[Congressional Record Volume 143, Number 40 (Tuesday, April 8, 1997)]
[Senate]
[Pages S2846-S2853]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH (for himself, Mr. Kennedy, Ms. Snowe, Mr. Kerry, Mr. 
        Jeffords, Mr. Dodd, Mr. Stevens, Mr. Rockefeller, Mr. Bennett, 
        Mr. Daschle, Ms. Collins, Mr. Wellstone, Mr. Smith of Oregon, 
        Mr. Bingaman, Mr. Campbell, Mrs. Murray, Mr. Reed, Mrs. Boxer, 
        Mr. Lautenberg, Mr. Durbin, and Mr. Reid):
  S. 525. A bill to amend the Public Health Service Act to provide 
access to health care insurance coverage for children; to the Committee 
on Labor and Human Resources.


              Child Health Insurance and Lower Deficit Act

  Mr. HATCH. Mr. President, today, Senator Kennedy, I, and a number of 
others, are introducing the Hatch-Kennedy child health insurance and 
lower deficit bill, or the CHILD Act, S. 525. We will also introduce a 
companion measure, S. 526, which contains a tobacco excise tax increase 
to pay for the program established in the CHILD bill.
  The CHILD bill has been negotiated over a long period of time in 
intensive and sometimes heated negotiations. As anybody can understand, 
it is difficult to get the two sides together on matters like this. So 
we have worked very, very hard to try and bring both sides together.

[[Page S2847]]

  It is no secret that Senator Kennedy and I have worked together in 
the past. And, we have fought each other in the past. But today is a 
time of unity, for I believe we have written a bill that really makes 
sense, a bill that will work and that will help one of the most 
vulnerable segments of our society, children without health insurance.
  Of the 40 million people who are uninsured in this country, 10 
million of them are children. Of those 10 million, about 3 million do 
qualify for Medicaid, but are not enrolled.
  While it has its problems, Medicaid is an excellent program overall, 
a program that does assist the poorest of the poor children and 
families. But those above the Medicaid eligibility poverty levels, 
comprise about 7 million children, most of whom are often called the 
near poor, or the working poor.
  Mr. President, as a recent study has made abundantly clear, about one 
out of three children in this country lacks health insurance. It is a 
pathetic situation.
  As my colleagues are aware, Senator Kennedy and Senator Kerry 
introduced a bill last year which addressed the child health insurance 
problem from a considerably different perspective than the bill we are 
finally going to introduce today.
  I think it is important to point out the differences for the 
edification of my colleagues.
  The bill we will file today is a bill that is a straight block grant 
to the States. The States have flexibility to determine their own 
eligibility standards with minimal Federal requirements.
  The proposal is not an entitlement program. It is a fully funded 
program. It is a 5-year authorization.
  The mechanism for funding the CHILD program authorization is an 
increase in the tobacco excise tax, amounting to 43 cents per package 
for cigarettes and proportionate increases on other tobacco products. 
Some have analogized this to a user fee on those who use tobacco 
products.
  We think this excise tax is justified. In 1955, a package of 
cigarettes cost about 23 cents. Of that amount, 8 cents consisted of a 
Federal excise tax on the cigarettes.
  Today, a package of cigarettes costs almost $2, at least $1.82 in 
most States, but we have only a 24-cent Federal excise tax on the 
utilization of those cigarettes.
  We think this provision is also justified from a public health 
perspective.
  Smoking is the largest preventable cause of premature death in the 
United States.
  Thirty percent of all cancer patients develop their diseases from 
smoking. Almost all lung cancer comes from smoking. And much of the 
cardiovascular disease that we have in our society comes from smoking--
including passive smoking as well.
  It should be no secret to my colleagues that it was a difficult 
decision for me to submit a bill which will increase taxes, but after 
considerable study I concluded in this case it is a just and a right 
thing to do.
  And if we increase the cigarette tax by 43 cents, we will still be 
below the percentage the excise tax was back in 1955 when a package of 
cigarettes cost 23 cents and the excise tax was 8 cents of that.
  It is important to note that two-thirds of the revenue raised from 
this bill over the next 5 years will be used for the new child health 
insurance. The States will be able to negotiate with private health 
insurance companies to provide coverage, and they will be able to 
utilize the community health centers which are giving low-cost but 
high-quality health care in America today.

