[Congressional Record Volume 151, Number 93 (Tuesday, July 12, 2005)]
[House]
[Pages H5719-H5723]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     SMALL BUSINESS AND HEALTH CARE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 2005, the gentleman from Georgia (Mr. Price) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. PRICE of Georgia. Mr. Speaker, what an honor it is to come before 
my colleagues tonight to talk about some of the most important aspects 
of all of our lives, and that is our jobs and our health and how they 
are tied together.
  I think it is helpful to begin this by answering the question, how 
did we get to this point? Why do most Americans receive their health 
insurance from their employer? Did you ever think about that? Whether 
it is good or bad. You think about other kinds of insurance. Car 
insurance does not come from your employer necessarily. Certainly, 
health insurance does, and that is so incredibly important. Your home 
insurance does not come from your employer. Why health? Like most 
things, it has a long and a curious and sometimes a colorful history.
  By way of introduction, and I will be brief, but I think it is 
important to review kind of how we got to where we are right now. 
Actually it begins during World War II when employers were short on 
employees, and they were attempting to attract employees, and so they 
offered a health benefit to try to encourage some folks to come and 
work at their place of business. The government at that time had to 
decide whether it was going to treat that health benefit as a taxable 
benefit or whether it was going to be a nontaxable benefit. Were they 
going to tax the employee for getting that benefit or not? What the 
government at that time elected to do is to treat it as a nontaxable 
benefit. And so began this incentive that we now have and have lived 
with for the past 60 years or so for employer-based health care.
  During the 1950s, there was a period of significant collective 
bargaining in our Nation, and many individuals got their health 
insurance with what is called first dollar coverage, meaning that every 
single dollar of their health care was paid for by somebody else. In 
the 1960s, the government got involved with Medicare and Medicaid and 
instituted Medicare as a program that was a cost-plus program, meaning 
that those individuals that were providing the care were paid for the 
cost for providing it plus some. And so what you had over a period of 
the next 10 or 12 years or so was a significant increase in the cost of 
health care. Businesses said, Hey, wait a minute, what's going on here? 
We've got to have some help. And so instead of looking at that 
situation then and moving toward a system that allowed individuals 
greater choice and greater opportunity for their selection in health 
care, what happened was an increasing regulation of both the insurance 
industry and the beginning of HMOs and the managed care as we know it. 
All of this began basically with the tax favorability for employers to 
purchase health insurance. And so that system flourished.
  Now, tying health care to jobs has had many unintended consequences 
and many that have adversely affected those who can get insurance. As a 
legislature, as a Congress, as leaders and decisionmakers, we need to 
make it easier for businesses to provide health insurance. One person 
who knows firsthand about that and about how to make that happen is the 
gentlewoman from Tennessee (Mrs. Blackburn). The gentlewoman from 
Tennessee is a small business owner herself and represents a district 
that is heavily dependent on small businesses and the jobs that they 
generate. She understands this issue as few do and has been a great 
leader in our Congress in an effort to pass both the health savings 
accounts and associated health plans. I am proud to yield to my 
colleague as she discusses the issue of small business and health care 
for a few moments.
  Mrs. BLACKBURN. Mr. Speaker, I thank the gentleman from Georgia for 
his leadership on this issue. He certainly brings a wonderful 
perspective to our body as he leads in the discussion of small 
businesses and health. I think most people know that small town 
physicians, that is a small business, and working with small business 
employers, he understands so readily how employers truly desire to 
provide great benefits for their employees. Mr. Speaker, I think most 
small business employers feel like their employees are family. They 
want to be certain that they have got the best of everything, the best 
of opportunity, the best of health care, the best work environment, 
because they treasure having those individuals work with them. Most 
small business owners understand, too, that it is important that 
employees be happy and content in their work environment, that they 
stay with you, because one of the greatest expenses is having to train 
a new employee, having to help them learn the ropes, learn the skills, 
come up to speed to fill that role. They also know that good health 
care is important because of time lost from work. That is very 
expensive. That means an employer, if he has an employee who is sick, 
who has not had access to good preventative health care, then what 
happens? He has to go hire a temporary employee to fill that job. So 
small business employers understand the importance of creating a good 
comprehensive work environment and the importance of appropriate health 
care and health coverage for employees.

