Street Journal knows this is
happening in States which have done exactly what we are proposing to
do.
So the first negative impact of this bill is that it eliminates one
of the prime incentives for young, healthy people to buy private health
insurance, and the second negative impact is that it distorts the risk
pool in the process.
The third thing it is going to do, which is part of the positive
impact, is that the 21 million people who are sick today and as a
result of being high risk have opted not to pay the going market rate--
or in some cases they simply have not been able to afford health
insurance--the positive thing for them will be that they will now be
able to buy health insurance. The fact that they will opt for coverage,
while younger healthier people, knowing they can get it later, will opt
not to get the coverage, however, will further distort the risk pool of
insurance. What this will mean is that in America there will be more
young, healthy people who do not opt for health insurance than we have
today, and there will be more
[[Page S3539]]
older, less healthy people who do. Given the inherent cost of changing
the mix of people who are buying private health insurance, the
inevitable result of this is going to be that you drive up the cost of
insurance premiums.
This is not just something that is theoretical, I know we have some
study which says that costs are going to go up by some minuscule
amount. I do not believe, however, that anybody who has looked at the
experience of States like Washington could possibly believe this. I
think what we are really looking at in this bill, independent of any
other changes, is younger, healthier people dropping out and older,
sicker people opting in. The net result of these shifts is going to be
a substantial increase in insurance rates for those who have bought
health insurance, for those who, in many cases, bought it when they
were young and healthy in order to have a guarantee of insurability.
The net result of this bill is going to be rising insurance costs.
Now, this bill, in fact, anticipates this result and sets up a series
of powers to help the States try to deal with these potential impacts.
At some later point I am going to debate and possibly offer an
amendment dealing with a provision on page 40 that gives the Secretary
of Health and Human Services the power to disallow a State program to
deal with rising costs unless it implements a mechanism to spread the
risk and to limit rate increases. I do not think we ought to be
dictating to the States what they can and cannot do in order to deal
with a problem that this bill is going to cause.
We have before us a bill that is going to help people, 25 million of
them, and for these individuals it is going to be a godsend. But
another 100 million people, who already have private health insurance
and who are going to see their rates go up, are going to be losers from
this reform. We are going to change behavior by inducing younger people
to not buy into the system, and as a result rates will be raised. We
are also going to bring sicker people into the system, and the final
result is going to be a spike in insurance rates--just as has happened
all over the country in States with similar programs.
We have now some 29 States that have gone about this in a different
way by creating risk pools to help people who have a preexisting
condition get health insurance. We are, in essence, going to kill that
off this approach by mandating that the insurance policy be sold in the
way we dictate at the Federal level.
There is a way to get the advantages to the 25 million people who
will benefit from the bill and offset the cost to the 100 million who
will lose from it. The way to do that is with fundamental reform which,
it seems to me, can take two basic approaches. No. 1 is with medical
savings accounts as will be offered by the majority leader. The idea
behind the medical savings account is to change the Tax Code to allow
an individual or a family to choose a high deductible insurance policy
instead of a low deductible policy, and to put the savings from the
resulting lower premiums into an account which is designated solely for
the purpose of paying the policy's deductible. At the end of the year,
if they do not spend that money on the deductible, they can roll it
over for their retirement or take it out as income and pay taxes on it.
What that means is that for routine type care they are spending their
own money. Medical savings accounts empower the individual consumer to
be cost conscious and provide a mechanism that will save the concept of
fee-for-service medicine so those who do not want to be members of an
HMO or a prepaid system can opt to stay in fee-for-service medicine and
yet have incentives to be cost conscious.
If we adopt the amendment of the distinguished majority leader, we
will fundamentally change the health care market, and those savings
will offset several times over the cost that is involved in driving up
insurance rates for 100 million Americans to help the 25 million who
will be beneficiaries of this program.
A second reform, which is not contained in the Dole amendment, deals
with medical liability. We have some estimates which indicate that 20
percent of the cost of medical care in America comes from expenditures
that are aimed at keeping people out of the courthouse instead of
keeping people out of the hospital and out of the grave.
If we are going to make the changes envisioned in this bill, which in
essence transfers costs to the people who have private health
insurance--by raising their premiums--from people who do not have
health insurance today, the way to offset that burden on people who
have in essence done what we wanted them to do--bought private health
insurance--is by allowing for medical savings accounts and dealing with
medical liability.
If we do not make these two changes, my fear is that 2 years from
today, insurance rates, especially on individual policies outside of
group plans--because under this bill we guarantee the availability of a
policy to somebody who leaves their group plan--I am concerned that
without medical savings accounts or without medical liability reform,
we are going to see insurance rates spike and we are going to see
States try to hold them down with rationing mechanisms and price
controls. I think they are going to fail, as they are failing in
Washington State today, and I think we are going to be right here 2
years from now debating a health care bill again, and the demand will
be made to do something about exploding costs. Yet we will have
produced these exploding costs with this bill.
We have it in our power to help 25 million people and yet not hurt
another 100 million people in order to pay for it. The way to do that
is with a medical savings accounts and medical liability reform.
In and of itself, this bill simply transfers income and assets from
one group of Americans to another, and in the whole you have 25 million
winners but you have 100 million losers.
With reform, we can see that virtually every American family wins. If
all we are doing is simply shifting risk, we are not dealing with the
fundamental health care problem in America.
So I hope my colleagues will vote for the Dole amendment. I think it
is very important. I totally reject the idea that this is a simple bill
and that we ought not to load it up with other items. If we do not have
fundamental savings, this bill is going to cause insurance rates to
explode, and we are going to be right back here 2 years from now
debating socialized medicine again. I have debated that once, I am not
eager to do it again, but if it is required, I certainly will.
I yield the floor.
Mr. HELMS. Mr. President, more than 80 percent of Americans younger
than 65 are covered by health insurance, but if one of them changes
jobs, or is laid off, he or she may be denied health insurance because
of a preexisting problem, or because his health insurance cannot move
with him or her. A genuine fear therefore exists that the security of
health insurance could very well be lost. In fact, opinion polls show
that as many as one-third of employees fear that if they switch jobs
they will be unable to obtain new health insurance.
The American people believe, and I agree, that they should be able to
change jobs without losing their health insurance. Congress needs to
insist that health insurance be made portable so that the fear of
losing their health insurance should not plague the American people
when they change or lose their jobs. This bill permits insured
employees who leave one employer to be covered immediately upon taking
another job that offers employees health insurance, regardless of their
health status.
This bill does not establish community rating. Community rating is a
grave threat to the insurance market. I have heard many cite the dismal
failure of guaranteed issue in States such as New York. These States
coupled guaranteed issue with price controls that kept premium prices
equal for everyone regardless of age, health status, etc. This
combination ensures collapse of the health insurance market. However,
S. 1028 narrowly defines guaranteed issue in order to avoid the
devastating effects of pushing healthy people out of the health
insurance market.
There must be a limit to preexisting condition restrictions that now
prevent many citizens from obtaining or holding onto health insurance.
I am convinced, Mr. President, that small businesses should be
encouraged to form
[[Page S3540]]
groups to build joint purchasing power when buying health insurance for
their employees.
These provisions of the Kassebaum bill will be welcome and overdue
improvements in the health insurance market, and I wholeheartedly
support them.
However, Mr. President, in the debate on health insurance reform,
perhaps the most innovative solution has been given the shortest
shrift--the medical savings account. This solution--that will provide
the greatest freedom--has been successfully used by many businesses to
keep their health care costs down and employee satisfaction up. In a
truly American way, medical savings accounts harness the free
enterprise profit motive to promote sorely needed efficiencies in the
health care economy. MSA's confer upon individuals an incentive, a
reason, to spend their health care dollars wisely by turning part of
the savings over to the employees, in effect rewarding efficiency.
Mr. President, many private businesses are already using cash
incentives and medical savings accounts to reduce their health care
costs while, at the same time, achieving great employee satisfaction
with the health care afforded them.
One company cut its health care costs significantly. In 1992, Forbes
magazine was spending $2.3 million per year for health insurance from
CIGNA at an average cost of about $5,000 per employee. In order to
encourage employees to be more cost conscious, Malcolm Forbes, Jr.,
decided to reward his employees with a bonus for not filing major-
medical and dental claims.
Forbes explained the choice to its employees: If, during the year, an
employee minimized the number of claims filed with the insurance
company, Forbes agreed to pay that employee a bonus of up to $1,200.
Employees enthusiastically embraced this plan; insurance claims dropped
dramatically. As of 1994, while premiums for other CIGNA clients rose
between 21 and 25 percent, Forbes' major-medical premiums fell 17.6
percent.
The obvious lesson learned from the Forbes example is that employees
will control their health spending--if they are allowed to keep the
savings. Of course, in the case of employees who are really sick, they
file the necessary claims and receive bonuses in lesser amounts.
Employees choosing to pay out-of-pocket for routine health expenses
instead of filing claims, get the bonuses at the end of the year.
Consider, Mr. President, how this kind of commonsense incentive will
change the public attitudes about health care costs. For example, one
Forbes employee regularly needs four different prescriptions filled,
but as a result of the Forbes bonus program, this employee now shops
around for the best price. Before, he didn't care how much a
prescription cost because insurance paid it. And when insurance pays,
we all pay, in the form of higher insurance premiums and lower income.
Forbes is not the only company to benefit from an incentive-based
program. Dominion Resources, a public utility holding company in
Richmond, VA, has likewise developed an innovative method of reducing
its health care expenses, a medical savings account.
An MSA works: The employer buys its employees a health insurance
policy with a high deductible. This kind of policy has two attributes:
First, it protects the insured against catastrophic health care
expenses; and second, its premiums are less expensive.
The employer then establishes a special account for each employee to
pay for routine medical treatment. What the employee does not spend
from the account, he keeps. This incentive encouraged 75 percent of
Dominion's employees to enroll in a high-deductible plan. And guess
what--since 1990, Dominion's health care costs have risen less than 1
percent per year; premiums have not increased in 3 years.
Forbes and Dominion Resources are but two examples of private
industry enterprise coming up with health care solutions that work.
Incentive-based solutions work for the company and they work for the
employee. As one economist, Gerald Musgrave, put it, ``We have
thousands of years of experience with how people handle their own
money.''
So, why not let Americans continue to handle their own health care
dollars and help them realize their role in cost savings? Time and time
again, Americans have shown that they can and will make cost-conscious
health care decisions when given a sensible incentive to do so.
So, Mr. President, insurance can be made more accessible by assuring
Americans that their policies will not be canceled because of an
illness or when they are changing jobs. These are some obvious flaws in
the market and I believe further progress can be made by addressing the
Tax Code. But I am convinced that we're on the right track.
Mr. President, I ask unanimous consent that an April 17, 1996 Wall
Street Journal article entitled ``A Way Out of Soviet-Style Health
Care'' by Milton Friedman be printed in the Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Apr. 17, 1996]
A Way Out of Soviet-Style Health Care
(By Milton Friedman)
In a chapter in his novel ``The Cancer Ward'' titled ``The
Old Doctor,'' Alexander Solzhenitsyn compares ``private
medical practice'' with ``universal, free, public health
service'' through the words of an elderly physician whose
practice predated 1918. A byproduct is an eloquent statement
of the major advantages of medical savings accounts for the
U.S. in 1996.
Mr. Solzhenitsyn himself had no personal experience on
which to base his account and yet, in what I have long
regarded as a striking example of creative imagination, his
character presents an accurate and moving vision. The essence
of that vision is the consensual relation between the patient
and the physician. The patient was free to choose his
physician, and the physician free to accept or reject the
patient.
In Mr. Solzhenitsyn's words, ``among all these persecutions
[of the old doctor] the most persistent and stringent had
been directed against the fact that Doctor Oreschenkov clung
stubbornly to his right to conduct a private medical
practice, although this was forbidden.''
``Easier to Find a Wife''
In the words of Dr. Oreschenkov in conversation with
Lyudmila Afanasyevna, a longtime patient and herself a
physician in the cancer ward: ``In general, the family doctor
is the most comforting figure in our lives. But he has been
cut down and fore-shortened. . . . Sometimes it's easier to
find a wife than to find a doctor nowadays who is prepared to
give you as much time as you need and understands you
completely, all of you.''
Lyudmila Afanasyevna: ``All right, but how many of these
family doctors would be needed? They just can't be fitted
into our system of universal, free, public health services.''
Dr. Oreschenkov: ``Universal and public--yes, they could.
Free, no.''
Lyudmila Afanasyevna: ``But the fact that it is free is our
greatest achievement.''
Dr. Oreschenkov: ``Is it such a great achievement? What do
you mean by `free'? The doctors don't work without pay. It's
just that the patient doesn't pay them, they're paid out of
the public budget. The public budget comes from these same
patients. Treatment isn't free, it's just depersonalized. If
the cost of it were left with the patient, he'd turn the ten
rubles over and over in his hands. But when he really needed
help he'd come to the doctor five times over. . . .
``Is it better the way it is now? You'd pay anything for
careful and sympathetic attention from the doctor, but
everywhere there's a schedule, a quota the doctors have to
meet; next! . . . And what do patients come for? For a
certificate to be absent from work, for sick leave, for
certification for invalids' pensions; and the doctor's job is
to catch the frauds. Doctor and patient as enemies--is that
medicine?''
``Depersonalized,'' ``doctor and patient as enemies''--
those are the key phrases in the growing body of complaints
about health maintenance organizations and other forms of
managed care. In many managed care situations, the patient no
longer regards the physician who serves him as ``his'' or
``her'' physician responsible primarily to the patient; and
the physician no longer regards himself as primarily
responsible to the patient. His first responsibility is to
the managed care entity that hires him. He is not engaged in
the kind of private medical practice that Dr. Oreschenkov
valued so highly.
For the first 30 years of my life, until World War II, that
kind of practice was the norm. Individuals were responsible
for their own medical care. They could pay for it out-of-
pocket or they could buy insurance. ``Sliding scale'' fees
plus professional ethics assured that the poor got care. On
entry to a hospital, the first question was ``What's wrong?''
not ``What is your insurance?'' It may be that some firms
provided health care as a benefit to their workers, but if so
it was the exception not the rule.
The first major change in those arrangements was a
byproduct of wage and price controls during World War II.
Employers, pressed to find more workers under wartime boom
conditions but forbidden to offer higher money wages, started
adding benefits in
[[Page S3541]]
kind to the money wage. Employer-provided medical care proved
particularly popular. As something new, it was not covered by
existing tax regulations, so employers treated it as exempt
from withholding tax.
It took a few years before the Internal Revenue Service got
around to issuing regulations requiring the cost of employer-
provided medical care to be included in taxable wages. That
aroused a howl of protest from employees who had come to take
tax exemption for granted, and Congress responded by
exempting employer-provided medical care from both the
personal and the corporate income tax.
Because private expenditures on health care are not exempt
from income tax, almost all employees now receive health care
coverage from their employers, leading to problems of
portability, third party payment and rising costs that have
become increasingly serious. Of course, the cost of medical
care comes out of wages, but out of before-tax rather than
after-tax wages, so that the employee receives what he or she
regards as a higher real wage for the same cost to the
employer.
A second major change was the enactment of Medicare and
Medicaid in 1965. These added another large slice of the
population to those for whom medical care, though not
completely ``free,'' thanks to deductibles and co-payments,
was mostly paid by a third party, providing little incentive
to economize on medical care. The resulting dramatic rise in
expenditures on medical care led to the imposition of
controls on both patients and suppliers of medical care in a
futile attempt to hold down costs, further undermining the
kind of private practice that Dr. Oreschenkov ``cherished
most in his work.''
The best way to restore freedom of choice to both patient
and physician and to control costs would be to eliminate the
tax exemption of employer-provided medical care. However,
that is clearly not feasible politically. The best
alternative available is to extend the tax exemption to all
expenditures on medical care, whether made by the patient
directly or by employers, to establish a level playing field,
in terms of the currently popular cliche.
Many individuals would then find it attractive to negotiate
with their employer for a higher cash wage in place of
employer-financed medical care. With part or all of the
higher case wage, they could purchase an insurance policy
with a very high deductible, i.e., a policy for medical
catastrophes, which would be decidedly cheaper than the low-
deductible policy their employer had been providing to them,
and deposit all or part of the difference in a special
``medical savings account'' that could be drawn on only for
medical purposes. Any amounts unused in a particular year
could be allowed to accumulate without being subject to tax,
or could be withdrawn with a tax penalty or for special
purposes, as with current Individual Retirement Accounts--in
effect, a medical IRA. Many employers would find it
attractive to offer such an arrangement to their employees as
an option.
Some enterprises already have managed to do so despite the
tax penalty involved. MSAs have proved very popular with
employees at all levels of income, and they've been cost-
effective for employers. The employee has a strong incentive
to economize, but also complete freedom to choose a
physician, and the equivalent of first-dollar coverage. There
are no out-of-pocket costs. Until the employee spends more
than the total amount in the MSA. Such costs are then limited
to the difference between the amount in the account and the
deductible in the catastrophic policy. Moreover, the employee
can use money in the MSA at his or her discretion for dental
or vision care that is typically not covered under most
health plans. No need to get ``authorization'' from a
gatekeeper or an insurance company to visit a specialist or
to have a medical procedure--until the catastrophic policy
takes over.
limiting competition
The managed care industry has come to recognize that MSAs
might threaten its growing control of American medicine by
offering a more attractive alternative. As a result, the
managed care industry has recently become a vigorous enemy of
MSAs. Every believer in competition will recognize that
opposition for what it is: a special interest using
government to limit rather than expand competition.
Medical savings accounts are not a panacea. Many problems
would remain for an industry that now absorbs about a seventh
of the national product. However, I believe that they offer
the closest approximation that is currently feasible to the
private medical practice that Dr. Oreschenkov cherished.
Mr. BRYAN. Mr. President, today is remarkable. At long last--on the
floor of the Senate--we are considering health care reform legislation
that the American people both want and support. And at long last, it is
legislation with significant bipartisan support.
I am proud to be a cosponsor of this bill. It will provide health
care insurance protection for thousands of Nevadans, and millions of
Americans. This incremental bill is our best opportunity to get working
Americans the health care access they deserve.
We have been close to this point before. It seems like ancient
history when I think back to cosponsoring former Senator Lloyd
Bentsen's small business insurance health care reform. It too had
incremental insurance coverage improvements that many in this body
supported--yet once again, the final hurdle could not be overcome.
Many times--and over many years--Nevadans have shared with me their
heart breaking stories. Families whose children have medical conditions
that prevent the family from being able to purchase health insurance,
because no insurer will take a child with a preexisting condition.
Working individuals who develop chronic health conditions, and cannot
leave their current employment for fear of not being able to get health
insurance in their new job.
Health insurance is often denied for the very illnesses most likely
to require medical care. Eighty-one million Americans have conditions
that could subject them to such exclusions if they lose their current
coverage, and sometimes these exclusions make them completely
uninsurable.
People with preexisting conditions are penalized twice. First, they
have a serious health care condition that requires medical care--a
situation they did not choose. Second, they are at the mercy of
insurers who decide whether they will have coverage, or be cut off.
For the person with a preexisting medical condition, who has been
lucky enough to get health care insurance through his or her job, the
secondary fear is keeping their job.
If the job is eliminated, it may mean no more health care insurance--
ever. For the person who wants to better himself or herself by taking a
new job, or starting a new business, it may mean no more health
insurance--period. We can all imagine that fear.
These insurance company decisions affect working people who play by
the rules. They pay their insurance premiums when they can get
coverage. But they find themselves in untenable situations.
They are unable to have the most basic insurance of all--for
themselves and their families--to not have to worry about health care
coverage.
It is demeaning to all Americans if people cannot better themselves
and their families' situations for fear of losing health care
insurance. This legislation will free many working people from the
stagnation of being unable to accept new job opportunities.
The Health Insurance Reform Act guarantees that private health
insurance coverage will be available, renewable, and portable to
working Americans.
This legislation will make it easier for individuals and employers to
buy and keep health insurance, even when a family member or employee
has a pre-existing condition. This legislation makes health care
coverage portable so workers would no longer be locked into jobs or
prevented from starting their own business for fear of losing their
health coverage.
Small businesses and self-employed individuals are particularly
victimized under the current system, because they lack the bargaining
power of larger corporations. This legislation addresses their problem
by encouraging them to form private, voluntary coalitions for purposes
of purchasing health plans and negotiating with providers. By forming
these groups, the costs of health plans would be more competitive for
small employers and individuals, as compared to large employers, by
giving them more clout in the marketplace.
This bill is the foundation for incremental health reform. Although
this insurance reform legislation will not solve all of the problems of
the Nation's health care system, it will promote greater access and
security for health coverage for all Americans. Private insurance
carriers will compete based on quality, price and service, instead of
by their ability to refuse coverage to those who need it the most.
We all know there will be attempts to add amendments to this
legislation. Some of those amendments are going to be very hard to vote
against.
But we must keep focused on what it is we are trying to accomplish
here.
We have the opportunity to provide access to health care insurance
for millions of Americans who each and every day face the uncertainty
of whether they will have coverage.
We can do something to allay those fears.
[[Page S3542]]
Passing this bill is a big step to ensuring health care coverage is
available to working Americans. Other steps are needed--but they need
not be taken today.
Let us first take this big step, and get the job started. And from
there, we can and will, work to ensure even better health care for all
Americans.
Mrs. MURRAY. Mr. President, during the 103d Congress many of us
worked very hard to try to enact comprehensive health care reform.
Despite our efforts and what felt like endless debate, politics
prevailed and we came up emptyhanded. Perhaps we were too optimistic to
think we could accomplish such broad and sweeping reforms in 1993; but
unfortunately health reform remains a critical high priority issue for
every family in this country.
Well, political realities are still very real factors in determining
the outcome of legislative initiatives here in Congress. And here we
are again discussing health care reform, only in a much more limited
and focused way.
I am encouraged that the dialogue is open once again, and that we are
taking positive steps toward addressing the many health-related issues
confronting people across our country.
If I had it my way, we would not just be talking about health
insurance reform today. We would be doing more, especially for our most
precious resource, children. We should be doing more, like: ensuring
better pre- and post-natal care for women and their babies; boosting
rates of immunization even higher for children across our nation;
working even harder to reduce adolescent health problems like teen
pregnancies, substance abuse and STD's; improving child nutrition
programs and strengthening our overall national commitment to children
and family health and well-being.
But, I recognize the realities of the 104th Congress, and realize
that sometimes progress comes one step at a time. I am proud to be a
cosponsor of S. 1028, the Health Insurance Reform Act. I believe this
is a commonsense measure that will directly benefit working families
across our country. I sincerely hope we can pass this bill and send it
to the President for his signature.
We should not weigh this bill down with amendments that could undo
the broad bipartisan support we so rarely see in this Congress. I
applaud Senators Kassebaum and Kennedy for their ongoing leadership and
commitment to enacting this legislation.
S. 1028 was carefully crafted so that we could pass it overwhelmingly
and see it enacted into law with the full support of the White House.
For this reason, I will join my colleagues in opposing any
controversial amendments that are offered, even those which I support
in principle. We should learn from the past, Mr. President, and not try
to bite off more than we can chew.
As I said, this bill is not a cure-all. We need to do more, of
course. But, this is a reasonable, sensible first step and will go a
significant distance toward guaranteeing coverage for millions of
American workers and their families.
Mr. President, we owe it to those families to pass this bill, and
pass it in its current form. To do anything which could jeopardize the
fragile coalition of support for this bill would be irresponsible and
bad public policy.
I appeal to my colleagues not to try and load up this bill with
amendments that will ultimately kill the bill. Let us show our
constituents that we can work together and we can put political
differences aside for the greater good.
Much of what we are discussing here will not be news to people in my
State. In 1993, we passed one of the most comprehensive health care
measures in the country, and even after serious modification the people
in Washington still have many of these same protections.
In some areas, like limits on pre-existing conditions, my State
actually has a shorter limit of 3 months, which the Kassebaum-Kennedy
bill will not preempt.
Earlier I said that we owe it to working families to pass this bill.
I am talking about people across the country who have to worry about
their health care coverage, people who want to work and take care of
themselves and their families. People like:
The working family of three. Dad wants to change jobs to a higher
paying company, but his daughter has multiple sclerosis. Under this
bill, he wouldn't have to worry that she will not be able to get
coverage under the new employer's plan. He plays by the rules, he pays
his premiums--this family will not be confronted with a preexisting
condition exclusion period.
By requiring insurance companies and employers to credit prior
insurance coverage, this bill will give workers with disabled family-
members peace of mind and the flexibility to change jobs without fear
of losing their insurance.
Or a woman who had breast cancer who is starting a new job. Today,
she could possibly be denied coverage or charged a higher premium
because of her cancer history. But, tomorrow--under S. 1028--because
insurance companies and employers would be prohibited from
discriminating against workers because of past medical problems, this
woman would be treated no differently than anyone else covered under
the same plan.
