[Congressional Record Volume 153, Number 26 (Monday, February 12, 2007)]
[Senate]
[Pages S1850-S1868]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. NELSON of Nebraska (for himself, Mr. Bunning, Ms.
Stabenow, Ms. Snowe, Mr. Kerry, Ms. Collins, Mr. Reed, Mrs.
Clinton, and Mr. Menendez):
S. 543. A bill to improve Medicare beneficiary access by extending
the 60 percent compliance threshold used to determine whether a
hospital or unit of a hospital is an inpatient rehabilitation facility
under the Medicare program; to the Committee on Finance.
Mr. NELSON of Nebraska. Mr. President, today I am introducing the
Preserving Patient Access to Inpatient Rehabilitation Hospitals Act of
2007 to make changes to a rule issued by the Centers for Medicare and
Medicaid Services, CMS, which has restricted the ability of
rehabilitation hospitals to provide critical care.
In my home State of Nebraska, Madonna Rehabilitation Hospital in
Lincoln is a nationally recognized premier rehabilitation facility
offering specialized programs and services for those who have suffered
brain injuries, strokes, spinal cord injuries, and the latest care for
cardiac, pulmonary, cancer, pain, and joint replacement patients. If
the CMS rule is not updated, Madonna and other facilities will not be
able to continue to offer critical care to patients eager to restore
their past health and physical function.
When CMS first looked at whether facilities would qualify as
inpatient rehabilitation facilities, IRFs, a list of criteria were
created to determine eligibility. The narrow criteria, generally
referred to as the ``75-percent rule,'' were first established in 1984,
but were never strictly enforced and ultimately suspended in 2002 due
to inconsistencies in accurately determining medical necessity.
Since establishing strict enforcement of the 75-percent rule in 2004,
field data estimates that as many as 88,000 Medicare patients have been
denied critical IRF services. The rule will, by CMS's own estimate,
shift thousands of patients both Medicare and non-Medicare into
alternative care settings which may be inappropriate and inadequate.
Bipartisan Congressional efforts have repeatedly petitioned both the
U.S. Department of Health and Human Services and CMS for cooperation in
averting an escalation of the 75-percent threshold, which currently
stands at 60 percent.
For cost-reporting periods beginning July 1, 2007, the compliance
threshold is scheduled to jump to 65 percent, with full 75-percent
implementation scheduled for July 2008. If legislative action is not
taken, IRFs will be forced to turn away more and more patients in order
to operate as rehabilitation hospitals or units. By freezing the
compliance threshold at 60 percent and ending the inconsistent and
unpredictable use of fiscal intermediaries' local coverage
determinations, our efforts will ensure that patients across America
will continue to have access to the rehabilitative care they need.
I am pleased a bipartisan group of Senate Finance Committee; Health,
Education, Labor, and Pension Committee; and Special Committee on Aging
members have joined me in supporting this legislation. In addition, the
American Association of People with Disabilities, the American Academy
of Physical Medicine and Rehabilitation, the American Hospital
Association, the American Medical Rehabilitation Providers Association,
the Federation of American Hospitals, and numerous other associations
and advocacy groups have endorsed our bill. Just as I have heard from
patients and medical providers who have experienced problems with the
75-percent Rule, my colleagues and the members of these associations
have witnessed the devastating effect this rule is having on those who
need this type of critical care.
I urge my colleagues to join Senators Jim Bunning, Debbie Stabenow,
Olympia Snowe, John Kerry, Susan Collins, Jack Reed, Hillary Clinton,
Robert Menendez and me in supporting this important bill. My colleagues
and I are determined to resolve this lingering problem and return
medical necessity decisions back into the hands of medical providers,
while ensuring access to improved inpatient rehabilitation care. The
Preserving Patient Access to Inpatient Rehabilitation Hospitals Act of
2007 is a top priority, and I look forward to its passage this year.
______
By Mr. VOINOVICH (for himself, Mr. Akaka, Mr. Levin, and Mrs.
McCaskill):
S. 547. A bill to establish a Deputy Secretary of Homeland Security
for Management, and for other purposes; to the Committee on Homeland
Security and Governmental Affairs.
Mr. VOINOVICH. Mr. President, I rise today to introduce legislation
with my good friend and partner on the Oversight of Government
Management Subcommittee, Senator Akaka, to address the critical
management challenges facing the Department of Homeland Security (DHS).
I am pleased to have Senators Levin and McCaskill as original
cosponsors of this measure.