[[Page H5720]]

  I cannot go any further talking about a small business without first 
having a couple of things to say about this economic engine and what a 
lot of these small business employers are able to do. We are averaging 
146,000 new jobs a month. Unemployment is at near historic lows. We are 
just above 5 percent on unemployment. What that tells us is that the 
small business sector is working, that with new ideas and new 
innovations and lower taxes and with the focus on lessening regulation 
like we have done this very week, this very day right here in this 
House as we have looked at OSHA regulations and found ways, we passed 
four bills, finding a way to help make OSHA and the rules and the 
regulations less burdensome to small businesses. So it is wonderful 
that during this small business week, we have our legislative attention 
focused on what we do, not to create jobs, what we do not to strap down 
business, but what we do to create the type environment in this Nation 
that small business and free enterprise can do what they do best, that 
is, create jobs, be the economic engine for this great Nation.
  I commend our leadership here in the House for continuing to work on 
these issues and put this focus on small businesses, whether it is 
through an energy bill or through the death tax repeal or class action 
fairness or bankruptcy or jobs training improvement. All of that 
affects small business, much the same way as health care affects small 
business and its employees.
  There are just a couple of other quick points that I would like to 
add. Looking at health care and the viability of health care for small 
business is not new. This is not something that is on the plate for the 
first time in the 109th Congress. This is an issue that our leadership 
has been focused on for many years.