And, the new small business owner and her three children. Mom was
abused in her former marriage and is trying to start over. A woman in
this situation is going to need all the help she can get to provide for
herself and her kids.
Today, she could be facing not one but two obstacles to starting her
new life for herself and her family. First, she could be denied
coverage for herself for any preexisting condition that was caused by
her years of being abused. Second, she is a new business owner and
maybe can't afford to purchase insurance for her handful of employees.
S. 1028 will give this woman a chance to succeed. She will not be
discriminated against because of her preexisting condition, and under
the provisions of this bill--small businesses and individuals are
permitted to form cooperatives to purchase insurance and negotiate with
providers and health plans. This arrangement will spread administrative
costs and empower the participants to negotiate for better prices.
In other words, S. 1028 will help this woman and her children put
their troubled pasts behind them.
Mr. President, the examples are endless. We have heard many stories
today, and as Senator Kassebaum pointed out--we all know someone who
could be helped by this bill.
Even though this bill may not be as comprehensive as I personally
would like, I want to reiterate my strong hope that we can pass S. 1028
without any controversial additions and move forward to address the
many other issues facing America's families. That's why we're here.
Mr. COHEN. Mr. President, I rise in support of S. 1028, the Health
Insurance Reform Act, which promises to relieve the anxiety that
millions of Americans are feeling that they may lose their health care
coverage if they change their jobs, lose their jobs, or become ill.
Health care reform is certainly not a new issue for any of us. In
fact, I introduced my first comprehensive health care reform bill back
in 1990. It was 76 pages long and it dealt with these same issues--the
availability and affordability of health insurance.
Over the subsequent 6 years, we have spent countless hours studying
and debating the issue. If we have learned anything, it is that the
American people want health care reform, but they want something they
can understand and afford, and something that builds upon rather than
reinvents the current system.
The American public wisely rejected the big-government approach
proposed in the last Congress by the administration--that 1,400 page
proposal literally collapsed under its own weight. More Government
bureaucracy is clearly not the way to lower health care costs or ensure
access to care.
But rising health care costs and expanding gaps in coverage are still
very much on the minds of the American people. Poll after poll
continues to show that health care remains a top priority. In fact, a
poll conducted late last year by Princeton Survey Research Associates
found that more Americans are concerned about their own health care
coverage than they are about crime, high taxes, the political system,
or the economy.
Americans clearly want health care reform. But what they mean when
they say that is: ``If I lose my job or get sick, I want to keep my
health insurance and I don't want it to cost so
[[Page S3543]]
much.'' They want Congress to enact sensible, targeted reforms to make
health insurance more affordable and available, and to ensure that they
do not lose the coverage that they currently have.
We have that opportunity today. Despite the partisan and sometimes
bitter debate over this issue in recent years, there is now broad-
based, bipartisan support for this bill, which would benefit as many as
25 million Americans each year, at no additional cost to the taxpayers.
The legislation currently has 65 Senate cosponsors and is supported by
a wide range of diverse organizations including the National Governors'
Association, the U.S. Chamber of Commerce, the American Association of
Retired Persons, and the American Medical Association.
The Health Care Reform Act of 1996 builds upon and strengthens our
current private insurance system to make it easier for individuals and
their employers to buy and keep their health insurance. It contains a
number of common sense, market-based reforms that are designed to
guarantee that private health insurance coverage will be affordable,
available, and portable. Most of these reforms have been included in my
own health care bills over the years, and they have also been common
elements of legislation introduced in past Congresses by both
Republicans and Democrats.
First, the bill limits the ability of insurers and employers to
restrict or exclude coverage for pre-existing health conditions like
heart disease or cancer, making it easier for workers to change jobs
and eliminating job lock. Insurers will also be prohibited from
dropping or denying coverage for an individual when they or a
family member becomes ill.
The legislation also provides a safety net for people who lose their
employer-paid coverage--insurers will now be required to sell them
individual policies. Some have expressed concern that this provision
will cause premiums in the individual market to skyrocket. However, our
experience in Maine--where insurers have been required to sell policies
to any individual who applies since 1993--shows that this change should
have only minimal price consequences. In fact, one Maine insurer
reduced rates for its individual policies by 16 percent last year.
And finally, the bill assists employers and individuals in forming
private, voluntary coalitions to purchase health insurance and
negotiate with providers and health plans. These kinds of arrangements
can provide small employers and individuals with the same kind of
purchasing clout enjoyed by large employers, making insurance coverage
more affordable.
No one pretends that the reforms contained in this bill are the
answer to all of our Nation's health care woes. They are targeted and
they are specific. But they will provide all Americans with what Robert
Samuelson of Newsweek has termed ``a little more peace of mind.''
We should not underestimate the importance of providing this peace of
mind to people like Susan Rogan, of Herndon, VA, who testified before
the Labor Committee last summer.
She told the committee that the experience of obtaining health
insurance after her husband's employers had gone bankrupt had been a
nightmare, even though he quickly found a new job. Insurers were
reluctant or unwilling to cover the family because their daughter has
cerebral palsy.
She urged us to work together, saying:
It is your responsibility, in Congress, to find a solution
to the insurance problems that have caused so much heartache
for so many American families. We voted for you, and we
expect no less of you.
And Susan Rogan is right. She should expect no less of us. It is our
responsibility to work together and take this positive step forward to
tear down the barriers that millions of working Americans and their
families face in obtaining and keeping essential health care coverage.
I therefore join the chairman and ranking member of the Labor
Committee in urging my colleagues to resist the temptation to weigh
down this important piece of legislation with highly controversial or
extraneous amendments.
Some of the amendments that may be offered today are ones that I
would, under other circumstances, support. For instance, I have been a
long-time supporter of Senator Domenici's legislation to provide people
with serious mental illness with health benefits and coverage that are
comparable to those provided to people with physical illness.
However, this is neither the time nor the vehicle, and I intend to
vote against all such extraneous amendments. We simply do not want to
run the risk of having this very sensible and eminently doable package
grow into yet another 1,400-page bundle of expensive mandates, more
Government bureaucracy, and untested proposals.
We should not let the ghosts of health reform past destroy the
promise that this important piece of legislation holds for resolving
some of the most serious problems plaguing our health care system, and
I urge my colleagues to join me in supporting it.
Mr. GORTON. Mr. President, let me make an important point about this
bill. It is very narrow in scope, addressing portability and health
coverage for preexisting conditions. It in no way resembles the
expansive Clinton health care proposal this body defeated 2 years ago.
In the summer of 1994, many hundreds of Washington state citizens
gathered in Westlake Mall in downtown Seattle to protest the proposed
Government takeover of their health care. They were outraged by the
hubris and the arrogance of that health care plan, and rightly so. The
plan focused on setting up new bureaucracies, that it completely
ignored the people who would have been affected by it.
This legislation takes a clear-headed approach, responding to one
problem that people face regarding preexisting conditions. It follows
the conclusions of the Senate health care task force, of which I am
pleased to have been a member for several years. We came up with the
lessons learned from the Clinton health care debacle, and topping the
list was the fact that there simply cannot be a government-run health
care system. Period. The only sane, responsible way to address
particular problems that may arise is to take a very narrow, targeted
approach. In other words, you don't solve a problem with grandiose,
wholly unworkable schemes. You solve a problem with a commensurate
response.
In this case, we have the problem of coverage for preexisiting
conditions. The goals of this bill are strickly defined and few. They
are to:
First, develop insurance reform legislation that builds upon and
strengthens the current private market system;
Second, make it easier for individuals to keep and obtain private
health insurance coverage, including measures to limit preexisting
condition exclusions and expand portability;
Third, increase the purchasing clout of individuals and small groups.
With that said, let me enunciate what this bill will not do.
It will not require employers to offer or pay for health insurance
coverage.
It will not require individuals to purchase health insurance.
It will not impose new and expensive regulatory requirements on
individuals, employers, or States.
It will not create new Federal boards, commissions, or regulatory
bodies.
It will not contain a standard benefit package or mandated benefits.
It will not subject ERISA plans to state regulation.
It will not impose any new taxes.
This is not ``Clinton Lite;'' this is a modest, narrow, targeted
proposal. This is the way health care reform should be accomplished:
not consumed with utopian visions and grand schemes of expensive
government power, but realistic and down-to-earth.
I believe we have finally got it right. I know that many of my
constituents in Washington State, and many Americans, are concerned any
time Congress addresses the issue of health care reform. With the
memory of the Clinton plan fresh in their minds, they certainly have
reason to be wary. But I believe that, once they know what is in this
bill, they will be pleasantly surprised. This Congress has neither the
intention nor the desire to let the government take over American
health care, the best health care system in the world. This Congress
wants to take a very limited approach to specific problems.
The Health Insurance Reform Act is in concert with the beliefs of
most
[[Page S3544]]
Americans, who do not want government-run health care, but who do
expect Congress to address and resolve certain problems in the system.
That is what this bill does, and I am glad to support it.
Mr. GLENN. Mr. President, as a cosponsor of S. 1028, the Health
Insurance Reform Act, I am pleased that the Senate is considering this
important legislation, and I urge its passage. I commend Senator
Kassebaum and Senator Kennedy for their leadership in crafting this
bipartisan measure which will help many working Americans keep
important health insurance protection for themselves and their
families.
The purpose of the Health Insurance Reform Act is to ensure that
people who have employer-provided health insurance will not lose their
insurance if they change jobs, lose their jobs or become sick. This
legislation makes changes in the private insurance market to protect
employees, and to make insurance more affordable for small businesses
and individuals.
The Health Insurance Reform Act requires insurers and health
maintenance organizations to provide and renew group coverage to
employers with two or more employees who want to purchase it, and this
coverage must be available to all employees regardless of their health
status. In addition, this legislation makes insurance portable by
limiting pre-existing condition exclusions and by requiring group to
individual coverage.
S. 1028 limits to 12 months exclusions for pre-existing conditions
which occurred within the 6-month period prior to receiving insurance
coverage. This 12-month limit will be imposed only one time for
individuals who maintain continuous coverage even if they change jobs
or insurance plans. Individuals who lose employer-provided health
insurance will be guaranteed the opportunity to purchase an individual
policy if they had continuous coverage for 18 months in a group plan,
if they have exhausted their COBRA continuation coverage, and if they
are not eligible for coverage under another group health plan. These
provisions will go a long way toward ending the current problem of job
lock, and ensuring that people who have been participating in health
insurance plans do not lose protection when they change jobs or become
sick.
S. 1028 is not comprehensive health care reform. It does not provide
universal coverage for all Americans, and insurance costs will be
unaffordable for others. However, it is a very important step forward
in addressing problems in our current health insurance system, and it
will provide peace of mind to many working Americans who have health
insurance but fear losing it.
Mr. HATCH. Mr. President, I rise in strong support of the Health
Insurance Reform Act, S. 1028. This important legislation represents a
significant and reasonable step in extending health insurance coverage
to a larger segment of the American population.
I am proud to serve as an original cosponsor of this bill and would
like to take this opportunity to commend the distinguished chairman and
ranking minority member of the Committee on Labor and Human Resources,
Senator Kassebaum and Senator Kennedy, for the outstanding contribution
they have made in helping to provide literally millions of Americans
with peace of mind that they will not lose their health coverage.
As my colleagues are aware, insurance market reform is a bipartisan
issue and it is something we have been working toward for many years. I
am thinking back to the Bentsen-Durenberger bill which many of us
cosponsored 4 years ago.
Indeed, as most of my colleagues know, the Senate and House have
spent considerable time and energy over the past 5 years debating
various proposals designed to address problems with our Nation's health
care system overall.
Perhaps no other issue in recent years has captured the attention and
concern of the American people than the issue of health care reform and
the role of the Federal Government in shaping that reform.
But I submit that today is not the time to debate measures of such
tremendous scope.
Unlike the President's approach, S. 1028 is targeted and narrowly
focused reform aimed at assisting nearly 25 million Americans in
obtaining health insurance coverage.
Most of us in the Senate recall the innumerable hours spent
considering President Clinton's legislation that was ultimately
rejected by the American people and by the Congress.
One of the lessons we learned from that endeavor was the need to
provide for greater access to health insurance than what is currently
available.
And access to health insurance is unquestionably one of the
fundamental problems facing Americans today.
The current health insurance market provides too little protection
for individuals and families with significant health problems and makes
it too difficult for employers--particularly small employers--to obtain
coverage for their employees.
The health insurance reform bill is specifically designed to address
this problem.
It will reduce many of the current barriers to obtaining health
coverage by making it easier for people who change jobs or lose their
jobs to maintain adequate coverage, and by providing increased
purchasing power to small businesses and individuals.
The bill will not only increase access to health care coverage, but
will also provide portability of insurance coverage and increase the
purchasing power of individual and small employers who wish to seek to
purchase insurance.
Specifically, the bill restricts the use of preexisting condition
limitations by insurance carriers.
Some insurers today impose preexisting condition limitations or
exclusions on individuals when they first become covered by an insurer.
These exclusions may limit coverage of a medical condition for a
certain period or longer or may exclude coverage of a medical
condition--forever.
Under the provisions of S. 1028, insurers, HMO's, and self-insured
firms would be limited in the ability to use preexisting condition
limitations to no more than 12 months after the enrollment date.
In addition, benefit limits or exclusions could not be imposed for
newborns, newly adopted children, children newly placed for adoption,
or for benefits for pregnancy.
Another important component of this bill is the provision regarding
the guaranteed issue of health coverage benefits.
Under this provision, an insurer or health plan is required to cover
any group or individual who applies, without regard to health status or
claims experience. The bill would require all insurers who offer group
coverage to accept coverage for all groups that apply.
Insurers would be required to offer individual coverage to all
individuals moving from group coverage to individual coverage as well.
However, to be eligible for this guarantee, the individual must satisfy
the following four criteria:
First, the individual must have been covered under one or more group
health plans for at least the past 18 months;
Second, the individual must not be eligible for group health
coverage, or, if eligible for continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, or a
similar State program, then they must have elected, and exhausted that
coverage;
Third, the individual must apply for individual coverage not more
than 30 days after the last day of coverage under the group plans, or
the termination date of COBRA benefits; and
Fourth, the individual must not have lost group coverage due to
nonpayment of premiums or fraud.
Accordingly, in order to be eligible for insurance coverage in the
individual market, we have incorporated important benchmarks to foster
individual responsibility and accountability in the purchasing or
insurance plans.
We are all aware that this bill has engendered considerable debate on
how it would impact existing premiums.
The American Academy of Actuaries has studied this issue in great
detail and estimates that people who are newly eligible for individual
coverage would pay an average of two to three times the standard-risk
premium rate, unless States restrict premiums.
The Academy further states that S. 1028 will have no effect on
individual insurance premiums for those currently purchasing coverage
in the vast majority of States.
[[Page S3545]]
In States that restrict premiums, S. 1028 would lead to individual
market premium increases in the range of 2 to 5 percent, spread out
over a 3-year period.
Thus, I believe that fears the bill will lead to large increases in
premiums are unwarranted. However, I recognize those concerns, and I
will be monitoring this situation closely.
Another important provision in this legislation addresses insurance
portability.
During our consideration of health care reform, it was clear that the
use of preexisting condition provisions in insurance plans has
contributed to a problem referred to as ``job lock''.
In effect, employees are locked into their current jobs because
changing jobs might subject them to periods without health insurance
coverage because of a preexisting health condition.
For an employee with a medical condition, or a dependent with a
medical condition, loss of coverage during a limitation period, or
worse, exclusion of coverage of the condition forever could mean
significant out-of-pocket health care expenditures.
As a result, guaranteed issue and limits on the use of preexisting
condition provisions by insurers provide needed portability of coverage
for American workers.
It is also important to note that the legislation provides specific
guidance with respect to State flexibility in compliance with this new
law.
Federal provisions for group to individual portability only become
effective if States do not have programs meeting Federal requirements
for access.
S. 1028 will provide for state flexibility for compliance with
Federal provisions.
State mechanisms could include guaranteed issue or open enrollment
programs by one or more plans, a high risk pool, or mandatory
conversion policies.
In my State of Utah, we have already enacted many of these reforms.
The legislation would permit a waiver from Federal law if a State
could demonstrate that its law achieved the objectives of affordable
individual market portability and renewability.
And finally, S. 1028 promotes group purchasing by small businesses by
assisting employers and individuals in forming private, voluntary
coalitions to purchase health insurance and negotiate with providers
and health plans.
These coalitions will provide small employers and individuals with
the kind of clout in the marketplace currently enjoyed by large
employers.
It's important to note what this bill does not contain.
S. 1028 does not impose new, expensive regulatory requirements on
individuals, employers or States.
S. 1028 does not create new Federal bureaucracies or agencies.
S. 1028 does not contain any new taxes, spending, or price controls.
S. 1028 does not require employes to pay for health insurance
coverage.
And, S. 1028 contains no unfunded mandates on State, local, or Indian
tribal governments.
In effect, this bill contains none of the onerous provisions
contained in the ill-fated Clinton health care reform bill.
Mr. President, I will state in all candor that initially I had
reservations about supporting this legislation.
As a general rule, I believe the Federal Government should not
intervene in areas where consumer choice and natural marketplace
conditions determine the level and costs of products and services.
And, indeed, in the past I have supported what I believe were true
market-based reform proposals in the health care area. However, the
problem of access to health insurance has long been a problem to
millions of Americans.
This problem remains, and it will continue to remain until
appropriate Federal action is taken.
Over the course of the past year, we have worked to develop and fine-
tune the provisions embodied in S. 1028.
Most of these modifications were developed to more clearly reflect
the intent of the bill.
These revisions were principally designed to provide more certainty
to States and insurers as well as to respond to concerns that the
Secretary of the Department of Health and Human Services was given too
much discretion over alternative State programs.
I am pleased that the manager's amendment deals with concerns
expressed to me from constituents in Utah over the need to revise the
bill's provisions regarding conflict of interest language as it applies
to purchasing cooperatives.
And, I would like to thank Senator Kassebaum's cooperation in
resolving these issues.
This legislation will now permit insurers, agents, and brokers to
serve on purchasing cooperative boards or be employed by a cooperative
as long as they do not personally benefit from the sale of services or
products to that cooperative.
I believe we have come as close as possible in this present political
environment in developing a viable measure that will appropriately
address the problem of access to health insurance for millions of
Americans.
The General Accounting Office estimates that passage of S. 1028 will
help at least 25 million Americans each year.
According to the GAO, an estimated 43 million Americans or 18.7
percent of the nonelderly population were without health insurance
coverage for some period of time in 1995.
This bill will truly help people, and I believe it deserves our
strong support.
It is clear that insurance market reform is one area which enjoys
wide bipartisan support in both houses of Congress. The fact that the
bill currently has 65 cosponsors and was reported unanimously by the
Labor and Human Resources Committee serves as a testimonial to its
strong bipartisan support in the Senate.
It is clear that this important piece of legislation with its strong
bipartisan support has the potential to be signed into law by the
President as he indicated in his State of the Union Address in January.
I commend Senators Kassebaum and Kennedy, and all the cosponsors, and
hope that we can move this key legislation forward today.
Mr. ROTH. Mr. President, I rise in support of the pending
legislation. Labor and Human Resources Committee Chairman Kassebaum and
Senator Kennedy deserve to be commended for there efforts in crafting
the bill before the Senate which assures that workers who intend to
change jobs will no longer experience the fear of losing their health
care coverage. Not only have Senator Kassebaum, other members of her
committee, and their staffs labored many long hours to draft the bill,
they have also successfully built a strong coalition of support. Thanks
to Senator Kassebaum and Senator Kennedy this bill is supported by big
business, small business, a wide array of advocacy groups, many
insurance companies, and many Americans.
While I do think the Kassebaum-Kennedy bill could be improved, I
think it is a critical step forward. At a later time, I will join the
majority leader in offering an amendment which makes health insurance
more affordable.
The Kassebaum-Kennedy health insurance reform bill has an important
focus. The bill will assist people who want and need to make necessary
and correct decisions about their health care needs--people who work,
people who join their group health care plans and have paid their
premiums continuously for no less than 12 months. The bill eliminates
``job-lock'' for workers who fear they will lose their health coverage
when they change jobs, and the bill eliminates the fear of losing
coverage for individuals who have maintained their group coverage and
have a preexisting condition.
Recently my office was contacted by a lady who has always been
insured and paid her premiums. Yet she finds herself today in a
situation where she is unable to obtain health care coverage because of
a preexisting condition. Nancy Miller is 56 years old, after a divorce
from a 27-year marriage, she was allowed access to continued group
health coverage through her former spouse's employer plan at the group
premium rate for 3 years. Mrs. Miller's 36 month COBRA coverage expires
at the end of May. To make sure she will not have a gap in health
coverage, Mrs. Miller has worked with her current insurer, called many
other insurers, contacted our office, worked with an insurance broker
and yet she has been rejected from every health plan she has
[[Page S3546]]
applied to. Mrs. Miller has a preexisting condition. She can not get
health care coverage because she contracted breast cancer 2 years ago.
Mrs. Miller's situation could apply to anyone, because anyone could
get sick. Mrs. Miller has not gamed the system seeking insurance only
when she needed it. For years she was healthy, and for her entire life
she has been insured. The letter Mrs. Miller's insurance broker
recently wrote her could be a letter received by many women. The
following is the letter she received from her broker:
This letter is to inform you that we have contacted all of
our standard individual health insurance carriers and are
unable to find one that is capable of writing a policy for
you because of your pre-existing condition. We have been
advised by all of the carriers that they will not consider
you for insurance until you are 5 years out from your time of
release from the doctor.
The Kassebaum-Kennedy bill will provide assurances to responsible
Americans. In particular, the bill provides portability in two
settings: When individuals change from one group health plan to another
group health plan (group to group), and when individuals leave their
group health plan and seek coverage as an individual policyholder in
the market (group to individual).
For group to group portability, the bill establishes uniform Federal
standards for insurers, health maintenance organizations [HMO's], and
employers who self-fund their health plan. There is a broad consensus
that these measures should be enacted, and a very broad coalition of
business as well as the insurance industry and advocacy groups support
these provisions. There is a need to establish uniform Federal
standards for the group to group portability measures as the bulk of
employer sponsored health coverage is self-funded and exempt from State
regulation. Under the Employee Retirement Income Security Act [ERISA],
the Federal Government regulates private self-funded employer plans.
ERISA prohibits States from regulating employer sponsored self-insured
plans. Therefore, States cannot achieve all the reforms needed to
assure portability when workers change jobs because the Federal ERISA
law prohibits States from regulating any group health plan which is
self-funded.
For those individuals leaving their group health care coverage and
seeking coverage in the individual market, the bill provides access to
coverage to individuals. The bill also provides States with important
flexibility to meet the goals of this section of the bill. While there
have been concerns raised regarding the bill's provision to guarantee
that insurers make health coverage available to individuals, I think
this section is important if we are to truly guarantee portability and
access to coverage. States currently regulate insurance provided to
individuals who are not in a group plan. The Federal role in this area
of the marketplace has been minimal; therefore I agree with the bill's
goal to retain a strong state role in the individual market. This
section of the bill provides the needed flexibility for States to be
creative.
It's important to note that the bill builds on responsible behavior
because it requires that individuals have previous continued group
health care coverage in order to qualify for the portability
provisions. This is the case with Mrs. Miller who responsibly
maintained her group coverage.
The pending bill provides that health plans can not impose
preexisting condition limits on individuals who had prior group
coverage. In fact no preexisting condition limits can be imposed on
individuals who join a group health plan if they had continuous group
health coverage for the previous 12 months. For individuals leaving a
group plan, they must have had 18 months of continuous coverage in
order to qualify for an individual policy without any preexisting
condition limits. In either case, if individuals have less than the
required months of coverage, their new plan would have to credit them
for the time that they were covered.
Most Americans with private health insurance receive their coverage
through their employers, and the majority of the uninsured are also
tied to the workplace. The Kassebaum-Kennedy bill will strengthen the
employer-based health care system we now have, and it will help
responsible Americans like Mrs. Miller retain their coverage. In fact,
the General Accounting Office estimates that as many as 21 to 25
million people per year could be affected by Federal portability
standards in all markets. This is a good first step.
Mr. KOHL. Mr. President, I rise as an enthusiastic cosponsor of the
Health Insurance Reform Act of 1995 and call on my colleagues to keep
this straight-forward measure clear of legislative land mines.
Passing this bill will help address a problem all too common in our
health care system--the fact that people can lose their insurance
coverage when they get sick even if they have paid their premiums.
Mr. President, there are a number of bipartisan initiatives that can
and should be passed before we adjourn this fall. Chief among these
proposals is this Health Insurance Reform Act.
