[Congressional Record Volume 149, Number 138 (Thursday, October 2, 2003)]
[House]
[Pages H9171-H9180]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




MOTION TO INSTRUCT CONFEREES ON H.R. 1, MEDICARE PRESCRIPTION DRUG AND 
                       MODERNIZATION ACT OF 2003

  Mr. BISHOP of New York. Mr. Speaker, I offer a motion to instruct.
  The SPEAKER pro tempore. The Clerk will report the motion.
  The Clerk read as follows:

       Mr. Bishop of New York moves that the managers on the part 
     of the House at the conference on the disagreeing votes of 
     the two Houses on the Senate amendment to the bill H.R. 1 be 
     instructed to reject division B of the House Bill.

  The SPEAKER pro tempore. Pursuant to clause 7 of rule XXII, the 
gentleman from New York (Mr. Bishop) and the gentleman from Louisiana 
(Mr. McCrery) each will control 30 minutes.
  The Chair recognizes the gentleman from New York (Mr. Bishop).
  Mr. BISHOP of New York. Mr. Speaker, I yield myself such time as I 
may consume.
  I rise today to offer a motion to instruct conferees on H.R. 1, the 
Medicare Prescription Drug and Modernization Act of 2003. In form, this 
motion instructs conferees to eliminate from the legislation the tax-
free savings accounts for medical expenses. These accounts are 
estimated to cost the Federal Government $174 billion over the next 10 
years; and in my opinion, this funding would better serve seniors if it 
were used to close the enormous gap in coverage that exists in H.R. 1, 
as it currently is formulated, that leaves seniors without a dependable 
prescription drug plan.
  Health savings security accounts are one of the many provisions in 
H.R. 1 that I find troubling. The health savings security accounts 
bill, like so many bills that this House has considered over the past 
few months, was brought to the floor in the middle of the night, in a 
last minute fashion, and was rammed through without debate. The bill 
passed largely along party lines and in the wee hours of the next 
morning was incorporated into the prescription drug bill through a 
rule. This Congress never had the opportunity to study such an enormous 
proposal.
  Supporters of the tax-free savings accounts will tell my colleagues 
that these accounts are valuable tools to cover the uninsured; and 
clearly, we must prioritize providing health coverage to the greater 
number of the uninsured, especially since we learned recently that 2.4 
million Americans joined the ranks of the now 43.6 million Americans 
who are uninsured in just the last year alone. However, these savings 
accounts will do very little to help the uninsured and are the wrong 
solution for several reasons.
  The medical savings accounts are a bad idea because they will cost 
the States already struggling with deep financial difficulties $20 to 
$30 billion in revenues over the next 10 years and, as I indicated 
earlier, will cost the Federal Government $174 billion over the next 10 
years. The significant costs associated with these accounts will go 
towards providing benefits that I believe are merely illusory. These 
accounts are presented as a device that will help the uninsured. Yet 36 
percent of the uninsured have incomes below the poverty

[[Page H9172]]

level so they pay little or no income tax. If their incomes are so low 
that they pay little in the way of income tax, then we cannot 
reasonably expect them to invest in medical savings accounts.
  If the majority of the House feels that this $174 billion is 
available to us and that we can afford to spend it, then in my opinion 
there is a much better way for us to invest it.
  The prescription drug bill that passed the House has an alarming gap 
in coverage. Just when seniors reach the point when their drug costs 
become unbearable and they need help the most, the prescription drug 
bill leaves them to their own devices. Under the bill that passed, 
seniors will be forced to pay 100 percent of their drug costs from 
between $2,000 and $4,900 a year. This gap is so huge that 48 percent 
of Medicare beneficiaries, almost one-half of seniors, will fall into 
the gap. And as if this were not enough, seniors with drug costs over 
$2,000 will continue to be required to pay their monthly premiums, even 
though they are receiving nothing in return.
  I am increasingly discouraged that every time this Congress is faced 
with a choice of helping out those who need help the most or those who 
do not, we opt for those who need assistance the least. By eliminating 
the medical savings account provision from H.R. 1 and applying their 
$174 billion in savings to close the gap in coverage, we will be doing 
the right thing by helping those that need it the most. This amount of 
money will significantly close the coverage gap and will give seniors 
whose prescription drugs costs are past $2,000 a year great peace of 
mind. It is patently unfair to leave seniors to fend for themselves as 
their burden increases.
  I urge my colleagues to support this motion and to do the right thing 
by our seniors by making this drug benefit more reliable. Let us send a 
strong message in support of seniors by giving them a prescription drug 
benefit with no gap in coverage.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McCRERY. Mr. Speaker, might I inquire of the gentleman from New 
York (Mr. Bishop) if he has additional speakers.
  Mr. BISHOP of New York. I have about eight additional speakers.
  Mr. McCRERY. Mr. Speaker, as far as I know, I am the only speaker on 
our side. So I reserve the balance of my time until such time as the 
gentleman from New York (Mr. Bishop) has arrived at his last speaker, 
and I will deliver my remarks at that time.
  Mr. BISHOP of New York. Mr. Speaker, I yield 3 minutes to the 
gentleman from Texas (Mr. Sandlin).
  Mr. SANDLIN. Mr. Speaker, I thank my colleague for yielding me the 
time.
  Mr. Speaker, we have an opportunity today. We have an opportunity to 
make prescription drugs both available and affordable to our Nation's 
seniors. We have an opportunity to slam the door shut on the giant 
Republican-sponsored gap in coverage in their so-called prescription 
drug bill, aka the HMO Enrichment Act. We have an opportunity today to 
help people in need, not HMOs in want.
  How do we do that? We must close the gap in coverage in prescription 
drugs that has been invented and advanced by our friends on the other 
side of the aisle, and we can do that by supporting this instruction.
  Mr. Speaker, as my colleagues know, the Republican drug plan provides 
absolutely no prescription drug coverage at all to our Nation's seniors 
between the amounts of $2,000 and $5,000; but even though they are 
receiving absolutely no coverage, they are required to pay a premium 
each and every month. Who wrote that provision, the HMOs? They expect 
to get paid a monthly premium every month like clockwork and provide 
absolutely no benefits to the seniors. That is outrageous, and how, oh, 
how, Mr. Speaker, can our Republican friends support such an outrageous 
position and favor the wealthy HMOs over our worthy seniors? How can 
they take that position?
  Mr. Speaker, some on the other side of the aisle say we cannot afford 
to make prescription drugs available to seniors. It is not that we 
cannot afford it. Let us be honest. It is that they do not want to do 
that because, Mr. Speaker, apparently we can afford huge tax cuts to 
the top 1 percent of American wage earners, but we cannot afford a 
prescription drug coverage. Apparently, we can afford to allocate $174 
billion in tax cuts through the inclusion of HSAs, but we cannot afford 
prescription drug coverage.
  Understand, Mr. Speaker, there is absolutely no requirement that the 
HSAs pass on savings to the employees. In fact, it is likely that 
employers will further burden American families by increasing 
deductibles and shifting costs to the employees; and understand, HSAs 
will not reduce the record number of uninsured in this country, and 
HSAs will not make prescription drugs more available for American 
seniors. It does none of that. In fact, just the opposite is true.
  While HSAs will help almost no one in America, if we use those funds, 
that $174 billion with a B, we could help address the prescription drug 
needs for everyone in America.
  Let us keep our priorities straight in this Congress. Let us do 
something to benefit all Americans, not just the wealthy. Please join 
me and America's seniors in supporting this motion to instruct by my 
fine colleague. We need prescription drugs for all, not just a tax 
shelter, Mr. Speaker, for the few.
  Mr. BISHOP of New York. Mr. Speaker, I yield 5 minutes to the 
distinguished gentleman from North Dakota (Mr. Pomeroy).
  (Mr. POMEROY asked and was given permission to revise and extend his 
remarks, and include extraneous material.)
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me the 
time.
  Let us take a look at the fiscal format of this country as we begin 
the debate on this measure this afternoon. We have seen revenue 
reestimate after revenue reestimate, all to the growing despair of 
those of us who care about running this country on a balanced budget, 
just like America's families run their financial affairs.
  We are now looking at an annual deficit in excess of $500 billion. I 
know the people I represent in North Dakota are really struggling with 
this request of the President to send $87 billion to Iraq because they 
know that when we are $500 billion in debt for this year, that this $87 
billion to Iraq is all borrowed money. That all falls on the heads of 
our children. It is important, I think, with that being the financial 
framework of our country, as we talk about this debate, that we look 
closely at what has happened to the staggering escalation in costs to 
this MSA, medical savings account, provision.
  I am a member of the Committee on Ways and Means that considered this 
legislation. The initial proposal was scored by the Congressional 
Budget Office at $14.3 billion over 10 years. I will submit this score 
from the Congressional Budget Office as part of the Record in this 
debate.
  When it came before the committee, of course, we had seen the effect 
of special interests. This had been stretched. It had been inflated. It 
had grown, and this tax cut at that point in time, the MSA tax cut for 
the affluent, at that point became a $71.5 billion bill. Because this 
country was in the red, I opposed this measure in committee. We had not 
seen anything yet in terms of the ultimate cost of the provision 
addressed by the gentleman's motion because the very next day there was 
a rewrite, not one that was accomplished in light of day, in committee 
of jurisdiction, where we could at least talk about the policy 
rationale for the further expansion of medical savings accounts; but 
when this measure came to the floor, many of us were astounded to see 
that a measure that had been passed out of committee costing $71 
billion over 10 years was now slated to cost $174 billion over 10 
years.