  I am one of the strongest advocate for community health centers, and, 
I must say, they have done a superlative job of delivering health care 
in general in our society.
  In Utah, we have what is known as the Caring Foundation. For every 
dollar we raise in charity, Blue Cross/Blue Shield matches that dollar 
with $1, making $2 for child health insurance. I believe that can be 
duplicated across this country in the best interest of children and 
families.
  When someone inquires about why I am sponsoring the CHILD Act, my 
thoughts turn to scores of constituents who have brought their concerns 
about the cost and availability of health insurance to my attention.
  It is heart rending to me when I have uninsured families come into my 
office--many of whom are young and who have children. These families 
are frantic; they don't know where to turn when a child gets sick.
  Two young women from Provo in my home State came in to visit me 
recently. Both had six children. They both work part time. Their 
husbands work full time, but neither family makes more than $20,000 a 
year. They are hard-working people. They are the working people of our 
society who are the poorest of the poor not on Medicaid, who cannot 
afford health insurance and, frankly, who do not know where to turn.
  I think that it behooves us to solve this problem for them, and the 
best way to do it is with a straight block grant to the States.
  The grant approach has a lot of benefits. There should be minimal new 
bureaucracy, because the IRS already collects excise taxes on 
cigarettes. There should be minimal bureaucracy because HHS will 
distribute the funds based on a simple formula reflecting the number of 
uninsured in a State.
  We provide a safeguard so there is no incentive for businesses to 
drop the lower paid people off their health insurance. In this bill, if 
a company wishes to drop any employee from the company health plan, 
then they will have to drop all their employees, from the top 
executives on down.
  We are trying to help those who cannot help themselves, which I think 
is the most conservative thing we can do in this society. We are not 
trying to help those who can help themselves but refuse to. People who 
can help themselves ought to help themselves.
  What I am saying, Mr. President, is that it is time. It is time for 
this Congress to get down to business.
  Mr. President, it is time.
  It is time for us to get down to business.
  It is time for the Congress to focus on how to make a great country 
greater on how to set aside partisan differences and help the people we 
were elected to help.
  It is time to focus on what truly needs to be done in this country 
not on deadlock or gridlock or shutdown.
  It is time to wake up and realize that--in this great land of 
incredible riches and abundance--in the greatest country of the world--
there are still children being left behind.
  Who cannot be disturbed, even frightened, by the statistics?
  Drug use among our young people is dramatically on the rise. In its 
ninth annual survey of students in grades 6-12, the National Parents' 
Resource Institute for Drug Education [PRIDE] reported that annual use 
of most drugs was at the highest level since the survey began 10 years 
ago. Record use was reported for cigarettes, marijuana, cocaine, 
uppers, downers, inhalants, and hallucinogens.
  Serious questions have been raised about our children's ability to 
learn. Our children rank pitifully behind other countries in 
educational scores. One survey of international test scores for math 
and science, found Americans to rank dead last and South Koreans 
ranking the best. And, who could not be disturbed by this? A 1991 
National Assessment of Education Progress survey, revealed that only 5 
percent of high school seniors demonstrated enough understanding of 
geometry and algebra to be prepared for college-level math.
  Violence is rapidly becoming a way of life for today's children. Over 
the past decade, the rate of homicide committed by teenagers aged 14-17 
has more than doubled, increasing 172 percent from 1985 to 1994. In 
fact, 35 percent of all violent crime is committed by offenders less 
than 20 years of age.
  And here's another astounding fact. Two years ago, a survey of 1,000 
teachers showed that 11 percent had been assaulted in school. Teachers 
have been robbed, vandalized, slashed by razors, physically assaulted, 
shot, and set on fire in the schools. What kind of learning environment 
is that for our children?
  And, let's look at child health. How many Senators are aware that 
almost one out of three children have no health insurance?
  Ten million children have no health insurance at all. That is more 
children than the entire populations of Maine,

[[Page S2848]]

Rhode Island, Alaska, Delaware, Georgia, Hawaii, Montana, Nebraska, 
South Dakota, and Vermont--10 States--combined.
  Did anyone know this? Over 500,000 American infants are uninsured, 
infants who need such critical services as immunizations to grow up 
healthy.
  Mr. President, these are astounding statistics. Terrifying predictors 
of our world as we head into the 21st century.
  And I, for one, am going to put my foot down. I will do everything I 
can to reverse this trend.
  I challenge each Senator in this body to work with me on what must be 
the top agenda item for the 105th Congress: Making this world a better 
place for our children.
  I will make this a top priority in the Judiciary Committee.
  We will look at such issues as the Federal Gang Violence Act, 
violence in the schools, and, importantly, a strong national antidrug 
abuse strategy.
  Already the committee has approved--only to suffer the most narrow of 
defeats on the floor--the Balanced Budget Act, passage of which is 
perhaps the most important legacy we can leave for our children, each 
of whom is born saddled with $20,000 in debt.
  And I hope other committees will be working as well.
  For no effort to improve this world for our children can be complete 
without measures to improve their ability to grow up healthy.
  That is why I have united with my good friend and sometimes 
adversary, Senator Kennedy, to draft the bill we are introducing today: 
the Child Health Insurance and Lower Deficit Act. We call it the CHILD 
bill. The CHILD bill will be accompanied by additional legislation we 
also introduce today which provides the funding offset for the CHILD 
Program through an increase in the tobacco excise tax.