Under the strong bipartisan leadership of Chairman Kassebaum and
Senator Kennedy, the bill unanimously passed the Labor and Human
Resources Committee 8 months ago. It has since languished in the
confounding waste zone between full Committee endorsement and Senate
floor action because some are opposed to even narrow health reform.
Last Congress the American people called for comprehensive health
reform. Unfortunately, consensus could not be reached on a single plan.
Instead, the country watched in disappointment as a golden opportunity
for health reform fizzled out. Partisan fights and interest group
influence won the day.
It will serve no good purpose to rehash the health reform battles of
the past. We now have the opportunity to move beyond party squabbling.
Congress can clearly demonstrate the will to enact a bipartisan health
reform bill. Or we can choose to remain gridlocked and at the mercy of
special interests. I believe that choice is an easy one.
Fortunately, there still is a broad consensus in this country in
favor of health insurance reform. Americans want to know that they
won't lose coverage if they or someone in their family gets sick.
Individuals and businesses want the ability to pool resources to get
the best insurance coverage possible at an affordable price.
The Health Insurance Reform Act does not seek to change our Nation's
health care structure drastically. Instead, it takes a careful approach
to remedy widely acknowledged problems in the health insurance market.
For the first time, preexisting condition exclusions would be limited,
health coverage availability and renewability would be guaranteed, and
small business group purchasing would be easier. At the same time,
State flexibility would be maintained.
Many States have taken the initiative and made notable progress by
enacting market-related reforms. But States are unable to achieve the
most effective reforms because some businesses have federally protected
self-insured health plans. This bill provides continuity by applying
the same standards to all employment-based plans.
The bill is also notable for what it does not do. It won't require
employer mandates, limit provider choice, set up new bureaucratic
health structures, or create a global health spending budget.
Many strongly believe that health care reform should go farther than
this bill. In fact, many Senators, including myself, worked hard last
Congress on comprehensive measures to control health costs and expand
health coverage. But those efforts turned out too complex to retain
broad support.
We now have a more narrow consensus measure that can pass. Yet some
Senators may offer a whole host of amendments to address special
concerns. A few of these are popular, others problemmatic. The sponsors
of this bill have taken careful steps to ensure that the bill is narrow
and bipartisan. It should remain that way. For that reason, I too will
oppose controversial, special interest amendments.
As we learned from previous attempts at reform, a consensus bill may
be the only way we can pass health reform this year. I urge my
colleagues to refrain from condemning this bill under a weight of
controversial additions.
Nonetheless, we should not hold out on improvements if they are
bipartisan and avoid endangering final passage.
[[Page S3547]]
As a long-time supporter of health care fraud and abuse legislation,
I believe it is imperative that we act to tackle rampant abuse. If
strong anti-fraud provisions, such as those included in Senator Cohen's
anti-fraud bill, can be added without stalling the bill, they most
certainly should. Similarly, provisions helping the self-employed
afford insurance and incentives for long-term care may be possible.
However, there are other compelling issues that, if attached to the
Health Insurance Reform Act, may kill this bill. We should not ingore
those issues. They can and should be taken up at a later date.
Mr. President, if we keep this bill clean, we will take a huge step
toward addressing compelling insurance problems facing the Nation. In
the process, Congress will prove that it can act in a bipartisan
fashion to help hard working Americans.
There are over 40 million people without health insurance in our
country. I am proud to say that Wisconsin has one of the lowest numbers
of uninsured people. However, there are still too many Wisconsinites
without health coverage and still too many who fear losing their
coverage.
The Health Insurance Reform Act will not solve all of the problems
plaguing our health care system, but it does fill a huge gap by solving
job lock. Workers will no longer have to live with the fear that if
they change their jobs, they may lose their health coverage.
No doubt, there is special interest opposition to this bill. It is a
rare legislative initiative that doesn't have critics. But this bill is
a positive first step.
The Health Insurance Reform Act does not provide a handout to the
public. No one gets a free ride at the expense of insurance companies.
People must maintain their payments for a full year-and-a-half before
qualifying for coverage guarantees. They also must be ineligible for
another group policy and exhaust their COBRA benefits. Finally, people
will still have to pay the rates charged by insurance companies. These
requirements were added to minimize affects on insurance premiums.
However, it is important to note that States would not be prevented
from going further on insurance reform.
Mr. President, you cannot satisfy everyone, but this bill comes
close. While there are opponents and critics on both sides, a large
majority of Americans support passage.
If Senators need more impetus to allow this bill to go forward, the
General Accounting Office estimates that passing the Health Insurance
Reform Act will help 25 million Americans each year obtain or retain
health coverage. That evidence alone is a compelling reason to pass a
clean bill.
Mr. President, Americans have had little proof this session that
Congress can act to help solve problems plaguing their families. Let's
give them one good reason to have greater confidence in their elected
officials and this institution. We should get the job done and pass the
Health Insurance Reform Act now.
Mr. BAUCUS. Mr. President, I rise in support of this bill. I am very
pleased to see that today, Congress is putting aside its petty
divisions and rivalries to work together on a bill that will help
people. Today, when the Senate votes on the Health Insurance Reform
Act, we show our support for a bipartisan effort that will address the
health needs of millions of Americans and thousands of Montanans.
Record of the Congress
That is a truly important step forward for this Congress, and not
only on health policy. At the beginning of 1995, a lot of Montanans had
high hopes for this Congress.
But those hopes have vanished in the mess of bumbling revolutionary
experiments and government shutdowns which the leadership, particularly
in the House has created.
Rather than make people a little more prosperous and secure, the
Congress seems to have deliberately done just the opposite. It has gone
from closing Yellowstone and Glacier, to a proposal to let Medicare
wither on the vine, to bills that would set up a Commission on closing
National Parks and dump all the public lands on the States.
The fact is, the 104th Congress has let our state down pretty badly.
All too often, rather than do something good and positive for the
people, it has done something irrational and destructive.
A Second Chance
But this health insurance reform is a second chance for the Congress.
A sign that with some more maturity and experience, we can accomplish
something good.
This bill, taken as a whole, means some more security and stability
for hard-working people.
It means that if you lose your job, you won't also face the loss of
your health insurance and the constant threat of lifelong debt in the
case of an accident.
It means that if you own a small business, you will have more ability
to buy insurance for yourselves, your family and your employees.
And it means you can upgrade your skills and change your job without
being denied insurance due to health troubles.
Belinda Byrd
Look at the case of Belinda Byrd from Great Falls, Montana.
She wrote to me last year to explain her case and that of her sister.
Belinda suffers from hydrocephalus, or ``water on the brain,'' and she
is about to undergo her fourth brain surgery.
She is fortunate enough to receive coverage through the Government
Champus program. But she wrote to me about the problem with pre-
existing conditions because of the problems her sister is having
getting health insurance. Belinda's sister has the same condition and
can not get affordable health insurance because of her health problem.
Montana and Health Insurance
Mr. President, that is wrong. We should not tolerate it even in one
case. And the sad fact is that it is not just one case. Thousands of
Montanans, and millions of Americans, have concerns just about as grave
as those of the Byrd sisters.
As I have walked across the State in the past 2 years, a few subjects
come up everywhere. In towns, on ranches, at small businesses, and in
roadside coffee shops. The need to raise the minimum wage. The low
cattle prices. And the fear of losing health insurance.
For individuals, today's bill will make a big difference. It will let
self-employed people deduct most of their health insurance costs. Big
businesses can already do this. Folks who are self-employed and buy
their own health insurance out of pocket should be able to deduct it
too. That is basic fairness and decency. With this reform, we raise the
deduction from today's 30 percent of insurance costs to 80 percent. It
is not all the way to 100 percent, but it is a very big step forward.
For farmers, ranchers, and small business owners, health insurance
will be available and more affordable. We may have to do more down the
line, but we are making a good start here.
And for people like the Byrd sisters who have pre-existing health
conditions, this means justice and security. No longer will having an
illness, no matter how treatable it is, mean going without affordable
health insurance.
Medicare Fraud and Abuse
Finally, we take some initial steps to fight health care fraud and
abuse, particularly in Medicare and Medicaid. Today, anywhere from 5
percent to 10 percent of our Nation's entire trillion dollar health
care bill goes to fraud. We need to step up our Federal efforts to
fight this problem and I support efforts to do so.
However, I would caution that the savings we get from fighting fraud
and abuse in Medicare or Medicaid must go to guarantee solvency for
these essential programs. It should not pay for new tax breaks as last
year's Medicare cuts would have done, nor to pay for untested ideas
like Medical Savings Accounts.
Conclusion
Mr. President, I am very happy to be here supporting this bill. It is
a sign that Congress is getting the message. Moving away from
partisanship and revolutionary experiments. And moving toward
practical, effective steps that makes life better and more secure for
Montanans and all Americans.
I appreciate the work of the Labor Committee Chair, Senator Nancy
Kassebaum and her counterpart, Senator Ted Kennedy. They have done this
country a great service with their
[[Page S3548]]
work on crafting this bill and moving it through the legislative
process. I hope it will get the Senate's support.
Mr. BRADLEY. Mr. President, I am very pleased to lend my strong
support to the Kennedy-Kassebaum health insurance reform bill. At long
last, we are actually moving forward on the basic reforms that will
make health insurance once again serve the function of insuring and
protecting American families against devastating illness or injury.
The problem of health insurance is right at the center of the
economic insecurity gripping American families. The 40 million or so
people who have no insurance live in fear that a headache or stomach-
ache will turn out to be a costly illness. But other workers, who have
health insurance, are hardly blessed with security and comfort. As the
American economy changes, they know that they can lose their jobs at
any moment, with no certainty of being able to find new insurance, or
if they do find new insurance, it might not cover the one medical
concern that is most likely to become a problem.
We have lost the idea of health insurance as real insurance, in which
we all pay premiums to spread our own risks over a lifetime, and to
share risks across a larger number of people. Instead, health insurance
has increasingly become a short-term privilege, that comes and goes
with the job, that only comes with certain kinds of jobs, and that
comes with exceptions and uncertainties. When you combine that with the
increasing insecurity about jobs, working families can't afford the
risk. People are trapped in jobs just to keep their insurance, rather
than moving on to find the job that would better use their skills, or
setting out as an entrepreneur, as many dream of doing.
This bill would restore the original concept of insurance to health
care. It would allow workers to change jobs without putting insurance
coverage at risk, to move from group to individual plans, and to buy
insurance despite a preexisting condition. It will help small
businesses afford insurance, and help people who want to start their
own businesses to do so without worrying about the arbitrary nature of
health insurance. It will help only some of the 40 million without
insurance to become insured, but it will prevent that number from
continuing to increase.
Mr. President, I hope that after this legislation becomes law, we
will not stop here but continue to closely watch the health insurance
market and make whatever further changes need to be made to keep the
focus on health and security. The first such change, which I hope will
occur by Mother's Day, and perhaps even before this bill gets through
conference, is to end the practice of insurance companies forcing new
mothers and their infants out of the hospital within a few hours, even
against the best judgment of the mother's doctor. In general, I am
concerned that this bill, because it is so narrowly targeted at certain
insurance practices, could have unintended consequences. I hope that if
rates do increase sharply, or if insurers cut back certain areas of
business, Congress should be willing to look at slightly broader
solutions that would address the health care crisis without unintended
consequences.
I am generally confident, however, that this legislation will serve
the purpose of protecting American families from the double risk of
economic and health insecurity. I hope action will be completed quickly
so that the President can implement these reforms without delay.
Mrs. FEINSTEIN. Mr. President, I rise to support the Kennedy-
Kassebaum legislation on health insurance reform. This legislation,
while not the comprehensive health care reform called for earlier,
takes an important and long overdue step in addressing the insecurity
many Americans feel about their health insurance.
Americans expect their insurance to be there when they need it. That
is why we buy it. And yet many Americans find that, just when they need
their health insurance, it is not there, or they are denied coverage,
or they can't afford the policy premiums.
This bill provides a measure of health security in a number of ways.
No arbitrary, discriminatory terminations: This bill protects
employers from having their policy terminated if their employees incur
large medical costs. Insurers could not impose preexisting condition
limitations for more than 12 months. This means that employees could
change jobs without fear of losing their insurance.
Guaranteed access: Under this bill, insurers are required to offer
insurance to all groups, regardless of the health status of any member
of the group.
Nongroup coverage guaranteed: It protects people who leave their job
from losing access to coverage. People who have had 18 months of prior
employer group coverage and have exhausted their extended coverage--
through COBRA--would be guaranteed access to an individual policy.
Enlarging small groups: The bill creates incentives for small
employers to form cooperatives to strengthen their bargaining power
with insurance companies.
Need for the bill: The need for insurance reform is very real:
Over 41 million Americans have no insurance. That is a 4-million
increase since 1993;
In California, almost 23 percent of the population is uninsured--7.4
million people. And two-thirds of these uninsured people are under the
age of 34;
Twenty-three million Americans lose their insurance every year;
Eighteen million people change insurance policies annually when
someone in their family changes jobs;
Employer sponsored insurance is declining, going from 61 percent of
employed workers in 1986 to 54 percent in 1996;
In California, it's even worse with only about 50 percent of people
covered by employer sponsored insurance in 1994; and
With California's unemployment remaining above 7 percent for the last
5 years--employer sponsored insurance is getting more scarce.
Preexisting conditions: The problem of people being denied insurance
because of preexisting health conditions is one of the most serious
concerns people have today about their health care.
As a matter of fact, 81 million Americans have preexisting health
conditions that could affect their health insurance;
Over 9 million Americans changed jobs in 1995; and
Millions more want to change jobs. The GAO estimates that as many as
4 million employees are ``locked into'' their jobs because they fear
that the insurer for the next employer would refuse to insure them
because of a preexisting health condition.
Take cancer as an example:
Over 1 million people are diagnosed with cancer each year. Over 10
million Americans alive today have a history of cancer.
About 184,300 new cases of breast cancer will be diagnosed this
year--the most common form of cancer among women. And, 44,300 will die
of breast cancer this year.
We probably all have some condition. And yet most policies sold to
individuals, and over half of all plans provided by employers, deny
coverage for some period of time for the conditions most likely to
require insurance.
This bill addresses this serious problem by prohibiting insurers from
imposing preexisting conditions for more than 12 months.
The Problem for Small Employers: Small employers acting alone often
lack the leverage to negotiate good prices and benefits that large
employers can get. More than half of all uninsured employees work in
small firms.
Administrative costs are higher for small groups. One survey shows
that health costs for large employers declined 1.9 percent in 1994,
while small employers had an increase of 6.5 percent.
This bill creates incentives for small employers to form cooperatives
to strengthen their bargaining power with insurance companies.
This approach can work. In 1993, California formed a health insurance
purchasing cooperative for small businesses; 2,500 small businesses
joined.
One year after formation, rates were 10 percent to 15 percent lower
than conventional insurance plans.
Individuals: Finally, there are 10 to 20 million individual Americans
seeking to buy insurance on their own. These people, who are not part
of a large pool where risk can be offset, often find themselves
excluded or unable to afford the premiums.
[[Page S3549]]
Genetic discrimination: I especially appreciate the agreement of
Senators Kassebaum and Kennedy to include in the managers' amendment
provisions barring genetic discrimination by employer-based plans.
The language included in this bill is similar to S. 1600, a bill I
introduced with Senator Mack, to prohibit health insurers from denying
health coverage based on genetic information of the insured or
applicant for insurance
Last fall, as co-chairs of the Senate Cancer Coalition, Senator Mack
and I held a hearing on the status and use of genetic tests. Witnesses
testified about the great promise of genetic testing in predicting and
managing a range of diseases, but they also cautioned about the
potential for discrimination.
In the past 5 years, there has been a virtual explosion of knowledge
about genes. Scientists are decoding the basic units of heredity.
We know that certain diseases have genetic links, including cancer,
Alzheimer's disease, Huntington's disease, cystic fibrosis, and Lou
Gehrig's disease. Altered genes play a part in heart disease, diabetes,
and may other more common diseases.
These advances pose some potential problems. Witness after witness at
our hearing discussed the potential and the reality of health insurance
discrimination based on genetic information.
They recounted actual cases where insurers denied or refused to renew
coverage based on genetic information. This type of discrimination
could have a catastrophic impact if it is not addressed:
About 15 million people are affected by one or more of the over 4,000
currently identified genetic disorders; genetic disorders account for
one-fifth of all adult hospital occupancy, two-thirds of childhood
hospital occupancy, one-third of pregnancy loss and one-third of mental
retardation; and an even larger number of people are carriers of
genetic disease. The June, 1994 issue of Scientific American estimated
that every person has between 5 and 10 defective genes though they
often are not manifested.
Insurance companies are poised to discriminate:
In a 1992 study, the Office of Technology Assessment found that 17 of
29 insurers would not sell insurance to individuals when presymptomatic
testing revealed the likelihood of a serious, chronic future disease.
Fifteen of the thirty-seven commercial insurers that cover groups
said that they would decline an applicant; and
Underwriters at 11 of 25 Blue Cross-Blue Shield plans said they would
turn down an applicant if presymptomatic testing revealed the
likelihood of disease.
The study also found that insurers price plans higher--or even out of
reach--based on genetic information.
Another study conducted by Dr. Paul Billings at the California
Pacific Medical Center, reached similar conclusions.
Here are a few examples of real-life cases:
An individual with hereditary hemochromatosis--excessive iron--who
runs 10K races regularly, but who had no symptoms of the disease, could
not get insurance because of the disease.
An 8-year-old girl was diagnosed at 14 days of age with PKU--
phenylketonuria--a rare inherited disease, which if left untreated,
leads to retardation. Most States require testing for this disease at
birth. Her growth and development proceeded normally and she was
healthy. She was insured on her father's employment-based policy, but
when he changed jobs, the insurer at the new job told him that his
daughter was considered to be a high risk patient and ``uninsurable.''
The mother of an elementary school student had her son tested for a
learning disability. The tests revealed that the son had Fragile X
Syndrome, an inherited form of mental retardation. Her insurer dropped
her son's coverage.
After searching unsuccessfully for a company that would be willing to
insure her son, the mother quit her job so she could impoverish herself
and become eligible for Medicaid as insurance for her son.
Another man worked as a financial officer for a large national
company. His son had a genetic condition which left him severely
disabled.
The father was tested and found to be an asymptomatic carrier of the
gene which caused his son's illness. His wife and other sons were
healthy.
His insurer initially disputed claims filed for the son's care, then
paid them, but then refused to renew the employer's group coverage. The
company then offered two plans. All employees except this father were
offered a choice of the two. He was allowed only the managed care plan.
A woman was denied health insurance because her nephew had been
diagnosed as having cystic fibrosis and she was found to carry the gene
that causes the disease. The insurer told her that neither she nor any
children she might have would be covered unless her husband was
determined not to carry the CF gene.
These are real horror stories.
If people with genetic conditions or predispositions cannot buy
health insurance on the private market, they usually have nowhere to
turn. To qualify for Medicaid, the primary public health insurance
program for the non-elderly, families have to ``spend down'' or
impoverish themselves.
Fear of discrimination can also have adverse health effects. If
people fear retaliation by their insurer, they may be less likely to
provide their physician with full information. They may be reluctant to
be tested. This means that physicians might not have all the
information they need to make a solid diagnosis or decide a course of
treatment.
This bill can help make health insurance available to many who need
it and who want to buy it. It can bring peace of mind to millions of
Americans. It can restore insurance to what insurance is supposed to
be.
I hope my colleagues will join me today in voting for this important
bill.
Ms. SNOWE. Mr. President, I rise in support of The Health Insurance
Reform Act of 1995, and would like to thank the Chairwoman of the Labor
and Human Resources Committee, Senator Kassebaum, for bringing this
common sense health care reform bill to the floor. Her knowledge and
efforts in the area of health care have made progress on this issue
possible, and her ability to craft consensus on this complex issue
deserves enormous praise from both sides of the aisle.
I would also like to compliment the ranking Member, Senator Kennedy,
and the rest of my colleagues who serve on the Labor and Human
Resources Committee--the strong bipartisan vote that brought this bill
out of Committee restores my hope that bipartisanship is not completely
lost in this Chamber.
It has been interesting to me, having ``survived'' the health care
wars of the last Congress, to read some of the things that have been
written about this bill. Talk about role reversal--you now have some
members on this side of the aisle complaining that S. 1028 does not go
far enough, and we have members on the other side of the aisle
complaining that the bill isn't small enough. What a difference a year
makes!
But one thing that has not changed is the fact that the American
people continue to demand changes in the health care system. This bill,
while not as large or as complex as the changes we considered in 1994,
would provide security to millions of Americans--25 million according
to the General Accounting Office. It would reassure them that their
health care coverage could not be taken from them if they changed jobs,
if they became pregnant, if their family situation changed, or if they
lost their jobs.
It does not solve all our Nation's health care problems--but we tried
the complicated, complex, approach with a more than 1,000 page bill in
1994 and we got nowhere. So what is wrong with taking a step in the
right direction? It doesn't mean that this is the only change that
Congress can or should make.
It is said that every journey begins with a single step. So let us
consider the Kassebaum-Kennedy bill before us today as Congress' first
step on the road to overhauling our health care reform system so that
all Americans will have access to affordable, quality health care by
the provider of their choice that can never be taken away.
The Health Insurance Reform Act of 1995 will achieve part of that
shared goal by ensuring access to health care that can not be taken
away. It will ensure that workers who are offered a
[[Page S3550]]
new job opportunity with a different company will be able to accept
it--instead of turning it down because they are afraid that a pre-
existing condition will prevent them from obtaining health care
coverage at their new firm.
It will ensure that workers who lose their job and have had insurance
coverage for the last 18 months will be able to obtain an individual
policy. They will still have a lot to worry about--but at least they
will know that they can obtain insurance for their family.
And it will ensure that small businesses will no longer find
themselves dropped from the insurance roles because one of their
workers has medical problems.
Every Senator--every Member of Congress--has received letters or
spoken with individuals who have been denied coverage or had their
coverage--or their firm's coverage--dropped because of a preexisting
condition. Yet these are the people who need the coverage most. It is
estimated that 81 million Americans suffer from a preexisting medical
condition that endangers their access to health care coverage. This
bill will provide them that protection.
The Kassebaum-Kennedy bill restricts health insurance exclusions on
preexisting conditions by prohibiting insurers and employers from
limiting or denying coverage under group plans for more than 12 months
for a medical condition that was diagnosed or treated during the
previous 6 months. For example, if an individual had been covered under
another employer's plan for 8 months, they would only have to work for
4 months in their new job before being covered.
The bill also prevents group health plans from excluding any employee
from coverage based on health status and requires insurers to renew
coverage for both groups and individuals as long as the premiums were
paid.
Once an individual had been covered for 12 months, no new pre-
existing condition could ever be imposed, even if they changed jobs or
insurance plans.
The bill also will help make health care coverage more affordable for
America's small businesses by lifting barriers to the formation of
private, voluntary coalitions to purchase health insurance. For states
like Maine, where small businesses are the backbone of our economy,
this provision will be particularly helpful. Banding together to obtain
health insurance coverage will give our small businesses the ability to
spread the risk among a larger population and to use their negotiation
power to get quality coverage at the best price. This bill will give
employers and employees the ability to obtain quality coverage at a
competitive price.
The Health Insurance Reform Act of 1995 is a commonsense approach to
a serious problem in this country--access to affordable, quality health
care that can never be taken away. It is not the complete answer to our
health care problems, but it is a big step in the right direction and
will help millions of Americans retain their health care coverage.
I would like to address one of the arguments being made against this
bill. Opponents of reform have argued that while the bill ensures
access, the practical problem will be that the cost of premiums will
soar, making coverage unaffordable for many. The American Academy of
Actuaries, however, has estimated that any premium increases would be
quite small, ranging between 2 and 5 percent. In fact, this potential
increase is lower than the increases we have seen in recent years: over
the last 10 years the average rate paid for individual insurance
premiums has increased between 8 and 15 percent annually.
And in my own State of Maine, which has had a law on the books
guaranteeing issue for employers with fewer than 25 employees since
1992 and guaranteed issue for individuals since 1993, these changes
have not resulted in premium increases that are outside the bounds of
the normal increases in the cost of health care coverage.
By passing this bill we will be renewing our commitment to the
American public that we have heard and have understood their demand
that we act on health care reform. It will provide security for
millions of Americans who currently fear losing their health care
coverage, and will provide access to more affordable coverage for our
small businesses as they band together to enhance their purchasing
power. Passage of this bill will leave us with a long road ahead of us
to address the outstanding issues of health care reform, but at least
we will finally be on the road.
I urge my colleagues to join me in supporting passage of this bill
and I yield the floor.
Mr. CONRAD. Mr. President, I want to express my strong support for S.