                              {time}  2000

  One provision that was on the table for quite a while and finally was 
passed in the 108th Congress is health savings accounts; and for small 
businesses that are seeking to find an affordable way to continue or to 
give health choices for their employees, the health savings accounts 
are a wonderful alternative.
  And, Mr. Speaker, one of the things that has come to mind that we 
have seen with the past year, with the advent of health savings 
accounts, more than 1 million Americans have chosen this as an option 
because it is a way for them to save, to set aside, and a way for them 
to begin looking to expanding their health care dollar, being certain 
that they have that health care dollar where they are getting basically 
the most bang for their buck. And I certainly think that it is to our 
credit that this option was made available to the American people last 
year, and I commend our leadership for that.
  Another bill that this House has passed, and we certainly are looking 
forward to the same type of success with, is association health plans. 
These are basically small business health plans that we talk about in 
my district, because it will allow businesses to group together in 
their associations, of different types, whether they are small business 
manufacturers or maybe marketing companies or some of the high-tech 
companies, but group together and pool their buying power so that they 
can have group policies for their employees and will be able to do it 
more affordably.
  So association health plans will be another great addition, putting a 
little bit more of that private sector expertise back in there to get 
the cost of health care down so that it is more affordable for our 
small business employers.
  I want to thank the gentleman from Georgia again for allowing me to 
come in and participate as we talk about small businesses, keeping them 
healthy, keeping them vibrant, and also having health care affordable 
and available for their employees. I thank him for the leadership.
  Mr. PRICE of Georgia. Mr. Speaker, reclaiming my time, I thank the 
gentlewoman so much for her comments. I appreciate her leadership in 
this issue and so many other issues in our Congress, and I thank her 
for her perspective as a small business owner and somebody who has been 
a real advocate for increasing choices for patients and opportunities 
to purchase health insurance.
  I mentioned briefly before the tax treatment of health insurance and 
why we seem to be in a situation now where there is this remarkable 
incentive for employers to purchase health insurance, and that again is 
because of the tax treatment. And nobody understands that better than 
the next individual whom I have asked to join me today. Because of this 
tax incentive, solutions to our current situation must address the 
taxes and how they affect decisions about the purchase of health care.
  And one person who understands this as well as anybody and is a good 
friend and legislator is the gentleman from Iowa (Mr. King). The 
gentleman from Iowa (Mr. King) is working to fight burdensome 
government regulation and red tape. He truly understands the challenges 
of starting and operating a business first hand as a successful agri-
businessman. He brings 28 years of business know-how with him to 
Congress, and he has introduced a very exciting piece of legislation 
that talks about the tax treatment of the purchase of health insurance.
  I yield to the gentleman from Iowa (Mr. King).
  Mr. KING of Iowa. Mr. Speaker, I thank the gentleman from Georgia 
(Mr. Price) for yielding to me. I appreciate the opportunity to speak 
here tonight, and I appreciate his organizing this Special Order so 
that we can further take a look into some of the things that we can do 
to improve the health care circumstances within this country.
  Mr. Speaker, health care costs are escalating. And there are few 
options for small business owners to choose from when selecting 
insurance coverage for their employees. In order to keep and attract 
talented workers, sourcing affordable, quality health insurance is a 
top concern. As an owner/operator of a small construction business for 
over 28 years, I am well aware that the largest challenges here are 
access and cost.
  But even though small business is the backbone of our American 
economy, over 60 percent of the estimated 43 million people without 
health care are small business owners, both employers and their 
dependents. Additionally, small businesses, which create two out of 
every three jobs in this country, continue to struggle with the high 
cost of offering health insurance to their employees. The structure of 
the current health care industry does not allow many small business 
owners and their employees access to affordable health insurance. As a 
result, uninsured figures continue to rise as the cost of insurance 
continues to skyrocket, pricing many small businesses out of the 
marketplace.
  Many factors contribute to the overall cost of health care. Lack of 
competition in the small group market, litigation, and mandates are 
just some of the many culprits driving up costs. The problems facing 
small business owners, their employees and families must be addressed 
as part of the overall health care debate.
  I support health savings accounts, HSAs, recently enacted under the 
Medicare Modernization Act, coupled with hide-deductible health care 
plans. They are a way for small businesses and individuals to lower 
their health care premiums. Along with HSAs, individuals should be 
allowed to deduct 100 percent of their high-deductible health plan 
premiums if they are not subsidized by an employer plan already. High-
deductible health care premiums are defined as a minimum of $1,000 and 
up to $5,100 deductible for individuals and a minimum of $2,000 and up 
to $10,200 deductible for families. I have introduced a bill titled the 
Health Insurance Affordability Act, H.R. 37, which would allow for this 
type of deductibility for health insurance premiums.
  Currently, large businesses are allowed to deduct employee health 
insurance premium payments, as are small businesses, for their 
employees as a business expense. Unfortunately, employees of small 
businesses that cannot afford to provide health insurance coverage are 
not able to deduct the cost of health insurance. This group of people 
includes waitresses in diners, workers in dry cleaners shops, temporary 
workers; and that is just a few. With the rising cost of health care 
coverage, many of the Nation's small employers are dropping coverage, 
which increases the number of uninsured Americans.

[[Page H5721]]

