[Congressional Record Volume 151, Number 13 (Wednesday, February 9, 2005)]
[Senate]
[Pages S1199-S1215]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. AKAKA (for himself, Mr. Bingaman, Mr. Sarbanes, Mr.
Dayton, and Mr. Durbin):
S. 324. A bill to provide additional protections for recipients of
the earned income tax credit; to the Committee on Finance.
Mr. AKAKA. Mr. President, I rise to introduce the Taxpayer Abuse
Prevention Act. Earned income tax credit, EITC, benefits intended for
working families are significantly reduced by the use of refund
anticipation loans, RALs, which typically carry triple digit interest
rates.
According to the Brookings Institution, an estimated $1.9 billion
intended to assist low-income families was received by commercial tax
preparers and affiliated national banks to pay for tax assistance,
electronic filing of returns, and high-cost refund loans in 2002.
Fifty-seven percent of consumers who received RALs in 2003 earned the
EITC. The Children's Defense Fund recently conducted a review of EITC
refunds in eight states and the District of Columbia. In Texas, it is
estimated that EITC families lost an estimated $251 million in tax
preparation fees and high interest loans. EITC families had an
estimated $82.6 million diverted to tax preparers in Ohio.
[[Page S1200]]
The interest rates and fees charged on RALs are not justified because
of the short length of time that these loans are outstanding and the
minimal risk they present. These loans carry little risk because of the
Debt Indicator program.
The Debt Indicator, DI, is a service provided by the Internal Revenue
Service, IRS, that informs the lender whether or not an applicant owes
Federal or state taxes, child support, student loans, or other
Government obligations, which assists the tax preparer in ascertaining
the applicant's ability to obtain their full refund so that the RAL is
repaid. The Department of the Treasury should not be facilitating these
predatory loans that allow tax preparers to reap outrageous profits by
exploiting working families.
Unfortunately too many working families are susceptible to predatory
lending because they are left out of the financial mainstream. Between
25 and 56 million adults are unbanked, or not using mainstream, insured
financial institutions. The unbanked rely on alternative financial
service providers to obtain cash from checks, pay bills, send
remittances, utilize payday loans, and obtain credit. Many of the
unbanked are low- and moderate-income families that can ill afford to
have their earnings unnecessarily diminished by their reliance on these
high-cost and often predatory financial services. In addition, the
unbanked are unable to save securely to prepare for the loss of a job,
a family illness, a down payment on a first home, or education
expenses.
My bill will protect consumers against predatory loans, reduce the
involvement of the Department of the Treasury in facilitating the
exploitation of taxpayers, and expand access to opportunities for
saving and lending at mainstream financial services.
My bill prohibits refund anticipation loans that utilize EITC
benefits. Other Federal benefits, such as Social Security, have similar
restrictions to ensure that the beneficiaries receive the intended
benefit.
My bill also limits several of the objectionable practices of RAL
providers. It will prohibit lenders from using tax refunds to collect
outstanding obligations for previous RALs. In addition, mandatory
arbitration clauses for RALs that utilize Federal tax refunds would be
prohibited to ensure that consumers have the ability to take future
legal action if necessary.
I am deeply troubled that the Department of the Treasury plays such a
prominent role in the facilitation and subsequent promotion of refund
anticipation loans. In 1995, the use of the DI was suspended because of
massive fraud in e-filed returns with RALs. After the program was
discontinued, RAL participation declined. The use of the DI was
reinstated in 1999, according to H&R Block, to ``assist with screening
for electronic filing fraud and is also expected to substantially
reduce refund anticipation loan pricing.'' Although RAL prices were
expected to go down as a result of the reinstatement of the DI, this
has not occurred. Use of the Debt Indicator should once again be
stopped. The DI is helping tax preparers make excessive profits from
low- and moderate-income taxpayers who utilize RALs. The IRS should not
be aiding efforts that take the earned benefit away from low-income
families and allow unscrupulous preparers to take advantage of low-
income taxpayers. My bill terminates the DI program. In addition, this
bill removes the incentive to meet congressionally mandated electronic
filing goals by facilitating the exploitation of taxpayers. My bill
would exclude any electronically filed tax returns resulting in tax
refunds distributed by refund anticipation loans from being counted
towards the goal established by the IRS Restructuring and Reform Act of
1998, which is to have at least 80 percent of all returns filed
electronically by 2007.
Mr. President, my bill also expands access to mainstream financial
services. Electronic Transfer Accounts, ETA, are low-cost accounts at
banks and credit unions intended for recipients of certain Federal
benefit payments. Currently, ETAs are provided for recipients of other
Federal benefits such as Social Security payments. My bill expands the
eligibility for ETAs to include EITC benefits. These accounts will
allow taxpayers to receive direct deposit refunds into an account
without the need for a refund anticipation loan.
Furthermore, my bill would mandate that low- and moderate-income
taxpayers be provided opportunities to open low-cost accounts at
federally insured banks or credit unions via appropriate tax forms.
Providing taxpayers with the option of opening a bank or credit union
account through the use of tax forms provides an alternative to RALs
and immediate access to financial opportunities found at banks and
credit unions.
I thank my colleagues, Senators Bingaman, Sarbanes, Dayton, and
Durbin for cosponsoring this legislation. I also thank Representative
Jan Schakowsky for introducing the companion legislation in the other
body.
I ask unanimous consent that the text of the Taxpayer Abuse
Prevention Act, support letters and an accompanying fact sheet from the
Association of Community Organizations for Reform, the Children's
Defense Fund, the Consumer Federation of America, Consumers Union, the
National Consumer Law Center, the Center for Responsible Lending, and
the text of the national summary of the refund anticipation studies
done by the Children's Defense Fund be printed in the Record.
I urge my colleagues to support this important legislation that will
restrict predatory RALs and expand access to mainstream financial
services.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 324
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Taxpayer Abuse Prevention
Act''.
SEC. 2. PREVENTION OF DIVERSION OF EARNED INCOME TAX CREDIT
BENEFITS.
(a) In General.--Section 32 of the Internal Revenue Code of
1986 (relating to earned income tax credit) is amended by
adding at the end the following new subsection:
``(n) Prevention of Diversion of Credit Benefits.--The
right of any individual to any future payment of the credit
under this section shall not be transferable or assignable,
at law or in equity, and such right or any moneys paid or
payable under this section shall not be subject to any
execution, levy, attachment, garnishment, offset, or other
legal process except for any outstanding Federal obligation.
Any waiver of the protections of this subsection shall be
deemed null, void, and of no effect.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3. PROHIBITION ON DEBT COLLECTION OFFSET.
(a) In General.--No person shall, directly or indirectly,
individually or in conjunction or in cooperation with another
person, engage in the collection of an outstanding or
delinquent debt for any creditor or assignee by means of
soliciting the execution of, processing, receiving, or
accepting an application or agreement for a refund
anticipation loan or refund anticipation check that contains
a provision permitting the creditor to repay, by offset or
other means, an outstanding or delinquent debt for that
creditor from the proceeds of the debtor's Federal tax
refund.
(b) Refund Anticipation Loan.--For purposes of subsection
(a), the term ``refund anticipation loan'' means a loan of
money or of any other thing of value to a taxpayer because of
the taxpayer's anticipated receipt of a Federal tax refund.
(c) Effective Date.--This section shall take effect on the
date of the enactment of this Act.
SEC. 4. PROHIBITION OF MANDATORY ARBITRATION.
(a) In General.--Any person that provides a loan to a
taxpayer that is linked to or in anticipation of a Federal
tax refund for the taxpayer may not include mandatory
arbitration of disputes as a condition for providing such a
loan.
(b) Effective Date.--This section shall apply to loans made
after the date of the enactment of this Act.
SEC. 5. TERMINATION OF DEBT INDICATOR PROGRAM.
The Secretary of the Treasury shall terminate the Debt
Indicator program announced in Internal Revenue Service
Notice 99-58.
SEC. 6. DETERMINATION OF ELECTRONIC FILING GOALS.
(a) In General.--Any electronically filed Federal tax
returns, that result in Federal tax refunds that are
distributed by refund anticipation loans, shall not be taken
into account in determining if the goals required under
section 2001(a)(2) of the Restructuring and Reform Act of
1998 that the Internal Revenue Service have at least 80
percent of all such returns filed electronically by 2007 are
achieved.
(b) Refund Anticipation Loan.--For purposes of subsection
(a), the term ``refund anticipation loan'' means a loan of
money or of any other thing of value to a taxpayer because of
the taxpayer's anticipated receipt of a Federal tax refund.
[[Page S1201]]
SEC. 7. EXPANSION OF ELIGIBILITY FOR ELECTRONIC TRANSFER
ACCOUNTS.
(a) In General.--The last sentence of section 3332(j) of
title 31, United States Code, is amended by inserting ``other
than any payment under section 32 of such Code'' after
``1986''.
(b) Effective Date.--The amendment made by this section
shall apply to payments made after the date of the enactment
of this Act.
SEC. 8. PROGRAM TO ENCOURAGE THE USE OF THE ADVANCE EARNED
INCOME TAX CREDIT.
(a) In General.--Not later than 6 months after the date of
the enactment of this Act, the Secretary of the Treasury
shall, after consultation with such private, nonprofit, and
governmental entities as the Secretary determines
appropriate, develop and implement a program to encourage the
greater utilization of the advance earned income tax credit.
(b) Reports.--Not later than the date of the implementation
of the program described in subsection (a), and annually
thereafter, the Secretary of the Treasury shall report to the
Committee on Finance of the Senate and the Committee on Ways
and Means of the House of Representatives on the elements of
such program and progress achieved under such program.
(c) Authorization of Appropriations.--There is authorized
to be appropriated such sums as are necessary to carry out
the program described in this section. Any sums so
appropriated shall remain available until expended.
SEC. 9. PROGRAM TO LINK TAXPAYERS WITH DIRECT DEPOSIT
ACCOUNTS AT FEDERALLY INSURED DEPOSITORY
INSTITUTIONS.
(a) Establishment of Program.--Not later than 1 year after
the date of the enactment of this Act, the Secretary of the
Treasury shall enter into cooperative agreements with
federally insured depository institutions to provide low- and
moderate-income taxpayers with the option of establishing
low-cost direct deposit accounts through the use of
appropriate tax forms.
(b) Federally Insured Depository Institution.--For purposes
of this section, the term ``federally insured depository
institution'' means any insured depository institution (as
defined in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)) and any insured credit union (as defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752)).
(c) Operation of Program.--In providing for the operation
of the program described in subsection (a), the Secretary of
the Treasury is authorized--
(1) to consult with such private and nonprofit
organizations and Federal, State, and local agencies as
determined appropriate by the Secretary, and
(2) to promulgate such regulations as necessary to
administer such program.
(d) Authorization of Appropriations.--There is authorized
to be appropriated such sums as are necessary to carry out
the program described in this section. Any sums so
appropriated shall remain available until expended.
____
National Consumer Law Center Inc,
Boston, MA, February 7, 2005.
Hon. Daniel K. Akaka,
U.S. Senate,
Washington, DC.
Dear Senator Akaka: The Association of Community
Organizations for Reform Now (ACORN), Center for Responsible
Lending, Children's Defense Fund, Consumer Federation of
America, Consumers Union, and National Consumer Law Center
(on behalf of its low-income clients), write to support your
bill, the ``Taxpayer Abuse Prevention Act.'' By prohibiting
lenders from making loans against the Earned Income Tax
Credit, this bill would greatly reduce the scope of abuses
caused by refund anticipation loans (RALs), which carry
effective annualized interest rates of about 40% to over
700%.
According to IRS data, 57% of consumers who received RALs
in 2003 were beneficiaries of the Earned Income Tax Credit.
These EITC recipients paid about $740 million in loan and
``administrative'' fees for RALs. These fees divert hundreds
of millions of EITC dollars, paid out of the U.S. Treasury,
into the coffers of multimillion dollar commercial
preparation chains and big banks. It's time to stop lenders
from making high cost, abusive loans using the precious
dollars intended to support working poor families.
Furthermore, we support the ``Taxpayer Abuse Prevention
Act'' for its provisions that halt several of the most
egregious practices of RAL lenders, such as seizing
taxpayers' tax refunds as a form of debt collection and
slipping in mandatory arbitration clauses, which leave RAL
consumers without their day in court. Moreover, we appreciate
the termination of the IRS Debt Indicator program, which
would stop the IRS's practice of sharing taxpayer's personal
financial information in order to make RALs more profitable
for lenders. Finally, we applaud the provisions of the bill
that support linking unbanked taxpayers with bank accounts,
such as the provision to permit them to open Electronic
Transaction Accounts to receive federal tax refunds.
Thank you again for all your efforts to combat taxpayer
abuse by the RAL industry.
Sincerely,
Maude Hurd, National President Association of Community
Organizations for Reform Now; Jean Ann Fox, Director of
Consumer Protection, Consumer Federation of America;
Chi Chi Wu, Staff Attorney, National Consumer Law
Center; Deborah Cutler-Ortiz, Director of Family
Income, Children's Defense Fund; Susanna Montezemolo,
Legislative Representative, Consumers Union; Yolanda
McGill, Senior Policy Counsel, Center for Responsible
Lending.
____
How the Taxpayer Abuse Prevention Act Addresses the Worst Aspect of
Refund Anticipation Loans
What are Refund Anticipation Loans (RALs)?
Refund anticipation loans (RALs) are high cost short-term
loans secured by taxpayers' expected tax refunds. To get a
RAL, consumers pay:
A loan fee to the lender, ranging from about $30 to $115 in
2005.
A fee for commercial tax preparation, typically around
$120;
In some cases, a fee to the commercial preparer to process
the RAL, sometimes called a ``administrative'',
``application'', or ``document preparation'' fee, around $30;
Who gets RALs?
Over 12 million taxpayers got RALs in 2003, according to
the latest available data from IRS, costing taxpayers an
estimated $1.4 billion dollars. Nearly 80% of these taxpayers
are low-income, making less than $35,000 per year. Over half
taxpayers who get RALs receive the Earned Income Tax Credit
(EITC). The EITC is a tax benefit for working people who earn
low or moderate incomes. It reduces the tax burden on these
working families, boosting millions of households out of
poverty. EITC recipients are disproportionately represented
in the ranks of those who get RALs, since these taxpayers
make up just 17% of the taxpayer population. RALs cost EITC
recipients $740 million in loan and application/
administrative fees, plus these EITC recipients paid nearly
an estimated $1 billion in tax preparation and check cashing
fees.
What are some of the problems with RALs?
RALs drain hundreds of millions in EITC benefits, and
diminish the EITC's poverty-fighting power.