                              {time}  1530

  Somehow, overnight, $100 billion in tax loopholes had been added to 
this measure. No hearing, no discussion, no committee vote.
  So as my friends in North Dakota scratch their heads about the $87 
billion Iraq request of the President, they should know that is not the 
only thing to scratch your head about in Washington: $100 billion added 
to this MSA tax loophole from committee action to the time of the 
floor. In contrast to that $87 billion to Iraq, this is going to lose 
the Treasury $173 billion.
  Now, when we look at a $173 billion hit to the revenue of this 
country, we

[[Page H9173]]

ought to think, well, can we afford it? Well, with a $500 billion debt 
already, I do not think we can afford it. This will be paid for by 
further driving up the debt of our country. It will be ultimately borne 
by our children and grandchildren as we leave to them a country so 
swimming in red ink that it will be hard to figure out how they ever 
get back to a balanced budget.
  Those days of surplus seem so long ago. And the reason we have gone 
down this terribly steep slope into these incredibly deep deficits is 
the very shenanigans we see before us. A bill that was $14 billion in 
cost when it came to the committee came out of committee inflated and 
stretched to $71 billion. And by the time it came to the floor, a 
further rewrite, not even in front of the public, not even in front of 
the committee of jurisdiction, not even with any discussion about the 
policy underlying the changes, and another $100 billion in tax 
loopholes is offered, so that now $173 billion in revenue is lost. 
There is an awful lot that can be done with $103 billion.
  As a former State insurance commissioner, I can tell my colleagues 
that spending this kind of money on medical savings accounts is a very 
poor investment. Pass this motion, strip this tax windfall out of this 
provision.
  Mr. Speaker, I submit for the Record the estimates of the CBO 
referred to earlier in my remarks:

           ESTIMATED REVENUE EFFECTS OF H.R. 2596, THE ``HEALTH SAVINGS AND AFFORDABILITY ACT OF 2003,'' SCHEDULED FOR CONSIDERATION BY THE HOUSE OF REPRESENTATIVES ON JUNE 26, 2003
                                                 [Joint Committee on Taxation, 6-26-03, JCX-65-03; fiscal years 2004-13; in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                  Provision                       Effective       2004      2005      2006       2007       2008       2009       2010       2011       2012       2013     2004-08     2004-13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Health Savings Security Accounts and Health
 Savings Accounts:
    1. Health savings accounts..............     tyba 12/31/03      -146      -433      -484       -541       -586       -633       -676       -700       -707       -752     -2,190      -5,658
    2. Health savings security accounts.....     tyba 12/31/03      -628    -4,665    -7,853    -11,155    -14,500    -17,666    -21,041    -24,542    -29,232    -32,165    -38,802    -163,448
                                                               ---------------------------------------------------------------------------------------------------------------------------------
          Total of Health Savings Security    ................      -774    -5,098    -8,337    -11,696    -15,086    -18,299    -21,717    -25,242    -29,939    -32,917    -40,992    -169,106
           Accounts and Health Savings
           Accounts.........................
Disposition of Unused Health Benefits in        typba 12/31/03      -361      -627      -767       -867       -919       -957       -992     -1,023     -1,055     -1,094     -3,541      -8,662
 Cafeteria Plans and Flexible Spending
 Arrangements...............................
Exception to Information Reporting                pma 12/31/02       -23       -24       -24        -25        -26        -27        -27        -28        -29        -30       -122        -263
 Requirements Related to Certain Health
 Arrangements...............................
Interactions Among Health Provisions........  ................        32       146       236        331        418        503        585        653        706        784      1,162       4,392
                                                               ---------------------------------------------------------------------------------------------------------------------------------
      Net Total.............................  ................    -1,126    -5,603    -8,892    -12,258    -15,614    -18,780    -22,151    -25,640    -30,317    -33,258    -43,493    -173,639
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. Legend for ``Effective'' column: pma = payments made after; tyba = taxable years beginning after.


 ESTIMATED REVENUE EFFECTS OF A CHAIRMAN'S AMENDMENT IN THE NATURE OF A SUBSTITUTE TO H.R. 2351, THE ``HEALTH SAVINGS ACCOUNT AVAILABILITY ACT,'' SCHEDULED FOR MARKUP BY THE COMMITTEE ON WAYS
                                                                                   AND MEANS ON JUNE 19, 2003
                                                [Joint Committee on Taxation, 6-18-03, JCX-64-03; fiscal years 2004-2013, in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                    Provision                          Effective       2004      2005      2006      2007      2008      2009      2010       2011       2012       2013     2004-08    2004-13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1. Health Savings Accounts.......................     tyba 12/31/03      -231    -1,785    -3,410    -4,876    -6,371    -7,503    -8,321     -9,271    -10,171    -10,668    -16,673    -62,607
2. Disposition of Unused Health Benefits in           tyba 12/31/03      -361      -627      -767      -867      -919      -957      -992     -1,023     -1,055     -1,094     -3,542     -8,664
 Cafeteria Plans and Flexible Spending
 Arrangements....................................
3. Exception to Information Reporting                  pma 12/31/02       -23       -24       -24       -25       -26       -27       -27        -28        -29        -30       -122       -263
 Requirements for Certain Health Arrangements....
                                                                    ----------------------------------------------------------------------------------------------------------------------------
      Net total..................................  ................      -615    -2,436    -4,201    -5,768    -7,316    -8,487    -9,340    -10,322    -11,255    -11,792    -20,337    -71,534
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. Legend for ``Effective'' column: pma = payments made after; tyba = taxable years beginning after.


                ESTIMATED REVENUE EFFECTS OF H.R. 2351, THE ``HEALTH SAVINGS ACCOUNT AVAILABILITY ACT,'' SCHEDULED FOR MARKUP BY THE COMMITTEE ON WAYS AND MEANS ON JUNE 19, 2003
                                       [Joint Committee on Taxation; #03-1 174 R, very preliminary, 6-18-03; fiscal years 2004-13; in millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                      Provision                            Effective       2004      2005      2006      2007      2008      2009      2010      2011      2012      2013     2004-08   2004-13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Health Savings Accounts:
    1. Income tax effect.............................     tyba 12/31/03      -136      -405      -453      -507      -550      -594      -635      -655      -659      -702    -2,052     -5,598
    2. FICA tax effect...............................     tyba 12/31/03       -10       -28       -31       -34       -36       -39       -42       -44       -47       -50      -138       -360
                                                                        ------------------------------------------------------------------------------------------------------------------------
          Total of Health Savings Accounts...........  ................      -146      -433      -484      -541      -586      -633      -676      -700      -707      -752    -2,190     -5,658
Dispostion of Unused Health Benefits in Cafeteria
 Plans and Flexible Spending Arrangements:
    1. Income tax relief.............................     tyba 12/31/03      -207      -361      -447      -509      -543      -568      -589      -607      -627      -654    -2,067     -5,113
    2. FICA tax effect...............................     tyba 12/31/03      -154      -265      -320      -358      -377      -390      -403      -416      -428      -440    -1,474     -3,551
                                                                        ------------------------------------------------------------------------------------------------------------------------
          Total of Disposition of Unused Health        ................      -361      -627      -767      -867      -919      -957      -992    -1,023    -1,055    -1,094    -3,542     -8,664
           Benefits in Cafeteria Plans and Flexible
           Spending Arrangements.....................
                                                                        ========================================================================================================================
              Net Total..............................  ................      -507    -1,060    -1,252    -1,408    -1,505    -1,590    -1,669    -1,723    -1,762    -1,846    -5,732    -14,322
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. Legend for ``Effective'' column: tyba=taxable years beginning after.

  Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
  I would just point out to the gentleman from North Dakota, Mr. 
Speaker, and to those listening to the debate, that the entirety of the 
cost of this bill, as noted by the gentleman from North Dakota, is 
accommodated by the budget that this House voted on earlier this year 
by a majority vote. Also, we should know that this bill, in its current 
form, at its current cost, as noted by the gentleman from North Dakota, 
passed this House with a bipartisan majority, with 15 Members of the 
minority supporting this bill in its current form.
  So while it may be true that the bill changed from the time it was 
introduced to the time it reached the floor, there is no one that was 
unaware of the cost when this was voted on by the Members of the House 
at large, and the amount is accommodated by the budget that we all 
agreed on earlier this year.
  Mr. POMEROY. Mr. Speaker, will the gentleman yield?
  Mr. McCRERY. I yield to the gentleman from North Dakota.
  Mr. POMEROY. Mr. Speaker, I thank my friend for yielding to me, 
someone I respect deeply on the Committee on Ways and Means, the 
gentleman from Louisiana.
  The gentleman notes that the money is fully accommodated for in the 
House budget. What I want to know is what the relationship of the price 
tag is relative to the deficit. Now, as I understand it, this $173 
billion will deepen the deficit. Is that not the gentleman's 
understanding?
  Mr. McCRERY. Reclaiming my time, Mr. Speaker, as the gentleman well 
knows, the budget that was voted on by this House earlier this year, 
which takes care of all of the priorities of government which we have 
the duty and the obligation to do, did anticipate a deficit at the 
Federal level. So any spending that the gentleman wants to point out, 
whether it is for projects in his district or highways or any other 
thing, one could say that is going to drive us deeper into deficit.

