[Congressional Record Volume 149, Number 35 (Wednesday, March 5, 2003)]
[Senate]
[Pages S3184-S3186]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. CANTWELL (for herself, Mr. Thomas, Mr. Leahy, Mr. Smith, 
        Mr. Wyden, Ms. Snowe, Mr. Durbin, Mr. Hagel, Mr. Roberts, and 
        Mr. Chambliss):
  S. 529. A bill to amend the Internal Revenue Code of 1986 to exclude 
from gross income loan payments received under the National Health 
Service Corps Loan Repayment Program established in the Public Health 
Service Act; to the Committee on Finance.
  Ms. CANTWELL. Mr. President, I rise today with Senator Craig Thomas 
to introduce legislation that would exclude loan repayments made 
through the National Health Service Corps from taxable income. I am 
pleased that Senators Leahy, Smith, Wyden, Snowe, Durbin, Hagel, 
Roberts, and Chambliss are also cosponsoring this important 
legislation.
  There have been many developments in the area of health care in the 
last few years from managed care reform, to increases in biomedical 
research, the mapping of the human genome, and the use of exciting new 
technologies in both rural and urban areas such as telemedicine. In 
fact, it seems that almost every day we hear of astounding new 
scientific breakthroughs. But unfortunately, while we are making great

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strides in the quality of health care, we are losing ground on the 
access to health care for so many.
  The sad truth is that there are currently 38.7 million Americans 
without health insurance coverage--9.2 million of whom are children. In 
Washington, before the recession, 13.3 percent of the population, and 
155,000 children, lacked health insurance. That is undoubtedly higher 
today.
  Access to health insurance for the uninsured is of the utmost 
importance--we know that at the very least, health insurance means the 
difference between timely and delayed treatment and at worst between 
life and death. In fact, the uninsured are four times as likely as the 
insured to delay or forego needed care--and uninsured children are six 
times as likely as insured children to go without needed medical care.
  But even insurance isn't enough if there are no available providers. 
Hospitals and other health care providers across the country are facing 
an increasingly uncertain future. The sad truth is that it is 
increasingly more difficult to recruit health care providers to work 
with underserved communities--especially in rural areas. In addition to 
economic pressures, rural areas must overcome the environmental issues 
involved with recruiting a doctor who may have been raised, educated, 
and trained in an urban setting.
  The National Health Service Corps was created in 1970 by Senator 
Warren Magnuson, one of the most distinguished Senators to come from 
Washington State. He saw the need to put primary care clinicians in 
rural communities and inner-city neighborhoods, and developed this 
program to fill that need.
  Since then, the Corps has placed over 22,000 health professionals in 
rural or urban health professions shortage areas. There is no doubt 
that National Health Service Corps has been extremely successful. In 
fact, the most recent available data show that more than 70 percent of 
providers continued to provide services to underserved communities 
after their Corps obligation was fulfilled--80 percent of these health 
care providers stayed in the community in which they had originally 
been placed.
  During the last August recess, I had the opportunity to travel 
throughout Washington State and held 15 community discussions on health 
care. I met patients who would not have access to health services but 
for the providers there through the Corps and I met many doctors who 
have been living in our rural communities for years because of their 
Corps' placements. And because it has been so successful--right now in 
Washington State there are 75 physicians or other health professionals 
working in underserved areas that would not otherwise be here--we must 
do everything possible to support this program.
  Under current law, the National Health Service Corps provides 
scholarships, loan repayments, and stipends for clinicians who agree to 
serve in urban and rural communities with severe shortages of health 
care providers. In 1986 the IRS ruled that all payments made under the 
program are considered taxable income. Understanding the immediate 
detriment to scholarship recipients, who were forced to pay the tax out 
of their own pockets, Congress eliminated the scholarship tax in 2001. 
And while the scholarship program is now not considered taxable income 
to the IRS, the loan repayments and stipends are.