The Taxpayer Abuse Prevention Act prohibits RALs made
against EITC funds. RAL contracts permit a lender to grab a
taxpayer' refund to repay any outstanding RAL debt, even if
the debt was to another lender.
The Taxpayer Abuse Prevention Act prohibits debt collection
from a taxpayer's refund. RAL contracts contain anti-consumer
mandatory arbitration clauses that deprive taxpayers of their
day in court if they have a problem with their RALs.
The Taxpayer Abuse Prevention Act prohibits mandatory
arbitration clauses in RAL contracts. The IRS helps increase
profits for RAL lenders by sharing taxpayer's personal
financial information in the form of the Debt Indicator,
which tells tax preparers and RAL lenders when a tax refund
offset exists.
The Taxpayer Abuse Prevention Act terminates the Debt
Indicator program, ensuring that IRS resources are not used
to help the bottom line of RAL lenders.
Isn't this denying EITC taxpayers an option to get their
refund money at tax time?
RALs cost an enormous amount for what is essentially a loan
of less than two weeks, draining billions for a mostly
useless product. Because they are such short term loans, the
RAL loan fee translates into effective annualized interest
rates of about 40% to over 700%, or 70% to over 1700% if
administrative fees are included. If the taxpayer's refund is
reduced or denied by the IRS, the taxpayer is on the hook to
repay the loan--a tough task for the low-income taxpayers who
mostly get RALs.
The EITC is money paid out of the federal Treasury to make
sure working families are lifted out of poverty. Other
similar government programs have longstanding similar
prohibitions against making a loan against those benefits.
For example, the Social Security Act, 42 U.S.C. 407(a),
prohibits lenders from seizing, garnishing, attaching, taking
an assignment in or securing a loan against Social Security
benefits. The Taxpayer Abuse Prevention Act prohibition's
against RALs secured by the EITC was modeled on this
provision of the Social Security Act, with the addition of a
prohibition against offsets of EITC benefits.
____
Children's Defense Fund,
Washington, DC, February, 2005.
Keeping What They've Earned: Working Families and Tax Credits
As the height of tax-filing season approaches, Americans
are being bombarded with advertisements from commercial tax
preparers on high-cost options for getting their taxes
prepared. Many of these commercial tax preparers focus on
low-income neighborhoods and lure their clients with the
promise of ``Fast Money,'' Money Now'' or ``Rapid Refunds.''
Two out of every three people nationwide who claim the
Earned Income Tax Credit (EITC) use commercial tax preparers
to prepare their returns. These low-income families end up
paying high preparation fees and many of them take out high-
interest loans against their expected refund. Unfortunately,
many of these low- to moderate-income working Americans are
unaware of other options--including free tax preparation
through Volunteer Income Tax Assistance sites.
Enacted in 1975, the EITC is our nation's largest and most
effective anti-poverty program, generating billions of
dollars to help
[[Page S1202]]
families meet their most basic needs. Research shows families
use their refunds to pay bills such as utilities and rent, to
purchase basic household commodities and clothing, to cover
the costs of tuition, and some even reserve parts of their
EITC for savings. In sum, EITC helps low- to moderate-income
families make ends meet while stimulating the local economy.
THE FULL VALUE OF THE PROGRAM IS NOT REACHING WORKING FAMILIES
Unfortunately, low-income taxpayers lost over $690 million
in loan charges in 2003 and a total of $2.3 billion if the
cost of commercial tax preparation is included. These costs
can include tax preparation, documentation preparation or
application handling fees, electronic filing fees and a
Refund Anticipation Loan (RALs). The RALs are loans secured
by tax-payer's tax refund, including the EITC.
In middle and upper income communities, consumers have
access to loans and credit cards at competitive rates, and
branch offices of mainstream banks and savings and loans
offer a full array of banking services. Low-income consumers
are forced to patronize fringe financial service providers
that charge exorbitant rates for personal loans and limited
banking services.
RALS TARGET HIGH POVERTY AREAS
Recent research has shown that low-income taxpayers who
claim the EITC represent the majority of the marketplace for
RALs. The product's popularity varies substantially across
the U.S., but the most recent Internal Revenue Service
figures indicate that 79 percent of RAL recipients in 2003
had adjusted gross incomes of $35,000 or less. Minority
consumers are heavier RAL users. Twenty-eight percent of
African Americans and 21 percent of Latino taxpayers told
surveyors they received RALs compared with 17 percent of
White consumers.
The Children's Defense Fund's review of eight states and
the District of Columbia reveals that almost $960 million
dollars has been siphoned away from low-income tax payers in
these states, because of tax preparation and high interest
loan fees.
California lost an estimated $236.5 million.
Minnesota lost and estimated 5.1 million.
Mississippi lost an estimated $54 million.
New York lost an estimated $182 million.
Ohio lost an estimated $82.6 million.
South Carolina lost an estimated $57 million.
Tennessee lost an estimated $57 million.
Texas lost an estimated $251 million.
Washington D.C. lost an estimated $5.8 million.
THE APPEAL OF RALS AND WHAT TAXPAYERS AREN'T TOLD
Many low-income families may feel they have little choice
but to take out a RAL. First, many are unlikely to have $100
on hand to pay for tax preparation fees. In setting up the
loan, the commercial tax preparers deduct these fees first,
relieving the families from the need to find alternative
resources. Second, and probably more significantly, RALs
enable families to access the amount of money they expect
from their refunds within 48 hours, rather than having to
wait for the IRS to process their returns. This wait could
last 6-8 weeks if the family does not file electronically and
does not have a bank account to accept an electronic transfer
of the refund. Indeed, many low-income families lack bank
accounts. According to the Federal Reserve, one out of four
families with incomes less than $25,000 does not have a bank
account of any kind.
RECOMMENDATIONS
1. Simplify the rules and process. Working families should
be able to complete their own taxes, without having to pay
for professional assistance. Federal and state laws,
especially those that govern working families income taxes,
need to be simplified and federal and state tax credit
programs need to be coordinated.
2. Ensure that free tax assistance for EITC families is
available, accessible and well-publicized. Very few people
know that free tax assistance for low-income families is
available at Volunteer Income Tax Assistance sites, Tax
Counseling for the Elderly, AARP and other free tax
preparation sites in many communities, but very few people
know this. The community groups and nonprofit
organizations that operate many of these sites need help.
Different levels of government, employers, foundations,
churches and other community groups can all provide
financial assistance, make site locations available,
donate computers for electronic filing, help recruit
volunteers and conduct outreach with potential EITC
families. EITC families should also be made aware that
there are free or low-cost tax filing websites available
that they can access through the IRS and other websites.
3. Strengthen consumer protection and education. There is
little regulation of tax preparers even though they are
entrusted with personal information and expected to stay
abreast of many complex tax laws. The federal and state
governments could do more to regulate and monitor the
practices of paid preparers as well as the national banks
with which they partner to offer RALs. Families need to
understand what they can expect of their tax preparer, as
well as the drawbacks and hidden costs of RALs. On the
federal level, the Taxpayer Abuse Prevention Act (TAPA)
legislation introduced by Senators Akaka (D-HI) and Bingaman
(D-NM) and Representative Schakowsky (DIL) would prohibit the
use of RALs against the EITC.
4. Connect more low-income families with fmancial
institutions and increase their financial literacy. Having a
tax refund electronically deposited directly into a bank
account speeds up the turnaround time significantly, but one
out of four families with incomes less than $25,000 does not
have a bank account. Recent efforts to partner free tax
assistance with financial institutions have been successful.
CHILDREN NEED ADEQUATE FAMILY INCOME IF THEY ARE TO MEET THEIR MOST
BASIC NEEDS, FROM DIAPERS To DOCTORS To HEALTHY FOOD AND SAFE HOUSING
Whether a child will flounder or flourish can hinge on
things that money buys: good quality child care, eyeglasses
to read the chalkboard, a little league fee, a musical
instrument, or simply the peace of mind that lets parents
create a warm and nurturing family life free from worries
about eviction or hunger.
Yet almost 13 million children are poor and millions more
live in struggling families with incomes just above the
official poverty line. Giving children economic security
means providing stronger tax credits for low-paid working
families and a more reliable safety net when jobs fall short.
It also means making more effective use of available programs
and ensuring that families have access to the tax credits and
food, health, and other benefits that already exist.
The millions of dollars lost by working families to
commercial tax preparers is money that could have been used
to help provide their children with a safe home, nutritious
meals and a good education.
These hardworking families are trying to lift themselves
out of poverty but are falling victim to targeted marketing
tactics that are taking their hard-earned money. The
Children's Defense Fund's efforts to educate and assist
families that may otherwise, fall prey to these
unconscionable sales tactics can make a difference in the
lives of the working poor.
______
By Mr. SANTORUM (for himself and Mrs. Lincoln):
S. 327. A bill to amend the Internal Revenue Code of 1986 to expand
the tip credit to certain employers and to promote tax compliance; to
the Committee on Finance.
Mr. SANTORUM. Mr. President, I would like to introduce, along with my
colleague, Senator Lincoln of Arkansas, the Small Business Tax
Equalization and Compliance Act of 2005, which would amend the tax code
to expand the tip credit to certain employers and to promote tax
compliance.
This bill addresses an unfair aspect of our current tax code that
adversely affects tens of thousands of small businesses across the
country. Under current law, certain small business owners are required
to pay Social Security and Medicare (FICA) taxes on tips their
employees earn, despite having no control over or share of the tip
earnings. This legislation will allow these small business owners to
claim a tax credit against their income taxes for their share of the
FICA tax paid on their employees' tips. The Small Business Tax
Equalization and Compliance Act would place cosmetology service owners
on equal footing with other similarly tip-intensive businesses such as
the restaurant and food delivery industries that already benefit from a
similar tax credit.
I ask unanimous consent that the text of the bill be printed in the
Record, and am hopeful my colleagues will join me in support of this
legislation.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 327
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Tax
Equalization and Compliance Act of 2005''.
SEC. 2. EXPANSION OF CREDIT FOR PORTION OF SOCIAL SECURITY
TAXES PAID WITH RESPECT TO EMPLOYEE TIPS.
(a) Expansion of Credit to Other Lines of Business.--
Paragraph (2) of section 45B(b) of the Internal Revenue Code
of 1986 is amended to read as follows:
``(2) Application only to certain lines of business.--In
applying paragraph (1), there shall be taken into account
only tips received from customers or clients in connection
with--
``(A) the providing, delivering, or serving of food or
beverages for consumption if the tipping of employees
delivering or serving food or beverages by customers is
customary, or
``(B) the providing of any cosmetology service for
customers or clients at a facility licensed to provide such
service if the tipping of employees providing such service is
customary.''.
[[Page S1203]]
(b) Definition of Cosmetology Service.--Section 45B of such
Code is amended by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively, and by inserting after
subsection (b) the following new subsection:
``(c) Cosmetology Service.--For purposes of this section,
the term `cosmetology service' means--
``(1) hairdressing,
``(2) haircutting,
``(3) manicures and pedicures,
``(4) body waxing, facials, mud packs, wraps, and other
similar skin treatments, and
``(5) any other beauty related service provided at a
facility at which a majority of the services provided (as
determined on the basis of gross revenue) are described in
paragraphs (1) through (4).''.
(c) Effective Date.--The amendments made by this section
shall apply to tips received for services performed after
December 31, 2004.
SEC. 3. INFORMATION REPORTING AND TAXPAYER EDUCATION FOR
PROVIDERS OF COSMETOLOGY SERVICES.
(a) In General.--Subpart B of part III of subchapter A of
chapter 61 of the Internal Revenue Code of 1986 is amended by
inserting after section 6050T the following new section:
``SEC. 6050U. RETURNS RELATING TO COSMETOLOGY SERVICES AND
INFORMATION TO BE PROVIDED TO COSMETOLOGISTS.
``(a) In General.--Every person (referred to in this
section as a `reporting person') who--
``(1) employs 1 or more cosmetologists to provide any
cosmetology service,
``(2) rents a chair to 1 or more cosmetologists to provide
any cosmetology service on at least 5 calendar days during a
calendar year, or
``(3) in connection with its trade or business or rental
activity, otherwise receives compensation from, or pays
compensation to, 1 or more cosmetologists for the right to
provide cosmetology services to, or for cosmetology services
provided to, third-party patrons, shall comply with the
return requirements of subsection (b) and the taxpayer
education requirements of subsection (c).
``(b) Return Requirements.--The return requirements of this
subsection are met by a reporting person if the requirements
of each of the following paragraphs applicable to such person
are met.
``(1) Employees.--In the case of a reporting person who
employs 1 or more cosmetologists to provide cosmetology
services, the requirements of this paragraph are met if such
person meets the requirements of sections 6051 (relating to
receipts for employees) and 6053(b) (relating to tip
reporting) with respect to each such employee.
``(2) Independent contractors.--In the case of a reporting
person who pays compensation to 1 or more cosmetologists
(other than as employees) for cosmetology services provided
to third-party patrons, the requirements of this paragraph
are met if such person meets the applicable requirements of
section 6041 (relating to returns filed by persons making
payments of $600 or more in the course of a trade or
business), section 6041A (relating to returns to be filed by
service-recipients who pay more than $600 in a calendar year
for services from a service provider), and each other
provision of this subpart that may be applicable to such
compensation.
``(3) Chair renters.--
``(A) In general.--In the case of a reporting person who
receives rent or other fees or compensation from 1 or more
cosmetologists for use of a chair or for rights to provide
any cosmetology service at a salon or other similar facility
for more than 5 days in a calendar year, the requirements of
this paragraph are met if such person--
``(i) makes a return, according to the forms or regulations
prescribed by the Secretary, setting forth the name, address,
and TIN of each such cosmetologist and the amount received
from each such cosmetologist, and
``(ii) furnishes to each cosmetologist whose name is
required to be set forth on such return a written statement
showing--
``(I) the name, address, and phone number of the
information contact of the reporting person,
``(II) the amount received from such cosmetologist, and
``(III) a statement informing such cosmetologist that (as
required by this section), the reporting person has advised
the Internal Revenue Service that the cosmetologist provided
cosmetology services during the calendar year to which the
statement relates.
``(B) Method and time for providing statement.--The written
statement required by clause (ii) of subparagraph (A) shall
be furnished (either in person or by first-class mail which
includes adequate notice that the statement or information is
enclosed) to the person on or before January 31 of the year
following the calendar year for which the return under clause
(i) of subparagraph (A) is to be made.