[[Page H9174]]

  But I think it is unfair for the gentleman to point out one item that 
we might pass and agree on and send to the President and say that is 
all going into the deficit. There are a great many other things we 
spend money on at the Federal level; and it would be fair to say, I 
suppose, that any one of those would be deficit spending.
  Mr. POMEROY. Mr. Speaker, if the gentleman will continue to yield for 
one brief question, is the $87 billion for Iraq requested by the 
President in the budget, or will that drive the deficit figure even 
deeper?
  Mr. McCRERY. Reclaiming my time once again, Mr. Speaker, as the 
gentleman knows, the $87 billion is in the form of a supplemental 
request from the administration, and that is not covered by the budget 
that we passed earlier this year.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BISHOP of New York. Mr. Speaker, I yield 3 minutes to the 
gentlewoman from California (Ms. Linda T. Sanchez).
  Ms. LINDA T. SANCHEZ of California. Mr. Speaker, I thank the 
gentleman for yielding me this time, and I rise in support of the 
Bishop motion to reject the use of $174 billion for health savings 
accounts included in the Republican prescription drug bill.
  On June 26, I, along with many of my colleagues, voted against the 
Health Savings and Affordability Act, H.R. 2596. It sounds like a great 
bill, but in reality these health savings accounts are a $174 billion 
tax cut for the wealthy.
  Republicans tell us these accounts will help those without health 
insurance, but in reality these people have incomes that are far too 
low to take advantage of the tax breaks in this bill. The truth is they 
do not have the additional $2,000 to $4,000 a year to put into these 
savings accounts.
  While Americans are struggling daily, this Republican Congress is 
trying to give more tax cuts for the wealthy, and it is shameful to 
disguise it by putting it into the Medicare prescription drug bill.
  At a time when our country is facing record deficits and so many 
seniors are struggling with rising drug costs, could $174 billion not 
be better used? Could it not be used, as the gentleman from New York 
(Mr. Bishop) has suggested, to significantly close the gap in coverage 
found in the current prescription drug bill?
  Asking our seniors to pay 100 percent of their drug costs above 
$2,000 until catastrophic coverage kicks in is simply unacceptable. 
This gap in coverage is the biggest problem in the prescription drug 
bill, and it would have a severe impact on millions of low-income 
Medicare beneficiaries.
  That is why, instead of giving more tax cuts to the wealthy, we must 
help seniors cover their prescription drug costs. That is what seniors 
want, and that is what our seniors deserve. In fact, according to a 
survey conducted by AARP, four out of five seniors did not want the 
Republican plan that ultimately passed this Congress.
  Why did seniors oppose this plan? The answer is very simple: because 
under the current bill, 48 percent, nearly half of all seniors, would 
fall into the coverage gap and be forced to pay 100 percent of their 
drug costs. And that is in addition to the $35-per-month premium, in 
addition to paying the first $250 worth of drugs, and in addition to 
paying 20 percent of all their drug costs up to $2,000 a year.
  The coverage gap is unacceptable. It is no way to treat the seniors 
in our country. They expect more and they deserve more. Therefore, I 
urge my colleagues to support the Bishop motion and reject more tax 
cuts for the wealthy. Give our seniors the respect they deserve and the 
coverage that they need.
  Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
  I would just point out, Mr. Speaker, that while we have had a couple 
of proponents of the motion to instruct mention that more money should 
be used for the prescription drug program, this motion to instruct does 
not direct any of the savings which would be gained from deleting 
division B of the Medicare bill to prescription drugs or for any other 
purpose. So while they may use conjecture to think about what they 
might use this money for, this motion to instruct has nothing to do 
with that.
  Also, Mr. Speaker, I might point out that if this motion to instruct 
were to redirect that money to the prescription drug program, that 
would be in violation of the budget agreement that this House passed 
earlier this year.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BISHOP of New York. Mr. Speaker, I yield myself such time as I 
may consume.
  I think the point of our contention that the monies saved by 
eliminating the Health Savings Security Act is that money that does not 
come into the Treasury is the same as money that comes in and is then 
spent. If the Treasury can afford to not take in an additional $174 
billion, our point is that the $174 billion would be better spent in 
assisting people who really do need the assistance as opposed to 
providing comfort and benefit to those who really do not need the 
assistance.
  Mr. Speaker, I yield 5 minutes to the gentlewoman from Illinois (Ms. 
Schakowsky).
  Ms. SCHAKOWSKY. Mr. Speaker, I thank the gentleman from New York (Mr. 
Bishop) for offering this motion and for standing up for senior 
citizens and persons with disabilities.
  We just heard that a motion that would put the money into closing the 
huge gap in coverage that seniors citizens are going to face if this 
so-called Medicare prescription drug benefit passes, that it would be 
somehow a violation of the budget agreement, that, instead, we would 
rather have some sort of another tax shelter that takes another $74 
billion away in lost revenue is typical of the kind of proposals and 
the solution that have been offered.
  Yes, the budget resolution says that we can give huge tax breaks to 
the wealthiest Americans; and now the way we are going to deal with the 
prescription drug plan is we are going to allow, again, people who have 
more money to be able to put it in a tax shelter so that they do not 
have to pay taxes on it.
  What the Democrats are talking about, what the gentleman from New 
York is talking about is let us look at what the problem is. Senior 
citizens, persons with disabilities cannot afford the prescription 
drugs that they need. So if we have $174 billion that we can use, why 
not just close that gap? That is the choice. The choice is between a 
$174 billion tax shelter, unavailable to lower-income people, or using 
$174 billion to try and redirect that so that Medicare beneficiaries 
get the coverage that they need. It is really as simple as that.
  One thing that has not been noted in this $174 billion tax shelter, 
that is the money lost to the Federal Government, is that it is also 
going to add about $20 billion to $30 billion in lost revenue to the 
States, according to the Center on Budget and Policy Priorities. Those 
lost revenues could further exacerbate the health care problem for low-
income people. It might force States to make cutbacks in critical 
health programs, hurting, once again, the uninsured and the 
underinsured.
  This kind of health savings account, this tax shelter, will also 
erode on-the-job coverage, because it will encourage employers to 
replace existing health coverage with high-deductible coverage. And it 
will especially hurt low-income families who cannot afford to pay those 
high deductibles, who cannot afford to contribute to a health savings 
account. What they are designed to do is to provide tax shelters and 
not to provide affordable coverage for the uninsured.
  It is also very important to note, by the way, that the hole that 
exists in coverage for senior citizens and persons with disabilities 
for their prescription drugs does not exist in the health plan that is 
offered to Members of Congress. So if we want to make sure that 
President Bush is accurate when he tells senior citizens that he wants 
to give them what we have, what we have in our Federal employee plan, 
then we have to fill that gap. The hole in coverage right now is big 
enough so that 48 percent of seniors and persons with disabilities fall 
right in it.
  We also know that nearly half of the Medicare beneficiaries live on 
less than $18,000 a year. Many of them are low-income women living 
alone; and for them, a $2,900 coverage gap is an insurmountable barrier 
to care.

[[Page H9175]]