The legislation would elevate the role and responsibilities of the
current Under Secretary for Management of the Department to a Deputy
Secretary of Homeland Security for Management. The language preserves
the authority of the Secretary and Deputy Secretary of DHS as the
first-and second-highest ranking Department officials, respectively.
The individual appointed as the Deputy Secretary for Management would
serve a five year term and be the third highest ranking official at the
Department. A term would provide management continuity at the
Department during times of leadership transition, such as following a
presidential election.
The role and responsibilities of the Deputy Secretary for Management
would include serving as the Chief Management Officer and principal
advisor to the Secretary on the management of the Department. The
Deputy Secretary for Management would also be responsible for strategic
and annual performance planning, identification and tracking of
performance measures, as well as the integration and transformation
process in support of homeland security operations and programs.
The division of labor between the Deputy Secretary and the new Deputy
Secretary for Management will be similar to the leadership structure at
the Office of Management and Budget. The Deputy Secretary will continue
to be the Secretary's first assistant on all policy matters, while the
newly created Deputy Secretary for Management will be the Secretary's
principal advisor on the development of sustained, long-term management
strategies.
I offer this legislation today because of my belief that the existing
Under Secretary position lacks sufficient authority to direct the type
of sustained leadership and overarching management integration and
transformation strategy that is needed department-wide.
There continue to be significant management challenges associated
with integrating the Department of Homeland Security, whose creation
represented the single largest restructuring of the Federal Government
since the creation of the Department of Defense in 1947. In addition to
its complex mission of securing the Nation from terrorism and natural
hazards through protection, prevention, response, and recovery
leadership of the Department of Homeland Security has the enormous task
of unifying 180,000 employees from 22 disparate Federal agencies.
Since 2003, the Government Accountability Office (GAO) has included
implementing and transforming the Department of Homeland Security on
its high-risk list of programs susceptible to waste, fraud, abuse, and
mismanagement. In announcing its 2007 high-risk list, Comptroller
General Walker said that, ``The array of management and programmatic
challenges continues to limit DHS's ability to carry out its roles
under the National Homeland Security Strategy in an effective risk-
based way.''
Similarly, in December 2005, the DHS Inspector General issued a
report warning of major management challenges facing the Department of
Homeland
[[Page S1851]]
Security. The report noted that although progress has been made since
the Department's inception, ``Integrating its many separate components
in a single, effective, efficient, and economical Department remains
one of DHS' biggest challenges.''
The Department's own Performance and Accountability Report, released
in November 2006, states that it did not meet its strategic goal of
``providing comprehensive leadership and management to improve the
efficiency and effectiveness of the Department,'' further underscoring
the need for good management.
The Homeland Security Advisory Council Culture Task Force Report,
published in January 2007, detailed persisting organizational
challenges within DHS, and prescribed leadership and management models
designed to empower employees, foster collaboration, and encourage
innovation. The third recommendation of the report is that the
Department establish an operational leadership position. The report
noted, ``Alignment and integration of the DHS component organizations
is vital to the success of the DHS mission. The CTF believes there is a
compelling need for the creation of a Deputy Secretary for Operations
(DSO) who would report to the Secretary and be responsible for the high
level Department-wide measures aimed at generating and sustaining
seamless operational integration and alignment of the component
organizations.''
The creation of the Deputy Secretary for Management will help address
the concerns outlined by GAO, the DHS Inspector General, the Homeland
Security Advisory Council, and the Department itself.
As former Chairman and now Ranking Member of the Oversight of
Government Management Subcommittee, improving the management structure
at the Department has been one of my top priorities. The Subcommittee's
Chairman, Senator Akaka, and I have been committed to ensuring that DHS
has the proper tools to make continual improvements in its operations.
It has become clear that the Department needs a stronger management
focus to enable programmatic and operational success. Congress must act
to strengthen the management function at DHS.
During my long career in public service, including as a Mayor and
Governor, I have repeatedly observed that the path to organizational
success lies in adopting best practices in management, including
strategic planning, performance and accountability measures, and
effectively leveraging human capital. When instituting reforms as Mayor
and Governor, individuals tasked with implementation would tell me,
``We don't have time for Total Quality Management; we are too busy
putting out fires.'' I appreciate that DHS is also busy putting out
fires. But the connection between good management practices and
operational success should not be lost.
With the four year anniversary of the Department only weeks away, we
must be honest about the remaining management challenges it faces. The
legislation I offer today provides the focused, high-level attention
that will result in effective management reform. I believe this
legislation is vital to the Department's success. I urge my colleagues
to join me in supporting this legislation.