  In the 2004 State of the Union Address, President Bush proposed that 
individuals who buy catastrophic health care coverage as part of our 
new health savings accounts be allowed to deduct 100 percent of their 
premiums from their taxes, President Bush's fiscal year 2006 budget 
request stating the following: ``Above-the-Line Deduction for Certain 
Health Insurance Premiums, under this proposal all individuals who 
purchase a high-deductible health plan in conjunction with a health 
savings account would be allowed to deduct the amount of the health 
plan's premium from their taxable income even if they do not itemize 
their deductions.'' That is the President's proposal. It mirrors my 
proposal on H.R. 37, the Health Insurance Affordability Act, which I 
drafted and dropped last year as well as this year. This new deduction 
would make high-deductible health plans more affordable.
  We should follow the President's lead and continue to promote 
personal health care ownership and control of health care policies. 
H.R. 37 provides an above-the-line tax deduction of the health 
insurance premiums for those who buy their own HSA plan. Several HSA 
providers report that a high number of previously uninsured individuals 
are buying HSAs in the individual market. By allowing consumers to 
deduct the premiums, we are building on the benefits of HSAs and will 
make health insurance affordable for America's uninsured population.
  Health savings accounts will also help reduce the number of uninsured 
Americans by allowing small businesses more choice in the current small 
group market. Additionally, individuals who have catastrophic health 
care coverage with a health savings account should be allowed to deduct 
100 percent of their premiums from their taxes. HSAs, along with 100 
percent deductibility, will provide small businesses with more 
accessible, affordable options in the health insurance market.
  A government-run health care system is not the solution to the health 
care problems facing small businesses. A government-run health care 
system or mandates and minimum benefit packages forced upon small 
employers will deter or even destroy entrepreneurship and the growth of 
small businesses.
  Mr. Speaker, the small businesses in this country lead in new jobs. 
They lead in employment. They are at a disadvantage today because the 
structure of health insurance premiums is wrong, and it is wrong 
because it lacks full deductibility for the people who utilize it. And 
this goes back in history to World War II when we had wage and price 
controls and when that order came out, employers were looking for a way 
to compete in a shrinking labor market because much of the labor put on 
a uniform and went overseas to fight World War II.
  So in keeping with the freezing of wages and prices, instead they 
gave health care benefits to their employees; and it was not really 
circumventing a raise, but it was keeping with the freeze, but it was 
benefits to compete for that shrinking labor supply that was there.
  That tradition now has been in place over 60 years, and in this 60-
plus years, we have watched it get more and more distorted every year. 
So if a large corporation or a government employer can offer a health 
insurance benefit that is fully deductible and especially to large 
corporations and there sits a ma-and-pa operation, a family farm, a gas 
station, a convenience store, a company that is hiring part-time labor, 
these people that are disadvantaged from the current structure, when 
they are disallowed from full deduction of their health insurance 
premiums, should be allowed that deduction. That is what the Health 
Insurance Affordability Act does, H.R. 37. It is one piece of the whole 
puzzle that we need to do.
  The gentleman from Georgia (Mr. Price) is bringing forth a more 
comprehensive discussion here tonight. I have targeted on H.R. 37 
because I think it is the one thing that we can do to bring 
deductibility to the employees who are not able to deduct their health 
insurance premiums. But I believe that if a Fortune 500 company can 
deduct a full coverage insurance plan and every dime that they put into 
that full coverage insurance plan is an above-the-line deduction, a 
Schedule C deduction, on their income tax, then that also should be 
available for every citizen whatsoever in the United States of America.
  H.R. 37 takes us down that path. It gets us closer. It does not get 
us all the way. We will not get this done overnight. It has been over 
60 years to get in the condition that we are in.
  I thank the gentleman from Georgia for organizing this Special Order 
tonight and for bringing his professionalism in the health care 
industry and his experience as a doctor that actually sees how this 
works in the lives and minds of patients to the floor here tonight and 
to everything he does here in this Congress. I thank the gentleman from 
Georgia (Mr. Price) and appreciate his yielding to me.
  Mr. PRICE of Georgia. Mr. Speaker, reclaiming my time, I thank the 
gentleman from Iowa (Mr. King) so very much for his comments.
  When I first started looking into this issue of health insurance and 
why it seemed that employers had this remarkable incentive and I looked 
back and looked back and tried to figure out where it began and I got 
to the discussion about World War II and I talked to some of my friends 
about it and they would say it could not have started back then, I 
appreciate his perspective on it and his knowledge and expertise in 
appreciating that the tax treatment of the purchase of health insurance 
is so important, so incredibly important, as we try to solve the 
challenges of the increased cost of health insurance and health care. I 
thank him so much for joining me tonight. He was very kind to 
participate and bring focus to those issues.
  I touched a little earlier on that association between jobs and 
health care and how jobs are so important to health care because of the 
tax treatment. And so it is important that we talk about jobs and small 
businesses; and this Congress has worked incredibly hard, incredibly 
hard, to create jobs, especially in the area of small business; and it 
is important. We keep talking about small business because that is the 
engine, that is the engine that drives our economy.
  Ninety-nine percent of all businesses in this Nation are small 
businesses, and 75 percent of all new jobs that have been created have 
been jobs that are added in the area of small business. And this 
Congress has been incredibly diligent in making certain that we have 
the right incentives to create jobs. And they have been mentioned 
earlier, but I would like to touch on a couple of them.
  The Energy Policy Act that we passed will create nearly \1/2\ million 
new jobs in the manufacturing and construction and agriculture and 
technology sectors, \1/2\ million jobs. The Death Tax Repeal Permanency 
Act, that is not only an unfair tax, but it is also taking money out of 
the pockets of individuals, especially small business individuals, that 
they could use to instead grow their businesses. The Class Action 
Fairness Act that we passed, some legal reform. It is estimated that 
$88 billion a year, $88 billion a year, is spent on lawsuits; and if 
that money is not needed on inappropriate lawsuits, then where can that 
money go? To small business and to jobs, create jobs, hire more 
workers. So this was an important bill that was passed and signed into 
law by the President.
  The highway bill, the Transportation Reauthorization bill, not only 
will it increase the quality of our transportation infrastructure 
across this Nation, but it is estimated that for every $1 billion that 
is spent to improve our highways, 40,000 jobs are created, 40,000 jobs: 
$1 billion, 40,000 jobs.