  Introduction today of S. 525, and the companion bill to increase the 
tobacco excise tax, completes 3 months of intense negotiations between 
myself and Senator Kennedy.
  Our discussions were sometimes heated, sometimes acrimonious, but 
always well intentioned. They have resulted in a bill, the adoption of 
which I think will make this country a better place.
  And so, today, Senator Kennedy and I have found a solid center--we 
have compromised from the left and from the right. We are doing this to 
help the 10 million children in the United States who are without 
health insurance. We are doing it because it is the right thing to do.
  The child health insurance and services bill Senator Kennedy and I 
will introduce today is targeted to the near poor, primarily working 
families, who are not covered by existing Government programs. Two-
thirds of the uninsured children come from low-income working families 
with annual incomes of $25,000 or less; 86 percent are from families 
where at least one parent is employed.
  I think any honest examination of this would show that these 
statistics are deplorable. Children are our most precious natural 
resource. If we had a vote on that today, it would pass 100 to 0. And 
if you agree on that, the next step is simple. I can't think of a more 
appropriate role for the Federal Government than helping the most 
vulnerable in our society. It has become a cliche, but children are our 
future.
  Already I have taken criticism for this bill and for uniting with a 
Democrat to sponsor the CHILD Act. It is true that Senator Kennedy and 
I represent the most divergent philosophies in the U.S. Congress. It is 
for that very reason we are proposing S. 525 today. United, we can 
provide the basis for a consensus position we hope all our colleagues 
will endorse.
  It is true that Senator Kennedy and I do not often agree on public 
policy. I can't even count the number of times I have stood on this 
floor to oppose--even filibuster--legislation he has sponsored. But 
with respect to health care--when it comes to helping people--we both 
have a strong commitment to doing the right thing regardless of 
politics. And this legislation is the right thing to do.
  Joining Senator Kennedy and me today in cosponsorship of the CHILD 
bill, S. 525, are 19 Senators, for a total of 21. Those Senators are: 
Snowe, Kerry, Jeffords, Dodd, Stevens, Rockefeller, Bennett, Daschle, 
Collins, Wellstone, Smith (OR), Bingaman, Campbell, Murray, Reed, 
Boxer, Lautenberg, Durbin, and Reid.
  Joining us in cosponsorship of the tobacco tax bill, S. 525, are 
Senators Bennett, Bingaman, Boxer, Dodd, Durbin, Jeffords, Kerry, 
Lautenberg, Murray, Reed, Reid, Rockefeller, Snowe, and Wellstone.
  What are the major features of the CHILD bill?
  Our proposal sets up a voluntary State grant program--I repeat, 
voluntary State grant program. The funds will be used by States to 
subsidize the cost, or part of the cost, of private health insurance 
for needy children. States will also be able to use Community and 
Migrant Health Centers to provide services directly to children.
  We hope our program will be a catalyst to improve health care for 
kids. It is a Federal/State/private partnership. Any State that wishes 
to participate must contribute to the program. States may require 
individuals or their employers to contribute as well.
  We have designed an approach which we believe is fiscally 
responsible. The bill authorizes program expenditures for each of 5 
years, and it is fully financed with a 43-cent increase in tobacco 
excise taxes. Two-thirds of the revenues will be used for program 
services, and one-third for deficit reduction.
  In drafting S. 525, we have worked very hard to make certain that no 
large, new bureaucracy will be needed to implement the CHILD Program. 
The idea of a huge new Federal involvement in health care frightens 
most Americans, as was so amply evidenced by the resounding defeat of 
the Clinton health care bill in 1994.
  I was one of the loudest objectors to that legislation as a member of 
both the Finance and Labor Committees at the time it was considered. I 
want to assure my colleagues that we are not replicating that exercise 
here today.
  HHS will disburse the grant money according to existing Medicaid 
formulas and the number of uninsured children in the State. The 
Treasury Department already collects an excise tax.
  The States will set eligibility levels, which presumably they could 
do very easily based on their experiences with Medicaid and other State 
programs to help the poor and near poor. The States will use their 
current Medicaid benefits packages to negotiate contracts for insurance 
coverage. These are not complex calculations. They should be easily 
achievable.
  We also worked very hard to allay any concerns that we were 
establishing a new entitlement program.
  We are not.
  The bill does not establish any individual entitlement to benefits. 
It is a 5-year authorization which is fully funded. It is not like 
Medicare where we guarantee we will pay for the services of every 
eligible beneficiary. It is not like Medicaid where we pay an open-
ended amount, which is appropriated annually.
  What we are really talking about doing with this bill is finding 
cost-effective ways to get quality health care services to children. 
Our bill recognizes and strengthens the important role that community, 
migrant and homeless centers play in caring for the Nation's uninsured 
children and their families. Community and rural health centers already 
exist. We are not creating them or remaking them in this bill.
  They are located in medically underserved communities where many 
uninsured children live. Over 940 health centers in every State serve 
one out of six low-income American children, over 4.5 million children. 
They are currently the family doctor for one out of seven uninsured 
children, totaling 1.3 million children. Last year, health center 
professionals delivered one of every 10 babies born in the United 
States, and one out of every five low income babies. They are experts 
in providing quality, comprehensive primary and preventive care to 
uninsured children--the very type of care we are trying to get to 
children with this bill.
  Our bill permits these children to continue to choose health centers 
as their primary care provider and to make the choice of a health 
center available to other uninsured children. In each area currently 
served by a health center, a direct service option will be available to 
children who are served by a health center. Families choosing the 
direct service option will

[[Page S2849]]

get the same comprehensive Medicaid package of services as do those who 
opt for a children's policy. Under the direct service option, children 
will receive their primary and preventive care at the health center 
they select and will receive specialty and inpatient care through 
networks of providers certified by the State or through a wrap-around 
insurance policy.
  We believe that the direct service option will be as cost effective 
as an insurance policy and may even be less expensive. Several studies 
which compared the total annual cost of health care for Medicaid 
patients served by health centers--including primary and specialty care 
and inpatient care--to the total annual cost of care for Medicaid 
patients served by other types of providers--including health 
maintenance organizations and private physicians--found that health 
center care was the least expensive.
  The reason? Health centers prevent illness because of the primary and 
preventive care they provide. Based on these studies, the cost of all 
care--primary, specialty, and inpatient--under the direct service 
option is expected to be lower than the cost for a child cared for by 
another type of provider.

  As the chief sponsor of the balanced budget amendment, I could not 
support the creation of any new entitlement program.
  Indeed, I believe this proposal is fully consistent with the BBA. 
First, our bill is fully financed by the proposed tobacco products tax. 
Second, for every $2 of program cost the Hatch-Kennedy bill dedicates 
$1 to deficit reduction.
  When all is said and done, this bill would help to bring the budget 
in balance--which I believe will be nearly as essential to children in 
the long-run as necessary health care is in the short-run.
  Let me underscore that the net cost to the Federal Government of the 
CHILD Act is zero, because it is fully funded. In fact, the bill 
literally saves money, because it provides at least $10 billion in 
funds for deficit reduction over the next 5 years.
  We cap Federal expenditures at $20 billion over 5 years for services, 
with $10 billion for deficit reduction. Over the 5-year period, the 
ratio of services to deficit reduction will be 2 to 1.
  For services, we will provide the following amounts: 1998: $3 
billion, 1999: $3 billion, 2000: $4 billion, 2001: $5 billion, 2002: $5 
billion.
  For deficit reduction, we provide the following amounts: 1998: $3 
billion, 1999: $3 billion, 2000: $2 billion, 2001: $1 billion, and 
2002: $1 billion.
  Let me make perfectly clear that the size of this program is capped 
each year. In fact, if not enough revenue is generated, then the size 
of the program will be lowered accordingly.
  Let me take a moment to address other potential concerns about this 
bill.
  Many have asked why we need a new program. Indeed, we have the 
Medicaid Program, which helps the poorest of the poor. Even so, there 
are 10 million children without coverage. In fact, 3 million uninsured 
children are eligible for Medicaid, but are not enrolled.
  There is no program for the remaining 7 million children, most of 
whom come from near poor families. Those families are faced with two 
very unattractive options: a choice between dropping out of the labor 
force in order to get Medicaid eligibility, or keeping their jobs with 
no health care coverage at all.
  It might be logical to assume that Medicaid would provide the basis 
for a program to increase child health coverage. And we did examine 
that idea. But, Medicaid is an open-ended entitlement--and an expensive 
one at that. Both the States and the Federal Government are seriously 
concerned about the runaway costs of Medicaid.
  In contrast, our capped program is not an entitlement. It is a 
targeted approach which allows States considerable flexibility in 
design and administration.
  Others have suggested that we use a tax-based approach. I would be 
willing to consider a tax credit approach, if we could design one that 
really works. But I foresee two problems in developing such an 
approach.
  The first is that a tax credit could really amount to an open-ended 
entitlement, whereas the size of our program is capped each year. The 
second is that poor and near-poor families, who we are trying to help 
with this bill, simply cannot afford to buy insurance coverage during 
the year, and wait until the next April to get the money back.
  For the benefit of my colleagues, I want to respond to two other 
concerns.
  First, I must emphasize that S. 525 is not the Kerry-Kennedy bill 
from last year, S. 2186. It is a new proposal that Senator Kennedy and 
I wrote together. Senator Kennedy and I have both moved considerable 
distances to write this compromise legislation.