Mr. AKAKA. Mr. President, I am extremely pleased to join with my good
friend, the senior Senator from Ohio, in reintroducing legislation
today to establish a Deputy Secretary for Management who would be the
chief management officer at the Department of Homeland Security (DHS).
I am especially pleased that we are joined by two of our colleagues on
the Homeland Security and Governmental Affairs Committee, Senator
Levin, who is also the chairman of the Armed Services Committee, and
Senator McCaskill.
The Department of Homeland Security continues to face serious
challenges, some of which stem from integrating 22 separate entities
with existing management problems into one agency. Such a broad, large-
scale merger is why the Government Accountability Office (GAO)
continues to place DHS on the GAO High-Risk List. Our bill would assign
overall management responsibilities to one individual who would be
accountable for leading and instituting change. A Deputy Secretary for
Management would provide the leadership necessary to move forward and
sustain these needed changes. This presidentially appointed and Senate-
confirmed individual, who will have a term of office of five years,
would serve as a bridge between political appointees and career
employees. Changing agency culture is difficult and takes time. As
Comptroller General David Walker notes, successful transformation
initiatives in large private and public sector organizations can take
at least five to seven years.
In addition to serving as chairman of Oversight of Government
Management Subcommittee, I am also the chairman of the Armed Services
Readiness and Management Support Subcommittee, and I have witnessed
firsthand how the Department of Defense (DoD) continues to struggle
with business modernization despite clear congressional directives to
do so. We cannot afford to allow the Department of Homeland Security,
which has an extremely complex and critical mission, to be affected by
the same management problems facing DoD. Our bill is born out of our
concern and frustration that DHS is not doing better. We believe
elevating the Under Secretary for Management to the Deputy Secretary
level will provide DHS the necessary tools needed to avoid making the
same mistakes as DoD. Having a single focus for key management
functions, such as human capital, financial management, information
technology, acquisition management, and performance management are
essential if DHS is to avoid the stovepipe style of management at DoD.
A Deputy Secretary for Management would bring needed attention to
management issues and transformational change; would integrate various
key operational and transformation efforts; and would institutionalize
accountability for addressing management issues and leading change. Our
bill enhances, not diminishes, the ability of the Secretary and Deputy
Secretary of DHS to focus on policy decisions while leaving the
management efforts to the Deputy Secretary for Management. It is good
business practice to have one individual responsible for integrating
strategic plans and overseeing change.
I would like to note that the Homeland Security Advisory Council,
established to advise and make recommendations to the Secretary of the
Department of Homeland Security, created a Culture Task Force (CTF) at
the request of Secretary Chertoff in June 2006. The CTF issued its
recommendations to the Secretary last month. The January 2007 Report of
the Homeland Security Culture Task Force recommends establishing an
operational leadership position, ``who would report to the Secretary
and be responsible for the high level Department-wide measures aimed at
generating and sustaining operational integration and alignment of the
component organizations.''
Congress has a responsibility to ensure that agencies are instituting
sound management practices that will empower agencies to spend taxpayer
dollars more wisely while carrying out critical missions. A fully
accountable chief management officer at DHS will make the difference by
ensuring strong leadership over essential government programs.
______
By Mr. LEAHY (for himself, Mr. Bennett, Ms. Cantwell, Mr. Cardin,
Mr. Cochran, Mr. Coleman, Mr. Conrad, Mr. Dodd, Mr. Domenici,
Mr. Durbin, Mrs. Feinstein, Mr. Kennedy, Mr. Kerry, Mr.
Lieberman, Mr. Sanders, Mr. Schumer, and Mr. Stevens):
S. 548, A bill amend the Internal Revenue code of 1986 to provide
that a deduction equal to fair market value shall be allowed for
charitable contributions of literary, musical, artistic, or scholarly
compositions created by the donor, to the Committee on Finance.
Mr. LEAHY. Mr. President, today we reintroduce the ``Artist-Museum
Partnership Act,'' and once again, I am pleased to be joined in this
effort by Senator Bennett. This bipartisan legislation would enable our
country to keep cherished art works in the United States and to
preserve them in our public institutions. At the same time, this
legislation will erase an inequity in our tax code that currently
serves as a disincentive for artists to donate their works to museums
and libraries.
[[Page S1852]]
We have introduced this same bill in each of the past four Congresses.
It was also included in the Senate-passed version of the 2001 tax
reconciliation bill, the Senate-passed version of the 2003 Charity Aid,
Recovery, and Empowerment (CARE) Act, and the Senate-passed version of
the 2005 tax reconciliation bill. I would like to thank Senators
Cantwell, Cardin, Cochran, Coleman, Conrad, Dodd, Domenici, Durbin,
Feinstein, Kennedy, Kerry, Lieberman, Sanders, Schumer, and Stevens for
cosponsoring this tri-partisan bill.