``(c) Taxpayer Education Requirements.--In the case of a
reporting person who is required to provide a statement
pursuant to subsection (b), the requirements of this
subsection are met if such person provides to each such
cosmetologist annually a publication, as designated by the
Secretary, describing--
``(1) in the case of an employee, the tax and tip reporting
obligations of employees, and
``(2) in the case of a cosmetologist who is not an employee
of the reporting person, the tax obligations of independent
contractors or proprietorships.
The publications shall be furnished either in person or by
first-class mail which includes adequate notice that the
publication is enclosed.
``(d) Definitions.--For purposes of this section--
``(1) Cosmetologist.--
``(A) In general.--The term `cosmetologist' means an
individual who provides any cosmetology service.
``(B) Anti-avoidance rule.--The Secretary may by regulation
or ruling expand the term `cosmetologist' to include any
entity or arrangement if the Secretary determines that
entities are being formed to circumvent the reporting
requirements of this section.
``(2) Cosmetology service.--The term `cosmetology service'
has the meaning given to such term by section 45B(c).
``(3) Chair.--The term `chair' includes a chair, booth, or
other furniture or equipment from which an individual
provides a cosmetology service (determined without regard to
whether the cosmetologist is entitled to use a specific
chair, booth, or other similar furniture or equipment or has
an exclusive right to use any such chair, booth, or other
similar furniture or equipment).
``(e) Exceptions for Certain Employees.--Subsection (c)
shall not apply to a reporting person with respect to an
employee who is employed in a capacity for which tipping (or
sharing tips) is not customary.''.
(b) Conforming Amendments.--
(1) Section 6724(d)(1)(B) of such Code (relating to the
definition of information returns) is amended by
redesignating clauses (xiii) through (xviii) as clauses (xiv)
through (xix), respectively and by inserting after clause
(xii) the following new clause:
``(xiii) section 6050U(a) (relating to returns by
cosmetology service providers).''.
(2) Section 6724(d)(2) of such Code is amended--
(A) by striking ``or'' at the end of subparagraph (AA),
(B) by striking the period at the end of subparagraph (BB)
and inserting ``, or'', and
(C) by inserting after subparagraph (BB) the following new
subparagraph:
``(CC) subsections (b)(3)(A)(ii) and (c) of section 6050U
(relating to cosmetology service providers) even if the
recipient is not a payee.''.
(3) The table of sections for subpart B of part III of
subchapter A of chapter 61 of the Internal Revenue Code of
1986 is amended by adding after section 6050T the following
new item:
``Sec. 6050U. Returns relating to cosmetology services and information
to be provided to cosmetologists.''.
(c) Effective Date.--The amendments made by this section
shall apply to calendar years after 2004.
______
By Mr. ROCKEFELLER (for himself and Mr. Leahy):
S. 329. A bill to amend title 11, United States Code, to increase the
amount of unsecured claims for salaries and wages given priority in
bankruptcy, to provide for cash payments to retirees to compensate for
lost health insurance benefits resulting from the bankruptcy of their
former employer, and for other purposes; to the Committee on the
Judiciary.
Mr. ROCKEFELLER. Mr. President, over the last several years as the
economy came down from the high of the 1990s, we have seen how
devastating it can be for workers when their companies declare
bankruptcy. From the enormous Enron bankruptcy at the end of 2001 to
the bankruptcies of Wheeling-Pitt and then Weirton Steel in my own home
State, every bankruptcy has brought heartache for workers who had
dedicated themselves to their employers. In many cases, employees and
retirees have very limited ability to recover the wages, severance, or
benefits they are due when their companies seek protection from
creditors.
Workers deserve better. So today I am introducing the Bankruptcy
Fairness Act to strengthen workers' rights in bankruptcy and to provide
greater authority to bankruptcy courts to ensure a fair distribution of
assets. I am very pleased that Senator Leahy, the distinguished ranking
Democrat on the Senate Judiciary Committee is an original cosponsor of
this bill.
Specifically, the bill will do three things. It will ensure that
retirees whose promised health insurance is taken away receive at least
some compensation for their lost benefits. Second, my legislation would
allow employees to recover more of the back-pay or other compensation
that is owed to them at the time of the bankruptcy. And lastly, it
would provide bankruptcy courts the authority to recover company assets
in cases where company managers flagrantly paid excessive compensation
to favored employees just before declaring bankruptcy.
I first introduced this legislation in the 108th Congress. I am
reintroducing
[[Page S1204]]
it because this issue is as important in West Virginia today as it has
ever been. I am hopeful that as Congress considers any changes to
bankruptcy law we will debate how we can better protect workers whose
companies file for bankruptcy. I do not pretend to have all the
answers. But I do know that we must do a better job of easing the
burden that bankruptcy imposes on employees and retirees. And I believe
that we can do so in creative ways that do not make it more difficult
for companies to successfully reorganize and emerge from bankruptcy. I
look forward to the ideas and suggestions of my colleagues.
In the simplest economic terms, employees sell their labor to their
companies. They toil away in offices, plants, factories, mills, and
mines, because they are promised that at the end of the day they will
receive certain compensation. One of the most important types of
compensation that workers earn is the right to enjoy certain benefits
when they retire. Pensions, life insurance, or health care coverage are
earned by workers in addition to their weekly paychecks. Yet, sadly we
have seen many companies in the last few years abandon these promises
when they declare bankruptcy.
More and more we see companies taking the easy road to profitability
by abandoning commitments that they made to workers. For retirees who
have planned for their golden years based on the benefits they have
earned, losing health insurance can be a devastating blow. Retirees
must have the right to reasonable compensation if the company seeks to
break its promise to provide health insurance. Under current law, these
retirees receive what is called a general unsecured claim for the value
of the benefits they lost. As any creditor will tell you, a general
unsecured claim is essentially worthless in most bankruptcies. It means
you are at the end of the line, and there are not enough assets to go
around. This law allows companies to essentially rescind compensation
that retirees have earned with virtually no cost to the company. Of
course that is a great deal for the company, but it is spectacularly
unfair to the retirees.
Recognizing that so-called legacy costs are often an impossible
burden for a company that is trying to emerge from bankruptcy, my
legislation would still allow companies in some circumstances to alter
the health coverage offered to retirees. However, it would require that
the company pay a minimum level of compensation to retirees. Under this
bill, each retiree would be entitled to a payment equal to the cost of
purchasing comparable health insurance for a period of 18 months. Of
course, 18 months of health insurance coverage is a lot less than many
of these retirees are losing, but it can ease the transition as
retirees make alternative plans, and it will discourage companies from
thinking that terminating retiree health coverage is an easy solution.
The retirees would still be entitled to a general unsecured claim for
the value of the benefits lost in excess of this one time payment. This
change would ensure that retirees, while still not being made whole on
lost benefits, will at least receive some compensation for the broken
promises.
Many active workers, too, have a difficult time recovering what is
owed to them by their employer when the company files bankruptcy. Under
current law, employees are entitled to a priority claim of up to
$4,925. But that figure is usually not enough to cover the back-wages,
vacation time, severance pay, or benefit payments that the employees
are owed for work done prior to the bankruptcy. Congress needs to
update the amount of the priority claim to ensure that more workers are
able to receive what is rightfully theirs. The Bankruptcy Fairness Act
would establish a priority claim for the first $15,000 of compensation
owed to an employee.
In most cases, employees have been working their hardest to help the
company avoid the nightmare of bankruptcy, only to find that they will
not be compensated for their services as promised. As we saw so clearly
with the Enron case, employees are often left holding the bag when
their company declares bankruptcy. In that case, employees were owed an
average of $35,000 in back-wages, severance, and other promised
compensation. They deserved to recover more than a mere $4,925 of what
was owed them. Let me be clear, this bill does not establish any new
obligation for a company to pay severance or other compensation to
employees caught up in a company's bankruptcy. It merely ensures that
employees can recover more of what is already owed to them through the
bankruptcy process.
I understand that many creditors or investors are not able to recover
what is rightfully owed to them in bankruptcy, but employees deserve
protection that recognizes the unique nature of their dependence on
their employer. Any smart investor diversifies his or her portfolio so
that a bankruptcy at one company does not bankrupt the investor.
Likewise, suppliers and creditors that do business with a company
typically have many other clients. This is not the case with workers.
They cannot diversify away the risk of working for a bankrupt company,
and the financial hardship a bankruptcy brings is more devastating to
the average worker than the average creditor or supplier.
Now, I know that some of my colleagues listening to this may be
worrying that this legislation is insensitive to the needs of companies
that are trying to reorganize in order to emerge from bankruptcy and go
forward as successful businesses. I am fully aware that sometimes, too
often in the real world, the bankruptcy process can help companies stay
open and maintain jobs by restructuring obligations to creditors. Too
many companies in West Virginia have had to go through the painful
process of Chapter 11 reorganization. I completely understand the need
to keep the factories open. And I have always worked side by side with
companies to help them recover.
I will continue that important work, and I have included a provision
in this bill to help bankrupt companies that are struggling to survive
to recover assets that have been pilfered from the corporate coffers.
In too many cases, company executives reward themselves even as their
companies careen toward bankruptcy. The most egregious recent example
is at Enron in 2001. In the days and weeks leading up to the bankruptcy
filing, executives granted large bonuses to themselves and their
favored employees. Millions of dollars were paid to a select group of
employees just before the company declared bankruptcy. It is
unconscionable that executives would grant themselves undeserved
bonuses and then weeks later claim that the company did not have the
resources to pay its rank and file employees.
My legislation provides bankruptcy courts greater authority to
recover excessive compensation that was paid just prior to the
bankruptcy filing. If the court finds that compensation was out of the
ordinary course of business or was unjust enrichment, the court can
recover those assets for the bankrupt company, ensuring that more
creditors, employees, and retirees can receive what is rightfully owed
to them by the company.
The reforms I have outlined are modest. They will not take the sting
out of bankruptcy. By definition a bankruptcy is a failure, and it is
painful for the company's employees, retirees, and business partners.
But the Bankruptcy Fairness Act I am introducing today would make
progress toward ensuring that bankruptcies are more fair to the workers
who gave their time and energy and sweat to the company in exchange for
certain promised compensation. And by helping a company recover assets
that should not have been paid out as undeserved bonuses just before
bankruptcy the bill ensures that more of a company's assets are paid to
the employees, retirees, and creditors who are rightfully owed.
It is my hope that this legislation will receive serious
consideration from my colleagues, and that this can open an important
debate about how workers and retirees can be better protected from the
ugly side of prolonged economic downturns. I ask unanimous consent that
the text of the legislation be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 329
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Bankruptcy Fairness Act''.
[[Page S1205]]
SEC. 2. FAIR TREATMENT OF COMPENSATION IN BANKRUPTCY.
(a) Increased Priority Claim Amount for Employee Wages and
Benefits.--Section 507(a) of title 11, United States Code, is
amended--
(1) in paragraph (3)--
(A) by striking ``$4,925'' and inserting ``$15,000''; and
(B) by striking ``within 90 days''; and
(2) in paragraph (4)(B)(i), by striking ``$4,925'' and
inserting ``$15,000''.
(b) Recovery of Excessive Compensation.--Section 547 of
title 11, United States Code, is amended by adding at the end
the following:
``(h) The court, on motion of a party of interest, may
avoid any transfer of compensation made to a present or
former employee, officer, or member of the board of directors
of the debtor on or within 90 days before the date of the
filing of the petition that the court finds, after notice and
a hearing, to be--
``(1) out of the ordinary course of business; or
``(2) unjust enrichment.''.
SEC. 3. PAYMENT OF INSURANCE BENEFITS OF RETIREES.
(a) In General.--Section 1114(j) of title 11, United States
Code, is amended to read as follows:
``(j)(1) No claim for retiree benefits shall be limited by
section 502(b)(7).
``(2)(A) Each retiree whose benefits are modified pursuant
to subsection (e)(1) or (g) shall have a claim in an amount
equal to the value of the benefits lost as a result of such
modification. Such claim shall be reduced by the amount paid
by the debtor under subparagraph (B).
``(B)(i) In accordance with section 1129(a)(13)(B), the
debtor shall pay the retiree with a claim under subparagraph
(A) an amount equal to the cost of 18 months of premiums on
behalf of the retiree and the dependents of the retiree under
section 602(3) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1162(3)), which amount shall not exceed
the amount of the claim under subparagraph (A).
``(ii) If a retiree under clause (i) is not eligible for
continuation coverage (as defined in section 602 of the
Employee Retirement Income Security Act of 1974), the
Secretary of Labor shall determine the amount to be paid by
the debtor to the retiree based on the 18-month cost of a
comparable health insurance plan.
``(C) Any amount of the claim under subparagraph (A) that
is not paid under subparagraph (B) shall be a general
unsecured claim.''.
(b) Confirmation of Plan.--Section 1129(a)(13) of title 11,
United States Code, is amended to read as follows:
``(13) The plan provides--
``(A) for the continuation after its effective date of the
payment of all retiree benefits (as defined in section 1114),
at the level established pursuant to subsection (e)(1) or (g)
of section 1114, at any time before the confirmation of the
plan, for the duration of the period the debtor has obligated
itself to provide such benefits; and
``(B) that the holder of a claim under section
1114(j)(2)(A) shall receive from the debtor, on the effective
date of the plan, cash equal to the amount calculated under
section 1114(j)(2)(B).''.
(c) Rulemaking.--The Secretary of Labor shall promulgate
rules and regulations to carry out the amendments made by
this section.
______
By Mr. ENSIGN (for himself, Mr. Reid, Mr. Burns, Mrs. Feinstein,
Mr. Nelson of Florida, Mr. Chafee, Mr. Sununu, Mr. Durbin, and
Mr. Dayton):
S. 330. A bill to amend the Help America Vote Act of 2002 to require
a voter-verified permanent record or hardcopy under title III of such
Act, and for other purposes; to the Committee on Rules and
Administration.
Mr. ENSIGN. Mr. President, in the November 2004 elections, Nevadans
entered a new frontier for casting their votes. We became the first
state in the nation to require that voter-verified paper audit trail
printers be used with touch-screen voting machines.
Not only did our election go off without a hitch, but voters across
Nevada left the polls with the knowledge that their vote would be
counted and that their vote would be counted accurately.
I understand better than most the importance of the integrity of the
ballot box. I was at the mercy of a paperless-machine election in my
1998 race for the U.S. Senate. When the votes were tallied with a
difference of only a few hundred, I asked for a recount in Clark
County, the only county at the time using electronic voting machines.
The result of the recount was identical to the first count. That is
because there was nothing to recount. After rerunning a computer
program, the computer predictably produced the same exact tally.