  This bill is not an open-ended, permanent entitlement; it is a capped 
5-year program, run by the States and, as such, is very similar to a 
proposal former House Republican Leader Bob Michel authored in 1995.
  Second is the assertion that this bill is part of the Clinton agenda 
on health care. If helping the needy is crime, then I plead guilty. But 
I hope I have convinced those here today that there is a big difference 
between Clintoncare and the Hatch-Kennedy bill.
  Indeed, I am aware that some believe there is a hidden Clinton agenda 
to enact health care reform piece by piece, starting with kids care.
  I think that is a red herring. This argument suggests to me that we 
should never do anything worthwhile because of the possibility that it 
may evolve into something bad. I agree that we do not want the huge 
Clinton health care mandate proposed and debated during the 103d 
Congress. But, this bill is not that bill--it is not even a look-alike 
bill.
  I have tried to design a Reaganesque block grant tailored to meet a 
specific problem with a wide degree of flexibility for the States. 
Unlike the Clinton program, the CHILD Act is focused. It is fully 
financed; it does not establish a new Federal bureaucracy; and it does 
not create any new entitlements. There are no price controls and no 
regional alliances and no global budgets.
  Another difference is that we are trying to make this a bipartisan 
approach right from the beginning. We have the wisdom of that national 
debate 2 years ago and are far wiser for it.
  Let me next turn to the issue of the tobacco tax as a source of 
revenue for the Children's Health Insurance and Lower Deficit Act. 
There can be no doubt that smoking and tobacco use is a major public 
health problem. By any measure, it is also costly.
  Smoking is our Nation's No. 1 preventable health threat. There are 
about 48 million Americans who smoke. About 2 million Americans use 
other tobacco products like chewing tobacco.
  Consider these facts.
  Tobacco kills an estimated 419,000 Americans each year.
  An additional 2.5 million more people throughout the world die from 
smoking each year.
  Smoking accounts for about 1 in 5 deaths in the United States.
  Tobacco accounts for more deaths than homicide, car and airplane 
accidents, alcohol, heroin, crack, and AIDS--combined. In fact, 
cigarettes are also a major cause of fire fatalities in the United 
States. In 1990, cigarettes were responsible for about one-quarter of 
all deaths associated with residential fires; this represented over 
1,000 deaths.
  Each day nearly 3,000 young Americans become regular smokers. 
Eventually, 1,000 will die early from tobacco-related diseases.
  Unfortunately, cigarette smoking is on the rise among the young: 
According to the Centers for Disease Control and Prevention [CDC], the 
number of high school students reporting that they smoked in the last 
month rose about one-third between 1991 and 1995, from 27.5 percent in 
1991 to 34.8 percent in 1995.
  Among black high school age males the jump in smoking was even more 
alarming, doubling from 14 percent in 1991 to 28 in 1995.
  About 8 in 10 smokers begin to use tobacco before age 18 and about 
one-half of all smokers started at age 14 or earlier.
  In 1964, Surgeon General Luther Terry reported that smoking causes 
lung cancer in men.
  In 1988, the Surgeon General C. Everett Koop reported that smoking 
was an addictive behavior--the same as for heroin or cocaine.
  Each year, the estimated 1 million youngsters who become smokers add

[[Page S2850]]

about $9 to $10 billion to the Nation's health care costs over their 
lifetimes.
  According to a 1994 CDC report, tobacco cost an estimated $50 billion 
in direct health care costs in 1993. Of this total, CDC estimated that 
$26.9 billion went for hospital expenditures, $15.5 billion for 
physician expenditures, $4.9 billion for nursing home expenditures, 
$1.8 billion for prescription drugs, and $900 million for home health 
care expenditures.

  The 1994 CDC report notes: ``The findings in this report indicate 
that cigarette smoking accounts for a substantial and preventable 
portion of all medical-care costs in the United States.''
  According to CDC projections, in 1993 approximately 24 billion 
packages of cigarettes were sold in the United States and for each of 
these packages about $2.06 was spent on medical care attributable to 
smoking. Of this $2.06 per pack estimated societal medical care cost, 
CDC estimated that $0.89 was paid through public sources.
  The CDC study estimated that there was a twofold increase in 
estimated direct medical care costs attributable to smoking between 
1987 and 1993.
  Extrapolating the 1987 survey data reported by CDC, it can be 
estimated that, in 1993, about $10 billion in Medicare costs and $5 
billion in Medicaid costs were attributable to smoking.
  It has been estimated that smoking cost $4.75 billion to other 
Federal health care programs, $1.6 billion to other State health 
programs, and over $16.7 billion in higher premiums paid to private 
health insurance companies.
  In addition to the direct cost of about $50 billion annually, experts 
agree that a similar amount of costs are borne by society through lost 
productivity--that is, the foregone earnings of those dying 
prematurely.
  Researchers at the University of California at San Francisco, Drs. 
Wendy Max and Dorothy Rice, estimate that the 1993 mortality costs due 
to smoking were $47 billion.
  Overall, smoking costs society over $100 billion annually. This is 
simply too high a price to pay.
  It is estimated by the Joint Tax Committee that a 43 cent per pack 
increase in the cigarette tax, coupled with proportionate tax increases 
for other tobacco products, would yield about $6 billion in new 
revenues.
  Another point that I want to make today is that the tobacco tax 
simply has not kept up with inflation. As a matter of fact, the 
relative component of the price of cigarettes devoted toward taxes has 
slipped over the last three decades and, even with the increase we 
propose today, will actually be lower proportionately once this bill is 
enacted than it was in 1964 when Surgeon General Luther Terry reported 
that smoking causes cancer.
  In 1964, the average total price of a pack of cigarettes was about 
30.5 cents per pack. Of this total, 8 cents went to pay the Federal tax 
and another 8.5 cents per pack were levied in State cigarette and sales 
tax. In sum, in 1964, about 50.5 percent of the cost of a pack of 
cigarettes went to taxes.
  Currently, the average price per pack of cigarettes is about $1.94. 
Of this total, 24 cents represents the Federal tax and an additional 
31.7 cents per pack is levied by the States together with an additional 
9.3 cents per pack in sales taxes. All in all, the share of the per 
pack price of cigarettes devoted to taxes has dropped to about 33.5 
percent today from the 1964 level of 50.5 percent.
  If the CHILD Act were signed into law and the new 43 cents per pack 
tax were added, and if this new tax were passed on directly to the 
consumer to increase the per pack price to $2.37 per pack, the share of 
the total price devoted to taxes--45.6 percent--would still be lower 
than it was in 1964.
  Even when this new tax is factored in, the United States would still 
have a relatively modest tax component built into the price of 
cigarettes compared with other industrialized countries. For example, 
in Canada 64 percent of the price of cigarettes is devoted to taxes. In 
Great Britain, the comparable figure is 82 percent.
  As a conservative, I am generally opposed to tax increases. I firmly 
believe that the Federal Government should spend less, and the American 
people should keep more of the money that is earned in our economy.