1028, the Health Insurance Reform Act.
Over the past several years, access to health care has been one of
the most important issues facing Americans. Far too many Americans--
over 40 million this year--are uninsured, and an equal number are
affected each year by preexisting condition exclusions and the job lock
that results when workers fear that they will lose all or part of their
insurance if they change jobs.
Two year ago, I and many of my colleagues spent countless hours
trying to find a compromise health care reform bill that would ensure
access to health insurance and health care, maintain choice and quality
for consumers, and control the skyrocketing growth in health care
costs. Given the importance of this effort to millions of Americans, I
was disappointed that our effort to find a moderate solution to these
issues was blocked.
The bill before us today takes a modest step in the right direction.
It attacks the most egregious barriers to health insurance: the use of
preexisting condition exclusions to deny coverage to those who most
need health insurance, and the lack of portability when workers change
jobs. Addressing these issues will guarantee access to health insurance
for an estimated 25 million Americans who would otherwise be subject to
these barriers.
However, it is important to remember that, although this is an
extremely important step, it is only a first step. It guarantees access
to health insurance, but it does not guarantee that the available
insurance will be affordable. And, as a representative of a rural
State, I wish this bill improved access to health care services in
medically underserved areas. Thus, when we complete the first step by
enacting this bill, our health insurance reform journey will not be
complete. There is lots of room for further progress in making health
care available and affordable.
Mr. President, with that caveat, let me explain why this bill is so
important. Today, millions of Americans are denied insurance because
they or someone in their family have so-called preexisting conditions.
This means the family of a child born with a heart murmur can't find
insurance because no insurance company wants to take the risk of
covering the costs of treating this heart condition. And it means that
someone who has paid insurance premiums through an employer-sponsored
plan but then leaves that job because she needs a major medical
procedure--for example, an organ transplant--may not be able to get
insurance when she tries to return to the workplace. That's just wrong.
No one should be forced to stay in a job she hates because she fears
she will lose her health insurance if she tries to change jobs. And no
one who has paid insurance premiums faithfully for years should lose
his insurance because he becomes sick and an insurance company refuses
to renew his employer's policy.
This bill fixes these problems. It strictly limits preexisting
condition exclusions when a person or a family applies for health
insurance for the first time. It prohibits any preexisting condition
exclusions for people who have faithfully paid their insurance premiums
for at least 18 months and then need to get new insurance because they
change jobs or lose their jobs. This means that people who change jobs
can rest assured that their new insurance policy will fully cover them.
The bill also requires insurance companies to provide coverage to any
employer with two or more employees. This keeps insurance companies
from denying insurance to certain types of business just because the
company thinks the employees are likely to get sick. It prevents the
cancellation of coverage for a company just because one of its
employees has gotten sick and incurred large medical costs. And it
allows small businesses and other groups to band together in voluntary
cooperatives to bargain as a larger
[[Page S3551]]
group for lower premiums and better coverage.
Finally, the bill requires individual insurance companies to provide
coverage to individuals who lose their job or become self-employed and
exhaust their conversion coverage under COBRA. Coming from a State with
large numbers of self-employed farmers and other small business men and
women, I am keenly aware of the fragility of the individual insurance
market. Average premiums in this market are much higher than in the
group insurance markets because of adverse selection.
Although critics of this so-called group-to-individual portability
provision greatly exaggerate its likely effect on this market, their
arguments are not groundless. This provision will result in more sick
people entering the individual market. In order to prevent this from
greatly increasing premiums for those who are already in this market, I
hope States will proceed very carefully in applying rating restrictions
that could inadvertently worsen the adverse selection inherent in this
market. I am encouraged that the bill gives States great flexibility in
designing their own approaches to meet the goals of this legislation.
This allows them to develop innovative solutions tailored to the
special needs of their population while ensuring that workers still
have access to affordable health insurance without unreasonable
preexisting condition exclusions.
Mr. President, this legislation takes a major step forward in
reforming the private insurance market. It removes the biggest barriers
to health insurance and will enable Americans to change jobs freely
without fear of losing all or part of their insurance coverage. I urge
my colleagues to reject the controversial special-interest provisions
added in the House that threaten to kill this important effort, and to
instead pass a bill that commands broad bipartisan support.
Mr. CAMPBELL. Mr. President, I take this opportunity to support the
health insurance reform bill, offered by Senators Kassebaum and
Kennedy. I am pleased to be a cosponsor of this legislation.
Reforming our Nation's health care system has been a concern for many
Americans. I believe the bill before us today, although limited to the
health insurance industry, is a significant step toward addressing some
of the issues we face with health insurance--cost, portability, and
preexisting conditions. Although this legislation will not fix all of
our health care problems, I think we all need to recognize that it does
make some progress toward addressing these issues.
Currently, reports indicate there are an estimated 40 million
uninsured Americans. This, in and of itself, highlights one of the
biggest problems within the health care industry--the availability of
affordable, flexible insurance policies.
All too often, people are forced into a situation where they feel
they must remain in a job they would rather leave just because they
have long-term health care needs and have no other source for insurance
other than through their employer. This ``job lock,'' coupled with
skyrocketing health care costs, makes the prospect of paying for your
own medical costs without insurance, a frightening, and financially
crippling situation. People simply can't afford to take this risk.
Over the past few years, my home State of Colorado has taken a very
progressive approach in dealing with the issues of health insurance
portability and preexisting conditions and has worked cooperatively
with the health insurance industry to develop what everyone seems to
recognize as a positive step forward. I have often had constituents
tell me how surprised they are to learn how little other States have
done in the area of health insurance reform. The Colorado State
legislature was instrumental in making this law, and in conjunction
with employers, have forged a partnership that seeks to cover as many
Coloradans as possible in the most cost-effective manner. In fact, many
of the safeguards and reforms already instituted within the State of
Colorado are very similar to the Kassebaum, Kennedy bill. Currently,
there are roughly 20 States that don't have this kind of insurance
protection, and I believe that through this bill, we can cooperatively
work to mirror at the Federal level some of the provisions the State of
Colorado already enjoys.
I feel this bill will establish a much-needed standard for the health
insurance industry and will work toward achieving the goal that all
Americans have access to more cost-effective and affordable insurance.
I don't believe anyone can deny the need for this.
Mr. President, I yield the floor.
Mr. SARBANES. Mr. President, I rise today to express my support for
S. 1028, The Health Insurance Reform Act of 1995. While S. 1028 is not
the comprehensive reform of our health system which would be necessary
to guarantee quality health care for all Americans, it does make
important strides in reducing the barriers to coverage for over 25
million people in this Nation.
The legislation before us today, S. 1028, would attempt to make
modest incremental reforms in the health insurance market by addressing
only those provisions upon which there is broad bipartisan agreement.
In fact, the President and over 65 of my Senate colleagues are in
agreement, supporting this legislation which would have an immediate
impact on the lives of over 25 million people.
For these Americans who are unable to change jobs, who cannot leave
their jobs to start a new business, or who lose their jobs, S. 1028
would provide an assurance of continued access to health insurance
coverage. It would end the incidence of job lock in this country by
limiting the ability of health insurers to deny coverage for people
with preexisting medical conditions. Once an initial exclusion period
of no longer than 12 months was exhausted no preexisting condition
exclusion could ever be applied to a policy holder again. It would also
guarantee that a group or individual who purchased an insurance policy
and faithfully paid their premiums, could never have their coverage
taken away from them or canceled.
Mr. President, the health care debate is one that goes to the heart
of the quality of life of all Americans. Access to quality health care
is a fundamental human need and is in my view a fundamental right in a
democratic society. Our challenge is to achieve a situation in which
every American has access to affordable, quality health care. While
there is much more that I would like to do to ensure that each and
every American is guaranteed the same high quality comprehensive care,
the bill before us today makes important steps toward accomplishing
this goal and improving the lives of over 25 million Americans and I
urge its immediate passage.
The PRESIDING OFFICER (Ms. Snowe). The Senate majority leader.
Mr. DOLE. Madam President, I think we have partial agreement here so
we can move ahead. I want to associate myself with most of the remarks,
probably all of the remarks made by my colleague from Texas. We do not
want to have to refight that battle again. I think he raised some
excellent points. I hope in part they have been addressed in the so-
called Dole-Roth amendment, that I think does improve this bill
substantially.
But I ask unanimous consent that during the consideration of S. 1028,
the health insurance reform bill, and following opening statements and
adoption of the managers' amendment as original text, the majority
leader or his designee be recognized to offer his amendment concerning
tax provisions and medical savings accounts.
I further ask that during the pendency of the Dole amendment, Senator
Kassebaum be authorized to move to strike the medical savings account
provision, there be 2 hours equally divided in the usual form on the
motion to strike, and that no amendments be in order to the Dole
amendment or the language proposed be stricken prior to the vote on or
in relation to the motion to strike.
The PRESIDING OFFICER. Is there objection?
Several Senators addressed the Chair.
Mrs. KASSEBAUM. Reserving the right to object, I would just like to
ask the majority leader, when we first discussed this we had 2 hours
equally divided. So much time elapsed since then, I suggest that we
would like to have the vote no later than 3:45, and time then be
equally divided until that time because we have already eaten up
[[Page S3552]]
so much. It had been my hope we could get through to some other
amendments as well, since we had some considerable time, and still
will, on discussing the provisions of the Finance Committee package. If
that would be agreeable?
Mr. DOLE. Obviously, I would have no objection to that. I will modify
the request to say the vote occur not later than 3:45 p.m., and that
any time between the time we start the debate on that motion and 3:45
p.m. be equally divided.
Mr. GORTON. Madam President, reserving right to object.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Madam President, the Senator from Washington would like a
clarification. I have just presented a small technical amendment to the
Dole amendment to the chairman of the Finance Committee. I want that
amendment to be in order.
If the understanding is that second-degree amendments would be in
order if the Dole amendment is not tabled or rejected, then I will have
no objection. I just want to make certain that before the Dole
amendment is adopted that it is itself subject to amendment. Is that
correct? Under the unanimous-consent request?
Mr. DOLE. That will be--let me just proceed with the request.
Mr. GORTON. I just want clarification my amendment will be in order
some time before the adoption of the Dole amendment.
Mr. DOLE. Is it an amendment to the Dole amendment or a separate
amendment?
Mr. GORTON. An amendment to the Dole amendment.
Mr. DOLE. I think the way it is going to work, it would be in order.
Because I would hope to have, if the motion to strike fails, we would
then get on the Dole amendment. But I could not get that agreement, so
the answer would be yes.
Mr. GORTON. I have no objection.
Mrs. BOXER. Madam President, I think this could be accommodated
easily. I have been waiting just to make a 3-minute statement on the
overall bill. I greatly would appreciate having that opportunity before
we get into the debate on the medical savings account.
Mr. DOLE. I will be happy to accommodate the Senator from California.
Mrs. BOXER. I thank the majority leader.
The PRESIDING OFFICER. Is there any objection? Without objection, it
is so ordered.
Mr. DOLE. The vote will occur then. Also following that vote the
Senator from North Dakota would like 15 minutes in a general statement.
Prior to discussion, then, the Senator from California would have 3
minutes.
I also ask, if the Kassebaum motion to strike is agreed to, then the
Dole amendment be immediately modified to reflect that chapters 2 and 3
of subtitle (f) of title IV be withdrawn.
Let me explain what that is.
In other words, they were ``pay-fors,'' and if the MSA's were
stricken we will take those ``pay-fors'' out of the bill. I think it
has been cleared by both Senator Kassebaum and Senator Kennedy.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOLE. I will send the amendment to the desk on behalf of myself,
Senator Roth, and others.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Amendment No. 3675
(Purpose: To provide for a substitute amendment)
Mrs. KASSEBAUM. Madam President, first I send to the desk a
substitute amendment and ask it be considered original text for purpose
of further amendment.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Kansas [Mrs. Kassebaum] for herself and
Mr. Kennedy, proposes an amendment numbered 3675.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
The PRESIDING OFFICER. Under the agreement, the amendment is agreed
to and is considered as original text.
The amendment (No. 3675) was agreed to.
Amendment No. 3676 to Amendment No. 3675
(Purpose: To amend the Internal Revenue Code of 1986 to improve health
and long-term care coverage in the group and individual markets by
making health and long-term care insurance more accessible and
affordable)
Mr. DOLE. Now I ask my amendment be called up.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Kansas [Mr. Dole], for himself, Mr. Roth,
Mr. Nickles, Mr. Pressler, Mr. Lott, Mr. Craig, Mr.
McConnell, Mr. Coverdell, Mr. Grassley, Mr. D'Amato, Mr.
Gregg, Mr. Santorum, Mr. Shelby, and Mr. Faircloth, proposes
an amendment numbered 3676 to amendment No. 3675.
Mr. DOLE. Madam President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. DOLE. Madam President, I will explain, as will the distinguished
chairman of the committee, Senator Roth, explain in some detail what
this amendment does. It is a very important amendment. It is about a
$10 billion amendment. It is paid for. And it does help make health
care more available and more affordable. That is the thrust of this
bill and that is why, even though we certainly want to accommodate
Senator Kassebaum and Senator Kennedy, as far as amendments are
concerned, we think this amendment does improve the bill and it does
provide a great deal of opportunity for many Americans who are now
denied health care. Let me tell you why.
I am committed to passing this bill and the amendment is designed to
help make that happen.
For many years self-employed individuals have been uncertain as to
whether they could deduct their health insurance premiums. And the
Democrat-controlled Congress refused to make the deduction permanent to
ensure that it would apply year after year.
Last year, one of the first things Republicans did when we took
control of the House and Senate was to make this deduction permanent,
and to increase it to 30 percent.
But we said then and we say now that 30 percent is not enough. The
amendment I now offer would raise the deduction for the self-employed
to 80 percent by phasing in increases over the next 10 years.
This will provide equity and much needed tax relief to farmers, small
business men and women, and other self-employed Americans.
My attempts to raise the deduction for the self-employed are not new.
An amendment I offered last year passed the Senate with strong
bipartisan support, but that did not stop the President from vetoing
it, just as he vetoed our $500 per child tax credit.
My amendment will also provide important tax relief regarding long-
term care expenses. The Internal Revenue Service has not seen the
wisdom to allow taxpayers a deduction for long-term care expenses or
premiums paid on long-term care policies.
So this amendment is needed to force the IRS to recognize that
expenses to care for those unable to care for themselves are legitimate
medical expenses that should be deductible.
It is in the best interest of the country to provide appropriate
incentives for families to give proper long-term care for family
members or to plan for future expenses, such as by purchasing long-term
care insurance. Families want to care for their own and the IRS should
not stand in the way.
This provision is particularly important for Americans who are likely
to face these expenses in the near future for their parents and
grandparents. Expenses to provide long-term care of a disabled or
elderly relative could bankrupt a family. We cannot and will not let
that happen. And neither should my Democratic friends, although they
have voted against this relief in the past and the President has
already vetoed this tax relief once before.
I have also included medical savings accounts in this amendment. You
may have heard a lot about MSA's already. But let me tell you about
them. First of all, they are hardly a radical new concept. They are
being used today in 13 States and have enjoyed bipartisan support for
many years.
MSA's provide individuals with choice and flexibility. If an
individual
[[Page S3553]]
chooses to accept an MSA, the individual can tailor his or her own
health care to his or her own needs. Individuals would have their own
personal savings accounts dedicated to health care spending--similar to
the way they have IRA's for their retirement savings.
Under the MSA proposal in this amendment, individuals could purchase
a high-deductible plan and then use the money they accumulated in their
savings account, up to the deductible limit, for health care expenses.
They could deduct the amount they contribute to the MSA and the savings
would accumulate tax free.
Who could argue against providing additional options and flexibility?
The answer is the same people who thought that the best way to reform
the health care system was to hand it over to the Federal Government--
to impose more mandates and Government controls. The American people
are thankful that the Democrat efforts to turn the health care system
over to the Government failed, and they hope that Democrats will fail
in their effort to block this amendment.
Let us remember that the Joint Tax Committee recently analyzed this
MSA proposal and concluded that 88 percent of the MSA tax benefits
would go to those making under $100,000 a year, with 78 percent of the
benefits going to those making under $75,000 a year.
I urge my colleagues on both sides of the aisle to join with me in
support of substantial tax relief for Americans.
Madam President, health insurance reform is, by no means, a newly
debated issue in this Chamber. In fact, it predates many individuals in
this town. The concern about the availability and affordability of
health insurance goes back as early as the Nixon administration when
President Nixon declared that the American health care system was in
need of repair, particularly when it came to affordability.
Madam President, that was 25 years ago. Since then, there have been
dozens of health care bills debated in this Chamber--the Bentsen bill,
the Dole-Packwood bill, and others, all of which were drafted with the
sole purpose of making health care more available and more affordable.
To this date, Madam President, none has been signed into law.
We now have before us a bipartisan bill that contains the kinds of
commonsense insurance reforms that this Senator and many of my
Republican colleagues have long advocated. I commend my colleague from
Kansas, Senator Kassebaum, for her hard work and determination to craft
a health insurance reform bill that could be supported by the vast
majority--if not all Members--on both sides of the aisle.
Madam President, as I stand here, I have to say that I feel a great
sense of relief--as I am sure many Americans will feel--that common
sense has finally prevailed.
For nearly a decade now Republicans have been trying to pass an
incremental health insurance bill that would solve many of the problems
with the availability and affordability of insurance.
During the Bush administration, however, the Democrat-controlled
Congress refused to give President Bush's proposal the time of day.
And then came the Clinton administration, and President Clinton's
insistence that turning the American health care system over to the
Federal Government was the only solution. It was a solution chock full
of mandates, Government intrusion, and untold costs. And the American
public took one good look at it and said, ``No thanks.''
From almost the very first day of the Clinton administration through
the entire long national debate over the President's plan, I said the
same thing day after day after day. And what I said was this: Fix what
needs fixing, makes changes in the insurance market so that more
Americans are able to obtain and afford health care, and leave the many
very good parts of American health care alone.
Here we are, however, 2 years later, and still talking about
insurance reforms that are still badly in need. And the tragedy of
that, Mr. President, is that there are millions of Americans who could
have been helped these past 2 years, had President Clinton not insisted
on his plan or nothing.
Madam President, our first priority is to start with portability.
This will assure that no American is denied coverage because he or she
changes or loses a job. I am committed to passing that change because
it will help millions of job-locked Americans with preexisting medical
conditions and their families.
As I have said, eliminating job lock should have passed at least 2
years ago. Regrettably it did not.
Before we get much further into this debate, I want to underscore at
the outset that it is very important that we pass a bill, once and for
all, that can be signed into law. There is no hidden agenda--no
surprises--no smoke and mirrors. This is serious work that we have
promised to the American public for a very long time.
I also want to take a moment now, that I will elaborate on later, to
describe an amendment Senator Roth and I plan to offer to this bill. In
that amendment there will be a number of tax provisions that will
enhance the insurance reforms in this bill.
Again, I want to underscore, this amendment is not meant to defeat
this bill or diminish its chances of being signed by the President. To
the contrary, my amendment will strengthen this bill and help more
people obtain affordable health insurance--all without the overdose of
Government control the American people already rejected.
My amendment will include an increase in the deduction of health
insurance premiums paid by the self-employed and provides deductions
for long-term care expenses so that families have real incentives to
plan for their later years. It also provides for tax-exempt high-risk
pools, and allows for tax-free accelerated death benefits. In addition,
this amendment makes medical savings accounts available to all
Americans.
Medical savings accounts are not a new concept and have enjoyed
bipartisan support. My view is that medical savings accounts are
another choice for Americans. They may not be right for everyone. They
may appeal to many others. They are included in this amendment as
another option. Choice, after all, is one of the greatest virtues of
American health care.
These are all provisions to help make insurance more affordable
thereby increasing the number of people who are insured.
Madam President, this Congress has worked very hard to keep the
promises we made to the American people when they gave us a majority.
This bill represents relatively noncontroversial needed change--change
we have promised for a long time. We owe it to the millions of
Americans who need our help to do today what we should have done
several years ago.
Passage of this bill will not only improve our health care system, it
could very well restore the faith of the American public that the work
for the Congress is not just a series of political stalemates. Even in
an election year, we can work on a bipartisan basis to pass legislation
that will improve the lives of so many Americans.
Let me indicate that the distinguished Senator from Maine, Senator
Cohen, will discuss his part of this amendment, proposals to clamp down
on health care fraud and abuse. Senator Cohen has been working on it
for a number of years, and they save about $3 billion. They are a very
important part of this overall amendment.
I will just say, as I said earlier, this is a very important piece of
legislation. It is a bill that should be passed. It is a bill that can
be signed into law. There is no hidden agenda, no surprises, no smoke,
and no mirrors. This is a serious work product that we have promised to
the American people for a long time. It seems to me we can get this
done yet today. The House has passed a different version. We will go to
conference. In my view, we can come up with a very reasonable proposal
that I think President Clinton will sign.
We have offered what we believe will be an amendment to strengthen
this bill. I happen to believe the medical savings account is another
addition that will strengthen this bill. I know there is some objection
to it. But all this is done without an overdose of Government control
which the American people rejected just a few years ago.
For all the reasons I can think of, I urge the adoption of this
amendment without anything being stricken from
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it. I hope at 3:45 the motion to strike will be defeated, and then we
can determine if we can vote on the Dole-Roth amendment or should there
be other amendments. Maybe the Senator from Washington has other
amendments or maybe other people. We can then dispose of those
amendments.
I yield the floor, and I thank the Chair.
The PRESIDING OFFICER. The Senator from California.
Mrs. BOXER. Madam President, will you tell me when my 3 minutes are
up? That is all I really need.
I believe we can have a rational debate about this bill. The Senator
from Texas said it is hard to be rational when you debate health care,
but I think Senator Kassebaum is a very rational woman, and I think
Senator Kennedy is a very rational Senator. I think the two of them
have come together. They have brought us a bill that I am very proud to
support.
In 1993, I authored a bill that would make it unlawful to cancel or
reduce an employee's benefits because the employee suffered from a
particular disease or illness, and it made it unlawful for employers to
impose different benefit caps for different diseases.
What happened, as we all know, is we got off track with health care
reform. It was derailed, and it took us some time to mend some frayed
feelings, and now we are back here in a bipartisan effort. We are on
the brink of a bipartisan success to bring some fairness to this world
of health insurance coverage.
Clearly, millions and millions of Americans are going to be better
off as a result of the Kassebaum-Kennedy bill, because we know we will
have portability now of health care coverage. Many Americans who are
locked in jobs because they fear losing their insurance--and I know so
many myself who are in that situation--will no longer be fearful of
that.
We think that will impact 25 million Americans. This bill will
prohibit group health plans from excluding any employee based on their
health status. We know that we do not want to encourage people just
buying insurance when they get sick, so we require a 12-month waiting
period, and then they cannot be denied for a preexisting condition. We
think 81 million Americans, Madam President, have conditions that could
subject them to such exclusions, so we are talking about more than 100
million Americans benefiting from this, as well as small businesses.
I strongly urge us to support the Kassebaum-Kennedy bill. I think if
we can support Senator Kassebaum's amendment to the Dole amendment, it
would be far better off, because the medical savings accounts are good
for some of the wealthiest and healthiest in our Nation but would be
damaging to the vast majority of Americans.
So I look forward to voting for this bill. I think it will be a
bright moment for this U.S. Senate.
I yield the floor, Madam President.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Madam President, the purpose of the leadership amendment to
the Kassebaum-Kennedy health insurance reform bill is to help
individuals and employers purchase affordable health and long-term care
insurance, and it will particularly help small business men and women
go a long way toward combating fraud and abuse in the Medicare system.
Affordability of health and long-term care insurance has long been a
major problem in our country, and the leadership amendment provides
concrete solutions. By eliminating many of the financial barriers to
affordable health and long-term care insurance, Americans will take
greater responsibility for their health and long-term care needs,
relying less on the Federal Government.
The leadership amendment provides affordable health and long-term
care insurance and personal responsibility by increasing the health
insurance deduction for self-employed individuals to 80 percent. On
average, employers pay about 80 percent of their employees health
insurance costs. But under current law, employers can exclude this
benefit tax.
In comparison, Madam President, under current law, self-employed
individuals can only deduct 30 percent of their health insurance.
Raising the health insurance deduction for self-employed individuals
will eliminate this inequity and will be a good first step toward
putting self-employed individuals on a par with workers who receive
health insurance from their employer.
But this is not all this amendment provides. It provides tax
clarification for long-term care insurance. Under this amendment, long-
term care insurance that meets certain consumer standards will receive
the same favorable tax treatment as medical insurance. The consumer
standards require insurance companies to disclose information to
consumers that will aid them in buying a long-term care policy that
best fits their individual needs.