                              {time}  2015

  Do we know what that means for a bill that has a price tag of about 
$280 billion? That is 15 million jobs. You talk about a Congress that 
is serious about putting people to work, this is that Congress. And the 
Job Training Improvement Act that we passed breaks down the barriers 
for millions, millions of job-seekers.
  So this Congress has actively worked to expand small business which, 
again, is the engine, the engine of our economy, and it is working. We 
see the results already. Mr. Speaker, 146,000 jobs were created in the 
month of June with the unemployment rate dropping to 5 percent, the 
lowest unemployment rate since September of 2001. Steady growth

[[Page H5722]]

has taken place each of the last 25 months with more Americans working 
than ever before.
  This chart shows the declining unemployment rate and the number of 
jobs that have been created, and we see each month for the past, on 
this chart, 13 months, but it has been 25 months in a row, each month 
we have created jobs in this Nation, across the Nation. The economic 
indicators show strong and sustained growth with real gross domestic 
product and real income revised up for the first quarter, and inflation 
down. Listen to this: profits as a share of gross domestic product are 
up to their highest level since 1967, profits up to their highest 
levels since 1967. What does that do? It allows businesses to reinvest 
and create more jobs.
  Mr. Speaker, durable goods orders are on the rise with new orders for 
durable goods increased by 5.5 percent in May. That is the largest 
increase in 14 months. U.S. manufacturing continues to expand. Again, 
for the 25th consecutive month, manufacturing expanded again in June. 
And we see it in the private sector as well, with consumer confidence 
rising nearly 3 points in June to its highest level in 3 years.
  Mr. Speaker, I am telling my colleagues, the improving economy that 
we have talked about and the jobs that have been created, it is not 
empty rhetoric, it is not just words. The policies of this Congress and 
this administration, they are pro-growth, and they are leading the 
charge, and they are indeed succeeding in the challenges that we have 
before us in creating jobs.
  But when I go home, when I talk to folks at home who are small 
business owners, who create the jobs in this Nation, and when I talk to 
them and I ask them, what is the biggest challenge that you have? I do 
not care what kind of small business it is, whether it is a restaurant 
owner or gas station folks or a small business owner or lawn care 
people, real estate, shoe repair, I do not care what it is, their 
biggest challenge, they will tell you that their biggest challenge is 
the health care, providing health care for their employees, and many, 
many simply stop. They are unable to provide health care any longer for 
their employees, whether it is that extra dollar that the health 
insurance costs or whether it is the undue burden of the regulation 
that pushes them over the top. And they say, as much as I would like 
to, I am just unable to do so from a financial standpoint.
  So it is imperative; remember, most employees, most people get their 
health insurance through their employer, again, because of the things 
we were talking about before, but it is imperative that we work on 
those constraints that make it so that it is difficult for employers to 
purchase that health insurance.
  The unemployment rate is coming down with all of the work that we 
have done, now down to, as the gentlewoman from Tennessee (Mrs. 
Blackburn) mentioned, 5 percent, a remarkable, remarkable improvement 
in our economy.
  I want to talk about small business and health care facts. I want to 
talk about the problem as it relates to the rising cost of health care 
and how it affects jobs and the provision of that health care. As 
health care premiums continue to increase or as they increase, 
employers are forced to pass that expense on to their workers in the 
form of higher copayments or deductibles, and oftentimes, they have to 
reduce coverage. They are not able to provide the same kind of coverage 
that they have in the past. It is not because they want to; it is 
because they are being constrained from a financial standpoint. 
Employers this year will pay an estimated 12 percent more for employee 