I conceded that race and was elected to Nevada's other Senate seat in
2000. But that experience made me realize the importance of ensuring
Americans that their votes will count--it is absolutely fundamental to
our democracy.
That is why I led the fight for voter verification paper trails in
the Help America Vote Act (HAVA) that President Bush signed into law in
2002. A voter-verified paper trail would allow voters to review a
physical printout of their ballot and correct any errors before leaving
the voting booth. This printout would be preserved at the polling place
for use in any recounts. This is exactly what Nevadans experienced when
they voted in November.
Unfortunately, the language that is contained in HAVA has not
resolved this issue for most other states. Now, I am working to ensure
voting integrity across the country. By introducing the Voting
Integrity and Verification Act, I want to ensure that HAVA is clear--
voters must be assured that their votes will be accurate and will be
counted properly. A paper trail provides just such an assurance.
Technology has transformed the way we do many things--including
voting. But we cannot simply sit on the sidelines and assume that our
democracy will withstand such changes. We recently witnessed the birth
of democracy in Afghanistan and Iraq and watched as citizens risked
their lives to cast their votes. Our continued work to ensure that each
vote counts here in the United States underscores the idea that we must
always be vigilant in protecting democracy--whether it is brand new or
more than 200 years old. The Voting Integrity and Verification Act
protects democracy by protecting the sanctity of our vote.
______
By Mr. DOMENICI (for himself and Mr. Bingaman):
S. 332. A bill to prohibit the retirement of F-117 Nighthawk stealth
attack aircraft during fiscal year 2006; to the Committee on Armed
Services.
Mr. DOMENICI. Mr. President, I rise to introduce a bill prohibiting
retirement of F-117 stealth fighter aircraft during fiscal year 2006. I
am also pleased my colleague, Senator Bingaman, has joined me as a
cosponsor. The Department of Defense budget proposed for next year
reduces operations and maintenance funds for the stealth fighter. As a
result, ten aircraft would be retired. I believe this would be
detrimental to our national security and so I offer a very simple bill
to maintain the current F-117 force structure.
The mission of the stealth fighter is to strike highly important,
highly defended enemy targets. Pilots from Holloman Air Force Base, NM
have flown thousands of successful sorties while evading heavy air
defenses because of the F-117's stealth capability. As I think most
know, F-117s played a key role during operations in Serbia, in
Operation Iraqi Freedom and in other dangerous theaters around the
world. The F-117 has been this nation's preeminent first strike
platform. And I would submit, that retiring nearly 20 percent of our
proven stealth fighter fleet before new planes such as the F-22 and the
Joint Strike Fighter enter the force is not prudent.
Last year, a similar budget request was made to reduce the F-117
fleet. I recommended that the Department of Defense delay such a
decision until new stealth platforms enter the fleet. Both the Armed
Services committee and the Defense Appropriations subcommittee agreed
with my assessment and included language in their bills prohibiting the
retirement. For fiscal year 2006 my goal remains the same: to retain
the vital first-strike capability this Nation has come to rely upon for
the immediate future.
I recognize that this is a time when our military forces are
transforming to a different kind of force--one that is more agile. I
also recognize that this will require new kinds of platforms and
different force structures. But at a time when the world presents a
number of challenges that may require use of stealth capability, I am
committed to maintaining the current configuration of the F-117 fleet
and I urge my colleagues to support this bill.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 332
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
[[Page S1206]]
SECTION 1. PROHIBITION ON RETIREMENT OF F-117 NIGHTHAWK
STEALTH ATTACK AIRCRAFT.
No F-117 Nighthawk stealth attack aircraft in use by the
Air Force during fiscal year 2005 may be retired during
fiscal year 2006.
______
By Mr. DORGAN (for himself, Ms. Snowe, Mr. Grassley, Mr. Kennedy,
Mr. McCain, Ms. Stabenow, Mr. Chafee, Mr. Jeffords, Mr. Lott,
Mr. Dayton, Mrs. Clinton, Mr. Bingaman, Mrs. Boxer, Mr. Conrad,
Mr. Durbin, Mr. Feingold, Mrs. Feinstein, Mr. Inouye, Mr.
Johnson, Mr. Kohl, Mr. Leahy, Mr. Levin, Mr. Nelson of Florida,
Mr. Obama, Mr. Pryor, Mr. Salazar, Mr. Sarbanes, Mr. Schumer,
and Ms. Collins):
S. 334. A bill to amend the Federal Food, Drug, and Cosmetic Act with
respect to the importation of prescription drugs, and for other
purposes; to the Committee on Health, Education, Labor, and Pensions.
Mr. DORGAN. Mr. President, today, I am introducing my bipartisan
prescription drug importation legislation, the Pharmaceutical Market
Access and Drug Safety Act, along with Senators Snowe, Grassley,
Kennedy, McCain, Stabenow, Jeffords and many others. In all, the bill
has 28 cosponsors, and I expect we will add more cosponsors in the
coming weeks and months.
I am particularly pleased that Finance Committee Chairman Charles
Grassley has joined forces with us on this year's bill. Chairman
Grassley has made a significant contribution to the drug importation
debate and has provided invaluable assistance in ensuring that our bill
complies with our country's trade obligations. Chairman Grassley's
support also helps to demonstrate the growing momentum in the Senate
for a vote on our bipartisan drug importation legislation.
I am also glad that, in addition to being tri-partisan, this year's
bill is also bicameral. Congresswoman JoAnn Emerson and Congressman
Sherrod Brown are introducing the companion to my bill in the House of
Representatives today.
This is an issue whose time has come. By now, it is well-documented
that American consumers pay by far the highest prices in the world for
prescription medicines, and our citizens are desperate for relief.
Earlier this month, we learned that prices on 31 of the top-50
bestselling drugs went up during the last two-month period. For
instance, the price of the top-selling drug Lipitor has gone up 5
percent--double the inflation rate for all of 2004--in just the two
months since November, 2004. Lipitor costs the American consumer nearly
twice as much per pill as the Canadian consumer.
These recent price increases come at the expense of American
consumers--especially those seniors and uninsured Americans who do not
have health insurance coverage for prescription drugs. The
Pharmaceutical Market Access and Drug Safety Act is a step that the
Congress can take to put downward pressure on drug prices in our
country. By some estimates, U.S. consumers could save up to $38 billion
if they could purchase prescription medicines at the Canadian prices.
This year's bill is substantially similar to the bill that Senator
Snowe and I introduced last year but it has been refined in response to
technical assistance we have received from various stakeholders. We
have thoroughly and pro-actively addressed all of the safety issues
that some have raised with respect to drug importation. The fact is
that a system of drug importation, called parallel trade, has
flourished with no safety problems within the European Union for the
last two decades. I am convinced that if the Europeans can safely trade
pharmaceuticals within Europe, the United States can safely do so, and
our bill gives the Food and Drug Administration the authority and
resources it needs to oversee such a system.
We simply cannot continue on our current course of inaction, and I
want to put my colleagues on notice that I am determined to get a vote
on this legislation this year on the Senate floor. The agreement that
Senator Snowe and I reached earlier this month with Majority Leader
Frist and new Health, Education, Labor, and Pensions Committee Chairman
Enzi to hold a hearing specifically on the Dorgan-Snowe bill is a step
in the right direction.
I am convinced that if the full Senate is given the opportunity to
vote on our bill, it will pass with overwhelming bipartisan support. I
look forward to continuing to work with my colleagues to get this
legislation passed by Congress and sent to the President for his
signature.
______
By Mr. SARBANES (for himself, Mr. Warner, Mr. Allen, and Ms.
Mikulski):
S. 336. A bill to direct the Secretary of the Interior to carry out a
study of the feasibility of designating the Captain John Smith
Chesapeake National Historic Watertrail as a national historic trail;
to the Committee on Energy and Natural Resources.
Mr. SARBANES. Mr. President, today I am introducing legislation to
initiate a study of the feasibility of designating the route of Captain
John Smith's exploration of the Chesapeake Bay and its tributaries as a
National Historic Trail. Joining me in sponsoring this legislation are
my colleagues Senators Warner, Allen and Mikulski.
Our system of National Historic Trails, NHTs, commemorate major
routes of historic travel and mark major events which shaped American
history. To date, 13 National Historic Trails have been established in
the National Park Service including the Lewis and Clark, the Pony
Express, Selma to Montgomery, and Trail of Tears National Historic
Trails. To be designated as a National Historic Trail, a trail must
meet three basic criteria: it must be nationally significant, have a
documented route through maps or journals, and provide for recreational
opportunities. In my judgment, the proposed Captain John Smith
Chesapeake National Historic Watertrail meets all three criteria.
Captain John Smith was one of America's earliest explorers. His role
in the founding of Jamestown, VA--the first permanent English
settlement in North America--and in exploring the Chesapeake Bay region
during the years 1607 to 1609 marks a defining period in the history of
our Nation. His contemporaries and historians alike credit Smith's
strong leadership with ensuring the survival of the fledgling colony
and laying the foundation for the future establishment of our nation.
With a dozen men in a 30-foot open boat, Smith's expeditions in
search of food for the new colony and the fabled Northwest Passage took
him nearly 3,000 miles around the Chesapeake Bay and its tributaries
from the Virginia capes to the mouth of the Susquehanna. On his voyages
and as President of the Jamestown Colony, Captain Smith became the
first point of contact for scores of Native American leaders from
around the Bay region. His relationship with Pocahontas is now an
important part of American folklore. Smith's notes describing the
indigenous people he met and the Chesapeake Bay ecosystem are still
widely studied by historians, environmental scientists, and
anthropologists.
The remarkably accurate maps and charts that Smith made of his
voyages into the Chesapeake Bay and its tributaries served as the
definitive map of the region for nearly a century. His voyages, as
chronicled in his journals, ignited the imagination of the Old World,
and helped launch an era of adventure and discovery in the New World.
Hundreds, and then thousands of people aspired to settle in what Smith
described as one of `` the most pleasant places known, for large and
pleasant navigable rivers, heaven and earth never agreed better to
frame a place for man's habitation.'' Even today, his vivid
descriptions of the Bay's abundance still serve as a benchmark for the
health and productivity of the Bay.
With the 400th anniversary of the founding of Jamestown quickly
approaching, the designation of this route as a national historic trail
would be a tremendous way to celebrate an important part of our
nation's story and serve as a reminder of John Smith's role in
establishing the colony and opening the way for later settlements in
the New World. It would also give recognition to the Native American
settlements, culture and natural history of the 17th century
Chesapeake. Similar in historic importance to the Lewis and Clark
National Trail,
[[Page S1207]]
this new historic watertrail will inspire generations of Americans and
visitors to follow Smith's journeys, to learn about the roots of our
nation and to better understand the contributions of the Native
Americans who lived within the Bay region.
Equally important, the Captain John Smith Chesapeake National
Watertrail can serve as a national outdoor resource by providing rich
opportunities for education, recreation, and heritage tourism not only
for more than 16 million Americans living in the Bay's watershed, but
for visitors to this area. The water trail would be the first National
Watertrail established in the United States and would allow voyagers in
small boats, cruising boats, kayaks and canoes to travel from the
distant headwaters to the open Bay--an accomplishment that would
inspire today's explorers and would generate national and international
attention and participation. The Trail would complement the Chesapeake
Bay Gateways and Watertrails Initiative and help highlight the Bay's
remarkable maritime history, its unique watermen and their culture, the
diversity of its peoples, its historical settlements and our current
efforts to restore and sustain the world's most productive estuary.
This legislation enjoys strong bipartisan support in the Congress and
in the States through which the trail passes. The legislation has been
endorsed by the Governors of Virginia, Pennsylvania, Delaware and
Maryland. The measure is also strongly supported by The Conservation
Fund, Izaak Walton League, the Chesapeake Bay Foundation and the
Chesapeake Bay Commission. I ask unanimous consent that letters from
the latter two organizations expressing support for the legislation be
printed in the Record. I want to commend Pat Noonan, Chairman Emeritus
of The Conservation Fund, for his vision in conceiving this trail and
urge that the legislation be quickly enacted.
As John Smith wrote four centuries ago and as many Americans today
agree, ``no place is more convenient for pleasure, profit and man's
sustenance'' than the Chesapeake Bay.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Chesapeake Bay Foundation,
Annapolis, MD, February 3, 2005.
Hon. Paul S. Sarbanes,
Hart Senate Office Building,
U.S. Senate, Washington, DC.
Hon. John W. Warner
Russell Senate Office Building,
U.S. Senate, Washington, DC.
Dear Senator Sarbanes and Senator Warner: John Smith's
1607-9 exploration of the Chesapeake was a monumental and
historic achievement, shaping the boundaries, character and
future of America. His courageous crew traveled almost 3,000
miles along the Chesapeake exploring the rivers and making
contact with American Indian tribes from what today is known
as Maryland, Virginia, Washington D.C., Pennsylvania, and
Delaware.
In honor of the 400th anniversary of the founding of
Jamestown in 1607 and the voyages of exploration in the
Chesapeake Bay, the Chesapeake Bay Foundation heartily
supports the establishment of the Capt. John Smith Chesapeake
National Historic Watertrai1. We also see the Trail as a
vital complement to a strong Chesapeake Bay Gateways Network
and believe that valuable synergy can result from the
combination.
Accordingly, we wish to express our support for the
bipartisan legislation you are introducing to authorize the
National Park Service to study the national significance of
Smith's voyages of exploration and the feasibility of
estabIihing a watertrail to commemorate the voyage.
We believe that the Capt. John Smith Chesapeake National
Historic Watertrail would provide invaluable assistance in
meeting the goals of the Chesapeake 2000 Agreement, our
blueprint for restoring and sustaining the Bay's ecosystem,
which has been badly damaged over the past 400 years by the
heavy footprints of our large and still-growing presence in
its watershed.
By focusing national attention upon the inherent beauty and
abundance of the Bay and its rich cultural and historic
values, America's first national watertrail would educate and
inspire visitors to explore, restore, and protect this unique
resource. The watertrail would provide exceptional
interpretation and stewardship opportunities, promote habitat
restoration and protection, and provide unparalleled
recreational and eco-heritage experiences--all in a cost-
efficient and low-impact manner.
Involving Communities, non-governmental organizations
public agencies, businesses, and private landowners in
establishing the Capt. John Smith Chesapeake National
Historic Watertrail would demonstrate a new model for public-
private partnerships that will form the basis of how we care
for our national treasures in the 21st century.
Nearly 400 years ago Smith sailed the Chesapeake and saw
the promise of a nation built on exploration, discovery and
partnership. America's first national watertrail will
celebrate the waters that once captured America's imagination
and instill awe and the, spirit of discovery in future
explorers, while it motivates them to take up active roles in
restoring its health.