Long-term care insurance tax clarification will provide the much
needed incentive for Americans to buy this insurance. All too often
individuals without long-term care insurance end up depleting their
life savings for their care and end up on Medicaid. Long-term care
insurance will give Americans with long-term care needs the dignity of
providing their own care and at the same time reducing the burden on
Medicaid.
Additionally, Madam President, this amendment allows tax-free
benefits from the early termination of life insurance. It permits
terminally and chronically ill individuals to take tax-free withdrawals
from their life insurance. Many terminally and chronically ill
individuals end up depleting their life savings for their care and end
up on Medicaid. This provision will provide an additional source of
funds for the terminally and chronically ill to attend to their health
care needs and at the same time will reduce the burden on Medicaid for
their care.
This amendment also includes tax-favored medical savings accounts.
Our medical savings account proposal permits an individual with a high-
deductible health plan to make tax-deductible contributions to an MSA.
Contributions to the medical savings account are limited to $2,000 for
single coverage and $4,000 for family coverage. Distribution from the
medical savings account can be used for medical expenses without being
taxed.
Excess funds in a medical savings account can be carried over to the
next year, would be available to pay for unexpectedly high health
costs, long-term care insurance, or to continue health insurance during
periods of unemployment, often called COBRA coverage. Madam President,
among the great freedoms that Americans cherish is the ability to make
choices and decisions about how to take care of their families. Medical
savings accounts will place control of America's health care back in
the family. It does so in significant ways that create the right
incentives for health care.
With the medical savings accounts, Americans will be able to choose
their physician, their hospital, and their health care plan. Not only
will Americans be allowed to go to the doctor of their choice, but to
the optometrist, the dentist, or the chiropractor of their choice as
well. Traditional low-deductible health insurance may not cover visits
to the dentist or optometrist, but the medical savings accounts will.
In addition, Madam President, many traditional low-deductible health
insurance plans do not pay for preventive care. For working poor
Americans, this feature of medical health savings accounts will be
especially helpful. That is because Americans with medical savings
accounts will have the money to pay for preventive care for their
families, whereas they may not have the money in the absence of a
medical savings account.
Beyond offering patients a choice, medical savings accounts will
lower health care spending by empowering people to become knowledgeable
about health care costs. As a result, medical savings account users
become more effective consumers of health care and reject unnecessary
or duplicative treatment. Unused medical savings account funds will
accumulate from year to year, providing an incentive for people to
remain healthy and consume medical care wisely.
In addition, Madam President, medical savings accounts will also
restore the physician-patient relationship, something that has eroded
over time. Patients are finding their choice of health care providers
being limited and bureaucracies are interfering with their doctor-
patient relationships.
[[Page S3555]]
With medical savings accounts, a patient can go to any doctor, nurse,
or other health care provider of their choice without worrying about
whether their insurance will cover the bill.
Madam President, we already know about the success of medical savings
accounts because hundreds of companies, including the United Mine
Workers, are experimenting with them with great success. Companies that
offer medical savings accounts have experienced significant reductions
in health care spending by their employees. Most of these companies
find that medical savings accounts are attractive to workers in both
low- and high-income categories and workers in all health conditions.
In fact, the Joint Committee on Taxation anticipates that about 78
percent of medical savings account users will have an annual income of
less than $75,000.
Madam President, the problem with current medical savings accounts is
that employees are treated worse under the tax laws by selecting a
medical savings account and high-deductible health plan. At the end of
each year the employee must include the full amount of the money
deposited in his or her medical savings account as income. That is a
grossly unfair result when employees with traditional low-deductible
insurance do not pay tax on their employer provided insurance.
Furthermore, medical savings accounts advance an important goal of
Senator Kassebaum's health insurance reform bill, and that is health
insurance portability. Health insurance portability is something
Americans have been requesting for years. The lack of health insurance
portability is a problem with the current health insurance market and
results in job lock for millions of Americans. Medical savings accounts
will help end job lock for millions of American workers because they
will be able to take their medical savings account with them when they
change jobs. This would promote continuity of insurance coverage.
Another feature of a medical savings account is that it will allow a
lower cost insurance alternative to millions of self-employed
Americans. American farmers and small businesses will be able to buy
high-deductible health insurance and fund a medical savings account to
provide for their family's health care needs. This feature has the
potential of removing millions of people from the ranks of the
uninsured.
Madam President, it is interesting to note that 13 States and at
least one city have passed medical savings account legislation and
dozens more are moving to pass similar legislation. For example, Jersey
City, NJ, has implemented medical savings accounts as an alternative
for their city employees. Ohio is implementing a test program for State
employees. Clearly, medical savings accounts offer Americans a choice
about their health care that should be fundamental in a country built
on free-market principles. It is the Federal Government that must now
move ahead with the idea.
Madam President, strong efforts have been made to defeat medical
savings account legislation by those who have a vested interest in the
current health care system that is not working for millions of
Americans. The real winners under medical savings accounts will be the
hundreds of thousands of Americans who will grab control over their
family's health care spending.
I hope the encouragement from hundreds of companies with successful
medical savings account programs and the many States that are
pioneering in medical savings accounts will serve as strong incentives
for my fellow colleagues to join me in supporting the medical savings
account provisions and the leadership amendment.
Madam President, I ask unanimous consent to have an editorial in the
Wall Street Journal by Nobel Prize-winning economist Milton Friedman
entitled ``A Way Out of Soviet-Style Health Care'' printed in the
Record.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Apr. 17, 1996]
A Way Out of Soviet-Style Health Care
(By Milton Friedman)
In a chapter in his novel ``The Cancer Ward'' titled ``The
Old Doctor,'' Alexander Solzhenitsyn compares ``private
medical practice'' with ``universal, free, public health
service'' through the words of an elderly physician whose
practice predated 1918. A byproduct is an eloquent statement
of the major advantages of medical savings accounts for the
U.S. in 1996.
Mr. Solzhenitsyn himself had no personal experience on
which to base his account and yet, in what I have long
regarded as a striking example of creative imagination, his
character presents an accurate and moving vision. The essence
of that vision is the consensual relation between the patient
and the physician. The patient was free to choose his
physician, and the physician free to accept or reject the
patient.
In Mr. Solzhenitsyn's words, ``among all these persecutions
[of the old doctor] the most persistent and stringent had
been directed against the fact that Doctor Oreschenkov clung
stubbornly to his right to conduct a private medical
practice, although this was forbidden.''
Easier to Find a Wife
In the words of Dr. Oreschenkov in conversation with
Lyudmila Afanasyevna, a longtime patient and herself a
physician in the cancer ward: ``In general, the family doctor
is the most comforting figure in our lives. But he has been
cut down and foreshortened. * * * Sometimes it's easier to
find a wife than to find a doctor nowadays who is prepared to
give you as much time as you need and understands you
completely, all of you.''
Lyudmila Afanasyevna: ``All right, but how many of these
family doctors would be needed? They just can't be fitted
into our system of universal, free, public health services.''
Dr. Oreschenkov: ``Universal and public--yes, they could.
Free, no.''
Lyudmila Afanasyevna: ``But the fact that it is free is our
greatest achievement.''
Dr. Oreschenkov: ``Is it such a great achievement? What do
you mean by `free'? The doctors don't work without pay. It's
just that the patient doesn't pay them, they're paid out of
the public budget. The public budget comes from these same
patients. Treatment isn't free, it's just depersonalized. If
the cost of it were left with the patient, he'd turn the ten
rubles over and over in his hands. But when he really needed
help he'd come to the doctor five times over. * * *
``Is it better the way it is now? You'd pay anything for
careful and sympathetic attention from the doctor, but
everywhere there's a schedule, a quota the doctors have to
meet; next! * * * And what do patients come for? For a
certificate to be absent from work, for sick leave, for
certification for invalids' pensions; and the doctor's job is
to catch the frauds. Doctor and patient as enemies--is that
medicine?''
``Depersonalized,'' ``doctor and patient as enemies''--
those are the key phrases in the growing body of complaints
about health maintenance organizations and other forms of
managed care. In many managed care situations, the patient no
longer regards the physician who serves him as ``his'' or
``her'' physician responsible primarily to the patient; and
the physician no longer regards himself as primarily
responsible to the patient. His first responsibility is to
the managed care entity that hires him. He is not engaged in
the kind of private medical practice that Dr. Oreschenkov
valued so highly.
For the first 30 years of my life, until World War II, that
kind of practice was the norm. Individuals were responsible
for their own medical care. They could pay for it out-of-
pocket or they could buy insurance. ``Sliding scale'' fees
plus professional ethics assured that the poor got care. On
entry to a hospital, the first question was ``What's wrong?''
not ``What is your insurance?'' It may be that some firms
provided health care as a benefit to their workers, but if so
it was the exception not the rule.
The first major change in those arrangements was a
byproduct of wage and price controls during World War II.
Employers, pressed to find more workers under wartime boom
conditions but forbidden to offer higher money wages, started
adding benefits in kind to the money wage. Employer-provided
medical care proved particularly popular. As something new,
it was not covered by existing tax regulations, so employers
treated it as exempt from withholding tax.
It took a few years before the Internal Revenue Service got
around to issuing regulations requiring the cost of employer-
provided medical care to be included in taxable wages.
That aroused a howl of protest from employees who had come
to take tax exemption for granted, and Congress responded
by exempting employer-provided medical care from both the
personal and the corporate income tax.
Because private expenditures on health care are not exempt
from income tax, almost all employees now receive health care
coverage from their employers, leading to problems of
portability, third party payment and rising costs that have
become increasingly serious. Of course, the cost of medical
care comes out of wages, but out of before-tax rather than
after-tax wages, so that the employee receives what he or she
regards as a higher real wage for the same cost to the
employer.
A second major change was the enactment of Medicare and
Medicaid in 1965. These added another large slice of the
population to those for whom medical care, though not
completely ``free,'' thanks to deductibles and co-payments,
was mostly paid by a third party, providing little incentive
to economize on medical care. The resulting dramatic rise in
expenditures on medical care
[[Page S3556]]
led to the imposition of controls on both patients and
suppliers of medical care in a futile attempt to hold down
costs, further undermining the kind of private practice that
Dr. Oreschenkov ``cherished most in his work.''
The best way to restore freedom of choice to both patient
and physician and to control costs would be to eliminate the
tax exemption of employer-provided medical care. However,
that is clearly not feasible politically. The best
alternative available is to extend the tax exemption to all
expenditures on medical care, whether made by the patient
directly or by employers, to establish a level playing field,
in terms of the currently popular cliche.
Many individuals would then find it attractive to negotiate
with their employer for a higher cash wage in place of
employer-financed medical care. With part or all of the
higher cash wage, they could purchase an insurance policy
with a very high deductible, i.e., a policy for medical
catastrophes, which would be decidedly cheaper than the low-
deductible policy their employer had been providing to them,
and deposit all or part of the difference in a special
``medical savings account'' that could be drawn on only for
medical purposes. Any amounts unused in a particular year
could be allowed to accumulate without being subject to tax,
or could be withdrawn with a tax penalty or for special
purposes, as with current Individual Retirement Accounts--in
effect, a medical IRA. Many employers would find it
attractive to offer such an arrangement to their employees as
an option.
Some enterprises already have managed to do so despite the
tax penalty involved. MSAs have proved very popular with
employees at all levels of income, and they've been cost-
effective for employers. The employee has a strong incentive
to economize, but also complete freedom to choose a
physician, and the equivalent of first-dollar coverage. There
are no out-of-pocket costs until the employee spends more
than the total amount in the MSA. Such costs are then limited
to the difference between the amount in the account and the
deductible in the catastrophic policy. Moreover, the employee
can use money in the MSA at his or her discretion for dental
or vision care that is typically not covered under most
health plans. No need to get ``authorization'' from a
gatekeeper or an insurance company to visit a specialist or
to have a medical procedure--until the catastrophic policy
takes over.
limiting competition
The managed care industry has come to recognize that MSAs
might threaten its growing control of American medicine by
offering a more attractive alternative. As a result, the
managed care industry has recently become a vigorous enemy of
MSAs. Every believer in competition will recognize that
opposition for what it is: a special interest using
government to limit rather than expand competition.
Medical savings accounts are not a panacea. Many problems
would remain for an industry that now absorbs about a seventh
of the national product. However, I believe that they offer
the closest approximation that is currently feasible to the
private medical practice that Dr. Oreschenkov cherished.
Mr. ROTH. Madam President, in his editorial, Dr. Friedman recognizes
medical savings accounts can be an important factor in restoring the
freedom of choice for both the patient and physician and to control
health care costs.
These important provisions in the leadership amendment are not all
that we are offering. Our amendment also permits penalty-free
withdrawals from IRA's for health and long-term care insurance. The
leadership amendment encourages people to purchase health insurance by
allowing penalty-free withdrawals from IRA accounts to buy health and
long-term care insurance and to pay for major medical expenses.
This provision will allow unemployed workers the ability to access
their IRA funds to continue their health insurance for their families.
The leadership amendment provides tax exemptions to State-sponsored,
high-risk insurance pools, a provision that will encourage States to
set up insurance pools from which high health risk individuals can
purchase affordable insurance.
Madam President, the leadership amendment also contains new tools for
law enforcement to aggressively attack fraud and abuse in health care.
GAO estimates that as much as 10 percent of health spending in the
United States is lost to fraud and abuse. Law enforcement officials
believe that most health care fraud goes undetected.
The leadership amendment makes substantial new funds available to the
Justice Department, the FBI and the IG of the Department of Health and
Human Services for investigation and prosecution of health care fraud.
These provisions also create for the first time a criminal statute for
health care crimes, tough new penalties for fraud in Federal health
programs, including Medicare and Medicaid.
Madam President, these health care fraud and abuse provisions were
crafted by Senator Cohen over the past 3 years. I commend him and his
staff on their tireless and important work. Madam President, the
leadership amendment is actually paid for. The offsets are, first,
large corporations will no longer be permitted to borrow corporate-
owned life insurance and deduct the interest. The provision is a major
corporate tax loophole that will be closed. The same proposal was
included in the Balanced Budget Act of 1995 and is similar to the
administration's proposal in its fiscal year 1997 budget.
Second, expatriates, those persons who leave the United States for
tax avoidance purposes, will be subject to taxation upon exit from the
United States. The proposal is similar to the expatriation provision in
the Senate version of the Balanced Budget Act of 1995.
Third, starting in 1996, thrift institutions will calculate their tax
deduction for bad debts the same way as banks. This provision will
facilitate future legislation to harmonize the bank and thrift
charters, and has widespread support. A similar proposal was included
in the Balanced Budget Act of 1995 as well as an administration revenue
proposal in the fiscal year 1997 budget.
Fourth, a measure to combat fraud and the earned-income credit
program. This proposal is identical to the earned-income credit
compliance provisions in the House health care bill.
Mr. President, I recognize that there are many other popular tax
proposals championed by other Members that would likely find their way
into this bill. However, this is a health insurance reform bill. The
focus of this and other amendments should be on expanding the
affordability of health and long-term care insurance for Americans. To
stray from the purpose of this amendment may doom the entire health
insurance reform effort. I suggest that no Senator wants to do that.
Mr. COATS. Madam President, the Congressional Budget Office reported
that health care spending, rather than cost, is the major problem in
U.S. health care. The report states that ``a major reason for high and
rapidly rising health cost is the failure of the normal discipline of
the marketplace to limit the quantity of services supplied.''
Today, nearly 80 percent of medical expenses are paid by somebody
other than the patients themselves.
Out-of-pocket expenditures have declined from 60 percent of the
Nation's total health bill in 1960 to 20 percent today. Since that
time, the Government's share has doubled to 46 percent.
This means that most health care expenditures in the United States
today are paid for by someone other than the consumer of health care--
by the Government or by insurance carriers. Unlike any other purchase,
when Americans receive medical care, they use someone else's money.
Our health care system has effectively insulated Americans from the
cost of care. There is little incentive to spend wisely. There is no
need to look for the best buy for the health care dollar.
Six years ago, I introduced the first MSA legislation in the Senate.
My plan provides a financial incentive for Americans to choose a
healthy lifestyle and to be better consumers of health care. Under my
plan, employers provide an umbrella catastrophic policy and invest the
rest of the money in a tax free account for each employee. I am pleased
to be a cosponsor of the Finance Committee amendment which builds on
these same principles.
For example, the average employer spends $4,500 on health benefits
for an employee. Under the typical MSA, an employer would buy a
catastrophic policy--with a $3,000 deductible--at an average cost of
$1,500. The remaining $3,000 would be given to the employee to cover
out-of-pocket medical expenses. Whatever is unused would be given to
the employee. We would provide a financial incentive both to stay
healthy and to shop for bargains in the system.
I was discussing this idea with some constituents in Indianapolis.
One woman told me she knew exactly what I was driving at. She called
her local hospital to inquire how much a mammogram would cost. When
told $300,
[[Page S3557]]
she asked if they ever offered any sales. Sure enough, Mother's Day
week, the screenings cost only $50. However, because her insurance
covered the cost, she had no incentive to purchase the care at the
reduced price.
This sounds complicated, but the effect would be simple. People would
be allowed to choose their own doctors, make their own health care
decisions, have a financial incentive to live a healthier life, and
control medical costs through increased competition.
Medical savings accounts are working. People with these plans are
looking for and finding bargains. And they are getting more
preventative care from their doctors.
Listen to a letter from one woman in Indiana:
When the MSA account became an option at my company, I
decided to try it with my family. For the last half of [the
first year], our family will be receiving a refund for our
unused portion. With five on our policy, this was a nice
surprise.
``I was told I would be needing surgery performed in the near future.
I have already made arrangements to pay our [catastrophic] deductible
in full * * * the total surgeon's charge was $9,843. However, they have
agreed to take off $3,797. With this account I have realized there is
no set doctor's charge.''
This Indiana woman has become a wise consumer of health care
services. She bargained and saved nearly $4,000 in surgery costs. She
scrutinizes her bills and makes sure that she is getting what she pays
for.
Another Hoosier had this to say:
``The MSA plan has helped me become a more frugal shopper of health
care for myself and my family. I now ask the doctor for generic
prescriptions when available, and try to utilize our family doctors
when available, instead of the more expensive immediate care centers.''
Another Indiana resident was surprised to learn that the price of
treatment does vary depending on the status of her insurance. Treatment
to an ear damaged in an auto accident was $900 through insurance, but
only $200 since she paid out-of-pocket.
A resident of Indianapolis writes, ``I am a single parent who
receives no outside support. Therefore, it is very important for me to
have insurance coverage for my 12-year-old daughter and I. I made the
decision to try the medical savings account because although vision and
dental expenses were not covered under the traditional plan, I would be
able to use the MSA money for these expenses * * * both my daughter and
I wear glasses. Both our prescriptions had changed this past year,
therefore I incurred the cost of the exams along with the cost of new
glasses.
``I did have necessary medical expenses last year that used all but
$37 of my MSA fund. While I may have received less than others who had
MSA's last year, I gained a great deal more than those who had the
traditional plan. I had no out-of-pocket expenses and still had $37
come back to me. There was nothing to lose, and everything to gain.''
In addition to empowering people, medical savings accounts help
control the costs of providing coverage for many companies.
In Indiana, 81 percent of employees at Golden Rule Insurance elected
the medical savings account option the first year it was offered. These
workers got $468,000 in reimbursements from their MSA's. Not
surprisingly, the next year, 90 percent of the employees selected the
MSA option. Golden Rule benefited as well--the company saw no increase
in health care costs for 2 straight years, with $734,000 refunded to
employees, an average of $1,000 per employee.
Dominion Resources has encouraged workers to opt for a high
deductible plan and to place the monthly premium savings into a health
account. Some 80 percent of Dominion's employees have selected this
plan and the company has seen no increases in premiums since 1989.
Knox Semiconductor in Rockport, ME, has experienced only one rate
increase in the last 4 years under its Health-Wealth Program. Its
president, John Marley, claims that the program saved his company more
than $100,000 in 3 years--a significant savings for a small business.
These savings are particularly impressive given the cost increases
experienced by companies in conventional plans. The Clinton-Mitchell
bill, for instance, claims it will achieve its major savings through
encouraging HMO styled delivery of services. But even HMO costs are
rising--13.6 percent a year between 1988 and 1992. In 1993, they jumped
another 6.5 percent.
MSA's could potentially achieve savings in another significant way.
Not only would they unleash the collective bargaining power of the
American consumer, but they could significantly reduce the
administrative burden on our health care system. Less than 15 percent
of all Americans spend $3,000 a year on medical care, and therefore the
accumulated cost of paperwork processing are for small claims. By
paying these bills directly, our health care system would realize
significant savings in paperwork reduction and substantially reduce the
$90 billion in administrative costs we spent each year.
Forbes magazine has experimented with this concept. In order to cut
down small claims, they give each employee an annual account of $1,200.
For every dollar filed in medical claims, the employee loses $2 from
the account. Employees can keep what is left in the account at the end
of the year. This system obviously encourages employees to pay for
small claims out-of-pocket. After the system was implemented, the
paperwork on routine claims fell dramatically. The company's health
costs fell by 17 percent in 1992 and by 12 percent the following year.
We are paying a high price for our social and behavioral attitudes,
our personal lifestyle choices. The United States pays $52 billion each
year on illnesses related to smoking. Unhealthy eating habits
contribute directly to 5 of the 10 leading causes of death in the
Nation. Two out of three deaths in the United States can be linked to
tobacco use, alcohol use and abuse, controllable high blood pressure,
overeating, traumatic injury, and lack of preventative care.
One man in Indiana commented, ``the plan has also given me a better
outlook on staying healthy. It provides financial incentive for not
over utilizing health care, but at the same time provides a way to
cover the more routine expenses which one would incur at regular
intervals. Getting a regular check up could help prevent more costly
health care bills. Its nice to have an outlet to pay for expenses when
you really should go to the doctor instead of waiting to the last
minute because our deductible is not satisfied.''
The MSA is the only health reform plan that provides incentives to
remain healthy. Indeed, the Kennedy bill entitles those at high risk of
sexually transmitted disease more health care than it does to others
not considered at risk. The Kennedy bill requires all Americans to pay
for smoking cessation classes regardless of whether or not you smoke.
So smokers get more care than nonsmokers under the Kennedy bill. Under
the MSA, non-smokers, who likely will remain healthier than smokers,
reap the rewards of their behavior.
The Wall Street Journal recently editorialized, ``Most of the health
bills before Congress remind us of Henry Ford's philosophy behind the
Model-T car: ``You can have any color you want as long as its black.''
[but] health care reform that includes medical savings accounts would
represent real consumer sovereignty; patient self-interest would be
harnessed to keep costs down, and workers would build up tax-free
health care funds for when they were between jobs. Health care security
would be enhanced, but not at the cost of quality or freedom of
choice.''
This Congress faces a fundamental choice. We can use the lessons of
our experience--Americans empowered choose wisely--competition in the
free market enhances quality and drives down costs--principles which
guide reform through medical savings accounts. Medical savings accounts
leave health care choices where they belong--in the hands of
individuals. I urge my colleagues to support real reform--and to retain
medical savings accounts.
Amendment No. 3677 to Amendment No. 3676
(Purpose: To strike medical savings accounts)
Mrs. KASSEBAUM. Madam President, I send to the desk an amendment and
ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
[[Page S3558]]
The legislative clerk read as follows:
The Senator from Kansas [Mrs. Kassebaum] proposes an
amendment numbered 3677 to amendment No. 3676.
The amendment is as follows:
Strike subtitle C of title IV.
Mrs. KASSEBAUM. Madam President, the purpose of this amendment is to
strike the portion of the package put forward by Senator Dole and
Senator Roth regarding medical savings accounts. It is difficult for me
to stand and do so because I think the rest of the provisions in the
package that have been put forward are ones that are generally agreed
to on both sides of the aisle. Senator Dole has been a long-time leader
of efforts to increase the deductibility for those who are self-
employed. It is a very positive amendment. It will be a very positive
part of this bill.
Also, Senator Dole has been a long-time leader in wanting to address
long-term care and to be able to provide some means of helping those
who have high costs for family and long-term care. This will provide
tax credits to do so.
The chairman of the Finance Committee, Senator Roth, has also been a
long-time proponent of such measures. I think the way in which the
measure is crafted is a very constructive addition to the legislation
before the Senate.
When the ranking member of the Labor Committee, Senator Kennedy, and
myself completed the work of the committee in a unanimous vote last
August, we agreed that we would not support any additional amendments
that were highly contentious. This included ones that individually we
would support, as well as those that we would oppose. Cumulatively,
they could cause a real collapse if they carried too much baggage, plus
or minus. Therefore, we have agreed, whether we individually supported
those amendments or not, to not support any amendments which were going
to prove to be controversial.