  By statute, the current loan program awards also include a tax 
assistance payment equal to 39 percent of the loan repayment amount, 
which is to be used by the recipient offset his or tax liability 
resulting from the loan repayment ``income.'' This means that nearly 40 
percent of the Federal loan repayment budget goes to pay taxes on the 
loan repayment ``income'' alone. If these Federal payments were not 
taxed, and the funding was freed up, more health professions students 
could take advantage of the loan repayment program, and could be placed 
in shortage areas, thereby increasing access to health care in both 
urban and rural areas.
  This is not a new problem. The tax burden that accompanies the 
National Health Service Corps loan payments is a significant deterrent 
to increasing the number of clinicians enrolling in the Corps. I do not 
want to see a situation where, as happened several years ago, over 300 
applicants actually left underserved areas because the Corps could not 
fully fund the loan repayment program.
  The legislation we are introducing today, the National Health Service 
Corps Loan Repayment Act, would address this disincentive, making the 
Corps available to more medical and health professionals, and thereby 
bringing more providers into underserved areas. If loan repayments are 
excluded from taxation, the National Health Service Corps will have 
greater resources to provide aid to health professionals seeking loan 
repayment, and will be able to increase the number of providers in 
underserved areas.
  There is no doubt that strengthening the National Health Service 
Corps is a win-win situation. Corps scholarships help finance education 
for future primary care providers interested in serving the 
underserved. In return, graduates serve those communities where the 
need for primary health care is greatest.
  The bill is supported by over 20 national organizations including the 
National Rural Health Association, the National Association of 
Community Health Centers, the Association of American Medical Colleges, 
and the American Medical Student Association. I am especially pleased 
that the Washington State Medical Association is supporting this bill. 
I ask unanimous consent that the complete list be included in the 
Record after my statement.
  I understand that there are no easy solutions to the health care 
problems we are facing right now. But we need to do something--even if 
it is taking small steps forward, and come in at this problem from many 
different angles.
  I urge my colleagues to look at this bill and to join us in expanding 
this vitally important and immediately successful program.
  Mr. THOMAS. I am pleased to rise today to introduce the National 
Health Service Corps Loan Repayment Act with my colleague from 
Washington, Ms. Cantwell. Specifically, this legislation will exclude 
loan repayments made through National Health Service Corps, NHSC, 
program from taxable income. Enactment of the National Health Service 
Corps Loan Repayment Act would increase the amount of Federal dollars 
available so more students could participate in the NHSC program.
  Under current law, the NHSC provides scholarships, loan repayments, 
and stipends for clinicians who agree to serve in national designated 
underserved urban and rural communities. The tax law changes in 1986 
resulted in the IRS ruling that all NHSC payments were taxable. 
Congress eliminated the tax on the scholarship in 2001, but the loan 
repayments and stipends continue to be taxed.
  To assist loan repayment recipients with their tax burden, the NHSC 
loan program includes an additional payment equal to 39 percent of the 
loan repayment amount so the loan repayment recipient can pay his or 
her taxes. Close to 40 percent of the NHSC Federal loan repayment 
budget goes to pay taxes on the loan repayment ``income.'' The current 
situation should not be allowed to continue. Given the fiscal 
restraints we are facing, we must ensure that Federal dollars are spent 
efficiently and effectively. It is obvious that today's NHSC loan 
repayment structure does not meet that goal. Our legislation resolves 
this issue.
  For over 30 years, the National Health Service Corps, NHSC, program 
has literally been a lifeline for many underserved communities across 
the country that otherwise would not have a heath care provider. I know 
this program is critically important to my State of Wyoming and to many 
other rural States that have difficulties recruiting and retaining 
primary health care clinicians.
  There are 2,800 health professional shortage areas, 740 mental health 
shortage areas and 1,200 dental health shortage areas now designated 
across the country. However, the NHSC program is meeting less than 13 
percent of the current need for primary care providers and less than 6 
percent of need for mental health and dental services. The National 
Health Service Corps Loan Repayment Act would increase

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the number of students in the program and allow more providers to be 
placed in these shortage areas.
  The National Health Service Corps Loan Repayment Act is crucial to 
the future well-being of many of our rural communities. I strongly urge 
all my colleagues to support this important legislation.
                                 ______