                              {time}  1545

  That is what we have got right now. We will have senior citizens 
going to the pharmacy and saying I want the same medicine as I ordered 
last month, and the pharmacist will say, Mrs. Jones, that will cost you 
$75.
  What do you mean, I thought I had a prescription drug coverage?
  Oh, it has run out for awhile now. You already have used it up. We 
will not pick it up again until you spend another $2,900. Hello, people 
cannot afford that, nor can they afford a $174 billion tax shelter that 
will provide help only to those who really can afford it, not to the 
millions and millions of seniors who cannot afford their prescription 
drugs. This is the choice that we have in front of us today. Let us do 
the right thing and support the Bishop motion to instruct.
  Mr. BISHOP of New York. Mr. Speaker, I yield 3 minutes to the 
gentleman from New Jersey (Mr. Pallone).
  Mr. PALLONE. Mr. Speaker, I want to express my support for the Bishop 
motion for several reasons. First of all, as the previous speaker 
mentioned, the biggest problem with the Republican so-called drug 
benefit, because I do not think it is that at all, is that it is not 
generous enough. This is a voluntary program. If seniors feel they have 
to pay more out-of-pocket than they actually are going to gain by 
paying a premium for this drug benefit, they are not going to opt for 
it, and it is going to be meaningless. I think that is the problem with 
the House Republican bill. Even the bill that the other body passed, 
although better, has the same problem. The benefit is not generous 
enough, not meaningful enough for the average senior citizen to want 
it.
  If we look at the gap in coverage, the so-called doughnut hole, the 
House Republican bill leaves beneficiaries 100 percent financially 
liable for all prescription drug costs between $2,000 and $4,900 in 
drug spending. So they are going to get some help, I think rather 
meaningless help, up to $2,000, and then there is the catastrophic 
above the $4,900; but in between, they are paying 100 percent of the 
costs. This leaves beneficiaries with a gap of $2,900 where they still 
must pay premiums, but get absolutely no coverage for their plan.
  So they are going to be paying so much a month under the House 
Republican plan, but after $2,000, they have to pay 100 percent even 
though they are paying a premium. If they figure out what it is going 
to cost them out-of-pocket, as opposed to what they are getting, they 
will not even opt for the drug benefit because it will not be worth its 
value.
  The Bishop motion says rather than leave this gaping doughnut hole, 
why not eliminate the health savings accounts, which is a totally 
meaningless proposal which just helps some rich people and use the 
money that the House Republicans allocate from that, $174 billion over 
10 years, to try to fill in at least part of the gap for the doughnut 
hole so that seniors get something for their value and the drug benefit 
has some meaning.
  According to the Joint Committee on Taxation, the health savings 
accounts that are included, this bogus proposal included in the House 
Republican bill, costs $174 billion over 10 years. The health savings 
accounts provision will undercut employer-provided health care 
coverage. The benefits are available only if individuals are covered by 
high-deductible plans, in other words, plans providing no coverage for 
at least the first thousand dollars of medical expenses. A deductible 
of that size is approximately double the deductible of most employer 
plans. So what does it mean?
  The provision will encourage employers to reduce coverage for workers 
and their families by increasing deductibles and shifting even more 
costs onto employees. The resulting cost savings will be enjoyed by the 
employer because there is no requirement that those savings be passed 
onto the employee.
  For many American families, the tax benefits are completely 
worthless. The only thing they would receive from the health savings 
account provision is reduced health care coverage.
  Most American families will not be able to take advantage of the tax 
shelter in these provisions because they do not have $4,000 per year in 
additional savings. The health savings account provisions are designed 
to benefit employers and upper-income management, not rank-and-file 
employees.
  Mr. Speaker, I just want to be clear, the serious limitations of this 
prescription drug benefit really need to be resolved so there is some 
benefit. I am just trying to make it perfectly clear. We have a lousy 
benefit with this huge, gaping doughnut hole. It needs to be filled up 
in some way so the benefit has some meaning, and the best way to do it 
is to get rid of this huge boondoggle, $174 billion over 10 years from 
the health savings accounts, that is not going to help anybody. It is 
probably going to reduce employer coverage.
  For the life of me, I cannot understand, of all of the motions that 
we have had on this issue, of all of the motions to instruct, this is 
the easiest for those on the other side to buy because they know when 
they go home and they talk to their constituents at home, a lot of them 
are concerned that the coverage in the House bill is meaningless, and 
they talk about the doughnut hole. If you have a forum, this is what 
the seniors talk about. Why not take away this lousy provision, the 
health savings account, which basically is not helping anybody, and use 
it to make a more generous benefit that maybe in conference, we could 
convince people on both sides, both in the Senate and the House, to 
adopt this as part of a conference report and have a meaningful drug 
benefit.
  I would urge my colleagues to support the Bishop motion. I think it 
makes a lot of sense, and it should be passed on a bipartisan basis.
  Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I have heard several speakers today on the floor say 
that this is a tax loophole for the wealthy; it is just a way for the 
wealthy to be able to set aside tax free money because these high-
deductible plans are not of use to anybody but the wealthy.
  The high-deductible portion of this bill is the health savings 
account provision. The health savings account provision only accounts, 
according to the Joint Tax Committee, for $5.5 billion of $173.5 
billion tax expenditure proposed by this bill. So it is not the high-
deductible HSA, the health savings account, which has been alluded to 
here today, which accounts for the vast majority of costs under this 
bill. It is instead the health savings security accounts which 
eligibility for begins to phase out at $75,000 of income for an 
individual. I hardly think anyone would call an individual making up to 
$75,000 a year wealthy, able to take advantage of huge tax loopholes. I 
wanted to set the record straight on that.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BISHOP of New York. Mr. Speaker, I yield 3 minutes to the 
gentleman from Ohio (Mr. Brown).
  Mr. BROWN of Ohio. Mr. Speaker, I thank the gentleman for yielding me 
this time, and appreciate the good work the gentleman has done on 
health care in this body.
  Mr. Speaker, I rise in support of the Bishop motion. The health 
savings security account provisions of H.R. 1 are misguided, they are 
misplaced; and, frankly, they are misnamed, misnamed because health 
savings accounts do not promote health security, they actually undercut 
health security. HSAs coupled with high-deductible insurance are a 
magnet for healthier and better-off individuals, ones who can use the 
tax break and are not put off by the $1,000 deductible.
  When the healthiest individuals leave existing insurance pools to buy 
high-deductible coverage, premium costs go up for everyone else. It is 
simple logic. Logic tells us that. So do studies by RAND, by the Urban 
Institute, and the American Academy of Actuaries. High-deductible 
health insurance discourages utilization of cost-saving preventive and 
routine care. It simply does not make sense to promote this type of 
coverage.
  Do we really want to spend $174 billion to inflate the cost of 
employer-sponsored health insurance and encourage the purchase of 
outdated, counterintuitive high-deductible health insurance?
  The HSA provisions are misguided because the Census Bureau just 
reported now, since President Bush has taken office, almost 3 million 
more uninsured people in this country, partly connected to the fact 
that we have lost 3\1/2\ million jobs in the United States

[[Page H9176]]

since 2001. But most uninsured individuals will not benefit from the 
tax preferences built in the HSAs, so this proposal not only will not, 
but it simply cannot, make a dent in the large pool of uninsured. They 
are not a serious solution. We should not waste money on them.
  These provisions are misplaced because this is a prescription drug 
coverage bill, not a health insurance coverage bill. If our goal is 
indeed to expand access to health insurance, then the conferees should 
be debating the best way to expand access to health insurance, and they 
are not doing that.
  So do we want to get one thing right, or do we want to get two things 
wrong? Let us get the prescription drug coverage in this bill right, as 
the Bishop motion does. The drug coverage contained in this bill is 
woefully inadequate. Seniors with $5,000 in drug expenses under the 
Republican plan would pay $4,000 out of pocket. Five thousand dollars 
worth of drug expenses, and the government will only pay $1,000; hardly 
insurance. The bill's coverage gap forces beneficiaries to pay 100 
percent of their costs after the first $2,000 of drugs have been 
purchased. The coverage does not begin again until drug spending 
reaches $4,000. That is not really insurance. It makes you wonder if 
Republicans really think it is a good idea to penalize people for being 
sick. This huge hole in the coverage, if you are spending between 2 and 
$4,000, you get no coverage on your drug costs. This motion, the Bishop 
motion, takes $174 billion allocated for health savings accounts and 
devotes it to beefing up the prescription drug coverage. The additional 
funding helps eliminate the hole in that coverage. The Bishop motion 
makes sense.
  Mr. McCRERY. Mr. Speaker, I yield myself such time as I may consume.
  I will point out once again that the motion to instruct before the 
House today does not in any way devote any funding to the prescription 
drug benefit. It merely deletes division B from H.R. 1. It does not 
supplement in any way, by any amount of money, the Medicare 
prescription drug benefit.
  Also, Mr. Speaker, I would like to point out that I am familiar with 
the RAND study, it is probably the same RAND study cited by the last 
speaker which showed that yes, when people are spending their own money 
for health care, there is a reduction in the utilization of health care 
services. But if Members read on in that same study, it says that there 
was no significant decline in health outcomes as a result of that. I 
would submit as we go forward with the baby-boom generation about to 
retire, we should be looking at the effectiveness of health care 
expenditures and health care outcomes, and not how much money we can 
spend on how many health care procedures.
  Mr. Speaker, in closing, we have had a good discussion today, I 
think, about some of the attributes of the health savings accounts and 
health savings security accounts, and I am not going to give the big 
long speech which I have prepared here, I will submit that for the 
Record, and I also want to submit for the Record a recent article from 
the New York Times which talks about utilization of services in the 
health care system.
  There has been a lot of talk today about wealthy people and low-
income people and access to health care and health insurance and 
employer-provided health insurance.
  Mr. Speaker, the whole idea behind health savings accounts and 
allowing employers to contribute on behalf of employees to health 
savings accounts, the whole idea of allowing employees to roll over 
$500 a year from their flexible spending accounts into a health savings 
account or health savings security account is to get people coverage 
for health care. We have too many people in this country today who are 
either uninsured or underinsured. This bill, which passed the House, is 
designed to allow some of those people to get insurance.
  I am not sure that the Members who spoke today have focused on the 
advantages of this bill. I think they are trying to find some way to 
get some money to put into prescription drugs which would not be 
allowable under the budget agreement that we have.

