[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

[[Page S3554]]

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.

                          ____________________