Your support of the study is critical to recognize this
magnificent national resource.
Respectfully,
William C. Baker,
President.
____
Chesapeake Bay Commission,
Annapolis, MD, February 1, 2005.
Hon. Paul S. Sarbanes,
Hart Senate Office Building,
U.S. Senate, Washington, DC.
Hon. John W. Warner,
Russell Senate Office Building,
U.S. Senate, Washington, DC.
Dear Senator Sarbanes and Senator Warner: John Smith's
1607-9 exploration of the Chesapeake was a monumental
historic achievement, shaping the boundaries, character and
future of America. His courageous crew traveled almost three
thousand miles along the Chesapeake exploring the rivers and
making contact with American Indian tribes from what today is
known as Maryland, Virginia, Washington D.C., Pennsylvania
and Delaware.
In honor of the 400th anniversary of the founding of
Jamestown in 1607 and the voyages of exploration in the
Chesapeake Bay, we support the establishment of the Capt.
John Smith Chesapeake National Water Trail. The Trail would
be a vital complement to the existing Chesapeake Bay Gateways
Network.
Accordingly, we wish to express our support for the
bipartisan legislation you are introducing to authorize the
National Park Service to study the national significance of
Smith's voyages of exploration and the feasibility of
establishing a water trail to commemorate the voyages.
We believe that the Capt. John Smith Chesapeake National
Water Trail would provide invaluable assistance in meeting
the goals of the Chesapeake 2000 Agreement, our blueprint for
restoring and sustaining the bay's ecosystem.
By focusing national attention upon the inherent beauty and
abundance of the Bay and its rich cultural and historic
values, America's first national water trail would educate
and inspire visitors to explore and protect this unique
resource. The trail would provide exceptional interpretation
and stewardship opportunities, promote habitat restoration
and protection and provide unparalleled recreational and eco-
heritage experiences--all in a cost-efficient and low-impact
manner.
Involving communities, non-governmental organization,
public agencies, business and private landowners in
establishing the Water Trail would demonstrate a new model
for public-private partnerships that will form the basis of
how we care for our national treasures in the 21st century.
Nearly 400 years ago Smith sailed the Chesapeake and saw
the promise of a nation built on exploration, discovery and
partnership. America's first national water trail will
celebrate the waters that once captured America's imagination
and instill awe and the spirit of discovery in future
explorers.
Your support of the study is critical to recognize this
magnificent national resource.
Respectfully,
Senator Mike Waugh,
Chairman.
Mr. WARNER. Mr. President, come 2007, Virginia, along with the rest
of our great Nation, will celebrate the 400th anniversary of the
historic founding of Jamestown, the first permanent English settlement
in the New World. At this site, back in 1607, an adventurous band of
Englishmen, led by Captain John Smith, pitched down their stakes on the
shores of the Chesapeake Bay, tired from a long journey across the blue
ocean, but full of hope for the possibilities that lay ahead. And
although they primarily came in search of economic gain, they brought
with them many of the principles that were integral to the formation of
our American Democracy. Free enterprise, the entrepreneurial spirit,
and respect for the principles of representative government and the
rights of man would guide these settlers through the trials and
tribulations of those tough, early years.
As we Virginians know, nobody was more influential in this founding
endeavor, than their leader: Captain John Smith. Captain Smith was not
just the man famously saved from death by Pocahontas, and he was more
than the mere commander of a small group of pioneers. John Smith, as
Virginians learn at a young age, was the first ambassador to the native
peoples of the Chesapeake, exchanging cultural customs, trading goods
necessary for the fledgling colonists survival. John Smith was also the
first English explorer of the many creeks and rivers
[[Page S1208]]
that populate the Maryland and Virginia of today. From 1607 to 1609,
Captain Smith plied the briny Bay waters, recording history and
surveying the land, even this patch of Earth where our Nation's Capitol
stands today. In honor of Captain Smith's historic 3,000 mile journey
through the choppy Chesapeake's main stem and tributaries, I rise
today, joined by Senator Sarbanes and my colleagues from the Bay
States, to propose a bill authorizing the study of the feasibility of
designating the Captain John Smith Chesapeake National Historic
Watertrail.
What would this trail accomplish? What would be its purpose? Outside
of the obvious tourism it would bring to the region, and besides the
fact that its creation would complement the existing Chesapeake
Gateways Network, the Watertrail would educate Americans on the perils
of our first English settlers, on their interaction with the numerous
Native tribes, on the voyages they undertook to better understand the
New World they had come to inhabit. First hand, students and seniors,
parents and children, would be able to retrace the paddle strokes and
footsteps of Captain John Smith, to see what he saw, to learn what he
learned, to know what he meant when he wrote in his diary that
``oysters lay thick as stones'' and fish could be caught ``with frying
pan(s).''
Ultimately, this trail would allow for a deeper appreciation for the
Chesapeake, for a better understanding of the settlers hardships, and
for the distinct cultures, English and Indian, that came to pass, in
that historic era, at this historic place. Today I rise to celebrate
Captain Smith's foresight, to celebrate the founding steps of America,
and to celebrate the bounty of the Bay. I urge my colleagues to join me
in supporting this feasibility study for the Captain John Smith
Chesapeake National Historic Watertrail.
______
By Mr. SMITH (for himself, Mr. Bingaman, Ms. Snowe, Mr. Jeffords,
Mr. Santorum, Mr. Kerry, Mr. DeWine, Mr. Durbin, Mr. Chafee,
Mrs. Lincoln, Ms. Collins, Mr. Nelson of Nebraska, Mr.
Voinovich, Mr. Corzine, and Mr. Coleman):
S. 338. A bill to provide for the establishment of a Bipartisan
Commission on Medicaid; to the Committee on Finance.
Mr. SMITH. Mr. President, first, let me thank the twenty-or-so
organizations that have offered their support for our bill which
creates a Medicaid Commission. I ask unanimous consent that the full
list of groups and their letters of support be printed in the Record.
The importance of this bill, I believe, is demonstrated by the
outpouring of support expressed by such a diverse group of people
representing state and local elected officials, providers and
advocates. It is truly impressive.
With the debate growing over the President's budget proposal for the
Medicaid program, Senator Bingaman and I are joining together with many
of our colleagues to introduce this bill that calls for the creation of
a Medicaid Commission. We are joined by Senators Snowe, Lincoln,
Santorum, Ben Nelson, DeWine, Jeffords, Collins, Durbin, Chafee and
Kerry in introducing the bill today.
For too long Medicaid has gone unnoticed by policy makers. Over the
past few decades Congress has spent a great deal of time and effort
modernizing the Medicare program, developing ideas to fund Social
Security, reforming our intelligence gathering apparatus, and enacting
legislation that stimulates the economy. Yet, through it all Medicaid
has gone unnoticed, even though it recently became the nation's largest
health care program.
As the former President of the Oregon Senate, I have long championed
Medicaid and worked to protect the vulnerable populations who are
helped by it. As a new member of the Finance Committee in 2003, I
helped lead the effort to provide $20 billion in short-term fiscal
assistance. However, since that time it has become clear that Medicaid
requires more than band-aide fixes.
Medicaid requires a thorough review that should be performed by all
key stakeholders working together to evaluate the program. We need to
consider its pluses and minuses, and then chart a new path for the
future. Our proposed Medicaid Commission will do just that.
As I have discussed with Governors, Secretary Leavitt and
Administrator McClellan, we have a unique opportunity in the history of
the Medicaid program. For once, everyone seems to be focused on
protecting and improving the program. The challenge lies in bringing
everyone together.
It certainly won't be easy, but accomplishing great things never is.
It will require both parties to work together. It will require Congress
to reach out to the Administration, Governors, State Legislators,
providers and advocates to determine how best to improve such a vital
program.
And it will require advocates and providers to be willing to listen
to new ideas that may help improve the program by creating
efficiencies, improving quality and expanding access to care. This
can't be accomplished working against each other or only with select
partners--it can only be accomplished when everyone works together.
I have never argued that this Commission is necessary because
Medicaid is broken. I truly believe in this program because I have seen
the difference it makes in Americans' lives. It helps support poor
children so they can go to school healthy and ready to learn.
It helps a poor expectant-mother receive the prenatal care necessary
for her new child to be born healthy and able to live a fulfilling
life, it helps a family manage the care of a disabled child, and it
helps an elderly person spend their last few years living with dignity.
However, this program is not perfect; improvements can and should be
made.
I don't have to look any further than my home State of Oregon to see
that change can be beneficial. In Oregon, most people who live with a
disability or who are elderly are served in their home or community. It
seems appropriate that this would happen, but Oregon actually had to
apply for a waiver to care for people in this way. That's because under
Medicaid States receive incentives to care for people in nursing homes,
it's called an institutional bias.
On the other hand, extreme reforms should be instituted simply to
save money. Medicaid is expensive, but so is private health care
coverage in this country. And in comparison, Medicaid is a pretty good
deal.
On a per-capita basis, Medicaid has only grown at a little more than
four percent while private sector health care costs have grown at over
12 percent. The problem with Medicaid is that enrollment is growing and
a lot more money is being spent on long-term care compared to years
past.
Much work is ahead of us. And one of the best ways to keep Medicaid
on the right path and ensure its long-term sustainability is to enact
this bill right now. If this Commission were made law today, we could
have its recommendations in time to inform Congress' deliberations next
year. We have a short window of opportunity before us. I urge my
colleagues, the President and all supporters to embrace this bill today
and call for its passage so the Medicaid Commission can get to work.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Organizations Supporting the Bipartisan Commission on Medicaid Act of
2005
National Alliance for the Mentally Ill (NAMI); National
Association of Public Hospitals & Health Systems (NAPH);
American Hospitals Association (AHA); National Association of
Community Health Centers (NACHC); National Association of
Children's Hospitals (NACH); AIDS Institute; National Rural
Health Association; Catholic Health Association of the United
States; National Conference on Aging (NCOA); Conference of
State Legislatures (NCSL); National Hispanic Medical
Association (NHMA); The American Academy of HIV Medicine;
American Association of Family Physicians (AAFP); Association
for Community Affiliated Plans (ACAP); American Health Care
Association (AHCA); National Association of Counties (NACo);
American College of Obstetricians & Gynecologists (ACOG);
American Dental Association (ADA); American Psychiatric
Association; Alliance for Quality Nursing Home Care; American
Geriatrics Society.
____
American Health Care Association,
Washington, DC, February 7, 2005.
Hon. Gordon Smith,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Hon. Jeff Bingaman,
U.S. Senate, Hart Senate Office Building, Washington, DC.
Dear Senators Smith and Bingaman: I am writing on behalf of
the American Health
[[Page S1209]]
Care Association and the National Center for Assisted Living,
the nation's leading long term care organizations. AHCA/NCAL
represent more than 10,000 non-profit and proprietary
facilities dedicated to continuous improvement in the
delivery of professional and compassionate care for our
nation's frail, elderly and disabled citizens who live in
nursing facilities, assisted living residences, subacute
centers and homes for persons with mental retardation and
developmental disabilities. AHCA/NCAL and their membership
are committed to performance excellence and Quality First, a
covenant for healthy, affordable and ethical long term care.
We review with great interest your draft legislation that
would establish a Bipartisan Commission on Medicaid and the
Medically Underserved. We welcome focus on the Medicaid
program from a population and a payment perspective. Long
term care is unique in that the government is the purchaser
of almost all nursing home services. The government demands
that quality be first rate--as it should--yet the payment
structure that would support greater quality is regulated in
silos, separate from each other. At a time when we as a
nation ought to be strengthening our long term care
infrastructure to prepare for the wave of baby-boom retirees
who will enter the system, we are, instead, allowing the
infrastructure to deteriorate.
Heretofore, Congress has focused on Medicare primarily for
the long term care sector, yet Medicare is a small albeit
significant portion of our patient population. lt is becoming
a better known fact that the Medicaid program funds the
majority of the care for people in nursing homes.
Approximately 67% of the average nursing home patient
population relies on Medicaid to pay their bill. And,
approximately 50% of the average nursing home's revenues come
from Medicaid.
This is why we find it illogical that the Medicare Payment
Advisory Commission (MEDPAC) continues to focus solely on the
sector's Medicare-only issues--without also looking at
Medicaid. When it comes to making important public policy
recommendations that truly impact people's lives, it is
inconceivable that data used to reach conclusions about the
sufficiency of Medicare funding fails to look collectively at
the real, and growing, interdependence between Medicare and
Medicaid.
We must take steps to begin to reform the long term care
system in terms of its reliance on the Medicaid program. Yet,
reform does not happen in a vacuum and we must have a debate
of ideas. We know a key stakeholder--the National Governors
Association--has placed this issue high on their list of
priorities. We are also beginning to see this issue raised
within the Social Security debate.
We support your legislation but do so with some
recommendations. First, we recommend that your legislation
consider the entire long term sector in terms of our payment
structure. Second, time is running out for reform and so we
believe the Commission should be vested with adequate power
and authority that its recommendations make a significant
impact on the policymaking process. We are not sure if the
Commission in its current form has enough force to really be
the catalyst for new ideas for reform.
We wholeheartedly believe that a far more holistic
evaluation is called for at this critical point in time, so
that beneficiaries will not fall through the cracks due to an
incomplete data picture and a short-sighted policy. Again,
thank you for the opportunity to review your legislation and
I look forward to working with you on Medicaid issues this
year.
Sincerely,
Hal Daub,
CEO and President.
____
The AIDS Institute,
Washington, DC, January 24, 2005.
Re Bipartisan Commission on Medicaid and the Medically
Underserved Act of 2005.
Senator Gordon Smith,
U.S. Senate,
Washington, DC.
Senator Jeff Bingaman,
U.S. Senate,
Washington DC.
Dear Senators Smith and Bingaman: As the single largest
source of federal financing of health care and treatment for
low income people with HIV/AIDS, the future viability of our
Nation's Medicaid program will have a direct bearing on the
health of hundreds of thousands of Americans living with HIV/
AIDS. Since Medicaid provides access to healthcare for 55
percent of all people living with AIDS, 44 percent of people
with HIV, and 90 percent of all children living with AIDS, it
plays a critical role in providing access to life-saving
medications that prevent illness and disability, and allow
people to live longer, more productive lives.
Because many people with HIV/AIDS are low income, or become
low income-and disabled, Medicaid is an important source of
coverage. In FY 2002, Medicaid spending on AIDS care totaled
$7.7 billion, including $4.2 billion in federal dollars and
$3.5 billion in state funds.