health care than benefits in 2003, 12 percent more, marking the fifth 
consecutive year of double-digit increases and a doubling of employer 
health care costs since 1999.
  This graph is so incredibly poignant, and it just shows the 
continuing increase of the cost of health care. The cost for employers 
is the lower bar. The middle bar is the cost for employees. And then 
the upper bar is the out-of-pocket costs for employees, and we see 
those continue to rise over the years. Decreasing these costs to 
American businesses is imperative, because what it will allow them to 
do is to spend more money on expanding their operations and hiring 
workers, more jobs.
  It has been shown that each percentage point increase, this is a 
phenomenal statistic, each percentage point increase in health 
insurance costs increases the number of uninsured by 300,000 people. 
Think about that. Each single percent of increase in health insurance 
costs increases the number of uninsured by 300,000 people. This is an 
issue that is imperative, imperative for us to tackle as a Congress.
  Then we have heard about the need for legal reform, what kind of 
challenges we have in the area of liability insurance that physicians 
and hospitals and others have. Those premiums for medical liability 
insurance have increased 500 percent, 500 percent since 1976, and what 
that has done is driven many doctors out of the profession, many of 
them closing their practices or decreasing the high-risk procedures 
that they do. I had one fellow physician tell me that they had to stop 
one of their high-risk procedures, and I said, what was that? And they 
said, delivering babies. An obstetrician, they could no longer deliver 
babies because that is defined as a high-risk procedure. In fact, in 
our State, over a third of the obstetricians have stopped delivering 
babies because it is a high-risk procedure because of the cost of 
liability insurance. The average jury award in a medical malpractice 
case is now up to $3.5 million, up more than 70 percent since 1995. 
This cost of insuring doctors against oftentimes petty and frivolous 
lawsuits is reducing the quality and access of Americans to top-rate 
health care.
  Now, there are a number of solutions that have been put on the table, 
and I want to talk about three of them in kind of a larger principled 
way. The first is about pooling resources. The second is about the tax 
treatment that we have talked about, and the third is about liability 
reform.
  Associated health plans, which the gentlewoman from Tennessee (Mrs. 
Blackburn) mentioned, are incredibly important, and they work because 
what they allow people to do is to pool larger numbers to purchase 
health insurance. Remember that 60 percent, 60 percent of the 44 
million uninsured Americans are employed by small businesses or are 
dependents of someone who is employed by a small business. Some people 
estimate that that number is as high as 85 percent, meaning that 85 
percent of the folks that are either employed or live in the home of 
somebody who is employed by a small business do not have health 
insurance, of the 44 million who are uninsured. Phenomenal when you 
think about it.
  What do associated health plans allow you to do? They allow you to 
buy in bulk. They allow one small business, a group of employees, say 
three or five folks to join with three or five folks from some other 
businesses to pool with eight or ten somewhere else, and before you 
know it, you have hundreds and thousands and sometimes millions of 
individuals who then use that purchasing power to purchase health 
insurance. It allows them to get health insurance at the cost that some 
of the larger employers do. Associated health plans would be required 
to offer fully-insured or self-insured benefits that are certified by 
the United States Department of Labor. There has been some discussion 
about whether or not people could provide cut-rate health insurance. 
Well, that is not the case. It encourages broad participation in 
coverage by prohibiting discrimination of any kind against certain 
high-risk individuals. Again, if you pool numbers of folks together, if 
you allow them to join together and use their power to purchase 
insurance, then they will be able to do so in a very competitive way. 
It increases the bargaining power.