I would like to speak for a moment about medical savings accounts and
my own concerns regarding them. As has been pointed out, 13 States have
now in place such savings accounts and I think that is going to be
useful to analyze the effect of medical savings accounts. The
proponents say it will bring down health care costs by encouraging
consumers to shop more wisely for health care, that they will increase
coverage by making health care that is affordable for individuals, and
they will reduce health care spending for employers.
Nevertheless, we are not really certain, and I still believe that we
need to carefully consider what medical savings accounts are about. I
think it is not a question of either/or. Medical savings accounts
should be considered and we should debate the merits of medical savings
accounts. I strongly question whether they should be attached to this
particular bill as they do not really enhance the provisions of this
bill that we are debating today.
I do believe that medical savings accounts are of benefit,
particularly to the healthiest and most financially secure Americans.
They do not really address those with preexisting conditions, nor those
with catastrophic illnesses at the time, nor those without a job or
income who need coverage the most.
I think the medical savings accounts could provide a false sense of
security because it does offer choices to individuals. It lends
encouragement to invest wisely. It lends to a shelter in the Tax Code
which would allow one to build up support that could be used at times
that are important. However, it is a false sense of security, Madam
President, I believe.
They are sold as giving Americans freedom to exercise choice and that
people will be protected when they get catastrophic illnesses. However,
as our colleague, Senator Jeffords knows, most so-called catastrophic
policies have very low lifetime limits. He will be offering an
amendment, as a matter of fact, to address that concern. So, people are
not protected for truly catastrophic illnesses. Medical savings
accounts are an experiment, not without merit. From the States that are
already experimenting with the accounts and have passed legislation, we
will be able to gather data which will be useful to us.
I suggest that Blue Cross Blue Shield of Ohio has shown that MSA's
would increase, not decrease, employer costs because there would be
less money in the pool to cover above average costs of high-risk
individuals. There needs to be the ability to have a risk pool, to have
reinsurance, so that those costs can be spread, of which all of us
would have to pay. That is not going necessarily to lead to escalating
premiums so much as spreading the costs across the board.
Blue Cross and Blue Shield has observed that there is a concern that
MSA's will segment the market into people who are very healthy and
people who are not healthy. If that happens, you lose the ability to
spread the risk pool. Senator Breaux spoke to that earlier this
morning. So for all those reasons, Madam President, I have some serious
reservations. Senator Cohen from Maine, as Senator Roth pointed out,
has legislation regarding fraud and abuse that helps provide savings,
which has been incorporated in this amendment. I think that is a
positive part of the package put forward by Senator Dole and Senator
Roth.
But as long as medical savings accounts have such a high degree of
uncertainty, I think it is a package that should be viewed with some
skepticism as we regard this particular proposal before us, which has
universal support and will continue to have if we give some care to the
amendments that are added to it.
I have the highest regard for the efforts of the majority leader, as
he has put forward what I believe are positive additions to our bill.
It is my hope that those additions can be accepted and that medical
savings accounts, with my motion to strike, will be defeated.
I yield the floor.
Mr. KENNEDY. Madam President, how much time does the Senator from
Connecticut need?
Mr. DODD. Seven minutes.
The PRESIDING OFFICER. The Senator is recognized for 7 minutes.
Mr. DODD. Madam President, 2 years ago the 203d Congress spent a
great deal of time discussing the merits of comprehensive health care
reform.
The Committee on Labor and Human Resources held more than 40 hearings
debating the issue.
And in the end those opponents of comprehensive reform, who said we
needed to go slow, won the day.
I, for one, thank that was a mistake.
But, at the same time, I understand the apprehension of my colleagues
about comprehensive reform.
Well today, the legislation before us today--the Kassebaum-Kennedy
Health Insurance Reform Act--gives us the opportunity to pass sensible,
incremental and common-sense health reform measures that will help
millions of Americans.
This bill may not solve every problem in our health care system. But,
it is good public policy.
And it will make a real difference in the lives of millions of
Americans.
And if we, as a body, believe that American workers should not live
in fear of losing their health care when they change their job, then we
must pass these sensible reforms.
In fact, recollecting our debates from 2 years ago, it's hard to
imagine that this bill would not pass on a unanimous vote.
Not once in our many committee meetings did any member argue for the
preservation of exclusions based on preexisting conditions.
Not once did anybody argue against insurance portability. Even while
we were debating health care reform on the Senate floor, not once did
anybody raise objection to the sort of market reforms that are included
in this bill.
the health care problem
And, I think we all recognize the huge scope of the problem.
Almost 40 million Americans have no health care insurance.
Approximately 12 million of those uninsured are children under the
age of 21.
In my State of Connecticut, 300,000 people were uninsured in 1993.
That is 12.1 percent of the population, up from 9.7 percent in 1992.
That's a 25 percent increase.
In fact according to a recent poll, 22 percent of Connecticut
Residents who needed health care did not go to a doctor or receive
health care services because it was either too expensive or simply
inaccessible.
These are unacceptable statistics, and they make clear the need for
reform.
[[Page S3559]]
job lock
And, throughout Connecticut and the Nation as a whole, millions of
others live in fear that if they change their job, they will lose their
health care as well.
Various surveys have found that as many as 30 percent of Americans
report that either they or a family member suffer from job lock.
Too many Americans are being forced to stay at a job because they
simply can not afford to lose their health care coverage.
But if this legislation passes, the provisions in this bill would
relieve as many as 3 to 4 million Americans from the burden of job
lock.
kassebaum-kennedy is a good first step
While I think that even my colleagues Senator Kennedy and Senator
Kassebaum would agree that this bill will not solve every problem with
America's health care system, it is a crucial step in the right
direction.
The Kassebaum-Kennedy would limit exclusions for pre-existing
conditions.
It would allow small businesses to form purchasing alliances, which
would be a difference for the 30 percent of employees at firms with 10
or less workers who do not have health insurance.
And most important it would guarantee to every American worker that
if you change your job, you will not lose your health insurance.
The GAO estimates that 25 million Americans would be helped by this
legislation.
These are common sense reforms and I believe that is one of the main
reasons this bill is receiving huge bipartisan support.
The Kassebaum-Kennedy bill not only has more than 60 cosponsors, of
which I am one, but it also passed our committee unanimously.
clean bill
With this clear level of bipartisan support it is hard for me to
understand why many of my colleagues are insisting on offering
amendments to this bill, that they know will make it impossible for it
to pass.
Unfortunately, over the past few years it has become increasingly
difficult for this body to reach compromise on any issue.
I think all my colleagues, from both sides of the aisle, bemoan this
lack of bipartisan agreement.
And today we have a bill with over 60 cosponsors, with wide
bipartisan support and with endorsement from much of the health
insurance industry and yet several of my colleagues stubbornly insist
that we allow amendments to be tacked on to this bill.
In particular, the insistence of some of my colleagues to add medical
savings accounts, or MSA's, to this bill threatens the enactment of any
health reform measure this year.
We all have provisions we would like to see included in this
legislation. I, for one, would like to see greater health care coverage
for our Nation's children.
But, this is not the time to be focusing on our individual projects,
particularly at the expense of genuine reforms that we can all agree
upon.
Today, we have the opportunity to help 25 million Americans with the
Kassebaum-Kennedy bill and applying MSA's or any other provision to
this bill will only undermine that effort.
The Kassebaum-Kennedy bill truly represents common sense, effective
reform.
These are reforms that will spare millions of Americans the pain and
suffering of losing their health care or being denied coverage because
of pre-existing conditions.
Today, we have a historic opportunity to make a real difference in
the lives of millions of Americans.
As I do not need to remind most of you, cynicism toward Congress runs
rampant in this Nation.
Too often the American people look to Washington and they shake their
head at the partisan political games we play.
In the last two elections they have demanded that we start working
together, Democrats and Republicans, and pass legislation that makes a
real difference in their lives.
And I believe that if we polled the American people and asked them:
Should Congress remove preexisting conditions in the health insurance
industry?
Should Congress make health insurance more portable?
Should Congress guarantee that if you lose your job you do not lose
your health insurance?
I think, the vast majority of the American people would respond with
a resounding yes.
So today, let us uphold our responsibility to the American people and
pass these sensible and commonsense reform measures.
Madam President, I ask unanimous consent to have printed in the
Record a letter dated today from Cecil E. Roberts, international
President of the United Mine Workers of America.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
United Mine Workers of America,
Washington, DC, April 18, 1996.
Senator Bob Dole,
Hart Senate Office Building, Washington, DC.
Dear Senator Dole: In recent days, certain special interest
groups have wrongly portrayed members of the United Mine
Workers of America as recipients of Medical Savings Account
akin to those that would become more widely available under
an amendment you are slated to offer to S. 1028.
The UMWA has been grossly misrepresented by these groups
who have wrongly counted us as supporters in their effort to
weaken the health care system through Medical Savings
Accounts.
In recent collective bargaining agreements, we have
negotiated a comprehensive health care plan for our members.
Our members also receive a bonus and are responsible for pay
equivalent deductibles under their medical plan. This plan is
not an MSA.
Representing more than 200,000 working and retired coal
miners and their dependents, the Mine Workers know that MSAs
are not a panacea for the health care crisis. It would be
unthinkable to leave such a group of people, many of whom
suffer from injuries or disease brought on from working in
the mines, dependent on MSAs for their health care coverage.
Sincerely,
Cecil E. Roberts,
International President.
Mr. DODD. Madam President, I commend our two colleagues. It has been
a long ordeal, dealing with this very important piece of legislation.
They deserve our universal acclaim for their efforts. It was a very
good process in our committee. As the chairman of the committee,
Senator Kassebaum, pointed out, this particular proposal was
unanimously voted out of committee. To the credit of all of our members
on the committee, Republicans and Democrats alike, we all have ideas
that we would have liked to have incorporated in this legislation. But
the agreement was that we would try and limit the bill to those areas
where there was consensus, so that we could deal with the problems that
25 million Americans face today. With the passage of this legislation,
and a Presidential signature, we would solve the problems immediately
for 25 million Americans. It would immediately solve the problems they
face with portability and preexisting conditions--not to mention some
of the proposals in the leadership amendment, which the Senator from
Kansas pointed out we all agree with and go back many years supporting.
We have a wonderful opportunity here. It has been almost since last
August that this bill came out of committee. We are almost in May now,
and the weeks are rolling by. Here is a chance to do something for 25
million Americans, without getting into a real disagreement and
argument over a controversial proposal--the medical savings accounts.
Madam President, I would like to spend a few minutes on that
particular subject matter. I will leave the remarks I have inserted in
the Record that go to the general provisions in the bill, which have
been discussed today at some length. I compliment my colleague from
Kansas and my colleague from Massachusetts for doing a remarkably fine
job in putting those provisions together.
I have inserted the letter from the United Mine Workers because there
has been some discussion here on the floor that this was one
organization that has a medical savings account. Without reading the
entire letter, let me read paragraphs 2, 3, and 4 of the letter:
The UMWA has been grossly misrepresented by these groups
who have wrongly counted us as supporters in their effort to
waken the health care system through Medical Savings
Accounts.
In recent collective bargaining agreements, we have
negotiated a comprehensive health care plan for our members.
Our members also receive a bonus and are responsible for
paying equivalent deductibles under their medical plan. This
plan is not an MSA.
[[Page S3560]]
Representing more than 200,000 working and retired coal
miners and their dependents, the Mine Workers know that MSAs
are not a panacea for the health care crisis. It would be
unthinkable to leave such a group of people, many of whom
suffer from injuries or disease brought on from working in
the mines, dependent on MSAs for their health care coverage.
I think that is important, since their names have been used as an
example of an organization with an MSA, and by implicit suggestion that
they are supporters of MSA's. I voted twice for medical savings
accounts, back when we considered the larger health care package. I am
proud of those votes. I have no inherent objection to the idea of a
medical savings account. But they need to be, as the Senator from
Kansas suggested, in the context of a larger discussion of health care.
Whether you agreed or disagreed with the large health care proposal
of a year or so ago, in that context, medical savings accounts make
sense. In the absence of it, you are running the risk of leaving people
aside who cannot afford to get into these programs.
It is very controversial, too. As many have pointed out, the major
insurance groups and consumer groups, which rarely agree on these
matters, all agree on this point--that this could create some real
problems. They all agree that this would segment and undermine the
insurance market. They would divide the health care system and cater to
the healthier and wealthier people at the expense of those with
financial constraints, leaving those in traditional plans to pay a
higher price tag on health care costs, as their risk pool shrinks and
as the percentage of individuals with serious health conditions
increases.
They point out that according to the Joint Committee on Taxation, it
would cost taxpayers about $1.8 billion.
Again, I am not talking about one group versus another. The insurance
industry, consumer groups, the Blues, are not saying that they are
totally opposed to this, but that in this context, it does not make a
great deal of sense.
I also point out there have been some studies done on the medical
savings accounts. According to the Congressional Budget Office, medical
savings accounts could threaten the existence of standard health
insurance, placing a far greater burden on lower-income patients,
individuals with chronic ailments, and patients with disabilities, who
have larger out-of-pocket expenses. The Blue Cross Blue Shield of Ohio,
as the Senator from Kansas pointed out, says, ``MSA's would bankrupt
our current system of financing health care and significantly add to
the cost of medical care.'' That is their language, not mine.
The American Academy of Actuaries said, ``Less healthy individuals
will likely pay more for their coverage, since the most healthy and
highest persons in the group are likely to select MSA programs.'' That
is not the Senator from Connecticut, or the Senator from Massachusetts,
or the Senator from Kansas. That is the American Academy of Actuaries
speaking.
We have a wonderful opportunity to deal with something we all agree
on, in a bipartisan way. The current bill is bipartisan, as we have
some 60 cosponsors. Why take on an MSA issue that is highly
controversial with major private sector groups and consumer groups that
are saying, ``Please do not do this''? This is not the right suggestion
at this hour. It jeopardizes what we could do for 25 million Americans,
by eliminating the problem of portability and preexisting conditions,
issues that we all agree on.
I do not know of anybody who stood up and suggested that we ought not
to make those changes. We have the chance to do that in a bipartisan
way. If you add the MSA's, given all the arguments raised by the
private sector, consumer groups, and others, including the American
Academy of Actuaries, and the Blues, who have looked at this issue
carefully, then you do great damage and jeopardize what we can
accomplish this afternoon by passing a good bill and showing the
American public we care about their concerns and we are determined to
see to it that they are addressed.
I strongly urge the adoption of the Kassebaum amendment to strike the
MSA provisions, adopt the other provisions, and then adopt this overall
piece of legislation.
I yield the floor.
Mr. KENNEDY. Mr. President, how much time remains?
The PRESIDING OFFICER (Mr. Kempthorne). The Senator has 24\1/2\
minutes.
Mr. KENNEDY. I yield myself 10 minutes of our time.
Mr. President, our distinguished colleague and friend, Senator
Kassebaum, has outlined, I think very effectively, the reasons why we
should reject the part of Senator Dole's proposal that deals with
medical savings accounts. Senator Kassebaum has outlined the principal
issues which are at stake--both the cost and the health implications of
MSAs, and I am in total agreement. My friend and colleague from
Connecticut has expanded on those thoughts in a very effective way.
I think many of the provisions that the majority leader has
introduced are useful and, by and large, helpful. He brings focus on
the need for long-term health care for the American people. If there is
a part of our Social Security system that has been really left out over
the period of the recent years, it has been the failure to deal
effectively with long-term care for our parents, for neighbors, for
friends, for communities, and for the American people. We are blessed
and fortunate to have people living longer lives and more productive
lives. That is an increasing phenomenon. The fragile elderly
increasingly are an important concern before us. To be able to attend
to their particular needs in a thoughtful way either through long-term
care, through nursing homes, or through home care is immensely
important. The idea that we have long-term care insurance included in
this legislation, I think, is commendable.
The leader as well has identified additional areas--providing the
deduction for the self-employed; the small businesses around this
country, in rural towns and in cities as well, have a particular
disadvantage in terms of the cost of health care for their employees.
And certainly there is a strong justification for that provision.
I believe the provisions which apply as well in terms of terminal
illnesses, to help those that have terminal illness, to give them at
least some assistance in terms of the tax system, again, to give them
some tax relief, is a commendable system.
So I hope at the time we have an opportunity to address those
particular issues that we will find broad bipartisan support throughout
the Senate on those measures. There may be a feature or two that we
might discuss, but I commend the leader for bringing attention to that
and for adding that particular measure.
Mr. President, I agree that those issues have been debated and
discussed. There is broad understanding of them and broad support for
them, and we are certainly justified in accepting those. But the issue
in terms of the medical savings account is another matter entirely.
For the reasons that have been outlined, the overall Kassebaum/
Kennedy legislation has broad support. Senator Kassebaum and I are in
agreement that we will resist amendments that do not have the
overwhelming support of the Members. There are many different
provisions that I would like to see which I think have been tried and
tested and for which there is a very important need.
My good friend from Vermont has talked about lifting the lifetime
limits in terms of health insurance because many of those that have
serious disabilities run up against the top limits in their health
insurance. I would like to support that measure. Senator Jeffords spoke
passionately about it, and he believes in it, and I look forward to
working very closely with him on a different health care proposal. I am
convinced that we will pass that proposal here in the U.S. Senate and
the House of Representatives.
I agree with my friend, Senator Domenici from New Mexico, who is one
of the real leaders in this body in terms of mental health issues.
During the course of the debate the last time we addressed the
comprehensive issues of health reform, one of the real important
features that we effectively worked out was that we were going to
consider the challenges of mental illness as well as physical illness
similarly and treat them equitably. They are not treated equally under
current law. I have supported that. We debated
[[Page S3561]]
it. There is broad support for it. It is justified as a health
improvement measure.
I support mandatory preventive services for children. That has been
an issue where there has been broad support. It passed overwhelmingly
in the Finance Committee as part of our previous discussions. There is
strong justification for providing the range of services--
immunizations, preventive, screening, and attention for children in our
society. It is not costly. We have the expenditures for that proposal.
Out of the list that is included in here, we certainly could have
worked on that measure. There is broad support. But we have resisted
that. Why? Because, as has been pointed out before, the range of
different supporters that we have been able to gather for this
measure--we have said that on this issue, on this bill, we will not
accept provisions which are going to be untested, untried, and
controversial in terms of their health implications and their cost
implications.
There is not a lot of difference in this body--Republican and
Democrat--about providing preventive health care services for children.
There is not a lot of difference in this body in trying to equate
mental health with other physical challenges. There is not a lot of
difference I say in raising lifetime limits.
Those are measures that I feel strongly about and that I would like
to support, but we do not have those measures up here. The reason we do
not have them up here is because we have an understanding; we have an
agreement that we are going to keep this legislation as close to the
target as we possibly can in trying to deal with the problems of
preexisting conditions so that individuals who are working and are
playing by the rules of the game and are paying their premiums are
going to be able, if they lose their job or change their job, to take
their insurance with them. We are going to provide the incentives in
terms of small business so that they can pull together and develop the
economic advantages that the major corporations have. We have agreed to
move in that area.
Now we have medical savings accounts. I have myself serious problems
with that issue. Others have expressed support. The question should not
be so much how we stand on these particular issues, but I want to just
express very briefly my very serious concerns about it. But,
nonetheless, it is highly divisive, highly controversial, and highly
unacceptable. I think all of us understand that if this measure is
included in the proposal, school is out--school is out in terms of
amendments; school is out in terms of what may be added or what may be
subtracted; school is out in terms of the focus and attention on a very
important proposal that has the broad support and the unanimous support
of Republicans and Democrats out of our committee.
So I hope that the proposal of Senator Kassebaum to strike this
provision will be acceptable.
Let me mention briefly why I am opposed and others are opposed to
medical savings accounts. First of all, over 10 years this is $3.2
billion. It is going to cost $3.2 billion. The fact of the matter is,
we have to ask ourselves: Are we going to raise the deficit by $3.2
billion when many of us were around here trying to increase education
programs, trying to even increase the various programs on Head Start?
We were told we did not have the money when we tried to expand support
for education on the Goals 2000, increasing academic achievement. We do
not have that money. When we were out here trying to do something about
increasing child care, we did not have the money. Now suddenly we have
$3.2 billion. That is the cost, $3.2 billion.
So we have to ask ourselves: Well, $3.2 billion, who is going to
benefit from the $3.2 billion? Is this going to be something that is
going to be across the board in terms of beneficiaries? We can start
right out and say, as the Joint Tax Committee has pointed out, no one
whose income is below $20,000 will benefit one nickel--not one. Only
one percent of all the benefits from the MSA proposal, will go to
individuals who earn less than $30,000--only 1 percent of the benefits.
Ninety-seven percent of the benefits will go only to people above the
median family income in this country--only 3 percent of the benefits
from MSAs will go to those below the median family income.
Who benefits from this? Who benefits are the wealthiest individuals.
Sound familiar? Sound familiar? The higher income individuals are the
ones that will be participating in this program.
So we ask ourselves at the beginning: Can we afford the $3.2 billion?
If we get it, not according to my estimates, not by the various actuary
and other groups, but by the Joint Tax Committee, Republican and
Democrat alike, it has been pointed out that the great majority of
Americans will not be eligible.
And why? It is quite understandable. They do not have the income to
pay the deductibles for the MSA's. So therefore it does not do them any
good. In order to be able to benefit from an MSA, an individual has to
be able to afford the deductibles, and ordinary working Americans
simply will not be able to do that; they won't be making enough money.
Secondly, we can ask, what is going to be the impact on our whole
health care system? Well, the various reports that we have received--
and we will have a chance perhaps to get into them in greater detail--
demonstrate that what is going to happen in this situation is that the
younger people and the wealthier people are going to take this
opportunity to participate in the MSA's. They are going to take the
opportunity. Why? Because they know they are not going to need to spend
up to $3,000 for a sickness over the period of that next year. That is
the deductible, $3,000. They know that by and large they are not going
to get sick during that period of time. So they are not really at risk.
They know they only need help if something serious is going to happen
to them.
So the healthy and the individuals who have the resources are going
to be the ones who use those MSA's. What about everyone else? Are they
going to use it? Probably not. Because they know they are going to have
deductibles and they know that they are going to have particular health
care needs like every family has.
And the health implications of this are profound. It means that the
general insurance pools are going to continue to include the sicker
people, and the premiums are going to go up for everyone because they
are going to have the sicker Americans and they are going to have the
working Americans who can't afford the MSA's. And what is going to
happen, the premiums are going to go up and therefore workers are going
to begin to disband their commitment to health care for themselves
because the costs are going up.
We have to ask ourselves: Does this really have an advantage in terms
of savings? Is this a new process of delivering health care that many
of us had hoped the HMO's would be? We hoped that by having the payment
for health care at the beginning of the year and the incentives on the
various kinds of HMO's to develop preventive programs that they would
keep people healthier so they save money through prevention. But with
MSA's, this won't happen.
To the contrary, every time a woman goes and gets a mammography test,
they are going to have to pay out. Is that covered by your health
insurance? No. Because you are not up to $3,000. Every time a woman
gets a pap smear, she has to pay out. Is that going to be offset by
health insurance? Absolutely not. They are going to have to pay out.
All the screening for children, for the sons and daughters of working
families, are they going to be encouraged to go to preventive health
care? Absolutely not, because they are going to have to pay out.
Finally, make no mistakes--medical savings accounts are also part of
the long-term Republican anti-Medicare agenda. Every senior citizen and
every Senator who cares about Medicare should be aware of this Trojan
horse. The special interests who are urging this provision now are part
of the ongoing effort to undermine Medicare by turning it over to the
private insurance industry. If we open the door to medical savings
accounts for the non-elderly today, we will be opening the door to
medical savings accounts for the elderly tomorrow and that is not a
step Congress should take.
So, Mr. President, in summary, this proposal is skewed financially.
The financial benefit goes to the wealthiest
[[Page S3562]]
individuals and to the healthiest people. It is poor health policy
because it is going to disadvantage the incentives in the areas where
you can provide true savings on health care, and that is going about
the business of providing preventive health care.
One of the extraordinary ironies in terms of our budget policy here
is you do not get any credit in terms of CBO when you move towards
preventive care. Even though you save the Government millions and
millions of dollars over the period of years, you cannot get credit for
any kind of preventive care. That is where savings come about--when you
immunize children, when you give well-baby care, when you give an
expectant mother good kinds of care and nutrition so the child is going
to be healthy rather than have medical complications at birth.
This vote is not just about medical savings accounts. It is also
about whether Americans will get the genuine health insurance reform
they deserve. Senator Kassebaum and I have pledged that we will resist
controversial amendments, because they will kill this bill. We intend
to vote against even controversial amendments that we support. Many
other Senators on both sides of the aisle have made the same pledge.
This vote is the test. If Senators insist on their narrow agenda, this
health reform will die.