  As a conservative, I believe in a balanced budget. That is why I 
spent the better part of February managing the floor debate for the 
balanced-budget amendment. That is why I worked hard to convince 
Senator Kennedy to earmark one-third of the revenues raised by the 
proposed increase in the cigarette tax for deficit reduction.
  Yet, the statistics about tobacco use and cost that I cited above, I 
believe, make the case that tobacco products are imposing external 
costs onto society that are not adequately reflected in the price of 
these inherently dangerous products. Simply stated, the producers and 
consumers of tobacco products are not paying the full costs of this 
product.
  When I balance the opportunity that we have in terms of helping to 
provide health insurance and services to children, coupled with a 
significant deficit reduction component, against my natural aversion to 
raising taxes, I come down in favor of this financing mechanism with 
this tobacco tax--or, as I call it, a user fee. I believe that both the 
public health and economics reasons are unique and compelling.
  I believe that when my colleagues in Congress have the opportunity to 
fully consider these issues that they will agree with the cosponsors of 
this legislation and support the CHILD Act.
  In closing, Mr. President, let me state my intention to work with all 
interested parties to improve this bill as it moves through the 
legislative process.
  Indeed, as I have stated, there are some provisions contained within 
this bill that I believe could be improved through a thorough public 
discussion.
  In particular, I would like to hear from the Governors about how this 
bill meets their needs with respect to the uninsured population.
  I am aware that they may have a few concerns about the bill, such as 
using the Medicaid benefits package as the model for the private 
insurance contracts.
  Senator Kennedy and I inserted that provision in the bill for two 
reasons. We knew that the Governors would be familiar with it and, most 
importantly, it would obviate the need at either the Federal or State 
levels to undertake the onerous task of creating a benefits package.
  Our Utah Governor, Mike Leavitt, has stated on more than one occasion 
that he believes the Medicaid benefit package is too ``rich;'' in other 
words, a more efficient package would be less costly and still provide 
needed care. I look forward to working with him and the leaders of 
other States to address this issue.
  Another issue of critical concern is the interrelationship of this 
program with the employer community. We were very careful to design a 
program that would complement existing employer efforts to insure their 
employees without a costly Federal mandate. On the other hand, though, 
we wanted to make sure that there was no incentive for employers to 
``dump'' employees into the new program in order to relieve themselves 
of a benefit cost.
  That is why we inserted a provision that states that any employer who 
makes health insurance contributions for an employee cannot vary such 
contributions based on an individual's eligibility under the CHILD Act. 
The only way an employer could put a currently insured employee into 
the CHILD program would be to eliminate coverage for all employees in 
the company plan. We think this is highly unlikely to happen.
  Again, let me state that we were very sensitive to the concerns about 
a mandate on employers, and we look forward to a very careful 
examination of this issue as the legislation progresses.
  Let me also discuss for a moment the issue that Senator Lott has 
already mentioned, that of making certain that the 3 million children 
who are currently eligible for Medicaid, but not participating, become 
enrolled. While our bill does not address that issue, it is something 
we need to do. I hope to work with Senator Jeffords and Senator DeWine 
who have indicated in interest to me in working to make certain that 
those who are eligible for Medicaid can participate.
  But let me hasten to add that only 3 million out of the 10 million 
uninsured children are eligible for Medicaid. So, Senator Lott's idea--
which is a good one--would still leave 70 percent of the problem 
untouched.
  Mr. President, in closing I want to reiterate my commitment to 
working

[[Page S2851]]