  So the first area is allowing folks to get together as groups, large 
groups, thousands, hundreds of thousands, millions of people to have 
the benefit of purchasing insurance.
  The second issue I want to bring to the fore that would allow for a 
real solution has to do with the tax treatment and flexible spending 
accounts. Now, the gentleman from Iowa (Mr. King) talked about his idea 
for health savings accounts and the equal tax treatment for individuals 
to purchase health savings accounts. Great idea. Works splendidly to 
move some of those incentives so that people who are employed by a 
small business or are self-employed or are unable to get their 
insurance in another way will have an incentive to

[[Page H5723]]

purchase health insurance. And what flexible spending accounts do is 
that they allow workers to direct their employers to deduct money from 
their paychecks to be placed in this flexible spending account, tax-
free--tax-free. That is the key. That is the incentive: to pay for 
health care expenses that they may incur during the course of the year. 
It is a tax benefit to employees. Workers could save on their taxes for 
the purchase of health insurance.
  It also provides for long-term coverage advantages, because 37 
million employees right now in America have access to these accounts, 
but few of them take advantage of it because there is a use-it-or-lose-
it rule. Now, what is the use-it-or-lose-it rule? Well, currently, if 
you do not use the money by the end of the year that you have put into 
a flexible savings spending account for health care, then that money is 
forfeited. It goes away. It goes back to the employer.
  This rule is a huge disincentive for participating in a flexible 
spending account, and it probably drives up health care costs itself 
because it encourages individuals to spend money on health care at the 
end of the year that may not necessarily be needed, but you have three 
weeks left, and you have this money in your account, so you might as 
well go do that. So it has that adverse incentive for the purchase of 
appropriate health insurance.
  So flexible spending accounts, allowing you to have equal tax 
protection, tax-free purchase of health insurance or health care, in 
addition to the pooling that we talked about. Those are the first two. 
And the final one is medical liability reform. As the gentleman from 
Iowa (Mr. King) mentioned, I am a physician, an orthopedic surgeon; 
spent nearly 20 years in private practice of health care and saw during 
that period of time an incredible explosion in the cost of liability 
insurance, for somebody that was never sued, never had a suit. And 
whether or not you do, the real cost of the current crisis that we have 
as it relates to medical liability reform is not the cost of the 
purchase of the insurance for the doctor; that is not the real cost. 
Those costs are going up, certainly, but that is not the real cost. But 
those are millions and millions of dollars.
  The real cost, the real reason that we need liability reform in the 
area of health care is because of the practice of defensive medicine. 
You may have heard about this. What is defensive medicine? Well, when 
you go to your doctor and you tell your doctor what your symptoms are, 
what you think is wrong, your doctor, he or she, will run through in 
their mind or look through their resources to be able to determine what 
kind of tests or studies ought to be done to make an appropriate 
diagnosis.
  Now, the practice of defensive medicine says to the doctor that we 
ought to do virtually everything that we can do to make that diagnosis 
as rapidly and as accurately as possible, even though those tests may 
not be absolutely imperative to do to make that diagnosis. The example 
that I like to use is, if you have back pain and you came into my 
office, 90 percent of back pain, 90 percent of back pain is what is 
called functional back pain. It means that you hurt your back, and you 
strained it, and it will go away, given a little rest and therapy and 
exercise and sometimes some medication, 90 percent. But I promise you 
that everybody that comes into the doctor's office with back pain, what 
do they get? They get an x-ray. Now, they do not get an x-ray because 
you can diagnose functional back pain on an x-ray; they get an x-ray 
because if something is not picked up immediately on that x-ray, then 
they are liable. They are liable to be sued for not picking it up in 1 
week when they may have picked it up in 3 weeks if the back pain did 
not get any better. That is the kind of thing that goes into the 
practice of defensive medicine. It has to do with blood tests. It has 
to do with heart tracings. It has to do with extremely expensive tests 
and studies that we have available to us that are wonderful. They allow 
us to have the kind of quality health care that we have as a Nation. 
But what happens is that they drive up the cost of health care to an 
incredible degree and frankly do not increase the quality of care that 
is being provided.
  How much money is that? The estimates vary because you cannot get a 
firm figure on that. No doctor orders a test and says, this test is 
unnecessary. So the cost is likely to be somewhere in the range of $250 
billion to $500 billion, that is with a B, $250 billion to $500 billion 
in the cost of health care each year in our Nation.