This is an unwise, untested, unjustified measure. It is effectively a
poison pill. There are many other, more deserving health care issues
that we ought to be accepting or addressing ourselves to that are a lot
less costly than this particular measure, and I hope that Senator
Kassebaum's amendment is accepted.
I would be glad to yield 12 minutes----
Mr. NICKLES addressed the Chair.
Mr. KENNEDY. Twelve minutes to the Senator, 12 minutes to the Senator
from West Virginia.
The PRESIDING OFFICER. The Senator from Massachusetts controls 10
minutes.
Mr. KENNEDY. Twelve minutes to the Senator from West Virginia.
The PRESIDING OFFICER. Does the Senator from Oklahoma have an
inquiry?
Mr. NICKLES. Mr. President, I believe that both the Senator from
Delaware and the Senator from Massachusetts have control of the time,
and I also think the Chair has usually recognized Senators seeking
recognition, and then the Senators delegate how they allocate that
time, I think is the normal procedure.
Mrs. KASSEBAUM. Mr. President, not to intervene here, but I would
suggest that I think the Senator from Oklahoma has been waiting quite
some time to speak. And while I am not in charge of the time at this
point, it would seem to me best to let that back-and-forth proceed.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I yield 10 minutes of the leader's time to the Senator from
Oklahoma.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized for up
to 10 minutes.
Mr. NICKLES. Mr. President, I thank you. I thank my colleague from
West Virginia. I will be happy to accommodate my friend as well. I
think it would be better if we go back and forth a little bit, if that
is possible. I say to my colleague from Massachusetts, that was my
interest because my colleague from Massachusetts has generated a little
interest in me to respond.
I also compliment the Senator from Massachusetts and the Senator from
Kansas for their work, but particularly I wish to compliment the
Senator from Delaware and the Senator from Kansas, the majority leader,
for this amendment. This amendment is probably the most significant
health care provision that the Senate has considered in a long time.
I have heard a lot of people say we want to make insurance more
portable; we want to make insurance more affordable. If you do, then we
need to support Senator Dole and Senator Roth's amendment. That would
include some tax equalization. The Tax Code is really skewed. It is
really inequitable. It is not fair.
Let me just give you a couple of examples. The amendment that we have
dealing both with the medical savings account and deductibility for
self-insured help fix the problem--not totally, but they certainly
improve it.
The Tax Code right now discriminates against people who do not work
for generous employers. If you work for a generous employer, they can
pay for your health care benefits and the individual can receive that
tax free benefit, does not have to pay anything for it. It is nice. If
you work for General Motors, they can deduct 100 percent for health
care costs.
What if you do not work for a generous employer? What if you work for
an employer who maybe cannot afford it or does not subsidize your
health care? Then as an individual you have to pay for your health care
with after-tax dollars. That is not fair.
What if you are self-employed? Right now, if you pay for your health
care, you get a 30-percent deduction. Let me make sure everybody
understands that. If you work for General Motors or a generous
corporation, they get a 100-percent deduction, the company does. If you
are self-employed, you get a 30-percent deduction.
That is not right. I used to run a manufacturing company, and at one
time we paid 100 percent of health care costs. It was all deductible, a
tax-free benefit for employees. I also used to be self-employed. Right
now, they get 30 percent. I used to have a janitor service when I was
self-employed. They only get 30 percent. But a big manufacturing
company or a little manufacturing company, a corporation, they get 100
percent.
Now, what is right about that? That makes no sense, no sense
whatsoever. This bill is going to help fix this.
What about an individual who maybe does not work, is unemployed. They
need health care just as much as anybody else. This bill helps fix
that. And the Senator from Massachusetts does not want to allow it to
happen. He said, well, school is out if we allow medical savings
accounts. Medical savings accounts are the only thing, the only thing,
that will benefit somebody who does not have a job and wants to get
health care. We do not help them in other areas. We are going to help
them. We are going to say, yes, you can get health care; you can have
your medical savings account; it is yours; it is portable; you do not
have to have a job; it goes with you. It is not contingent on a job.
We use the Tax Code to encourage homeownership and so we say, you are
entitled to an interest deduction on your home. And we do not say you
have to have a job to get the interest deduction; it is yours; you
designed the house, or you can buy the house. That is your decision,
and it is your deduction. We do the same thing for other things. You
make that decision. But we do not do it on health care. We say, well,
you have to work for a generous employer. You get a real nice benefit.
You work for yourself, you only get a third as much. You get a 30-
percent deduction.
This bill takes it up to 80 percent for self-employed. And that is
about what the average of a lot of companies is. So that is pretty
equitable. It takes some time to get there, I might mention. We do not
do it overnight. But at least it gets it up to 80 percent. That is a
good move.
I compliment Senator Dole. When we passed this originally in the
Balanced Budget Act, it only went to 50 percent and Senator Dole said,
``Let's make it 80 percent.'' He was right. That is equitable, and that
means that Don Nickles' janitor service gets just about as good a deal
as a manufacturing company in 7 years.
That is a good provision. It needs to pass. But equally as important
is that individual who does not have a job or that individual who is
unemployed or that individual who works for an employer that does not
give anything to their health care. Right now, they have to buy their
health care with after-tax dollars. And they need health care as much
as somebody working for any company in America. Let us help them.
Medical savings accounts will help them, and they are not something
untested and untried, as my colleague from Massachusetts said. We have
something like 3,000 firms right now offering those.
Seventeen States now have MSA laws, an additional 11 States have
called on Congress to enact MSA legislation. We ought to do it.
Everybody ought to have the opportunity to have this choice. We are not
mandating it on
[[Page S3563]]
anybody, but it should be a choice. They should have the opportunity.
What is the choice? Yes, they can buy insurance, I think pretty good
insurance. They can buy insurance that is for the catastrophic illness.
We say a medical savings account is very comparable to an Individual
Retirement Account. Individuals can put in $2,000, families or couples
can put in $4,000, and then use it for medical expenses. They have to
buy at least catastrophic coverage, to cover the really expensive care.
That makes sense.
We are encouraging this with medical savings accounts. A lot of the
private sector is doing the same thing. In our company we used to
ensure the first dollar coverage on anything. That is very expensive
and it is not what insurance is for. When you buy car insurance you do
not buy car insurance to fill the car up with gasoline or fill it up
with oil. You buy car insurance for collision or something that is
really expensive that you need insurance for. That also makes sense in
the medical field, to let people use their own dollars for the small
things, the routine things, the doctor's office visit. And they will
use their own money. If they do not use it they can save it. It is not
use it or lose it. They can save it, accumulate it. We encourage
savings and they can use that money later for something that really is
serious, that is problematic. Or they can use it for long-term health
care.
This is a good provision. This will help countless middle-income
families. Mr. President, 88 percent of the benefit falls to individuals
who make less than $100,000. It is not for wealthy people, it is for
American families and it will help people who get no help whatsoever
from the present Tax Code. If we want to eliminate a lot of this tax
inequity, medical savings accounts will go a long way to doing that.
Let us give them some benefit. Right now they get zero. An individual
who is unemployed, an individual who works for a corporation that does
not subsidize his or her health care, they get zero tax benefits.
Finally, if we pass this they will get something and to me that is a
very positive contribution.
So I urge my colleagues, let us not make this a partisan issue. I
know Senator Breaux introduced a MSA bill in 1992. Senator Daschle,
Senator Nunn, Senator Boren, Senator Dixon--they cosponsored the bill.
Representative Gephardt, in 1994--almost all Members but one of the
Democrat Party on Ways and Means supported Mr. Gephardt's provision
that had medical savings accounts. So why all of a sudden are we being
partisan? This is a good provision. It is a bipartisan provision. It
should be passed.
We should help individuals. We are not helping individuals. We should
make insurance truly portable and we do that with medical savings
accounts. It is not contingent on a job. If they lose their jobs they
still have their medical savings account. It is portable. It stays with
them. It is not contingent on employment. It is a good provision. So I
am very disappointed in some of the comments that have been made.
This is a good provision. It will make health care more portable. It
is the most portable health care plan you can have. It goes with the
individuals. It is theirs. If they save the money and they do not spend
it, it grows, it accumulates. They can use it for later times.
Also, it makes it more affordable. People are a lot more frugal with
their own money than they are with employer money or than they are with
Government money.
Mr. President, I urge my colleagues to pass the medical savings
account provision, to vote against the amendment to delete this
provision, and then also to pass the underlying Dole-Roth amendment. It
is an excellent amendment that will help expand coverage to countless
Americans that right now, because of inequities in the Tax Code, really
come up short.
Again, I thank my colleague from Delaware for his leadership. And
also Senator Dole for proposing this amendment. I hope my colleagues
will agree to it.
Mr. ROTH. Before we conclude action on the measure before us, I want
to specially commend the Senator from Kentucky, Senator McConnell, for
his invaluable contribution to this effort. His introduction of S.
1658, the Family Choice in Long-Term Care Act, along with his behind-
the-scenes advocacy on this issue, has made the difference in getting
long-term care on the must-do list of health care reforms. Senator
McConnell has shown tremendous concern for the long-term care needs of
elderly Americans and their families, and he has played a key role in
proposing common sense and compassionate solutions to the problem. We
all know how some people just talk about an issue; the junior Senator
from Kentucky works issues, and the legislation before us reflects the
work that Senator McConnell has devoted to this crucial health care
concern.
Mr. McCONNELL. Let me thank the chairman for his generous remarks and
for his tremendous work on this legislation. The need to provide
meaningful long-term care coverage cannot be overstated. It is
estimated that at least 40 percent of those aged 65 and over will
require nursing home care at some point, costing an average of $38,000
per year. As the chairman knows, this poses a terrible Hobson's choice
for most seniors and their families. Many seniors are forced to
liquidate their life savings and sell off family heirlooms just to pay
for this expensive care, and only when they have depleted nearly all of
their assets will Medicaid pick up the tab. Because of the massive
costs involved, private insurance has thus far played a negligible role
in the financing of long-term care, accounting for less than 2 percent
of long-term care payouts. The dearth of private planning options for
long-term care is also having a devastating impact on strained State
Medicaid budgets. Long-term care costs are draining away Medicaid
resources that are needed to provide health care for indigent and
disabled Americans. We cannot continue to rob Peter to pay Paul much
longer. America's elderly population is expected to increase by almost
25 percent between 1993 and 2011, and this will place an unbearable
burden on the Medicaid Program unless decisive action is taken. This
bill provides essential private financing options for long-term care,
and takes a positive step toward meeting the long-term care needs of
future generations of Americans. Again, I want to thank the chairman
for addressing this issue in his amendment, and look forward to having
it signed into law.
Mr. SANTORUM. Mr. President, I wanted to take some time to discuss a
specific provision included in the majority leader's amendment.
I have had the pleasure of working with the long term care industry
in Pennsylvania during my service in Congress. I am extremely pleased
that the leadership amendment included long-term-care provisions which
will fill a void in the security of older Americans. I wrote my Senate
colleagues this past week as well as the majority leader directly
urging the inclusion of the long-term-care language. The long-term-care
section will improve this bill by giving long-term-care insurance the
same Federal tax treatment as health insurance and by establishing
Federal long-term-care insurance standards and consumer protections.
The cost of long-term care is easily the biggest financial threat
facing elderly Americans. The average cost of nursing home care has
risen to $38,000 per year. We also know that more than 40 percent of
those who turn 65 this year will require nursing facility care at some
point in their lives. Medicaid does pay for nursing home care, but only
after the costs of long-term care makes the recipient destitute.
Basically, people in need of long-term-care services must pay for the
care out of pocket until they spend down all their assets to the point
of poverty. Then and only then do they qualify for Medicaid.
The real crime here is that people do not know that they will have to
lose all their assets to obtain long-term-care services. They think
Medicare covers it.
Even after 30 years of Medicare, many Americans remain confused
regarding what Medicare does and does not cover--particularly regarding
long-term care. Year after year, public surveys show that nearly half
of Americans believe that Medicare covers long-term care. Because of
this misconception, many Americans come to a rude awakening when they
need long-term care for which they have not prepared. Helping
individuals and families understand the limits on Government long-
[[Page S3564]]
term-care assistance and giving them incentive to prepare for their
needs will encourage more Americans to plan for, save for, and insure
against the costs of long-term care.
We currently allow acute health care expenses and insurance premiums
to be deducted. State laws require car insurance, home or flood
insurance, and other protections for individuals and families. Yet we
do not require, much less encourage, people to plan for something that
more than likely will impact them--the need for long-term-care
services.
The language in the leadership amendment would correct this.
Specifically, the provisions will give long-term-care insurance the
same Federal tax treatment as health insurance and link tax provisions
to Federal long-term-care insurance consumer protections. This second
part is so important because it ensures that policies offer value to
consumers and pay appropriately and adequately for quality long-term
care when needed.
Not only would greater use of long-term-care insurance help protect
individuals and families from impoverishment due to long-term-care
costs, but it would also help control Medicaid costs. Mr. President, in
the long run this will save money for the Medicaid program.
In a 1994 article in Health Affairs, Marc Cohen, Nanda Kumar, and
Stanley Wallack estimated that having a long-term-care insurance policy
reduces the probability of spending down to Medicaid eligibility levels
by some 39 percent. The authors estimate that, in the aggregate,
Medicaid expenditures would be reduced by $8,000 to $15,000 for every
nursing home entrant who had a long-term-care insurance policy.
According to the analysis, this translates into cutting what Medicaid
pays per nursing home entrant in half for long-term-care policy
purchasers. It is in our best interest to encourage people who can meet
their long-term-care needs to do so. Medicaid will then take care of
truly needy individuals.
The majority leader's amendment assists America's elderly and their
families with long-term care by putting policies in place that help
assure the affordability and value of long-term-care insurance. Giving
Americans tax incentives to insure against the potential costs of long-
term care will also save Medicaid dollars in the long run. Since we
cannot continue to rely so heavily on scarce Government dollars to pay
for long-term care, individuals and families should be encouraged to
plan for, save for, and insure against the potential long-term-care
costs. I urge my colleagues to vote for this amendment and to support
this specific language.
Mrs. KASSEBAUM addressed the Chair.
The PRESIDING OFFICER. The Senator from Kansas.
Mrs. KASSEBAUM. Mr. President, I ask unanimous consent that there be
10 additional minutes for debate, equally divided in the usual form.
The PRESIDING OFFICER. Without objection, it is so ordered. Who
yields time?
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware is recognized.
Mr. ROTH. I am sorry, I did not hear.
Mrs. KASSEBAUM. There will be 10 additional minutes added, equally
divided.
Mr. ROTH. I ask whether, because we agreed to a very brief time,
whether at least on our side we could have another 10 minutes, total of
15 minutes.
Mr. KENNEDY. I will give you my 5.
Mrs. KASSEBAUM. That gives you 10 minutes additional.
Mr. ROTH. Can I have 15?
Mrs. KASSEBAUM. I think maybe you better take it. A bird in the hand
is worth two in the bush.
The PRESIDING OFFICER. Who yields time? The Senator from
Massachusetts.
Mr. KENNEDY. Mr. President, how much time do we have remaining?
The PRESIDING OFFICER. The Senator from Massachusetts has 14 minutes
and 55 seconds.
Mr. KENNEDY. I yield 10 minutes to the Senator from West Virginia.
The PRESIDING OFFICER. The Senator from West Virginia is recognized
for up to 10 minutes.
Mr. ROCKEFELLER. Mr. President, I agree with the Senator from
Oklahoma that this could be the most significant health care
legislation that we have passed in a long time, which is why I think it
is terribly important that we pass it. What has been made very clear,
very distinct throughout this discussion, is that we are in an argument
now on MSA. We have not been in an argument on anything else. We are in
an argument on MSA. The agreement, from the very beginning, was to take
the controversial stuff out; leave that for now, and do it later. It
will probably pass on its own, but now is not the time.
To back that up, I have a letter from the NFIB. This NFIB letter,
signed by Dan Danner, says, ``The NFIB opposes the adoption of any
amendment to S. 1028 which would draw a Presidential veto or cause the
bill to be defeated in the Senate.''
I repeat the statement of administration policy from the White House,
in which they indicated, as their first priority, that for the bill to
include medical savings accounts would, as they say, ``create grave
risks to the passage and enactment of this bipartisan legislation.'' I
think those who are pushing the MSA, for whatever the various
interesting reasons that have floated around here for the past several
days, ought to bear very carefully in mind that they are putting the
entire bill in jeopardy. If the amendment passes with MSA's, as the
Senator from Massachusetts said, ``school is out.'' Everything else
comes in. The bill is down. The bill is gone. An opportunity is
finished.
I hope people will take moral responsibility in considering the
decision which they are making. In fact, every single serious health
policy analyst--and you can laugh at them, except when you realize they
are just about the whole gamut--they all say that giving a tax break
for medical savings accounts is a very bad idea. I repeat--it is a very
bad idea. Medical savings accounts, they say, would cherry pick the
healthy people --yes--and drive up health care costs for the sick--yes.
Medical savings accounts would further destabilize an already seriously
fragmented insurance risk pool. And of course we understand what that
means.
The insurance risk pool gets fragmented when companies self-insure;
many big companies do that now. They did not 25 years ago. That puts
more pressure on the small business market where you have individual
insurance. It is a very, very risky business in any event, without
thrusting MSA into it.
Another thought worries me. The Republicans put MSA's into
reconciliation, with respect to Medicare. CBO has determined that only
about 1 or 2 percent of Medicare beneficiaries would, in fact, select a
medical savings account. But let there be no doubt in the mind of
anyone here that what is hoped is that the MSA's would spread, indeed,
to the whole concept of Medicare. This should represent to every one of
my colleagues a very severe threat to the future of Medicare. That, I
think, is what is in mind here. Furthermore, CBO concluded that healthy
seniors would opt in and out of traditional Medicare based on whether
they thought they would be using health services in that particular
year. In other words, there would be no predictable pattern.
Lewin-VHI, a well respected consulting firm, concluded that ``An
optional health coverage program that promises potential cash benefits
to persons who are able to keep their health spending low will
experience extreme selection bias.''
The American Academy of Actuaries has also been quoted. This is an
interesting quote from them. ``Those who have little or no health care
expenditures. . .would save money on MSA's. The greatest losses will be
for those employees with substantial health care
expenditures. Those with high expenditures are primarily
older employees and pregnant women.
A report from the Congressional Research Office, written by the
nonpartisan folks there says, ``If MSA's only attracted the healthy,
the cost of insurance for everyone else would increase due to adverse
selection.''
The Kaiser Family Foundation has concluded that, ``Enrollees who
leave the traditional Medicare plan would be healthier on average than
those who remain in the traditional plan.''
Again, notice that threat--the Medicare beneficiaries lost to MSA's
would
[[Page S3565]]
be healthier on average than those who remain in the traditional
plan.''
That foreshadows an ominous future for Medicare. And you have this
broad, broad coalition that is saying exactly the same thing.
Mr. President, I do not think it is any secret that there have been
special interests working very hard on this in the last several days,
and those who are in the process of making up their mind at this point,
I think, might consider that there is really one group that is
especially interested in this particular medical savings account
activity. Their president was working the entire Capitol yesterday and
saw a number of people. In exchange, they are hoping to win approval of
a special tax break that they hope will throw millions of dollars in
new insurance business their way. Is that a crude thing to say? I do
not know. I think it is a major part of this debate, and I think it is
a major part of the reason that we are in a debate we should not be in
at all. Debate on this bill was to be based on the clear premise that
we agree that controversial stuff should be left out--so we can take,
as the Senator from Oklahoma said, 25 million kids and adults and
improve their lives substantially, in terms of health care.
This is a bill which enjoys strong bipartisan support. MSA's do not
enjoy strong bipartisan support. I have to conclude that the vote on
this will be very close, and I hope as people vote, they will consider
the pressures which have been brought, particularly by one single
company, on Members on both sides of the House and the Senate.
Are we really going to do their bidding, or are we going to help 25
million people in this country when we have a historic chance to do it?
I think the answer is easy. I hope my colleagues will move to strike
the MSA provision. I thank the Presiding Officer.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. I yield 4 minutes to Senator Faircloth.
The PRESIDING OFFICER. The Senator from North Carolina is recognized
for up to 4 minutes.
Mr. FAIRCLOTH. Thank you, Mr. President.
Mr. President, what a difference 2 years makes. All of us remember
that at this time 2 years ago, the Clinton administration was
struggling to keep afloat their Health Security Act--the Clinton plan
for a nationalized health care system.
In case anyone's memory needs refreshing, I have reproduced the chart
that Senator Specter used to illustrate the workings of the Clinton
plan. Once Members of Congress and the American people saw what was
behind the President's rhetoric, nothing could save the Clinton plan.
Once the American people realized that the Clinton plan was a big-
government power grab on the most enormous scale ever attempted in this
country, they rejected it.
Mr. President, in contrast, the general philosophy of Republicans in
Congress supports health care reform that benefits and empowers
Americans and their families on an individual scale. As these charts
illustrate, this philosophy is about improvements for individuals, not
big government.
On my chart, I have included four principles: affordability,
availability, flexibility, and portability. In the bill we are now
debating, Senator Kassebaum has done a fine job of addressing two of
these principles. In the provisions for insurance reform and for
insurance purchasing pools, Senator Kassebaum's bill takes important
steps to improve the availability and portability of health care
coverage.
It is my strong and sincere hope that we can further improve this
legislation by amending it to include provisions that enhance the
flexibility and affordability of health care coverage for all Americans
on an individual basis. The provisions I have in mind include those
that I have placed on my chart: medical malpractice reform, increased
deductibility of insurance for self-employed individuals, and medical
savings accounts.
The majority of uninsured Americans are adults who work full-time
jobs, usually in small businesses. Measures like more favorable rules
for the formation of voluntary purchasing pools, increased deductions
for health care expenses, medical malpractice reform, and medical
savings accounts would give small employers more options at lower costs
to help them offer the health coverage they currently cannot afford.
Under these proposals the decisionmaking will remain where it belongs,
with individuals and their employers.
To reduce the number of uninsured Americans, President Clinton
proposed an employer mandate that would have required all businesses to
cover their employees with a Cadillac plan designed in Washington. The
result of this policy would have been hundreds of thousands of lost
jobs, and hundreds of billions of dollars in increased costs for
businesses.
President Clinton also proposed that his nationalized health care
system would have been run by a system of health alliances. Through a
complex system of cost controls and rationing, the bureaucrats who ran
these alliances would have decided what Americans spent health care
dollars on, and how much they spent individually and collectively. If
medical savings accounts were available to Americans, any individuals
who chose them would gain full control of their own health care
decisions.
As chairman of the Labor Committee, Senator Kassebaum has done a
commendable job of advancing the difficult issue of health insurance
reform within the jurisdiction of her committee. But, medical savings
accounts fall within the jurisdiction of the Finance Committee.
Mr. President, the rules of the Senate should not deprive the
American people of the most meaningful free-market health care reform
measure that we could give them.
Perhaps the most important debate that we can have is a debate on
medical savings accounts. It is unfortunate that the administration has
already tried to poison this debate by threatening to veto a health
care reform bill that contains them. Their accusation is that anyone
who wants to include medical savings accounts wants to kill the
Kassebaum bill. That simply is not true. The truth is the President
knows that if medical savings accounts become law, they will drive the
final nails in the coffin of the Clinton plan, and bury his dream of
nationalized health care.
Once individual Americans have the power to control how their own
health care dollars are spent, they will never allow the Government to
take that power back.
In his last State of the Union Address the President stated that
``the era of big-government is over.'' I wonder if he really meant it,
or if he was just echoing a decision already made by the voters in the
last elections. Regardless, the decision has been made. We should pass
health care reform that ensures that the power to make health care
decisions is placed in the hands of individual Americans, not big-
government. That means health care reform that includes medical savings
accounts.
I applaud the decision of Chairman Roth and the majority leader to
bring an amendment to the floor that contains medical savings accounts.
Just as he has done so many times in the past Senator Dole has shown
the leadership necessary to make the difficult decisions, and push
aside the administration's rhetoric.
Mr. President, there are very different goals involved in this
debate. Our goal should be health care reform based on improvements for
individuals, not health care reform based on big-government solutions.
I plan to strongly support the Dole-Roth amendment, and I urge my
colleagues to do the same.
Thank you Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. FAIRCLOTH. I plan to support the Dole amendment and urge my
colleagues to do the same.
Mr. ROTH. I yield 5 minutes to the Senator from Pennsylvania.
The PRESIDING OFFICER. The Senator from Pennsylvania is recognized
for 5 minutes.
Mr. SANTORUM. Thank you, Mr. President. I appreciate that.
As I always like to say, I was one of the first Members of Congress
in either the House or Senate to introduce a medical savings account
bill. I introduced a bill with John Kasich, Tom DeLay and John Miller,
a former Member from Washington, back in January
[[Page S3566]]
1992. I have followed it for a long, long time prior to corporate
lobbyists being up here on the Hill, and I believe very strongly in its
concept.