with Senator Kennedy and all 98 of my other colleagues to enact a bill 
this year which will improve child health insurance coverage in the 
United States.
  It is time, and I hope the majority of this body will agree.
  The PRESIDING OFFICER. Under the previous unanimous-consent request, 
the 15 minutes allocated to the Senator from Utah has expired.
  Mr. HATCH. Will my friend yield me 30 seconds?
  Mr. KENNEDY. Sure.
  Mr. HATCH. I want to compliment my friend for the remaining 30 
seconds. I wish I could spend more time.
  Development of these bills has not been an easy thing for him to do, 
or for me. But I am convinced we have drafted a program that will work.
  I have to suggest that if Senator Kennedy and Senator Hatch--who have 
such widespread differences of philosophy--can unite to propose a 
program like this, then anybody can get together. Despite our 
philosophical differences, which are wide, we both have a great deal of 
friendship and caring for each other. We are working as hard as we can 
to do what is right here.
  I want to thank my colleague for his great work in this effort.
  I yield the floor.
  Mr. KENNEDY. Mr. President, I want to thank Senator Hatch for his 
leadership on this important issue affecting our Nation's children.
  Those of us in the Senate have noted that Senator Hatch was 
instrumental a number of years ago, working with Senator Dodd and 
myself, on the child care block grant program, which still is in 
existence. It has been evaluated as an extremely effective program for 
providing child care for the working poor.
  A number of years ago we also worked closely together in the summer 
jobs initiative that included continuing education programs.
  In the area of children, I think Senator Hatch and I as well as many 
others understand that this is neither a Democratic issue nor a 
Republican issue. Nor is it a North or South issue. It is an American 
family issue.
  For every American family children come first, as well they should. 
They are our greatest asset and they represent our Nation's future. 
When we invest in our children, we are investing in America's future. 
That is why this effort is of such importance and why Senator Hatch and 
I are now working closely together to make sure that this legislation 
becomes law.
  Mr. President, it is reasonable to ask, why now? Why children?
  The fact of the matter is 3,000 children every single day lose their 
health insurance. Nine out of ten of those who are losing their health 
insurance in this country are children.
  The number of uninsured children is growing. It will rise to 5 
million by the year 2000, making it increasingly urgent that we address 
the fact that more and more children are becoming uninsured.
  We are talking about the sons and daughters of working families--
families that are working 52 weeks of the year, 40 hours a week, trying 
to make ends meet and play by the rules. One of the things they are 
unable to do is provide health care coverage for their children.
  Their children require this coverage, which is why Senator Hatch and 
I and many others want to make health insurance accessible and 
affordable for all of America's children. We know the number of 
children who have ear infections and never see a primary care doctor. 
We know the number of children who are in school at this very hour and 
have difficulty seeing the blackboard or reading a book and are 
humiliated in their classroom because they have not had their eyes 
tested.
  This crisis is occuring all over the country. It is happening in 
urban areas and in rural communities. But we can do something about it, 
and that is why the legislation is of such importance.
  Ten million children are uninsured. Their parents are working hard 
trying to make ends meet, and the one thing they cannot afford are the 
premiums to provide health care coverage for their children.
  As Senator Hatch has pointed out, our legislation will build on 
existing programs in the States, and the States by and large are 
overwhelmingly using the voucher system. I know there are those who 
favor a tax credit program, but it has been tried and did not work in 
the past.
  We are also building on the private sector because the insurance that 
will be provided and distributed is going to be as a result of 
competition in the States.
  Finally, we are paying for the program with a 43-cents-per-pack 
increase in the Federal tobacco tax.
  Some say, isn't this unfair and unjustified? We say that tobacco 
costs the Nation $50 billion a year in direct medical costs--$50 
billion a year. By adding 43 cents on a pack of cigarettes, we will 
have even less than the proportion of tax--Federal, State, and sales 
tax--for a pack of cigarettes than we had in the early 1960's.
  When we look at where we are in comparison to where other countries 
around the world--our cigarette taxes are well below every other 
industrial country in the world. With our 43-cents-per-pack increase in 
the Federal cigarette tax, it will still be among the lowest of all 
industrial nations.
  Mr. President, we strongly support this increase in the cigarette tax 
because it can do more to stop children from smoking than any other 
action we could possibly undertake. This will have a dramatic impact on 
reducing addiction among teenagers, who have less income than adults to 
spend on cigarettes. That is when the smoking really starts and where 
the child becomes addicted.
  We say that not only because that has been the history of pricing 
over the period of the last 30 years, but it is there in the documents 
and statements of the tobacco companies as we have seen in the Liggett 
story recently.
  Mr. President, this is legislation which the American people support. 
It makes sense from a health point of view. It makes sense from their 
family point of view. It makes sense for the future in terms of having 
children who are going to have good quality health care. It makes sense 
because it will save the lives of over 800,000 children who would 
otherwise have died from a smoking-caused illness. And it will also 
provide a modest reduction in terms of the deficit.
  This is a win-win-win for the American people. It should be a 
bipartisan effort. I want to commend Senator Hatch for his leadership 
and I thank all of our Democratic colleagues for joining in our 
efforts.
  I am honored to join Senator Hatch in introducing the Child Health 
Insurance and Lower Deficit Act of 1997, which will be a major step 
toward making health insurance accessible and affordable for all of 
America's children. I am hopeful that the legislation we are 
introducing today will be approved by this Congress, and signed by 
President Clinton. It shows that Democrats and Republicans can work 
together to solve this national problem.
  One of the most urgent needs of children is health insurance 
coverage. Insurance is the best possible ticket to adequate health 
care--and every child deserves such care.
  Today, however, more than 10 million children have no health 
insurance--1 child in every 7--and the number has been increasing in 
recent years. Every day, 3,000 more children lose their private health 
insurance. If the total continues to rise at the current rate, 13 
million children will have no insurance coverage by the year 2000.
  Almost 90 percent of these uninsured children are members of working 
families. Two-thirds are in two-parent families. Most of these families 
have incomes above the Medicaid eligibility line, but well below the 
income level it takes to afford private health insurance today.
  The children's health care crisis begins at the beginning--with 
inadequate prenatal care. Some 17 industrial countries have lower 
infant mortality rates than the United States. Every day, 636 infants 
are born to mothers in this country who did not have proper prenatal 
care; 56 die before they are 1 month old. And 110 die before the age of 
1. Many more grow up with permanent disabilities that could have been 
avoided with prenatal care. Uninsured pregnant mothers have sicker 
babies, and these babies are at greater risk--low birth weight, 
miscarriage, and infant mortality.
  Too many young children are not receiving the preventive medical care 
they need. Uninsured children are twice as likely to go without medical 
care for conditions such as asthma,