                              {time}  1600

  But this bill before us that is the subject of the motion to instruct 
today is designed to get more people in this country insurance.
  Yes, they could opt for high-deductible insurance. We think that is a 
good thing. At least they would have some insurance. By having a high-
deductible policy for minor medical expenses, they would be spending 
their own money. And, yes, as the RAND study shows, they would be more 
prudent with their health care choices when they are spending their own 
money. That could help get overall health care costs down. It certainly 
could help inject into the health care system some market forces that 
are not there presently.
  Mr. Speaker, I think, unfortunately, this motion to instruct is ill-
advised. It is not designed to supplement the prescription drug 
program. It is designed to kill a very worthwhile tax incentive to 
encourage people in this country to get health insurance, to insure 
their families for health care expenses, and even if they are lucky 
enough to be basically healthy for most of their lives, to be able to 
use their health savings accounts and health security savings accounts 
to provide long-term care in their old age if they should need it. This 
is a very good proposal.
  Mr. Speaker, the Motion before us is an interesting one. Generally 
made by a member of the minority party, Motions to Instruct allow this 
Chamber to go on record with respect to one aspect of a measure pending 
in conference.
  These motions generally tackle a specific piece of a bill and allow 
the moving party to encourage the House to recede to a Senate-passed 
provision or to force the House to take a position on a provision or 
provisions which were not subject to an individual recorded vote during 
House debate.
  That is not the case here. The House has already voted, 
overwhelmingly, against the position being advocated by my colleague 
from New York.
  While the Motion before us is a new one, the issue is not. The Motion 
asks the conferees to reject Division B of the House-passed Medicare 
bill, which, as my colleague from New York has noted, relates to the 
creation of tax-favored savings accounts to meet current and future 
health care needs.
  Before becoming Division B of H.R. 1, the text in question was a 
stand-alone bill, H.R. 2596. On June 26 of this year, the House voted 
to pass that measure by a vote of 237 to 191. I should add that the 
vote was bipartisan, with 15 Members of the minority supporting the 
provision.
  Under the terms of debate for the bill, as set by the Committee on 
Rules, H.R. 2596 was appended onto H.R. 1, the Medicare Prescription 
Drug and Modernization Act of 2003 as Division B.
  Mr. Speaker, I have provided this detailed legislative history so 
that we can all understand that the House is already on record on the 
issue presented by the Motion to Instruct. Before casting their votes 
on this Motion, I hope my colleagues will review their vote on the 
identical issue which occurred on June 26.
  Having discussed the legislative history of this provision, let me 
turn to the substance, which is not less distinguished.
  This week, the Census Bureau reported what we all know to be true. 
There are far too many Americans without health insurance. The economic 
slow-down, from which we are only now starting to recover, left too 
many without jobs and has caused some workers to lose employer-
sponsored health insurance.
  That problem demands bold and innovative thinking. I have long 
believed that the employer-based system for health insurance, the 
product of historical happenstance, must be radically restructured if 
we are to provide affordable health insurance for all Americans. I have 
worked across party lines to explore this issue and hope those efforts 
will someday lead to fruition.
  Part of the solution lies in taking steps which increase personal 
responsibility. That is why the provisions creating HSAs and HSSAs are 
so important.
  Mr. Speaker, I will insert in the record an article which ran in the 
New York Times on September 13, 2003 entitled ``Patients in Florida 
Lining Up for all That Medicare Covers''.
  The article outlines how some seniors, shielded from the true cost of 
health care services by Medicare and supplemental insurance, have 
turned visits to doctors from a dreaded necessity into a focal point of 
their social schedule.

  The conclusion, frankly, is not a shocking one. I think we all know 
that people tend to consume more of things they perceive to be free. To 
the extent health insurance features low deductibles and minimal cost-
sharing, enrollees are more likely to consume health care goods and 
services which they otherwise might not. This lack of personal 
responsibility

[[Page H9177]]

is at the root of many of our health care cost problems.
  Division B of H.R. 1 takes concrete steps to ensure that health care 
consumers have more responsibility and more influence, in our 
healthcare system. Thought there are important differences, HSA 
policies are only available to those individuals who buy higher 
deductible health insurance. HSSAs will be available to those with more 
traditional health plans, but they may also be established by those who 
have no health plan at all, are therefore uninsured and who, I suppose, 
could be thought of as having an infinite deductible.
  By encouraging Americans to shift to higher-deductible health 
insurance, these accounts address a fundamental problem in health care 
today--the phenomenon of first-dollar coverage paid for by third-
parties.
  In his comments, my friend from New York indicated that these 
accounts will be used by the wealthy as a way to save money tax-free. 
About that I have several comments.
  First, in reviewing this bill, the Joint Tax Committee did estimate 
that enactment would result in a revenue loss to the Government of 
about $173 billion over the next decade. The vast majority of that loss 
came from individuals establishing HSSA accounts. Yet individuals can 
make tax-deductible contributions to HSSAs only if their incomes are 
below certain thresholds. Mr. Speaker, HSSA account holders are not the 
idle rich, looking for a tax shelter. They are the families in this 
country trying to get by and maybe get ahead a little.
  Allowing them to set aside some money on a tax-free basis for health 
care hardly seems like a tax-shelter. In fact, if the funds in an HSSA 
are not used for health care, the distribution is generally taxed as 
ordinary income and subject to an additional 15 percent tax. The 15 
percent penalty does not apply if the account holder becomes disabled 
or withdraws the funds after reaching age 65.
  It is true that account balances remaining upon death are included in 
the decedent's estate. And, if the estate tax repeal is made 
permanent--as a vast majority of this Chamber supports--it is possible 
that some of these funds set aside for health care might be used for 
other purposes.
  But that fear is not in my estimation a good reason to reject an 
improvement to the tax code which will increase personal responsibility 
and whose benefits flow predominantly to those who otherwise will have 
the most difficulty meeting their health care needs as they age.
  Second, Mr. Speaker, a population today having real difficulty with 
high health care costs are those who are retired or laid off but not 
yet eligible for Medicare. Caught in this gap are millions of Americans 
between the ages of 55 and 65. As account balances in HSSAs may be used 
to purchase individual health insurance, these accounts could be a real 
helping hand to those too young for Medicare but not eligible for other 
employer-sponsored coverage.
  Third, if we really want to tackle the issue of ``tax fairness,'' it 
is not appropriate to look at the creation of HSAs and HSSAs in 
isolation Let's look at all of the tax subsidies, both hidden and 
explicit in the tax code and how they operate today.
  Consider the fact that in 1999, the Federal Government ``spent'' 
approximately $100 billion in a hidden tax subsidy for health care, the 
exclusion from income, and therefore taxes, of the value of employer-
sponsored health care. If that exclusion were not in place, meaning 
employees were taxed on the value of the health benefits provided as if 
it were ordinary compensation, the federal government would have 
collected an additional $62 billion in income tax that year and $34 
billion in FICA contributions.