Let me explain. I guess we had a lot of talk about what is going on
here with this specific MSA bill. Let me explain the concept behind
medical savings accounts and the fear many of us have with, the best
way I can put it, the ``corporatization'' of the health care field and
how we see medical savings account as, really, the last chance for
patient choice and for compassion in an industry that is becoming more
and more regulated by third parties in the fundamental relationship
between doctors and patients.
If I can, let me just walk back to the system we had before managed
care came into place. What we had was a doctor/patient relationship.
That was the problem. There was nobody in this relationship who had any
incentive to control costs. As a rule, costs escalated out of control.
Why?
If you were the patient and had first-dollar coverage, who asked how
much things cost? Who asked whether you needed one or two or five of
these? You took whatever the doctor suggested and you did not pay for
it, so why did you care?
So, on the other side is the doctor, and what is the doctor's
incentive in this doctor/patient transaction? The more the doctor does,
the more money he gets paid. The more the doctor does, the less chance
the doctor gets sued. So you have a doctor who gets more money, with
less chance of being sued, and you have a patient who does not pay for
anything.
Then we sat back and wondered several years ago, gee, why are health
care costs going up? It was very simple. There was nobody with any
incentive to control costs. We understood that and companies understood
that and insurance companies understood that, and they did a very
logical thing. They brought someone in to control costs, the
gatekeeper, the insurance company, who came in; and now they are
governing the relationship between the doctor and patient. If you want
something done, you go through the insurance company. You get approval,
and it can be done. That is now the governor, the one who is in charge
of this relationship.
What many of us believe is that that is not the most compassionate,
and some would suggest that it may not result in the best quality of
care. It certainly does not result in the maximization of patient
choice. So what we have put forward is a concept called medical
savings. I think it is really misnamed. I think we should call it
``patient choice accounts,'' because that is what is left. If we do not
do medical savings accounts, if we do not do patient choice accounts,
the doctor-patient relationship which we know will disappear in
America. It will disappear. It is disappearing, has disappeared, in a
lot of communities already in this country.
We hear so much from so many people on both sides of the aisle about
being compassionate, about caring for people, about doing things to
give people choices and to give people the ability to do what is best
for them and their families. What we have here is a situation going on
in the private sector in America where that choice is going away.
Private practice is almost a thing of the past in many communities and
is growing more apparent in all States across this country.
What medical savings accounts do is provide a chance, an opportunity,
for the traditional doctor-patient relationship to be restored where
now the incentive is on the patient to be cost conscious. How? Because,
instead of the old system where you had first-dollar coverage and the
insurance company pays for everything, we are going to say, look, we
are going to take a higher deductible policy like an auto insurance
policy--we do not pay, as Senator Nickles said, for gasoline or oil
changes--but you pay for the incidental costs of health care, the day-
to-day costs, and we insure you for the catastrophic illness or for a
year where you had a lot of serious problems.
So you take a high-deductible policy and you pay for the out-of-
pocket expense and you afford that because, when you take a higher
deductible policy, the cost of that policy is less.
Senator Craig gave an example earlier where a policy with a $250
deductible and a $500 cap and a 20-percent copay cost $458 a month for
a family. A $3,000 deductible policy, same coverages, no copay, costs
two-thirds less, costs under $200 a month. Where did that savings go
between the $200 and $450? It went into the pocket of the person who
had the medical savings account.
It would go, under this bill, tax free into an account you set up at
your bank. You get a little debit card. You could then use it to
purchase health care. You could use it to make choices about what
doctor you wanted to go to, what hospital, and how much you wanted to
spend.
I always ask people, ``Who are the lowest paid doctors in this
country?'' Well, they are pediatricians and family practitioners and
dentists because they are not covered under insurance. Why? They have
to charge people who pay out of pocket, so they have to keep their
costs down. Just imagine if we did that to most of the health care
sector in this country. It would be an enormous contraction, I believe,
in costs in our society. It would not lead to higher costs in other
areas, in other insurance pools. I think this is a dramatic step
forward. This is the reason that I applaud Senator Dole for fighting to
the end because this is the kind of dramatic reform that this country
needs to preserve freedom of choice for patients.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I yield 2 minutes to the Senator from Texas.
The PRESIDING OFFICER. The Senator from Texas is recognized for up to
2 minutes.
Mrs. HUTCHISON. Thank you, Mr. President.
I appreciate the chairman's generosity in letting me talk on this
very important issue. I wanted to speak on two points on the amendment.
First, the deductibility for the self-employed is such an important
step forward that the people who are self-employed will be encouraged
to get health care coverage for themselves, and that is what we are
trying to do here. It is what we have been trying to do for 2 years. To
increase the tax deductibility for them to 80 percent from 30 percent
is a big step in the right direction to encourage more people to get
health care coverage.
The issue of medical savings accounts--``patient choice accounts'' is
a great name for it because it really will make a difference for so
many people and so many small businesses in this country, giving them
an opportunity they would not have had.
Senator Kennedy's bill in 1994 had language saying that they hoped
there would be medical savings accounts included in the health reform
bill passed by the Senate. This is not a partisan issue. Congressman
Jacobs and Congressman Torricelli today wrote the President of the
United States asking him to support MSA's.
Let me give you some examples of companies that have benefited from
MSA's, medical savings accounts, patient choice accounts.
Dominion Resources in Richmond, VA. Since 1989, the company's health
care costs have risen less than 1 percent a year while other health
care costs all over this country have risen over 10 percent. Here we
are at 1 percent a year. Not only have their costs come down, but their
employees are happy because they have had improved and expanded medical
benefits under their medical savings accounts.
Knox Semiconductor in Rockport, ME. Their president says they have
saved the company $100,000 over 3 years. That is with just 42
employees.
The National Center for Policy Analysis in Dallas, TX, has been on
the leading edge of giving their employees the choices. They have been
able to contain their health care costs, and their employees are
happier with their coverage.
Mr. President, medical savings accounts are a key part of the reform
that is necessary to give more health care coverage to more people,
more working people, in our country. That is why it is important to
keep this amendment, the medical savings account, in the bill. Thank
you, Mr. President. I thank the chairman.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. I yield 4 minutes to the Senator from Iowa.
[[Page S3567]]
The PRESIDING OFFICER. The Senator from Delaware controls 2 minutes
30 seconds.
Mr. ROTH. With 1\1/2\ minutes of leader time, we have a total of 4
minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Iowa is recognized for 4 minutes.
Mr. GRASSLEY. Mr. President, the best thing we can do for health care
reform is to let the marketplace operate to a greater extent in the
delivery of health care. This issue is the most important one that
faces us today. You know how strong our argument is from the weakness
of the argument made by those on the other side of this question.
The other side's argument is that we should leave this medical
savings account provision out of this bill because it happens to be
controversial. Well, that is the strength of their argument: it is
controversial in Washington, DC; that is, inside the beltway. Well, Mr.
President, medical savings accounts are not controversial outside of
Washington, DC.
The people who oppose this amendment are some of the same people who
believe that Washington knows best, that Washington knows how to
dictate the delivery of health care better than the people themselves
do, particularly people at the grassroots. It seems to me a weak
argument when the strongest argument against this legislation is that
it is controversial. Since when is giving people more choice in health
care controversial? That is what people want. That is what people know
will work better. This is the usual big Government argument against any
changes.
It is the argument in favor of big government versus letting the free
marketplace work. It is the old in favor of big government making
decisions for people, as opposed to letting people themselves make
decisions.
Medical savings accounts give people choice. It is letting people
control their resources for health care. Quite frankly, it is going to
save us a lot of money and reduce health care costs.
I am very happy that the leadership puts forth this amendment,
because allowing medical savings accounts is a step in the right
direction. They are basically like IRA's, giving people an opportunity
to save for their retirement. Medical savings accounts are giving
people an opportunity to save for themselves and to control their
resources for their own medical expenses.
There is a widespread use of medical savings accounts already in this
country that speaks better than any of us can to their legitimacy and
to their hope for success. They should reduce health care costs.
Administrative costs are lower. Consumers with MSA's should use health
care services in a more discriminating manner. Consumers with MSA's
should be more selective in choosing providers. This should cause those
providers to lower their prices to attract medical savings account
holders as patients. Medical savings accounts can also help to put the
patient back into the health care equation.
Patients should make more cost-conscious choices about routine health
care. Patients with medical savings accounts would have complete choice
of providers. Medical savings accounts should make health care coverage
more dependable. Medical savings accounts are completely portable.
Medical savings accounts are still the property of the individual, even
if they can change jobs.
Hence, for those reasons, I support medical savings accounts. I very
much thank the leadership for providing this amendment. I yield the
floor.
Mr. DASCHLE. Mr. President, I know that we want to have a vote by 4
o'clock so I will divide the time remaining with the distinguished
Senator from Delaware.
How much time remains?
The PRESIDING OFFICER. Six minutes and twenty-two seconds.
Mr. DASCHLE. I yield 3 minutes to our side and leave the Senator from
Delaware the final 3 minutes.
Mr. President, given the very short period of time we have remaining,
and the fact that all of the arguments have been made, let me simply
summarize the case against including MSA's on this bill.
Two years ago we all agreed that comprehensive health care reform
would not pass. In the last year and a half we have all agreed that we
can only pass something which enjoys broad bipartisan support. It was
with that understanding and with the remarkable leadership of the Chair
of the Labor Committee, the distinguished Senator from Kansas, and the
Senator from Massachusetts, we now have a bill that we all agree is the
only health reform legislation that can pass this Congress with broad,
bipartisan support. This narrowly drafted bill some of the most
pressing health problems facing Americans.
Portability and coverage for preexisting conditions are two of the
most important issues we face. So let there be no mistake, we have an
opportunity today to pass something, but we also have an opportunity to
kill that very bill with this MSA provision in this amendment. The NFIB
clearly stated in a letter dated today, and they have said very
clearly, ``We oppose any amendment which will bring about a defeat of
the legislation before us.''
They recognize the importance of this moment. They recognize what an
opportunity we have before us. We should not blow it. We should not
kill this bill. Let us recognize there will be another day to have yet
another debate about many other health care issues. But let us not
destroy the golden opportunity we have today to pass meaningful
legislation, by adding something as controversial as MSA's. We can do
better than that. We will do better than that if we can, on a
bipartisan basis, strike the MSA portion of the Dole amendment and pass
this bill intact, as we know we can.
If we do that we can look back on this Congress with some
satisfaction that we have done our best under these circumstances to
address some of the real health care problems working Americans face.
I yield the floor.
Mr. ROTH. Mr. President, medical savings accounts are among the most
important steps that must be taken to address this country's health
care needs, particularly the need for portability. MSA's are of such
importance in our effort to address our health concerns that on
September 8, 1992, several of my distinguished colleagues signed a
letter calling for the introduction of MSA's as part of their bill.
Let me quote a portion of that letter:
Unlike many standard third-party health care coverage
plans, Medical Care Savings Accounts would give consumers an
incentive to monitor spending carefully because to do
otherwise would be wasting their ``own'' money. . . Once a
Medical Savings Account is established for an employee, it
is fully portable. Money in the account can be used to
continue insurance while an employee is between jobs or on
strike. Recent studies show that at least 50 percent of
the uninsured are uninsured for four months or less. . . .
Today, even commonly required small dollar deductibles
(typically $250 to $500) create a hardship for the
financially stressed individual or family seeking regular,
preventative care services. With Medical Savings Accounts,
however, that same individual or family would have this
critical money in their account to pay for the needed
services.
Mr. President, these are important arguments that were made for MSA's
over 3 years ago. They are equally, if not more, important today. That
letter was signed by Senators Breaux, Boren, Daschle, Lugar, Coats, and
Nunn, a formidable bipartisan coalition of Senators taking a necessary
stand on a critical issue.
Mr. President, I have a copy of a letter received from the Vice
President of the NFIB that makes it clear that they are supporting the
MSA. This letter, dated today, April 18, 1996, to the Honorable Don
Nickles says, ``Overall, NFIB members need health care reform. It has
been a top priority for years. MSA's are among the provisions we have
consistently supported. These also include portability, no preexisting
condition exclusion, deductibility, and small business purchasing
groups. We will continue to fight for all these provisions of
importance to small business.''
For these reasons, Mr. President, I urge my colleagues on both sides
of the aisle to vote against the motion to strike. I yield the floor.
The PRESIDING OFFICER. All time has expired. The question is on
agreeing to the Kassebaum amendment No. 3677.
Mr. KENNEDY. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
[[Page S3568]]
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk called the roll.
Mr. LOTT. I announce that the Senator from Florida [Mr. Mack] and the
Senator from Colorado [Mr. Campbell] are necessarily absent.
The VICE PRESIDENT. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 52, nays 46, as follows:
[Roll Call Vote No. 72 Leg.]
YEAS--52
Akaka
Baucus
Biden
Bingaman
Bond
Boxer
Bradley
Breaux
Bryan
Bumpers
Byrd
Chafee
Conrad
Daschle
Dodd
Dorgan
Exon
Feingold
Feinstein
Ford
Glenn
Gorton
Graham
Harkin
Hatfield
Heflin
Hollings
Inouye
Johnston
Kassebaum
Kennedy
Kerrey
Kerry
Kohl
Lautenberg
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Nunn
Pell
Pryor
Reid
Robb
Rockefeller
Sarbanes
Simon
Wellstone
Wyden
NAYS--46
Abraham
Ashcroft
Bennett
Brown
Burns
Coats
Cochran
Cohen
Coverdell
Craig
D'Amato
DeWine
Dole
Domenici
Faircloth
Frist
Gramm
Grams
Grassley
Gregg
Hatch
Helms
Hutchison
Inhofe
Jeffords
Kempthorne
Kyl
Lott
Lugar
McCain
McConnell
Murkowski
Nickles
Pressler
Roth
Santorum
Shelby
Simpson
Smith
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner
NOT VOTING--2
Campbell
Mack
So the amendment (No. 3677) was agreed to.
Mrs. KASSEBAUM. Mr. President, I move to reconsider the vote.
Mr. KENNEDY. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. DOLE. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER (Mr. Craig). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DOLE. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOLE. Mr. President, we had hoped that we might have a vote on
the Dole amendment, a rollcall vote here. I need to check with one
Senator on this side. Is there any objection on the other side to
having a vote at this time or not? Are you prepared?
Mr. DASCHLE. Yes.
Mr. DOLE. I would say with reference to the last vote, I think it was
a close vote. As one of the conferees on the tax side, I think there
will still be opportunities in conference. We wanted as many votes as
we could have. We have one absentee so I think we have about 47 or 48
votes, which puts us in a strong position in the conference.
But, in any event, the outcome here may permit us to conclude action
on this bill today, hopefully. I trust that is what the managers have
in mind.
So, perhaps maybe Senator Dorgan might proceed at this time so we
would not lose any time, if he wants to take his 15 minutes now while
we are checking to see if we can go ahead and have the vote?
Mr. DORGAN. I say to the majority leader, if the majority leader
wishes to proceed I will defer my time until after the vote. I do not
need to intervene at this point. All I want to do is get the
appropriate time following the vote.
Mr. BUMPERS. Will the majority leader yield for a question?
The PRESIDING OFFICER. The Senate is not in order.
Mr. DOLE. I will be happy to yield to the Senator.
Mr. BUMPERS. Mr. President, I wonder if it is too early for the
majority leader to tell us if plans have been made for a session
tomorrow and, if so, will votes be included tomorrow?
Mr. DOLE. If we can complete action on this bill tonight I do not
anticipate any votes tomorrow. We will probably move to term limits,
unless we could have some agreement. There would not be any votes.
I do not believe there are that many amendments left on this bill.
So, as soon as I check with the Senator from Texas, we will be able to
proceed.
Mr. COHEN. Will the Senator yield? I inquire whether or not he
included the antifraud provision in his amendment?
Mr. DOLE. We included the Cohen antifraud provision, which I think
will save $3 billion.
Mr. COHEN. According to the CBO, they scored a $3 billion savings. I
want to commend Senators Dole and Roth for including it in the package.
We are losing roughly $18 billion a year just out of the Medicare
Program itself, and we are losing about $100 billion itself throughout
the health care system. It works out to about $275 million a day, $11.5
million an hour. I would also like to thank Mary Gerwin, Helen Albert,
and Priscilla Hanley from the Aging Committee for all their hard work
on the fraud legislation.
Mr. President, last spring the Medicare trustees, on a bipartisan
basis, issued an urgent warning that the Medicare hospital trust fund
will go broke by the year 2002, unless major changes are made to
protect the system. Since that alarm was sounded, the Congress has been
wrestling with ways to bring Medicare spending under control, in order
to forestall impending bankruptcy and to strengthen Medicare for both
current and future beneficiaries.
The debate over how--and how much--to control the unsustainable
growth of Medicare spending was part of the budget reconciliation
process which now remains stalled.
A major step we can and must take toward Medicare reform is to crack
down on the fraud and abuse that drives up the costs of health care for
senior citizens and taxpayers. Estimates are that Medicare loses over
$18 billion each year to fraud and abuse, and that fraudulent schemes
cost the entire health care system and our economy over $100 billion
each year.
The investigation of the Senate Special Committee on Aging, which I
chair, has revealed that it is shockingly simple to commit health care
fraud, and that the size, complexity, and splintering of the current
health care system creates an environment ripe for abuse.
Health care fraud is equal opportunity employer that does not
discriminate against any part of the system. All Government health care
programs--Medicare, Medicaid, CHAMP- US, and other Federal and State
health plans, as well as private sector health plans, are ravaged by
fraud and abuse.
Similarly, no one type of health care provider or provider group
corners the market on health care fraud. Scams against the system run
the gamut from small companies or practitioners who occasionally pad
their Medicare billings because they know they'll never get caught, to
large criminal organizations that systematically steal millions of
dollars from Medicare, Medicaid, and other insurers. According to the
FBI, health care fraud is growing much faster than law enforcement ever
anticipated, and even cocaine distributions are switching from drug
dealing to health care fraud schemes because the chances of being
caught are so small--and the profits so big.
Of particular concern is the growing evidence that health care fraud
has infiltrated the health care industries providing services to our
nation's elderly and disabled Americans, and in turn, contributing to
the runaway costs of these entitlement programs.
The Inspector General of the Department of Health and Human Services,
for example, has cited problems in home health care, nursing home, and
medical supplier industries as significant trends in Medicare and
Medicaid fraud and abuse. Padding claims and cost reports, charging the
government and patients outrageous prices for unbundled services, and
billing Medicare for costs that have nothing to do with patient care
are just a few of the schemes that are occurring in these industries.
Unscrupulous providers are enjoying a feeding frenzy on Medicare and
Medicaid, while taxpayers are picking up the tab for their feast.
It is time that we crack down--and shut down--these schemes that are
bilking billions of dollars from Medicare and other health care
programs. If we have asked honest health care providers to take cuts in
reimbursement and asked Medicare and Medicaid recipients to pay more
out-of-pocket costs to bring spending under control,
[[Page S3569]]
we have an absolute duty to ensure the American public that their
health care dollars are not lining the pockets of criminals and greedy
providers who are manipulating the system through fraud and abuse.
I was very pleased that the budget reconciliation bill includes anti-
fraud legislation that I introduced last year as a result of an
investigation of the Special Committee on Aging and I am pleased that
my legislation is included in the leadership amendment on the Kassebaum
bill.
Specifically, the proposal creates tough new criminal statutes to
help prosecutors pursue health care fraud more swiftly and efficiently,
increases fines and penalties for billing Medicare and Medicaid for
unnecessary services, overbilling, and for other frauds against these
and all Federal health care programs, and makes it easier to kick
fraudulent providers out of the Medicare and Medicaid Program, so they
do not continue to rip off the system.
Most importantly, the bill establishes an antifraud and abuse program
to coordinate Federal and State efforts against health care fraud, and
substantially increases funding for investigative efforts, auditors,
and prosecutors.
According to the Congressional Budget Office, these provisions will
yield over $3 billion in scorable savings to Medicare--without costing
a penny to senior citizens. I am convinced that the long-term savings
are much greater, and that billions more will be saved once dishonest
providers realize that we are cracking down on fraud, and that they can
no longer get away with illegally padding their bills to pad their own
pockets.
The legislation has received the support of the FBI Director, the
Attorney General, the HHS' Secretary, and the Congress, which passed it
as part of Budget Reconciliation. We should not let an opportunity to
pass this bill go by. We lose as much as $275 million per day or as
much as $11.5 million per hour to health care fraud and abuse. Every
day we wait, will be a victory to those unscrupulous providers who are
bankrupting our public health programs.
I urge my colleagues to support this important endeavor and I would
like to thank Senators Roth and Dole for including this proposal as
part of the leadership amendment.
Mr. HATCH. If my colleague would yield for a moment, I would like to
take this opportunity to discuss some concerns I have with the section
which pertains to establishment of a new health care fraud and abuse
data collection program.
Mr. COHEN. I would be glad to yield to my colleague.
Mr. HATCH. As you may be aware, the alternative medicine community
has expressed concerns about this provision. I have received
communications from, for example, the American Preventive Medical
Association and the National Nutritional Foods Association. In general
their concerns--which I share--focus on the potential abuse of the
fraud provisions we are passing today. I am sure my colleague is aware,
for I know he shares my strong support for alternative medicine, that
providers of alternative medical treatments sometimes find themselves
in the cross hairs of the more traditional medical establishment.
Personally, I believe that both alternative and traditional medicine
are important and that both can benefit patients. But, this cooperative
coexistence has not been fully realized it seems.
While we are all supportive of strong efforts to weed out health care
fraud and abuse, I hope the Senator from Maine will agree that we do
not want to create an opportunity for those who might want to eliminate
or discourage such alternative treatments by threatening fraud actions
under the new language we are considering today.
Mr. COHEN. My colleague is correct. I have long been interested in
promoting alternative medical treatments and I do not have any desire
to enact a new law which might treat such providers unfairly. Could the
Senator from Utah share with me specific concerns?
Mr. HATCH. I would be glad to. I have concerns in four specific
areas. First of all, would the Senator agree that the mere practice of
unconventional or non-standard therapies would not fall within the
definition of fraud? I am not asking you to amend the bill here, but
rather to give me your assurances and the implementing agencies your
guidance that such is the case.
Mr. COHEN. I agree with my colleague that the practice of alternative
medicine in itself would not constitute fraud.
Mr. HATCH. Thank you. My next concern relates to creation of the
health care fraud and abuse data collection program. As you know, some
people are concerned about the very establishment at the Federal level
of this new program. I understand those concerns, but I also am very
sympathetic to my colleague's argument that this would be a strong
weapon in our Federal arsenal to fight the fraud and abuse which are
costing our health care system so many billions of dollars each year
and robbing us of valuable resources which would be better used for
patient care.
The specific concern I want to raise now is that the program not
duplicate existing data bases which already collect information about
credentialing, licensing, and malpractice violations against providers.
Is that the Senator's intent?
Mr. COHEN. My language does not cover malpractice at all. Further, it
is my intent that the new data collection system be coordinated with
existing data bases, so that there is no costly and burdensome
duplication of effort. I have revised the language to reflect my
colleague's concerns in this area. The new language makes it clear that
there should be coordination with existing databases.
Mr. HATCH. I appreciate my colleague's actions to accommodate my
concerns here. Turning to another concern I have with respect to
reporting action on licensing and certification of health care
providers, suppliers and licensed health care practitioners, I
understand that the Senator intends that the actions to be reported are
final actions, after completion of due process. Is my understanding
correct?
Mr. COHEN. That is correct. I would want to make certain that
participants in the system can avail themselves of due process
guarantees, and that only final actions be included in the new
database.
Mr. HATCH. The last issue I wish to raise is with respect to a data
base requirement of reporting providers, suppliers, and licensed health
care practitioners who are excluded from participation in Federal or
State health care programs. This is my concern. Increasingly, managed
care organizations are excluding providers from participation solely
because of economic concerns, not because of any wrong-doing or program
violations. For example, a physician could be excluded from a managed
care organization certified by the State to care for the Medicaid
population solely because that provider may have ordered more services
than the managed care plan allows. If a provider were excluded from
participation in such a plan because of such ``economic
decredentialing,'' could that provider be reported to the data base?
Mr. COHEN. That is certainly not my intent. I have revised the
language in the bill to state specifically that only exclusions for
program violations are to be reported.
Mr. HATCH. I thank Senator Cohen very much for his work in this area,
and specifically for his efforts to clarify the bill with respect to
the treatment of alternative medical providers. I think that his
changes have improved the bill greatly. I appreciate his efforts in
this regard.
Mr. PELL. Mr. President, I ask unanimous consent to speak as in
morning business for 4 or 5 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
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