[[Page S2852]]

sore throats, ear infections, and injuries. One child in four is not 
receiving basic childhood vaccines on a timely basis. Periodic physical 
examinations are out of reach for millions of children, even though 
such exams can identify and correct conditions before they cause a 
lifetime of pain and disability.
  Preventive care is the key to a healthy childhood, and it also is a 
cost-effective investment for society. Every dollar invested in 
childhood immunizations saves $10 in later hospital and other treatment 
costs.
  Some say there is no health care crisis for children. But I reply, 
tell that to the hard-working parents who cannot afford coverage for 
their families or whose employers won't provide it.
  Tell it to the hospital emergency room physicians who are often the 
only family doctor these children know, and who have to treat them for 
heart-breaking conditions that could have been prevented or easily 
cured with timely care.
  Tell it to school teachers struggling to teach children too sick to 
learn. Tell it to children's advocates across the country, who see 
children every day with health care needs neglected for too long. 
Between 30 and 40 percent of children in the child protective system 
suffer from significant health problems.
  For all these reasons and many more--10 million more--the children's 
health care crisis is real, and the time to address it is now. Every 
child deserves a healthy start in life. No family should have to fear 
that the loss of a job, or an employer's decision to drop coverage or 
hike the insurance premium will leave their children without health 
care.
  The current neglect is all the more unconscionable, because children 
and adolescents are so inexpensive to cover. That is why we can and 
must cover them this year--in this Congress. The cost is affordable--
and the benefits for children are undeniable.
  The legislation that Senator Hatch and I are introducing will make 
health insurance coverage more affordable for every working family with 
uninsured children. It does so without imposing new Government 
mandates. It encourages family responsibility, by offering parents the 
help they need to purchase affordable health insurance for their 
children.
  Under our plan, $20 billion over the next 5 years will be available 
to expand health insurance coverage for children, and $10 billion will 
be available for deficit reduction. I share Senator Hatch's commitment 
to balancing the Federal budget by the year 2002. As our plan today 
suggests, we believe we can do it, and do it fairly.
  When fully phased in, our legislation will provide direct financial 
assistance to approximately 5 million children annually. Every family 
with an uninsured child will have access to more affordable coverage. 
Combined with efforts to enroll more eligible children in Medicaid, 
this plan is a giant step toward the day when every American child has 
health insurance coverage. This bill is the most important single step 
the Congress can take this year to provide a better life for every 
American child.
  States choosing to participate in the program will contract with 
private insurers to provide child-only private coverage. These 
subsidies will be available to help eligible families purchase coverage 
for their children, or participate in employment-based health plans. 
Coverage will be available for every child, including children in 
families not eligible for financial assistance. The program also allows 
States to allocate up to 5 percent of total program costs to provide 
preventive care and primary care to pregnant women. Participating 
States must contribute to the cost of the program, and must maintain 
their current levels of Medicaid coverage for children.
  The basic principles of this proposal are neither novel nor untested. 
Fourteen States already have similar programs for children. In 
Massachusetts, an existing program was expanded last year, so that 
families up to 400 percent of the poverty level are now eligible for 
financial assistance to buy insurance. In 17 additional States, Blue 
Cross/Blue Shield offers children's-only coverage, with subsidies for 
low-income families. These State initiatives provide a solid base on 
which to build an effective Federal-State-private partnership to get 
the job done for all children.
  Senator Hatch and I propose to pay for this program of children's 
health insurance and deficit reduction with an increase of 43 cents a 
pack in the Federal cigarette tax, from its current level of 24 cents. 
It makes sense to finance the coverage this way, because of the higher 
costs for health care and premature deaths caused by smoking.
  Smoking is the leading preventable cause of death in the United 
States. It kills more than 400,000 Americans a year. It costs the 
Nation $50 billion a year in direct health costs, and another $50 
billion in lost productivity. A cigarette pack sold for $1.80 costs the 
Nation $3.90 cents in smoking-related expenses.
  Even with our proposed increase, cigarette taxes as a percent of the 
product price will still be lower than they were in 1965 and will be 
far below the levels in almost every other industrialized country.
  A higher cigarette tax will have the added benefit of reducing 
smoking among teenagers. If we do nothing to reduce such smoking, 5 
million deaths from smoking-related diseases will occur over the 
lifetime of the current generation of children.
  Raising tobacco taxes to finance health insurance for children has 
the support of an overwhelming 73 percent of the public. If the tobacco 
tax is raised, an even higher 87 percent support using the revenue to 
expand health services for children.
  I look forward to early action by Congress on this issue. Every day 
we delay means more children fail to get the healthy start in life they 
need. When we fail our children, we also fail our country and its 
future.
  I yield the remaining time to the Senator from Connecticut, Senator 
Dodd.
  Mr. DODD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Connecticut.
  Mr. DODD. Mr. President, let me thank my colleague from Massachusetts 
for yielding.
  Let me begin these brief remarks by commending him and, of course, 
our good friend and colleague from Utah, Senator Hatch, who is the lead 
sponsor of this legislation, for his efforts here, along with our 
colleague from Massachusetts who historically, of course, has taken the 
leadership role over the last number of decades on health-care-related 
issues.
  Our colleague from Utah and I have had the pleasure and privilege of 
working together on major legislation. When he says, if you have a bill 
with Orrin Hatch's name on it, there is a good chance it is going to 
become law, I can testify to that, having worked with him on the act 
for better child care. Today millions of people have accidental health 
care and decent child care because of his efforts. So I commend, Mr. 
President, both of our colleagues.
  I offered the first child health care package almost 4 years ago to 
deal with children's health. As both of our colleagues have pointed 
out, Mr. President, we have about 10 to 10.5 million children in the 
country who do not have any health care at all. In my State of 
Connecticut, about 110,000 children are without any health care 
coverage at all.
  What makes this so ironic in many ways, Mr. President--as we have 
gone through a debate on welfare reform fairly recently--is that 88 
percent of the parents of these children without health care are 
working. The assumption I think a lot of people must have is that 
children without health care are the children of parents who are living 
on public assistance. Nothing could be further from the truth. If you 
are on public assistance, you get health care, you get Medicaid. If you 
are out of work on welfare, you get Medicaid. If you are in jail, you 
get health care in this country. But God help you if you are a working 
family out there working at the lower income levels trying to provide 
for your family when we have a seen a dramatic increase in the 
reduction of private health care coverage.
  Mr. President, I asked for a General Accounting Office study a number 
of months ago, the results of which came back about a few weeks ago on 
what has happened to private health insurance for working families. We 
have seen about a 4.5 to 5 percent increase nationwide in the number of 
families who have dropped or been dropped from private health 
insurance. In 1993, 29