Any radical change to the benefits provided by Medicaid or
its financing structure can have devastating impacts that can
seriously jeopardize access to HIV/AIDS care in the United
States. What is needed is a carefully crafted, long term
solution to the current challenges facing the Medicaid
program so that low income and disabled Americans, including
those living with HIV/AIDS, are provided the necessary
healthcare they require.
The AIDS Institute applauds you on the introduction of the
``Bipartisan Commission on Medicaid and the Medically
Underserved Act of 2005'', and looks forward to its passage
in the very near future. The Bipartisan Commission envisioned
by the bill would create the necessary careful review of the
Medicaid program in a truly bipartisan manner with the
expertise of representatives of the affected communities and
government entities. The AIDS Institute strongly believes
that such a review, as designed by your legislation, will
result in a process to conduct a thoughtful review of the
Medicaid program outside of the often partisan political
process.
The AIDS Institute congratulates you on your leadership on
this program, which is critically important to so many people
living with HIV/AIDS, and the introduction of the
``Bipartisan Commission on Medicaid and the Medically
Underserved Act of 2005''. We look forward to its enactment,
participating in the Commission activities, and the eventual
recommendations of its final report.
Sincerely,
Dr. A. Gene Copello,
Executive Director.
____
National Association of
Children's Hospitals,
Alexandria, VA, February 8, 2005.
Hon. Gordon Smith,
U.S. Senate,
Washington, DC.
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senator Smith and Senator Bingaman: On behalf of the
National Association of Children's Hospitals (N.A.C.H.) and
our more than 120 members nationwide, I thank you for your
leadership in introducing the ``Bipartisan Commission on
Medicaid Act of 2005.'' Medicaid's critical role in providing
health coverage to low-income children, as a major payer for
children's hospital services and the primary safety net in
the nation's pediatric health care infrastructure cannot be
overstated. We welcome a thoughtful review to strengthen and
secure this vital program for years to come.
Medicaid is now the largest single source of health care
coverage for children in the nation. Half of its 53 million
enrollees are children and one in four children in the
country relies on Medicaid for health coverage. But children
account for only 22 percent of the costs, with the lion's
share of the costs attributable to people with significant
health and long term care needs such as the elderly and
people with disabilities.
Medicaid and children's hospitals are partners in caring
for children. Our member hospitals are major providers of
both inpatient and outpatient care to children on Medicaid.
In fact, children on Medicaid represented 47 percent of all
discharges and 41 percent of all outpatient visits at
children's hospitals in FY 2003.
And children's hospitals rely on Medicaid to serve all
children, not just low-income children. When provider
reimbursements are cut, or benefits and eligibility changes
are made, it affects children's hospitals' ability to provide
a wide range of services that all children rely upon.
As the single largest payer of children's health care,
Medicaid's performance affects the health care of all
children. It's coverage of low income children has enabled
advancements in pediatric medicine that would not have been
otherwise possible. We need to sustain Medicaid's successes
and move forward to ensure that eligible children are
enrolled, with access to appropriate, effective and safe
care.
Your legislation recognizes, as do our member hospitals,
that the future of Medicaid is not simply about cost. A hasty
move toward program reforms without a thorough review of the
program with input from those most closely associated with
the program would be irresponsible. The National Association
of Children's Hospitals applauds your efforts to direct
attention to how to improve service delivery and quality care
in Medicaid.
We again congratulate you on your leadership in introducing
this important legislation and we look forward to working
toward its enactment.
Sincerely,
Lawrence A. McAndrews.
____
Association for
Community Affiliated Plans,
Washington, DC, February 8, 2005.
Hon. Gordon Smith,
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senators Smith and Bingaman: I write today on behalf
of the members of the Association for Community Affiliated
Plans (ACAP), an organization of Medicaid-focused community
affiliated health plans committed to improving the health of
vulnerable
[[Page S1210]]
populations and the providers who serve them, to express our
support for your legislation, ``The Bipartisan Commission on
Medicaid Act of 2005.'' ACAP's Medicaid-focused managed care
plans serve over 1.7 million Medicaid beneficiaries in states
across the country.
The demand for efficiency and quality in our nation's
health care system combined with the fiscal pressures on the
federal, state and local governments has spurred
consideration of a broad spectrum of proposals to reform the
Medicaid program. Like you, ACAP believes the forty year-old
program is in need of updating. However meaningful and
sustainable changes will only occur if federal and state
policymakers along with providers, health plans, consumers
and others undertake a comprehensive and forthright
examination of the Medicaid program.
The purpose of such a review should be to improve the
efficiency of the Medicaid program based on historical
experiences and recent advances in health care while
preserving the fundamental purpose of the program--to serve
as the nation's health care safety net for the millions of
low income children, families, elderly, and disabled.
ACAP believes that your legislation establishing a Medicaid
commission would move our nation's policymakers and health
care leaders in the right direction. The commission's work
would be instrumental in understanding the underlying
inefficiencies as well as the initiatives and programs that
have proven successful. In turn, the commission would direct
health care leaders to respond accordingly with improvements
that can and should be made to the Medicaid program.
Should your legislation be enacted into law, we encourage
you to include a representative of the managed care plans on
the Commission. Medicaid managed care has been shown to
provide greater quality of care and access to providers at a
lower price than the traditional fee-for-service programs. As
such, it can serve as a model for reform of the Medicaid
program.
Tens of millions of Americans rely on Medicaid to receive
health care services. ACAP believes your commission would
result in reform that will be thoughtfully considered in
light of the significant consequences for Medicaid enrollees
as well as the providers that deliver their care.
Please do not hesitate to contact me if there is any way we
can contribute further to this effort.
Sincerely,
Margaret A. Murray,
Executive Director.
____
National Association of
Community Health Centers, Inc.,
Washington, DC, February 7, 2005.
Hon. Gordon Smith,
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senators Smith and Bingaman: On behalf of the National
Association of Community Health Centers, the advocate voice
for our nation's Community, Migrant, Public Housing and
Homeless Health Centers, and the more than 15 million
underserved people cared for by them, I am writing to offer
our strong endorsement of your legislation to create a
bipartisan commission on Medicaid.
Pressure undoubtedly is growing at the federal and state
levels to consider reforms to Medicaid, some of which could
dramatically alter its fundamental structure. The commission
envisioned by your legislation would provide the necessary
leadership and serve as a credible forum for developing
viable solutions to strengthen Medicaid's long-term financial
health and assure that it continues its crucial role as a
safety net for our nation's most vulnerable populations.
Community health centers serve as a major provider of
primary and preventive care to nearly 6 million of the
estimated 51 million people served by Medicaid. Moreover,
studies continue to demonstrate that health centers save
Medicaid 30% in total health care costs compared to other
providers. Unfortunately, some reform proposals now being
discussed merely seek to cap spending or restrict Medicaid's
long-term cost, raising significant concerns about the
continued ability of health centers and other safety net
providers to provide quality health care to Medicaid
patients.
Health centers believe efforts to improve Medicaid should
seek to preserve the federal guarantee of its coverage, and
not reduce or eliminate its services or consumer protections.
In addition, we also believe it is important that these
efforts recognize the critical role that health centers and
other safety net providers play as essential sources of care
for millions of Medicaid recipients and uninsured Americans.
Medicaid is a health insurance program of critical
importance in this country, and finding solutions to its
current challenges can be daunting. However, lawmakers must
strive to forge a bipartisan consensus that aims to protect
the public's health, while ensuring that its benefits and
services remain a reality for low-income individuals. We
strongly believe that your commission is the appropriate
forum to achieve this goal. Therefore, we are proud to
endorse and offer our full support for your legislation, and
we stand ready to assist you in helping to achieve its
enactment.
Please do not hesitate to contact me or Licy Do Canto,
Assistant Director of Health Care Financing Policy, if there
is any way we can contribute further to this effort.
Sincerely,
Daniel R. Hawkins, Jr.,
Vice President for Federal, State,
and Public Affairs.
____
The Catholic Health Association,
Washington, DC, February 8, 2005.
Hon. Gordon Smith,
Chairman, Special Committee on Aging, U.S. Senate,
Washington, DC.
Dear Chairman Smith: On behalf of the Catholic Health
Association of the United States (CHA), the national
leadership organization of more than 2,000 Catholic health
care sponsors, systems, facilities, and related
organizations, I am writing to express our strong support for
the ``Bipartisan Commission on Medicaid Act of 2005.''
As you know, Medicaid provides crucial services to over 50
million low-income children and pregnant women, the elderly,
and persons with disabilities. Many of these individuals
receive care in Catholic hospitals and Catholic long-term
care facilities. Without a strong and vibrant Medicaid
program, the number of uninsured individuals in the United
States would be dramatically worse. In light of the critical
role that Medicaid plays in the health of our nation, we
believe that it is important to undertake a comprehensive
review of the program before making any dramatic changes. To
do otherwise could further unravel an already frail health
care safety net.
For that reason, we are pleased to offer our support for
your legislation. By assembling a 23-member commission to
undertake a thorough review of the Medicaid program, your
legislation can help ensure that Medicaid continues to play a
key role in the health care safety net for years to come. We
are particularly pleased that the commission would be
comprised in part from important stakeholders in the Medicaid
program, including representation from the health care
provider community and advocates for Medicaid beneficiaries.
We are grateful for your continued efforts in support of
the Medicaid program. If we can be of further assistance,
please do not hesitate to contact me.
Sincerely,
Michael Rodgers,
Vice President, Advocacy and Public Policy.
____
National Association of Public
Hospitals and Health Systems,
Washington, DC February 8, 2005.
Hon. Gordon Smith,
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senators Smith and Bingaman: I am writing on behalf of
the National Association of Public Hospitals and Health
Systems (NAPH) to express our support for the Bipartisan
Commission on Medicaid Act of 2005. The legislation
recognizes Medicaid's critical role in supporting our
nation's safety net and emphasizes the need to carefully
consider any changes to the program in order to protect
Medicaid patients and the providers who serve them.
NAPH represents more than 100 of America's metropolitan
area safety net hospitals and health systems. NAPH hospital
systems serve unique roles in their communities often as the
largest provider of inpatient and ambulatory care to Medicaid
patients and patients without insurance and as providers of
essential services needed by everyone in their communities,
such as trauma and burn care services. Medicaid is the
primary mechanism for ensuring the provision of access to
health care for low-income patients. It supports safety net
providers, including NAPH members, who dedicate themselves to
providing high quality care to anyone, regardless of their
ability to pay. Medicaid payments provide 49 percent of the
net patient care revenues of NAPH members and Medicaid
disproportionate share hospital (DSH) payments alone support
nearly 25 percent of the unreimbursed care provided by NAPH
members. Therefore, Medicaid payment issues are of critical
importance to NAPH members.
The proposed Commission on Medicaid could play an important
role in protecting the future of Medicaid and in ensuring
that any changes to Medicaid account for the various roles
that the program currently serves. Promoting a thorough
discussion among representatives of various Medicaid
stakeholders to develop comprehensive recommendations is a
responsible approach to examining the program. Measured
consideration is especially important today as the number of
uninsured continues to rise and as state Medicaid budgets
experience increasing pressure. NAPH does not believe that
reductions in the rate of growth or caps on Medicaid spending
are necessary to achieve stability in the program.
Thank you for your ongoing support of Medicaid and safety
net providers. We look forward to continuing to work with you
on finding sustainable ways to preserve and protect Medicaid.
Sincerely,
Larry S. Gage,
President.
____
NAMI,
Arlington, VA, February 7, 2005.
Hon. Gordon Smith,
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senators Smith and Bingaman: On behalf of the 210,000
members and 1,200 affiliates of the National Alliance for the
Mentally III (NAMI), I am writing to express our
[[Page S1211]]
strong support for your legislation to form a bipartisan
commission to study the future of the Medicaid program. As
the nation's largest organization representing people with
severe mental illnesses and their families, NAMI is pleased
to support this important measure.
As you know, Medicaid is now the dominant source of funding
for treatment and support services for both children and
adults living with severe mental illness--currently, Medicaid
comprises 50% of overall public mental health spending, a
figure that is expected to rise to 60% by 2010. More
importantly, Medicaid is a safety net program that is
intended to protect the most disabled and vulnerable children
and adults struggling with severe chronic illness and severe
disabilities such as mental illness.
At the same time, Medicaid is facing enormous stress at the
state level and in 2005 we expect more and more states will
be seeking to curtail future spending. NAMI remains extremely
concerned that these cuts are being made at the state level
without any discussion about the long-term impact of the
program. It is critically important that this debate gets
beyond cost and considers reforms that can make the program
more effective in meeting the needs of individuals who depend
on Medicaid as a health care and community support safety
net.
Your legislation to establish a bipartisan commission on
Medicaid is critically important step forward to helping the
federal government and the states consider and promote
policies that improve the program and maintain its role in
protecting the needs of low income people with severe
disabilities. NAMI thanks you for your leadership on this
important issue. We look forward to working with you to move
this important legislation forward in 2005.
Sincerely,
Michael J. Fitzpatrick, M.S.W.,
Executive Director.
____
The National Council on the Aging,
Washington, DC, February 8, 2005.
Hon. Gordon Smith,
Russell Office Building,
Washington, DC.
Dear Senator Smith: On behalf of the National Council on
the Aging (NCOA)--the first organization formed to represent
America's seniors and those who serve them--is grateful for
your leadership on Medicaid issues and supports your proposal
to establish a bipartisan Commission on Medicaid.
Medicaid is the critical health care safety net for over 50
million of our nation's most vulnerable, poorest citizens.
Seniors who depend on Medicaid are our oldest and most frail.
While Medicaid is an extremely important program, it is
also quite expensive. Some have gone so far as to question
our ability to continue to afford the essential services
provided under the program. We fear that some proposals to
reform Medicaid may be driven solely by budget concerns and
misplaced priorities, rather than what is best for our nation
and its citizens.
Medicaid is also a very complex program. We fear that only
a small handful of members in the Congress and their staff
understand how the program works, who it serves and what it
covers.
Largely due to our record federal budget deficit and
increasing budget challenges in the states, Medicaid this
year is being considered for significant spending reductions
and possible structural reforms. In our view, we should be
very cautious before moving forward with far-reaching changes
that could harm millions of Americans in need.
With the aging of the baby boom generation, Medicaid will
face increasingly serious challenges in the future, not
unlike those under the Medicare and Social Security programs.
For those programs, Congress established bipartisan
Commissions to consider reforms to strengthen and improve
them as we begin to address demographic challenges. A similar
non-partisan analysis is desirable for Medicaid. Bringing
together experts and key stakeholders is a necessary
prerequisite to reforming the program. For example, we need
to be more creative about how to finance long-term care,
while promoting access to a broader range of home and
community services. We therefore support your proposal to
establish a bipartisan Commission on Medicaid and look
forward to working with you to enact legislation into law.