  Those are large and abstract numbers. Let's break them down and see 
what they mean to American families. According to the Lewin Group, the 
tax exclusion provided the average family with a subsidy of $1,155 in 
2000. But the benefits were not evenly divided. Families with incomes 
under $15,000 averaged just $79 in benefits, while families with 
incomes over $100,000 received an average subsidy of more than $2,600.
  Mr. Speaker, those figures are both shocking and disappointing. 
Encouraging employers to provide bigger and more generous health plans 
is not the answer.
  In addition to the odd distributional effects of the tax exclusion, 
there is ample evidence that the richest benefit packages are offered 
by employers with higher-income workers. A 1998 government survey found 
that only 42 percent of Americans under age 65 with incomes under 250 
percent of poverty have insurance through an employer, compared to 83 
percent of Americans with incomes above that level.
  Part of the reason may be because businesses with low-wage workers 
are less likely to offer health insurance. A Kaiser Family Foundation 
report in 2000 found that two-thirds of small businesses offer coverage 
to their workers. But that number is cut in half for small businesses 
in which more than 35 percent of the workers make less than $10 per 
hour.
  Part of the reason may also be that when coverage is offered to 
lower-income workers, it is generally offered on less favorable terms. 
A Moran Company study in 2000 found the average employees' monthly 
premium for family coverage was $130 for workers earning less than $7, 
while the cost for employees earning more than $15 per hour was just 
$84.
  Mr. Speaker, these are depressing statistics. I stand ready to work 
with any of my colleagues in designing a system which more rationally 
allocates scarce resources for health care.
  In the meantime, however, we must recognize that the uninsured and 
lower-income families are at a severe disadvantage when it comes to 
health benefits. I would not stand here and tell you that allowing them 
to set up tax-favored HSSAs is going to solve all of the distributional 
problems I mentioned. But surely providing more Americans an 
opportunity to use pre-tax dollars for health care cannot be a bad 
thing.
  I should also mention two other important provisions in Division B 
which merit their own discussion.
  First, the bill would allow individuals with unused balances in 
Flexible Spending Accounts to roll-over up to $500 each year. Even 
worse than insurance plans which make medical care appear free, FSAs 
have a use-it-or-lose-it feature. As a result, many account holders 
scramble at the end of each year to exhaust their accounts on 
marginally beneficial health care services. By allowing account holders 
to roll-over some unused funds, the provision reduces the very perverse 
current law incentive encouraging this over-consumption of health care.
  Second, the provision contains a clarification of current law which 
will eliminate a burdensome requirement on FSA plans which use debit 
cards to make and track account-holders' health care spending.
  In May, the Treasury Department and the Internal Revenue Service 
published a Revenue Ruling providing guidance on the use of debit and 
stored-value cards used to make payments under FSAs and health 
reimbursement accounts. Overall, the procedures will make it easier for 
millions of Americans to use stored-value cards to access the benefits 
of these accounts.
  There is, however, an impediment to the expanded use of these Cards. 
The Revenue Ruling requires that employers and other plan sponsors 
issue Form 1099 reports to service providers who accept these Cards. 
There is little evidence that the requirement will affect the 
administration of the tax code, but the administrative and paperwork 
burdens will serve as an impediment to the use of these stored-value 
cards.
  I was pleased that H.R. 2596 included a provision overriding the 1099 
requirement. I have since written to Secretary Snow, urging him to 
issue a new Revenue Ruling removing the 1099 requirement.
  Based on conversations with Treasury officials, I am hopeful that 
this can be addressed without action by the Congress but am concerned 
that passage of this Motion could signal Treasury that Congress does 
not care if the 1099 requirement is left in place.
  Before concluding, Mr. Speaker, I do want to respond to concerns that 
the deficit is too large to justify a tax cut of this kind.
  I, too, am troubled by the recent projections of significant deficits 
for the next several years. But, as a share of our national income, 
those deficits--and more importantly the debt as a percentage of our 
gross domestic product--remain manageable.
  More importantly, to the extent HSAs and HSSAs allow Americans to 
accumulate funds to pay for health care and encourage them to consume 
medical services more prudently, we can stem the otherwise unchecked 
growth in medical inflation which is, in my estimation, the most 
serious cause of long-term upward pressure on our budget picture.
  Finally, Mr. Speaker, let me express my concern about any Motions to 
Instruct the conferees on H.R. 1. As my colleagues are well aware, the 
issued surrounding the creation of a Medicare drug benefit are as 
numerous as they are complex. These discussions will only be brought to 
a successful conclusion if the conferees are able to creatively address 
the difference between the two bills.
  By artificially seeking to tie the hands of the negotiators this 
motion makes it less likely, rather than more likely that the conferees 
will be able to strike the delicate balance necessary to produce a bill 
acceptable to each Chamber and the President. Accordingly, we should 
reject this Motion for fear it will make it less likely that a Medicare 
prescription drug benefit can be enacted this year.
  Mr. Speaker, I urge my colleagues to affirm the vote this House took 
in June and to defeat the Motion to Instruct.

[[Page H9178]]

               [From the New York Times, Sept. 13, 2003]

       Patients in Florida Lining Up for All That Medicare Covers

                            (By Gina Kolata)

       Boca Raton, Fla.--It is lunchtime, and the door to Boca 
     Urology's office is locked. But outside, patients are milling 
     about, calling the office on their cellphones, hoping the 
     receptionist will let them in. To say they are eager hardly 
     does them justice.
       ``We never used to lock the door at lunch, but they came in 
     an hour early,'' said Ellie Fertel, the office manager. 
     ``It's like they're waiting for a concert. Sometimes we 
     forget to lock the door and they come in and sit in the 
     dark.''
       Yet few have serious medical problems, let alone 
     emergencies. ``It's the culture,'' said Dr. Jeffrey I. 
     Miller, one of four urologists in the practice.
       Doctor visits have become a social activity in this place 
     of palm trees and gated retirement communities. Many patients 
     have 8, 10 or 12 specialists and visit one or more of them 
     most days of the week. They bring their spouses and plan 
     their days around their appointments, going out to eat or 
     shopping while they are in the area. They know what they 
     want; they choose specialists for every body part. And every 
     visit, every procedure is covered by Medicare, the federal 
     health insurance program for the elderly.
       Boca Raton, researchers agree, is a case study of what 
     happens when people are given free rein to have all the 
     medical care they could imagine. It is also a cautionary 
     tale, they say--timely as Medicare's fate is debated in 
     Congress--for it demonstrates that what the program covers 
     and does not cover, and how much or how little it pays, 
     determines what goes on in a doctor's office and why it is so 
     hard to control costs.
       South Florida has all the ingredients for lavish use of 
     medical services, health care researchers say, with its large 
     population of affluent, educated older people and the doctors 
     to accommodate them. As a result, Dr. Elliott Fisher, a 
     health services researcher at Dartmouth Medical School, said, 
     patients have more office visits, see more specialists and 
     have more diagnostic tests than almost anywhere else in the 
     country. Medicare spends more per person in South Florida 
     than almost anywhere else--twice as much as in Minneapolis, 
     for example.
       But there is no apparent medical benefit, Dr. Fisher said, 
     adding, ``In our research, Medicare enrollees in high 
     intensity regions have 2 to 5 percent higher mortality 
     rates than similar patients in the more conservative 
     regions of the country.''
       Doctors say that Medicare's policies are guiding medical 
     practice, with many making calculated decisions about whom to 
     treat and how to care for them based on what Medicare covers, 
     and how much it pays.
       ``The bottom line is that the stuff that reimburses well is 
     easier to get done,'' Dr. Carl Rosenkrantz, a Boca Raton 
     radiologist, said.
       Thomas A. Scully, administrator of the Centers for Medicare 
     and Medicaid Services, said he knew the situation all too 
     well.
       ``We have a system that does nothing to look at 
     utilization,'' Mr. Scully said in a telephone interview. ``If 
     you send in a bill and you are legitimate, we pay it.''
       The effect shows up in the way doctors deal with office 
     visits, for example. Medicare in Boca Raton pays $52.46 for a 
     routine visit, in which a doctor sees a patient with no new 
     problem. That is not enough, doctors say; it costs about 
     $1,500 a day to run an office there, they explain. Payments 
     in other states are different, adjusted for cost of living, 
     but doctors say, and Mr. Scully agrees, that they are 
     generally inadequate. Doctors who try to make a living seeing 
     only Medicare patients for routine visits, he said, ``have a 
     very rough time.''
       Medicare bases its payments on a system in which each kind 
     of service is assigned a ``relative value,'' Mr. Scully said. 
     To increase the payment for routine office visits and stay 
     within its budget, Medicare would have to decrease the 
     relative value of other services.
       A committee of doctors meets each year to suggest relative 
     values, he said, but ``the most aggressive and active groups 
     tend to be the specialists.''
       ``Year after year,'' Mr. Scully went on, ``the specialists 
     come in and make a very strong argument for higher 
     reimbursements. There's eventually a squeeze on the basic 
     office visit.''
       In many areas of the country, private insurers pay more for 
     office visits than Medicare does, so doctors can essentially 
     subsidize their Medicare patients.
       ``If we just saw Medicare patients and didn't see anyone 
     with regular insurance, we wouldn't be able to pay the 
     bills,'' said Dr. James E. Kurtz, an internist at Chatham 
     Crossing Medical Center in Pittsboro, N.C.
       Elsewhere, many doctors are refusing to see Medicare 
     patients. ``Some counties in Washington have no doctors who 
     take new Medicare patients,'' Dr. Douglas Paauw, a professor 
     of medicine at the University of Washington, said.
       Doctors in South Florida do not have a choice. Private 
     insurers there pay the same as Medicare or less, and so many 
     old people live in the area that if doctors want to practice, 
     they must accept them. But how to make a living?
       One way, Dr. Robert Colton, an internist in Boca Raton, 
     said, is to see lots of patients, spending just a few minutes 
     with each and referring complicated problems to 
     specialists.
       Dr. Colton did that for a while, seeing as many as 35 
     patients a day. A typical busy internist, he said, would see 
     20 patients a day. ``I felt like a glorified triage nurse,'' 
     he said.
       ``If you try to handle a complex problem, it slows you 
     down,'' Dr. Colton said. ``You have to sit down with the 
     family, meet with the patients, talk to them. If you say you 
     have coughing and you are short of breath and your knee 
     hurts, I might have sent you to two different specialists.''
       The goal, Dr. Rosenkrantz said, is to move the patients on. 
     ``The worst thing than can happen is for someone to walk into 
     your office and say, `I have an interesting case for you.' 
     Financially, you'd be dead.''
       Even seeing patients in the hospital can become an exercise 
     in time management, Dr. Rosenkrantz said. ``We have doctors 
     who do rounds at 4 a.m.''
       A second driving force behind medical care in Boca Raton is 
     the demands of patients. They want lots of tests and 
     specialists, they refer themselves to specialists, they ask 
     for and get far more medical attention from specialists than 
     many doctors think is reasonable or advisable.
       ``This Medicare card is like a gold card that lets you go 
     to any doctor you want,'' Dr. Colton said, ``I see it every 
     day. When there's no control on utilization, it's just the 
     path of least resistance. If a patient says, `My shoulder 
     hurts, I want an M.R.I., I want to see a shoulder 
     specialist,' the path of least resistance is to send them 
     off. You have nothing to gain by refusing.''
       Patients here say they have mixed emotions. They complain 
     about rushed primary care doctors but readily admit that they 
     seek multiple specialists and multiple procedures.
       The primary care doctors are often irritatingly busy, 
     patients say. ``In waiting rooms sometimes they are standing 
     against the wall,'' said Marvin Luxenberg, a retired lawyer 
     who lives in nearby Boynton Beach. Then, he said, ``when you 
     get in to see the doctor, you get just three or four minutes 
     of time.''
       Dr. Colton says he found a way to give his patients more 
     time. He joined a ``concierge'' practice, in which patients 
     pay an annual fee in addition to the normal charges for 
     medical services. Dr. Colton's group, MDVIP, charges patients 
     $1,500 a year and limits the number of patients each doctor 
     sees.
       But not everyone wants to pay that kind of fee. Many 
     patients just spend their time in specialists' offices. Each 
     specialist handles a different aspect of their care, with no 
     one coordinating it.
       Specialists get no more than primary care doctors for an 
     office visit, but they provide tests and procedures that 
     demand higher Medicare reimbursements. Doctors say those 
     payments allow them to stay in business, especially if they 
     provide the procedures in their own office.
       Medicare pays the doctor and the facility where a procedure 
     is done. For a nuclear stress test, for example, the doctor 
     gets about $200 and the facility gets about $1,200.
       ``Doctors have incorporated these tests as much as possible 
     into their offices so they can gain from the facility fee,'' 
     Dr. Thomas Bartzokis, an interventional cardiologist in Boca 
     Raton, said. Patients say they have lots of specialists, and 
     lots of tests. Asked how many doctors he saw, Leon 
     Bloomberg, 83, a patient of Dr. Miller, thought for a 
     minute and looked at his wife, Esther.
       ``Between us, we have 10 or 12,'' Mr. Bloomberg said, 
     including a pain specialist and a neurologist for his 
     neuropathy, a cardiologist for his heart condition, ``a 
     pulmonary man'' for his asthma, a rheumatologist for his 
     arthritis and Dr. Miller for his prostate. Mrs. Bloomberg has 
     her own doctors, including ones for heart disease and for 
     diabetes. ``We have two to four or more doctors' appointment 
     a week,'' Mr. Bloomberg said.
       It is easy to find all these specialists, he said. ``You 
     get recommendation at the clubhouse, at the swimming pool. 
     You go to a restaurant here and 9 times out of 10, before the 
     meal is over, you hear people talking about a doctor or a 
     medicine or a surgery.'' And of course there are the other 
     patients in all those waiting rooms. Mr. Bloomberg even 
     recommends specialists to his own doctors.
       But some patients say they are frustrated by what they call 
     a waste of resources. ``The doctors are raping Medicare,'' 
     said Louis Ziegler, a retired manufacturer of flight 
     simulators who lives in Delray Beach.
       Mr. Ziegler recalled going to a doctor for a chronic 
     problem, a finger that sometimes freezes. All he wanted was a 
     shot of cortisone. But he got more, much more: ``I had 
     diathermy. I had ultrasound. I had a paraffin message. I had 
     $600 worth of Medicare treatment to get my lousy $35 shot of 
     cortisone.''
       Dr. Colton, the internist here, is frustrated, too.
       ``The system is broken,'' he said. ``I'm not being a mean 
     ogre, but when you give something away for free, there is 
     nothing to keep utilization down. And as the doctor, you have 
     nothing to gain by denying them what they want.''