[[Page S2853]]

million families lost their health care coverage in this country. And 
the premium costs went up. Small employers decided to drop it 
altogether.
  So we have watched a tremendous increase in the number of families, 
working families, with children without any kind of health care 
coverage at all.
  Many of our State laws, Mr. President, require, under law, that you 
insure your automobile. Many of our State laws, if not all of them, 
require that if you have a home mortgage, there be insurance on your 
house. All that we are suggesting here today is that if you have a 
child, there ought to be health care coverage or insurance for that 
child.
  If it is mandatory that your home be insured, if it is mandatory your 
car be insured, if you are out of work and on public assistance you get 
health care, if you are in prison you get health care, what our 
colleagues from Massachusetts and Utah, and those of us who are 
supporting them, are suggesting, is that if you are a working family in 
this country, your children--your children--also ought to have a safety 
net for health care. So this proposal does just that.
  Mr. President, I will just conclude with a story. We had a press 
conference announcing this GAO study a few days ago. I brought with me 
a woman from Connecticut. Both she and her husband work. Her husband is 
in construction. She works for a nonprofit organization in the State of 
Connecticut. They have two children. Their oldest boy has a serious 
mental health problem. It is a serious mental health illness with a 
cost of over $1,000 a month, on average, for medication. They have run 
out of support from the State program. There is not going to be any 
more. They were left with this choice--until someone stepped in and 
made an exception in their case--but left with this choice: Either they 
could quit their jobs and go on public assistance and get health care 
for that child, that is one option, or the other was to take their 
child and turn him over to the State, give up custody and let him 
become a ward of the State, so that then the child could get health 
care coverage.

  We hear people talking of family values and families staying together 
all the time. But somehow, in this situation, this family wants 
desperately to keep custody of their child, and they keep working and 
they get no help whatever. There is something fundamentally erroneous 
about the situation that presently exists that if you work and want to 
keep your children, you run the risk of losing the health care, whereas 
if you go on public assistance or give up the custody of your child, 
you can get health care coverage.
  Mr. President, the suggestion of both of our colleagues is to fill in 
this gap that exists for these 10\1/2\ million children today that are 
without any health care coverage. The numbers are growing, by the way. 
This is not a number that is declining, but is a number that is 
growing.
  They have come up with a funding scheme that I think most people will 
support in this country. It is controversial. Obviously, some will 
object to how this is paid for. I think it is a very sound idea to come 
up with this funding scheme and also to allocate some of the resources 
for deficit reduction.
  Again, Mr. President, if we can insure our cars by law, our homes by 
law, if you are on welfare or in prison and you get health care 
coverage, at the very least, we ought to do the same for America's 
children. This legislation allows us to do that. I commend both of our 
colleagues and look forward to adoption of the law.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized 
for 5 minutes.
  Mr. KERRY. Mr. President, I am delighted to join with my colleague, 
Senator Kennedy, with Senator Hatch, and others, in introducing today 
legislation to provide health care to the 10 million children in the 
United States who today do not have that care.
  Last year, Senator Kennedy and I joined together with other Senators 
to introduce legislation to similarly provide health care to these 
children. Since the time that we introduced legislation a year ago, 
over 750,000 children under the age of 18 have lost health insurance. 
One child loses health insurance every 35 seconds in the United States. 
We are the only industrial country on the face of this planet that does 
not insure our children, or that does not insure, even, many of our 
adults.
  What is extraordinary about this situation is that we are not talking 
about the poorest of our poor in America. The poorest of the poor get 
help. They have health insurance. They get Medicaid. The fact is that 
we are talking about 10 million children who are the children of 
working Americans, fully three-fifths of whom work full-time jobs, and 
90 percent of whom are working at some job or another.
  I visited recently at the Children's Hospital in Boston and I 
listened to the story of two parents who are working, both of whom are 
just not earning enough money in their full-time jobs to be able to pay 
the premiums for the expensive insurance that their sick child needs.
  The fact is that over one-half of all the children in the United 
States who have asthma never see a doctor. One-third of all the 
children in the United States who have an ear problem never see a 
doctor. Similarly, for eye problems: As we have learned from medical 
experts, those problems, often undiagnosed, become chronic ailments and 
many times become lifetime impairments. We then pick up the cost of 
those impairments with special education needs, and at the back end of 
often substance abuse or other kinds of highly intensive, labor-
intensive interventions which we could have avoided early on.
  Just take the case of neonatal/prenatal care. It costs $1,000 for a 
year of covering a pregnant woman with early nutrition, early 
intervention, for pregnancy. But if a child is born underweight as a 
consequence of the lack of that kind of intervention, it costs $1,100 a 
day.
  I have talked to teachers in schools who have told me the stories of 
young students who come into the school; they are in the classroom and 
they are disruptive, not because they want to be disruptive, but 
because they have a problem. In one particular case, a teacher told me 
of a child who chronically disrupted the entire class. They could not 
figure it out. They finally got the child to a clinic because the child 
had not been examined by a doctor, and they found the child had a 
chronic earache problem as a consequence of an infection. Antibiotics 
were given, the infection was cleared up, and the child became a full 
participant in the classroom.
  Mr. President, there are countless stories like these. I want to 
congratulate Senator Kennedy and Senator Hatch for working together in 
helping to come up with a scheme to fund this, that clearly addresses 
other health needs of the country. When we consider the costs of our 
various wings of hospitals that are dedicated to pulmonary disease, to 
emphysema, to cancer as a consequence of smoking, we are spending 
billions upon billions of dollars, far in excess of the cost of this 
kind of program, to provide preventive care at the early outset.
  So this is really an investment, not an expenditure. This will repay 
itself many times over. We know that the health care expenditure in 
early prevention will save anywhere from $3.40 to $16 by virtue of $1 
invested.
  Mr. President, it is time in America for us for catch up to the rest 
of the industrialized world and provide insurance to the young children 
of this Nation who desperately need it.
                                 ______