Sincerely
James Firman,
President and CEO.
____
American Hospital Association,
Washington, DC, February 4, 2005.
Hon. Gordon Smith,
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senators Smith and Bingaman: On behalf of our 4,700
hospitals, health care systems, and other health care
provider members, and our 31,000 individual members, the
American Hospital Association (AHA) strongly supports your
legislation to create a bipartisan commission on Medicaid and
the uninsured. Pressure is mounting to reform Medicaid, our
nation's largest health care safety net program. Your
commission would provide the right setting to carefully
deliberate needed policy changes and ensure the long-term
financial stability of the program.
Medicaid serves over 52 million people, surpassing the
number served by the Medicare program. Half of Medicaid's
beneficiaries are children and one-quarter are elderly and
disabled. It serves our nation's most vulnerable populations,
and provides half of all the dollars spent on long term care
in this country. Reform will have enormous consequences for
those Medicaid covers and the providers that deliver their
care. The blue ribbon panel you propose would be a
responsible approach to examining the program.
The American Hospital Association does not believe that
reductions in the rate of growth or caps on spending for
Medicaid is needed to achieve positive, successful
modernizations. The AHA stands ready to assist you in
securing passage legislation for thoughtful, deliberate
change to protect our most vulnerable citizens.
Sincerely,
Rick Pollack,
Executive Vice President.
____
American Psychiatric Association,
Arlington, VA, February 9, 2005.
Hon. Gordon Smith,
Chairman, Senate, Special Committee on Aging,
Washington, DC.
Hon. Jeff Bingaman,
Senator,
Washington, DC.
Dear Chairman Smith and Senator Bingaman: The American
Psychiatric Association (APA), the nation's oldest medical
specialty society representing more than 35,000 psychiatric
physicians nationwide, is pleased to commend your legislation
to establish the Bipartisan Commission on Medicaid and the
Medically Underserved. The establishment of a Commission to
examine Medicaid and the medically underserved will help
identify Medicaid's current benefits and areas of needed
strengthening.
For millions of Americans with mental illnesses, Medicaid
is a critical source of care. Medicaid is especially
important to states as they face deficits that threaten the
stability of Medicaid funding for patients. We are also
concerned about the possible consequences for those of our
dual eligible patients who face potential disruptions of
treatment as they shift from Medicaid to Medicare. This bears
close attention.
Your leadership in calling for an assessment of Medicaid is
timely and appreciated. APA would be pleased to be a resource
of expertise in psychiatry and medicine with respect to
Medicaid.
Thank you again for your leadership in assessing the needs
of the nation's medically underserved.
Sincerely,
James H. Scully Jr., M.D.,
Medical Director.
____
American Dental Association,
Washington, DC, February 8, 2005.
Hon. Gordon Smith,
Hon. Jeff Bingaman,
U.S. Senate,
Washington, DC.
Dear Senators Smith and Bingaman: On behalf of the American
Dental Association (ADA), our 152,000 members and 597 state
and local dental societies, we would like to offer strong
support for your legislation to establish a bipartisan
commission on Medicaid and the uninsured. As Congress and
individual states begin to contemplate and propose Medicaid
reform options, it is critical to ensure an open dialogue
with all Medicaid stakeholders. Your commission would allow
policymakers, practitioners, provider institutions, patients
and others to work together to provide necessary reforms to
this important program.
The ADA is particularly concerned with improving access to
oral health care for low-income children and adults served by
the Medicaid program. In the 2000 landmark report, Oral
Health in America, the Surgeon General concluded that dental
decay is the most prevalent childhood disease--five times as
common as asthma, particularly for this population. We know
that only one-in-four children enrolled in Medicaid receives
dental care and only eight states currently provide
comprehensive adult dental benefits. Cumbersome
administrative requirements, lack of case management and
inadequate payment rates affect dentist participation in the
program and utilization of dental services. More must be done
to improve the Medicaid program to ensure adequate access to
oral health services.
The ADA looks forward to working with you to pass this
legislation and address ways to strengthen and improve the
dental Medicaid program, and the Medicaid program as a whole.
Sincerely,
Richard Haught, D.D.S.,
President.
James B. Bramson, D.D.S.,
Executive Director.
Mr. BINGAMAN. Mr. President, Senator Smith and I have worked together
successfully on several issues within the last year to defend and
improve our Nation's health care safety, including on an amendment to
the Medicare prescription drug bill addressing community health center
payments within Medicare that passed by a vote of 94-1. However, none
of these initiatives have been more important than the legislation that
we are introducing together today, along with a list of 13 other
senators--7 Republicans, 5 Democrats, and 1 Independent, 7 of which
serve on the Senate Finance Committee--to create a Bipartisan
Commission on Medicaid.
[[Page S1212]]
Joining Senator Smith and I as original cosponsors are: Senators Snowe,
Jeffords, Santorum, Kerry, DeWine, Durbin, Chafee, Lincoln, Collins,
Nelson of Nebraska, Voinovich, Corzine, and Coleman.
I will not go into the specifics of the legislation, as Senator Smith
has explained how the Commission would be formed and would operate.
Instead, I will take the time to explain why it is that the formation
of commission is so important.
Medicaid is a critically important health care safety net program
that provides health care services to over 50 million low-income
children, pregnant women, seniors, and people with disabilities.
In New Mexico, Medicaid is the single largest payor for health care.
All told, Medicaid covers the health care costs of more than 400,000
New Mexicans--nearly one-quarter of our State's population.
Although the least expensive to cover, those who benefit most from
Medicaid are nearly 300,000 of New Mexico's children. Of the various
populations covered, children represent almost two-thirds of all our
State's beneficiaries, which is the highest ratio in the Nation
according to data from the Kaiser Family Foundation.
However, Medicaid is much more than just a safety net program for
children from low-income families. It also serves low-income adults and
pregnant women. It also serves senior citizens and people with
disabilities who receive the bulk of their health care through Medicare
but who still rely on Medicaid for a substantial share of their
benefits and cost-sharing assistance. Medicaid also provides critically
needed funding to support our Nation's safety net providers, including
disproportionate share hospitals.
In the President's budget that was just released, the administration
has proposed cutting Medicaid by $60 billion over the next 10 years.
Secretary Leavitt recently testified in the Senate Finance Committee
that he believes ``Medicaid is flawed and inefficient.''
There are others that believe Medicaid is not working and that costs
are spiraling out of control and so the program needs dramatic
overhaul.
In contrast. there are also those that will attest that there is
absolutely nothing wrong with Medicaid. I firmly believe neither point
of view is correct.
First, Medicaid is far from broken. The cost per person in Medicaid
rose just 4.5 percent per year from 2000 to 2004. That compares to a 12
percent rise in the annual cost of premiums in the private sector. If
that is the comparison, Medicaid seems to be about the most efficient
health care program around, even more so than Medicare.
The overall cost of Medicaid is going up largely, not because the
program is inefficient, but because more and more people find
themselves depending on this safety net program for their health care
during a recession. When nearly 5 million people lost employer coverage
between 2000 and 2003, Medicaid added nearly 6 million to its program.
Costs rose in Medicaid precisely because it is working--and working
well--as our Nation's safety net program.
Consequently, as noted previously, Medicaid now provides health care
to over 50 million low-income Americans, including one-quarter of all
New Mexicans.
This is precisely why I so strongly oppose block grants or any
arbitrary caps on Federal spending for Medicaid. If we had caps in 2000
and Medicaid could not have responded to the economic downturn, we
would have 50 million uninsured today. Medicaid is a Federal-State
partnership and an arbitrary cap of the Federal share to States is
nothing more than the Federal Government trying to shift all risk to
States.
On the other hand, it is also not true that Medicaid is not in need
of improvement. The administration is rightly concerned about certain
State efforts to provide ``enhanced payments'' to institutional
providers as a significant factor in driving Medicaid costs. Secretary
Leavitt, in a speech to the World Health Care Congress on February 1,
2005, referred to State efforts to maximize Federal funding as ``the
Seven Harmful Habits of Highly Desperate States.'' As a result, he
called for ``an uncomfortable, but necessary, conversation with our
funding partners, the States.''
Unfortunately, Medicaid reform driven by a budget reconciliation
process is not a dialogue or conversation. It is a one-way mechanism
for the Federal Government to impose its will on the States. The
administration's budget calls for $60 billion in cuts to Medicaid,
including $40 billion that would directly harm States.
Where is the conversation in that? In fact, the States have a fair
amount of complaint with Federal cost shifting to the States. While I
certainly do not speak for the National Governors' Association or
National Conference of States Legislatures, some of those grievances
are rather obvious and I share them.
For example, according to data from Kaiser Family Foundation, 42
percent of the costs in Medicaid are due to Medicare dual eligible
beneficiaries. These dual eligibles are also a major driver of health
costs in Medicare and this is a prime example of where better
coordination between Medicare and Medicaid could improve both programs.
States have been calling for better coordination for years to no avail.
In the Medicare prescription drug bill that was passed by the
Congress in 2003, the Federal Government imposed what is referred to as
a ``clawback'' mechanism which forces the States to help pay for the
Federally-passed Medicare prescription drug benefit. Although States
will derive a financial windfall from moving dual eligibles from
Medicaid coverage to Medicare, some of the States believe the
``clawback'' will cost them more than if they continued to provide
prescription drug coverage themselves.
The prescription drug bill also impacted States financially in a host
of other ways that went largely unnoticed, including those that
increased Medicaid costs for dual eligibles as a result of increases in
the Medicare Part B deductible and increased payments to the new
Medicare Advantage plans. The law also required States to help enroll
low-income Medicare beneficiaries into the low-income drug benefit.
In fact, the Congressional Budget Office, or CBO, estimated that
States had $5.8 billion in added enrollment of dual eligibles in
Medicaid due to what they refer to as a ``woodworking'' effect on dual
eligibles trying to sign up for the low-income drug benefit discovering
they are also eligible for Medicaid benefits. CBO further estimated
that States had $3.1 billion in new administrative and other costs
added by the prescription drug legislation.
States had no ability to ``have a conversation'' with the Federal
Government about the imposition of such costs on them when the Medicare
prescription1rrug drug bill was passed, but they should have and will
have in our Bipartisan Commission on Medicaid.
Furthermore, due to a recent rebenchmarking done by the Department of
Commerce's Bureau of Economic Affairs with respect to the calculation
of per capita income in the States and the application of that data by
the Centers for Medicare and Medicaid Services, or CMS, the Medicaid
Federal Medical Assistance Percentage, or FMAP, many States, including
New Mexico, will see a rather dramatic decline in their Federal
Medicaid matching percentage. In fact, due to the rebenchmarking and
other factors, 29 states will lose Medicaid funding in 2006 by an
amount of in excess of $800 million. Again, this occurred with no
dialogue or conversation.
Mr. President, I agree with Secretary Leavitt that there should be a
conversation among all the stakeholders about the future of Medicaid
and about what are the fair division of responsibilities between the
Federal Government, States, local governments, providers, and the over
50 million people served by Medicaid. It is for this reason that the
Bipartisan Commission on Medicaid includes all of those stakeholders at
the table to have a full discussion and debate about the future of
Medicaid.
It is our intent that the recommendations would not be focused on
cutting costs but about improving health care delivery to our Nation's
most vulnerable citizens. However, they are not mutually exclusive. In
fact, both can and should be done.
There are those that will argue that a commission may not reach a
consensus to make recommendations to
[[Page S1213]]
improve the Medicaid program and so is not worth the effort. I would
strongly disagree and point to the fact that the National Academy for
State Health Policy recently convened a workgroup they called Making
Medicaid Work for the 21st Century that included many of the Medicaid
stakeholders and came forth with a 78-page report with numerous
recommendations with respect to eligibility, benefits, and financing.
According to the report entitled Improving Health and Long-Term Care
Coverage for Low-Income Americans, the workgroup attempted to ``assess
areas where it would be most productive to focus on improvement in the
program, and to develop consensus around recommendations for reform.''
I would underscore the emphasis of the workgroup on ``improving''
Medicaid and health coverage. This should be the primary and overriding
goal of the Bipartisan Commission on Medicaid that we are introducing
today.
Before closing, I once again thank Senator Smith, the other 12 Senate
cosponsors, and the various stakeholders--State and local governments,
providers, and consumers that have endorsed this legislation--in an
effort, not to cut Medicaid, but to make it more efficient and
effective in the delivery of care to our Nation's most vulnerable
citizens.
I ask unanimous consent to have a copy of the Fact Sheet accompanying
this legislation printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Fact Sheet
BIPARTISAN COMMISSION ON MEDICAID
Senators Gordon Smith (R-OR), Jeff Bingaman (D-NM), Olympia
Snowe (R-ME), Jim Jeffords (I-VT), Rick Santorum (R-PA), John
Kerry (D-MA), Mike DeWine (R-OH), Richard J. Durbin (D-IL),
Lincoln D. Chafee (R-RI) Blanche L. Lincoln (D-AR), Susan
Collins (R-ME), Ben Nelson (D-NE), George Voinovich (R-OH),
Jon S. Corzine (D-NJ), and Norm Coleman (R-MN) are
introducing legislation that calls for the creation of a
Bipartisan Commission on Medicaid.
Just as the Balanced Budget Act of 1997 called for the
creation of the Bipartisan Commission on the Future of
Medicare, the Medicaid program should also undergo a
comprehensive and thorough review of what is and is not
working and how to improve service delivery and quality in
the most cost-effective way possible.
This legislation recognizes that determining the future of
Medicaid is not simply about cost. While Medicaid is
estimated to cost the federal government $188 billion in FY
2005, attention also should be given to the diverse
population served. Over 50 million people receive care
through Medicaid, including low-income seniors, people with
disabilities, children, and pregnant women. Further, it is
important to note that while costs are increasing, Medicaid
is growing at a slower per capita rate than either Medicare
or the private sector.
The Medicaid Commission would be charged with a number of
duties, including reviewing and making recommendations with
respect to the long-term goals, populations served, financial
sustainability (federal and state responsibility),
interaction with Medicare and the uninsured, and the quality
of care provided.
Medicaid is a critically important program helping meet the
health care needs of a diverse population through four
different programs by serving as:
(1) a source of traditional insurance for poor children and
some of their parents;
(2) a payer for a complex range of acute and long term care
services for the frail elderly and people with disabi1ities;
(3) a source of wrap-around coverage or assistance for low-
income seniors and people with disabilities on Medicare,
including coverage of additional benefits and assistance with
Medicare premiums and copayments; and,
(4) the primary source of funding to safety net providers
that serve both Medicaid patients and the 45 million
uninsured.