                              {time}  2030

  That is why, that is why it is imperative that we have medical 
liability reform. So the cost of the insurance itself is significant. 
But that is not the real reason.
  Now, there are a number of ways that you can institute appropriate 
health care reform. I believe that we must give States as much 
flexibility as possible. I think that there are a number of good 
solutions on the table. I believe that we have got to adopt one of 
those solutions that will have true and real and honest effect on the 
medical liability crisis that we face.
  So lots of solutions. Three that I have put out on the table tonight: 
one is to allow individuals to pool together, to be able to use the 
power of many people for the purchase of health insurance; second it is 
imperative to allow individuals to have that equal tax treatment for 
the purchase of health insurance that the employer has. We need to make 
it so that all individuals have an incentive to be able to purchase and 
have health insurance; and then the third issue is the one that I 
touched on at the end there, that is, the extreme importance of 
reforming our crisis in lawsuit abuse. It is imperative that that 
happen. If we do not do that, we do all of the other things, it is not 
likely that we will be able to get our handle on the increase of health 
care costs.
  So, finally, what three things drive up the cost of business for any 
business, be it large or small? There is a common denominator to those 
things that drive up costs. They are taxation, they are litigation, and 
they are regulation.
  The problem with the area of health care is that all of those costs 
for the provision of health care for our entire Nation are passed on to 
somebody else. They are passed on in this instance to the employer, by 
and large, who provides again the majority of health insurance.
  When they are passed on to the employer, what is the employer bound 
to do? They must pass them on to the employee, to the worker. So the 
worker is hit twice. It is a double jeopardy as it relates to the 
ability to obtain health insurance.
  So hopefully what we have been able to do tonight is to bring some 
clarity and some focus to how jobs and how health insurance are 
related, why it is important to concentrate on the cost drivers for 
health care, taxation litigation, regulation, and why it is important 
to provide options and opportunities for both individuals and 
businesses to purchase health insurance and to provide health insurance 
for their employees.
  So with that, Mr. Speaker, I am honored to have had the opportunity 
to address the House tonight; and once again I want to thank my 
colleagues, the gentlewoman from Tennessee (Mrs. Blackburn) and the 
gentleman from Iowa (Mr. King) who were so very helpful in bringing 
clarity to those issues.
  And I look forward to garnering the support of my friends on both 
sides of the aisle, because this is not a Republican issue, it is not a 
Democrat issue. It is an American issue. It is an issue that is 
important for all of our constituents across this Nation.
  I look forward to working with all Members of this House to solve the 
challenges that we have.

                          ____________________