  Mr. Speaker, I yield such time as he may consume to the gentleman 
from California (Mr. Thomas), the chairman of the Committee on Ways and 
Means.
  Mr. THOMAS. I thank the gentleman for yielding me this time.
  Mr. Speaker, I take the floor because I was off doing other business 
but listening to testimony that has been presented on this floor; and 
if something

[[Page H9179]]

gets repeated often enough and loud enough, people may begin to think 
that it is true.
  In depicting the proposal that has been offered for seniors and 
prescription drugs, much has been made of the fact that when you have 
limited dollar amounts and you want to write a program that benefits 
the greatest number of people, the logical way to write the program is 
to provide reasonable benefits so that most people who have small drug 
costs have a decent shared payment structure. In the House plan, that 
happens to be 80 percent government payment and, 20 percent individual. 
And for those who, through no fault of their own, have extremely high 
drug costs, above a certain point, 100 percent of those costs are 
assumed by the government, or the taxpayers. That is called typically a 
catastrophic plan.
  The question is, how much would it cost to provide sliding coverage 
throughout an entire range?
  Many drug programs are set up where they have a period at which the 
individual pays the full cost. It has been depicted over and over again 
and, most recently, just a few minutes ago, that this is a program we 
are trying to provide to seniors which we do not have as Members of 
Congress. That is flat-out not true.
  If, in fact, Members of Congress can take their insurance from the 
Federal Employees Health Benefits Program, which is where we get it, if 
anyone would take the time, instead of preparing demagogic speeches for 
the floor of the House, and study the Federal Employees Health Benefits 
Program, they will find there are programs offered to Federal employees 
that have what is called, in a pejorative way, a doughnut hole. Why? 
Because it makes sense to build insurance plans at a dollar amount with 
a doughnut hole.
  The program that we have built makes sense. Programs in the private 
sector do the same. Programs that are offered to Federal employees, 
including Members of Congress, do the same thing. This is not some 
unique concept that we have dreamed up. It is a common practice in 
insurance.
  So I fully expect, if this is not done just for show, if someone 
really did not know, and if in fact they are now pleased to have the 
facts, I do not expect another Member to take the floor and say we 
ought to give to seniors what we give to Congress and other members of 
the Federal Government and that they don't have a doughnut, so we 
shouldn't have a doughnut for seniors. The fact of the matter is, the 
Federal Employees Health Benefits Program has plans that are actually 
chosen by Federal employees that have doughnuts. Why? Because it makes 
sense. It provides you the maximum minimum payment when your drug costs 
are low and it provides you the maximum coverage at the top end when 
your drug costs are high.
  But remember what I said, if you are dealing with a fixed cost. The 
Congress said you have $400 billion to build a prescription drug 
program in a modernized Medicare. That is a fixed cost. For some people 
who do not believe the taxpayers' money should be accounted for or you 
should cater to groups so that you can give people whatever they want 
regardless of what it costs, I can understand why a sensible program, 
to give maximum benefits to the greatest number of people, would be a 
puzzlement. But for people who live on budgets and for people who are 
cognizant of taxpayers' dollars, building a plan for a given amount 
that brings the maximum benefits to the greatest number of people makes 
all kinds of sense. That is why, even in the Federal Employees Health 
Benefits Program, they have insurance programs that have doughnuts.
  I am quite sure now we will never hear another word about saying we 
are trying to give seniors something that the Federal employees do not 
have, because it is not true.
  Mr. McCRERY. Mr. Speaker, I yield myself the balance of my time.
  Let me thank the gentleman for his remarks that explain very well the 
rationale for what we think is an excellent prescription drug program 
that we constructed within the confines of the budget, the $400 billion 
in the budget.
  But, once again, Mr. Speaker, let me point out that the motion to 
instruct before us has nothing to do with the prescription drug 
program. It in no way relates to the prescription drug program. It does 
not allocate a dime of spending, extra spending, to the prescription 
drug program. All the motion to instruct before us today does is delete 
from H.R. 1 a very worthwhile tax incentive designed to get more people 
in this country health insurance coverage for themselves and their 
families.
  Mr. Speaker, I yield back the balance of my time.
  Mr. BISHOP of New York. Mr. Speaker, I yield myself the balance of my 
time.
  In closing, let me just say a few things. Chairman Thomas just made 
reference to the fact, he talked about the difficulty associated with 
developing plans and writing legislation when there are limited dollar 
amounts available. Certainly he is right about that. But I think it is 
important that we recognize that one of the reasons that we have 
limited dollar amounts available for this and so many other benefits is 
that we have been on a tax-cutting frenzy in this Congress in the last 
several months.
  We are now talking about the instant issue, the $174 billion for 
health savings accounts; $350 billion tax cut over 10 years that we 
approved in March. We all know that that number is probably an 
illusion. It is probably going to be closer to $1 trillion over 10 
years because we all know that the sunsets really are not going to 
happen. The estate tax, the permanent elimination of the estate tax of 
$161 billion, and the, let us say, the overreaction to fixing the child 
tax credit problem. We have put in place an $82 billion solution to a 
$9 billion problem.
  These tax cuts have two things in common, in my view. One is that 
they disproportionately favor the well-to-do and second is that they 
will not do what they purport to do. The health savings accounts 
purport to help the uninsured become insured and be able to handle 
their health expenses. It is not going to happen because so many of the 
uninsured are those who cannot afford insurance and cannot afford these 
accounts under any circumstance. And the other tax cuts have been 
designed, we are told, to stimulate the economy and create jobs, yet we 
continue to lose jobs at an alarming rate in this country.
  It seems to me that what we are doing is we are throwing solutions at 
problems without really knowing whether the solution will work or not.
  In the case of the prescription drug package, we do in fact know that 
if we make the benefit more substantial we will be truly helping people 
in need and we will be providing a real solution to a real problem.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of this 
motion. The House Republican bill includes $174 billion over 10 years 
for health savings accounts (HSAs). That money is desperately needed to 
fill the doughnut hole they put in the seniors' prescription drug 
coverage.
  Not only are HSAs a waste of $174 billion over 10 years, they will 
also undercut the system of employer provided health care coverage that 
we have today. The benefits of HSAs are available only if individuals 
are covered by high deductible plans, i.e., plans providing no coverage 
for at least the first $1,000 of medical expenses. A deductible of that 
size is approximately double the deductible of most employer plans.
  Therefore, the provisions will encourage employers to reduce coverage 
for workers and their families by increasing deductibles, and shifting 
even more costs on to employees. The resulting cost savings will be 
enjoyed by the employer because there is no requirement that those 
savings be passed on to the employee.
  For many low to moderate income American families, the tax benefits 
are worthless. The only thing they would receive from the health 
savings account provisions is reduced health care coverage. The HSA 
provisions are designed to benefit employers and upper-income 
management, not the hard working regular employees who are being 
crushed by today's economy.
  Because of gross financial mismanagement and misplaced priorities, we 
have only $400 billion to spend over the next 10 years on getting 
seniors and the disabled the prescription drugs they need to live. As 
we look at the skimpy benefit package the Republicans have put together 
we have to wonder how we can still afford to spend 100s of billions of 
dollars on pre-emptive war. But, that is the box they have put us in, 
and that is what we need to deal with. So, if we only have $400 
billion, it is irresponsible to spend $174 billion of it on a tax 
shelter that will erode the health insurance coverage of those who 
really need it.