In recognition of this diversity, the bill's Medicaid
Commission would be comprised of 23 members that reflect all
the stakeholders and components in the Medicaid program.
Those members include the following: One Member appointed by
the President; Two House members (current or former)
appointed by the Speaker and Minority Leader; Two Senators
(current or former) appointed by the Majority and Minority
Leader; Two Governors designated by NGA; Two Legislators
designated by NCSL; Two state Medicaid directors designated
by NASMD; Two local elected officials appointed by NACo; Four
consumer advocates appointed by congressional leadership;
Four providers appointed by congressional leadership; Two
program experts appointed by Comptroller General.
The Commission has just one year to hold public hearings,
conduct its evaluations and deliberations, and issue its
report and recommendations to the President, the Congress,
and the public.
Ms. SNOWE. Mr. President, I am pleased to join with a number of my
colleagues in cosponsoring the Bipartisan Commission on Medicaid and
the Medically Underserved Act of 2005, which Senator Smith and Senator
Bingaman are introducing today.
The Medicaid program provides essential medical services to low-
income and uninsured children and their families, pregnant women,
senior citizens, individuals with disabilities, and others. Last year,
nearly 55 million Americans were enrolled in Medicaid, including more
than 300,000 in Maine where one in five people now receive health care
services through MaineCare, our State's Medicaid program.
Individuals who rely upon Medicaid-funded health services have no
other option. Without Medicaid, they would join the ever growing ranks
of the uninsured in this country, which now numbers an all-time high of
more than 45 million Americans who lacked health coverage at some point
last year. These two groups represent a total of 100 million Americans
who would have no health insurance were it not for Medicaid coverage
which reaches just over half of them. And to the extent that the
Federal Government reduces its support for Medicaid funding, the
numbers of uninsured Americans will rise at an even faster rate.
As Congress begins to consider the administration's Fiscal Year 2006
Budget, I believe we must take a balanced approach that is both
fiscally responsible and reflects our long-standing commitments to
provide health care for many of the low-income and uninsured through
the Medicaid program. Although we face growing budget deficits and ever
tightening Federal budgets, the Federal Government cannot simply
abandon its responsibility to help states provide health care access to
our most vulnerable citizens.
Today, Medicaid is the fastest growing component of State budgets,
according to the most recent survey of the National Governors
Association. Total Medicaid spending nationwide now averages 22 percent
of State budgets, while State spending on all healthcare functions is
approximately 31 percent. However, although its costs are increasing,
the annual growth in Medicaid spending on a per capita basis is growing
more slowly, at 4.5 percent a year, than the private sector where
health insurance premiums have increased an average of 12.5 percent a
year for the last 3 years.
The economic downturn which State economies experienced several years
ago, and from which many States are only now emerging, has continued to
leave many families jobless and without health insurance, forcing them
to turn to Medicaid. This has put an enormous strain on the states
already strapped with budget scarcities. Many States reduced Medicaid
benefits last year and even more restricted Medicaid eligibility in an
effort to satisfy their budgetary obligations.
In fact, the Chairman of the National Governors Association, Governor
Warner of Virginia, and the Vice Chairman, Governor Huckabee of
Arkansas, recently warned Congress that if Federal spending for
Medicaid were capped and the number of Medicaid recipients increased
sharply, States would face dire fiscal consequences. According to the
Governors, total costs for State Medicaid programs are growing at an
annual rate of 12 percent, and total Medicaid expenditures now exceed
that of Medicare, due primarily to factors beyond States' control,
especially the costs of long-term care: Medicaid now accounts for 50
percent of all State long-term care spending and pays for the care of
70 percent of those in nursing homes.
At this time, therefore, it is crucial that we continue to provide
sufficient Federal funding for Medicaid, which has worked so well since
it began providing care for some of our most vulnerable populations 40
years ago. We must proceed cautiously before making any significant
changes in the program, and the Medicaid Commission established by this
bill will ensure that necessary deliberative approach.
The concept of a commission to undertake a comprehensive review of
the Medicaid program and recommend possible changes is similar to the
commission which Congress established in the late 1990s, the Bipartisan
Commission on the Future of Medicare. That commission examined various
aspects of
[[Page S1214]]
the Medicare program to determine areas that should be modernized and
later recommended a number of changes, including a prescription drug
benefit. Those recommendations initiated the process of congressional
debate and consideration of reforming the Medicare program, culminating
in the Medicare Prescription Drug, Improvement, and Modernization Act
which passed in 2003 and, among other reforms, included the new
prescription drug benefit for seniors which will take effect next year.
The new Medicare prescription drug benefit will have a major impact
on Medicaid since it will shift Federal expenditures for drug benefits
currently provided by Medicaid for the ``dual eligible'' population--
those who are eligible for both Medicaid and Medicare--to Medicare.
However, this will not lift most of the financial responsibility and
burden of prescription drug costs from the States. Recent estimates by
the National Governors Association show that currently 42 percent of
all Medicaid dollars are spent on ``dual eligible'' Medicare
beneficiaries, although they comprise only a small percentage of
Medicaid cases, and they are covered by Medicare for other services.
The new prescription drug program includes a provision known as the
``claw-back'' which will require States to remit funds to the Federal
Government, based on their inflation-adjusted 2003 per person Medicaid
expenditures for prescription drugs for these beneficiaries. Although
the percentage share of drug costs that States must pay for the dual
eligibles will decline over time, from 90 percent to 75 percent, States
will continue to pay the lion's share of dual eligibles' prescription
drug costs. Many States are just now recognizing this fact and are
looking for ways to accommodate these ongoing costs.
Unanswered questions like these remain concerning the ultimate impact
of the Medicare drug program on State budgets and Medicaid programs.
One of the primary duties of the Medicaid Commission would be to review
and make recommendations on the interaction of Medicaid with Medicare
and other Federal health programs.
Moreover, the formula for calculating the Federal matching rate,
known as the Federal Medical Assistance Percentage, FMAP, which
determines the Federal Government's share of a State's expenditures for
Medicaid each year, has also contributed to the Medicaid problems that
States are facing. The FMAP formula is designed so that the Federal
Government pays a larger portion of Medicaid costs in States with a per
capita income lower than the national average. However, the formula
looks back 3 years, to points in time that are not necessarily
reflective of a State's current financial situation.
In fiscal year 2003, for example, the FMAP for that year was
calculated in 2001 for the fiscal year beginning October 2002. The FMAP
for FY 2003 was determined on the basis of State per capita income over
the 3-year period of 1998 through 2000, when State economies were
growing significantly. Yet in 2003, when this matching rate was in
effect, a serious economic downturn was affecting many State budgets,
and that downturn has contributed greatly to the growth of Medicaid for
several years now.
We recognized this situation in the last Congress and provided for
State fiscal relief by providing a temporary increase in the Federal
Medicaid matching rate, which provided $10 billion in fiscal relief to
States during fiscal 2003 and 2004, when we passed the Jobs and Growth
Tax Relief Reconciliation Act of 2003. But that fiscal relief has
sunset.
One of the duties of the Medicaid Commission would be to make
recommendations on how to make Federal matching payments more equitable
with respect to the States and the populations they serve, as well as
how to make them more responsive to changes in States' economic
conditions.
The fact is, Medicaid and Medicare have complex responsibilities,
financing, and interrelationships and that is why a Medicaid Commission
is vital for the future state budgets and the Medicaid program as a
whole.
I urge my colleagues to join us supporting this legislation to help
sustain and improve this critical health care safety net for our most
vulnerable Americans.
______
By Mr. REID (for himself, Mr. Baucus, Mr. Stevens, Mr. Nelson of
Nebraska, and Mr. Ensign):
S. 339. A bill to reaffirm the authority of States to regulate
certain hunting and fishing activities; to the Committee on the
Judiciary.
Mr. REID. Mr. President, today I am introducing the ``Reaffirmation
of State Regulation of Resident and Nonresident Hunting and Fishing Act
of 2005.'' This legislation explicitly reaffirms each State's right to
regulate hunting and fishing. I am pleased that Senators Ben Nelson,
John Ensign, Max Baucus, and Ted Stevens are joining me in sponsoring
this important bill.
This is a Nevada issue, but it also is a national issue, as a recent
Federal circuit court ruling undermines traditional hunting and fishing
laws. In Conservation Force v. Dennis Manning, the Ninth Circuit Court
of Appeals ruled that State laws that distinguish between State
residents and non-residents for the purpose of affording hunting and
related privileges are constitutionally suspect.
This threatens the conservation of wildlife resources and
recreational opportunities. Although the Ninth Circuit found the
purposes of such regulation to be sound, the court questioned the
validity of tag limits for non-resident hunters.
I respect the authority of States to enact laws to protect their
legitimate interests in conserving fish and game, as well as providing
opportunities for in-State and out-of-State residents to hunt and fish.
That's what this legislation says--we respect that State right.
Sportsmen are ardent conservationists. They support wildlife
conservation not only through the payment of State and local taxes and
other fees, but also through local non-profit conservation efforts and
by volunteering their time.
For example, in Nevada there are great groups such as Nevada Bighorns
Unlimited and the Fraternity of Desert Bighorn. These are dedicated
sportsmen who spend countless hours and much of their own money
building ``guzzlers'' in the desert, which help provide a reliable
source of water for bighorn sheep and other wildlife. Without these
efforts it would be extremely hard for bighorn sheep to survive in much
of their historic range in Nevada because much of their historic range
has been fragmented by development. Today, Southern Nevada is in the
midst of a very difficult 500-year drought, and the work of the
conservation groups has saved thousands of our bighorn sheep.
The deep involvement of local sportsmen in protecting and conserving
wildlife is one important justification for the traditional resident/
non-resident distinctions, and provides the motivation for our
legislation. The regulation of wildlife is traditionally within a
State's purview, and this legislation simply affirms the traditional
role of States in the regulation of fish and game.
This bill is time sensitive. The out-of-State hunters that brought
the suit in the 9th Circuit are now threatening to get a restraining
order from the Federal court to delay the opening of the big game
season in Nevada this year. This threat itself is causing great damage
to conservation and fish and game management in Nevada.
According to The Las Vegas Sun, Nevada's Wildlife Department has
already borrowed $3 million to get through the fiscal year, eliminated
three positions, and has plans to eliminate five more. Delaying hunting
seasons while the courts resolve this issue could cause the Department
to literally shut down.
Uncertainty with regard to hunting and fishing regulations is bad for
the conservation of Nevada's resources. This bill needs to pass now. I
look forward to working with my colleagues to expedite passage of this
important legislation. I ask that the text of this bill be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 339
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reaffirmation of State
Regulation of Resident and
[[Page S1215]]
Nonresident Hunting and Fishing Act of 2005''.
SEC. 2. DECLARATION OF POLICY AND CONSTRUCTION OF
CONGRESSIONAL SILENCE.
(a) In General.--It is the policy of Congress that it is in
the public interest for each State to continue to regulate
the taking for any purpose of fish and wildlife within its
boundaries, including by means of laws or regulations that
differentiate between residents and nonresidents of such
State with respect to the availability of licenses or permits
for taking of particular species of fish or wildlife, the
kind and numbers of fish and wildlife that may be taken, or
the fees charged in connection with issuance of licenses or
permits for hunting or fishing.
(b) Construction of Congressional Silence.--Silence on the
part of Congress shall not be construed to impose any barrier
under clause 3 of Section 8 of Article I of the Constitution
(commonly referred to as the ``commerce clause'') to the
regulation of hunting or fishing by a State or Indian tribe.
SEC. 3. LIMITATIONS.
Nothing in this Act shall be construed--
(1) to limit the applicability or effect of any Federal law
related to the protection or management of fish or wildlife
or to the regulation of commerce;
(2) to limit the authority of the United States to prohibit
hunting or fishing on any portion of the lands owned by the
United States; or
(3) to abrogate, abridge, affect, modify, supersede or
alter any treaty-reserved right or other right of any Indian
tribe as recognized by any other means, including, but not
limited to, agreements with the United States, Executive
Orders, statutes, and judicial decrees, and by Federal law.
SEC. 4. STATE DEFINED.
For purposes of this Act, the term ``State'' includes the
several States, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Virgin Islands, American Samoa, and
the Commonwealth of the Northern Mariana Islands.
______
By Mr. LUGAR:
S. 340. A bill to maintain the free flow of information to the public
by providing conditions for the federally compelled disclosure of
information by certain persons connected with the news media; to the
Committee on the Judiciary.
Mr. LUGAR. Mr. President, I rise today to introduce the Free Flow of
Information Act of 2005. This bill was originally introduced in the
House of Representatives by my friend and colleague, Congressman Mike
Pence. I applaud the initiative by my colleague to address this
important issue and I am pleased to have this opportunity to be the
Senate sponsor.
Last year, Congress passed legislation I proposed that directed the
State Department to increase and add greater focus to international
initiatives to support the development of free, fair, legally protected
and sustainable media in developing countries.
I am pleased to announce that the State Department and the National
Endowment for Democracy have embraced this initiative and are now
proceeding with implementing this initiative.
Our Founders understood that free press is a cornerstone of
democracy. To embrace and implement President Bush's bold and visionary
call for the spread of democracy and freedom in the world, it is
incumbent upon us to ensure that foreign assistance programs focus on
the development of all the institutions that help democracies work and
protect basic human rights.
While we focus on those needs abroad, we cannot let those basic
freedoms erode at home. The Constitution makes very clear that freedom
of the press should not be infringed. A cornerstone of our society is
the open market of information which can be shared through ever
expanding mediums. The media serves as a conduit of information between
our governments and communities across the country.
It is important that we ensure reporters certain rights and abilities
to seek sources and report appropriate information without fear of
intimidation or imprisonment. This includes the right to refuse to
reveal confidential sources. Without such protection, many
whistleblowers will refuse to step forward and reporters will be
disinclined to provide our constituents with the information that they
have a right to know. Promises of confidentiality are essential to the
flow of information the public needs about its government.
The Free Flow of Information Act closely follows existing Department
of Justice guidelines for issuing subpoenas to members of the news
media. These guidelines were adopted in 1973 and have been in
continuous operation for more than 30 years. The legislation codifies
the conditions that must be met by the government to compel the
identity of confidential sources.
I am hopeful that my colleagues will give careful consideration to
the merits of this legislation. It provides an appropriate approach and
careful balance to protect our freedom of information while still
enabling legitimate law enforcement access to information.
____________________