[[Page H9180]]

  This money would be much better spent improving the drug benefit, 
getting coverage to the growing number of uninsured, or bringing down 
our deficit. The Republican bill leaves nearly half of all seniors with 
no coverage for part of the year, even while they continue to pay 
premiums. Vote ``yes'' on the Bishop motion to fill that gap in 
coverage.
  Mrs. CHRISTENSEN. Mr. Speaker, I rise in support of the motion to 
instruct conferees on H.R. 1 offered by my colleague from New York, Mr. 
Bishop, and I commend him for offering it.
  Medicare, which Republicans fought against at its inception and 
continue to attempt to undermine today, is an entitlement. It is 
available equally to everyone over the age of 65 who has paid into the 
system, and provides the security and peace of mind individuals need 
and deserve when they are disabled, or have reached retirement.
  This motion to instruct the Conference committee would strike the new 
savings accounts portion of the House bill, and use the $174 million 
instead to close the gaping hole that 48 percent of Medicare 
beneficiaries would fall through.
  In addition to making good common sense, it also makes good on our 
promise to seniors to give them a prescription drug benefit. We did not 
say a half a benefit or three quarters of a benefit, or a ring of a 
benefit, but a comprehensive benefit.
  Additionally, I would further instruct the conferees to ensure that 
no group, regardless of income, should be left out or be made to pay 
for inclusion in this program. To do otherwise would further undermine 
Medicare. Low-income patients, who depend on Medicare's assurance of 
access to healthcare, must not be kicked off the program and on to 
Medicaid, especially since this benefit is not fully extended to the 
American citizens living to the terrorities. To do this would renege on 
the basic promise of Medicare to all of its eligible seniors and 
disabled.
  In reaching an agreement, I would call the attention of the conferees 
to the fee-for-service chronic care management provisions especially as 
included in the House provisions. This is a good provision that would 
do much to cut the skyrocketing cost of health care to those most at 
risk for either acute or chronic institutionalization.
  Finally I would point out to the conferees and all of my colleagues, 
that this benefit is not scheduled to take effect until January of 
2006. Rather than kill or damage an important safety net program in 
this time of great uncertainty, let's wait and take the time to do it 
right.
  Although, I fundamentally disagree with the premise and direction of 
both the House and Senate prescription drug bills, it should be noted 
that the Republican prescription drug plan does nothing to expand 
prescription drugs to the million of seniors that are in dire need of 
such help.
  Both bills have a gap in coverage for Medicare beneficiaries, but the 
Senate bill, unlike the House bill, has no gap in coverage for low-
income seniors. Under the House bill, low-income individuals receive no 
assistance in meeting their drug costs over $2,000 until they have 
spent $3,500 out of their own pockets on prescription drugs; 41 percent 
of total income for someone at the federal poverty level.
  The House bill provides virtually no low-income assistance for those 
with incomes over 135 percent of poverty ($12,123 for an individual). 
The Senate provides substantially assistance for individuals with 
incomes up to 160 percent of poverty.
  The House bill includes an assets that will prevent many low-income 
people from receiving assistance. The Senate bill allows low-income 
people who do not meet the assets test to qualify for the same 
assistance available to those with incomes between 135 and 160 percent 
of poverty.
  No prescription drug program that does not provide comprehensive, 
low-cost prescription drug coverage to low income senior citizens can 
meet the needs of our constituents. The special benefits provided the 
low income under the Senate bill effectively addresses our concerns. 
However, the principle of universality and nondiscrimination that is 
central to the Medicare program demands that basic drug coverage be 
provided through Medicare, as specified in the House bill.
  The Senate low-income assistance provisions are far superior to the 
House provisions, and these assistance provisions are of particular 
importance to the Nation's African American communities. There are 
2,853,000 African American Medicare beneficiaries over age 65. Of 
these, almost 22 percent or 626,000 individuals are below 100 percent 
of the Federal Poverty Level ($8,980 for an individual, $12,120 for a 
couple). Another twenty percent live on incomes between 100 percent and 
150 percent of poverty. This compares to a total of 9 percent of 
Caucasian senior beneficiaries below 100 percent of poverty and another 
14 percent of Whites living on incomes between 100 percent and 150 
percent of poverty.
  As you can see, nearly twice as many African-American Medicare 
beneficiaries are living in poverty compared to the total Medicare 
propulation--and that means the pharmaceutical drug needs of this 
population are not being met.
  For example, low-income Medicare beneficiaries without prescription 
drug insurance are able to fill only about 20 prescriptions per year, 
compared to 32 prescriptions per year for those with insurance. By 
providing better assistance to the low-income, the Senate bill will 
help fill this `prescription gap.'
  The differences in the low-income provisions of the House and Senate 
are clear:
  House provides deductible and co-pay help only up to 135 percent of 
poverty ($12,123 per year for an individual);
  Senate provides meaningful help up to 160 percent ($14,368 for an 
individual);
  House imposes an asset test as a condition of getting low-income 
assistance. The asset test means that a low-income person is ineligible 
for assistance if they own any disposable assets (like U.S. savings 
bonds) of more than $6,000 for an individual or $9,000 for a couple. 
This test disqualifies several million low-income beneficiaries from 
getting any special assistance;
  The Senate permits even those who do not meet the asset test to get 
special assistance in meeting the costs of co-pays and deductibles;
  The House does not provide any assistance whatsoever to the low-
income when they have $2,000 to $4,900 worth of prescription drug 
expenses (when they are in the so-called donut hole);
  The Senate provides substantial help in meeting 80 percent to 95 
percent (depending on exactly how low-income an individual is) of the 
costs of the ``donut.''
  When you combine all these provisions, the impact is dramatic. For 
example, if a Medicare beneficiary is living on $12,123 a year (135 
percent of poverty), and his or her doctor has prescribed $3000 worth 
of medicines, in the House bill, the beneficiary will owe $1,114 out of 
pocket (assuming they meet the asset test and have almost no liquid 
assets). Under the Senate bill, the person will only owe $150. Under 
this example, an individual who obviously had medical problems and has 
other out-of-pocket expenses for doctors, tests, etc., would have to 
spend more than one month's income on prescription drug cost sharing.
  Furthermore, I believe that in addressing the low-income provisions, 
conferees must add language that will allow for full participation of 
the U.S. territories within the Medicaid program. As you know, the U.S. 
territories' Medicaid programs are capped and any coverage provision 
extending aspects of these programs do not translate to the U.S. 
territories.
  Again, to help close the disparities in our society, we ask you to 
urge the House-Senate conferees to support the Senate low-income 
assistance provisions. Adopting the Senate's subsidy provisions will 
make a major improvement in the lives of our nation's most vulnerable 
Medicare beneficiaries. Mr. Speaker, we need to pass a meaningful 
prescription drug plan that uses Medicare to make drugs affordable and 
provides a universal, voluntary benefit for all seniors. I urge my 
colleagues to support this motion to instruct.
  Mr. BISHOP of New York. Mr. Speaker, I yield back the balance of my 
time.
  The SPEAKER pro tempore (Mr. Gerlach). Without objection, the 
previous question is ordered on the motion to instruct.
  There was no objection.
  The SPEAKER pro tempore. The question is the motion to instruct 
offered by the gentleman from New York (Mr. Bishop).
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. BISHOP of New York. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

                          ____________________