Our bill is sensible and straightforward. It would allow artists,
writers, and composers to take a tax deduction equal to the fair market
value of the works they donate to museums and libraries. This is
something that collectors who make similar donations are already able
to do. Under current law, artists who donate self-created works are
only able to deduct the cost of supplies such as canvas, pen, paper and
ink, which does not even come close to their true value. This is unfair
to artists, and it hurts museums and libraries--large and small--that
are dedicated to preserving works for posterity. If we as a Nation want
to ensure that works of art created by living artists are available to
the public in the future--for study and for pleasure--this is something
that artists should be allowed to do.
In my State of Vermont, we are incredibly proud of the great works
produced by hundreds of local artists who choose to live and work in
the Green Mountain State. Displaying their creations in museums and
libraries helps develop a sense of pride among Vermonters, and
strengthens a bond with Vermont, its landscape, its beauty, and its
cultural heritage. Anyone who has contemplated a painting in a museum
or examined an original manuscript or composition, and has gained a
greater understanding of both the artist and the subject as a result,
knows the tremendous value of these works. I would like to see more of
them, not fewer, preserved in Vermont and across the country.
Prior to 1969, artists and collectors alike were able to take a
deduction equivalent to the fair market value of a work, but Congress
changed the law with respect to artists in the Tax Reform Act of 1969.
Since then, fewer and fewer artists have donated their works to museums
and cultural institutions. For example, prior to the enactment of the
1969 law, Igor Stravinsky planned to donate his papers to the Music
Division of the Library of Congress. But after the law passed, his
papers were sold instead to a private foundation in Switzerland. We can
no longer afford this massive loss to our cultural heritage. Losses to
the public like this are an unintended consequence of the 1969 tax bill
that should be corrected.
Congress changed the law for artists more than 30 years ago in
response to the perception that some taxpayers were taking advantage of
the law by inflating the market value of self-created works. Since that
time, however, the government has cut down significantly on the abuse
of fair market value determinations.
Under our legislation, artists who donate their own paintings,
manuscripts, compositions, or scholarly compositions would be subject
to the same new rules that all taxpayer/collectors who donate such
works must now follow. This includes providing relevant information as
to the value of the gift, providing appraisals by qualified appraisers,
and, in some cases, subjecting them to review by the Internal Revenue
Service's Art Advisory Panel.
In addition, donated works must be accepted by museums and libraries,
which often have strict criteria in place for works they intend to
display. The institution must certify that it intends to put the work
to a use that is related to the institution's tax exempt status. For
example, a painting contributed to an educational institution must be
used by that organization for educational purposes and could not be
sold by the institution for profit. Similarly, a work could not be
donated to a hospital or other charitable institution that did not
intend to use the work in a manner related to the function constituting
the recipient's exemption under Section 501 of the tax code. Finally,
the fair market value of the work could only be deducted from the
portion of the artist's income that has come from the sale of similar
works or related activities.
This bill would also correct another disparity in the tax treatment
of self-created works--how the same work is treated before and after an
artist's death. While living artists may only deduct the material costs
of donations, donations of those same works after death are deductible
from estate taxes at the fair market value of the work. In addition,
when an artist dies, works that are part of his or her estate are taxed
on the fair market value.
I want to thank my colleagues again for cosponsoring this bipartisan
legislation. The time has come for us to correct an unintended
consequence of the 1969 law and encourage rather than discourage the
donations of art works by their creators. This bill will make a crucial
difference in an artist's decision to donate his or her work, rather
than sell it to a private party where it may become lost to the public
forever.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 548
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 ``Artist-Museum Partnership
Act''.
SEC. 2. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS CREATED BY
THE TAXPAYER.
(a) In General.--Subsection (e) of section 170 of the
Internal Revenue Code of 1986 (relating to certain
contributions of ordinary income and capital gain property)
is amended by adding at the end the following new paragraph:
``(8) Special rule for certain contributions of literary,
musical, or artistic compositions.--
``(A) In general.--In the case of a qualified artistic
charitable contribution--
``(i) the amount of such contribution shall be the fair
market value of the property contributed (determined at the
time of such contribution), and
``(ii) no reduction in the amount of such contribution
shall be made under paragraph (1).
``(B) Qualified artistic charitable contribution.--For
purposes of this paragraph, the term `qualified artistic
charitable contribution' means a charitable contribution of
any literary, musical, artistic, or scholarly composition, or
similar property, or the copyright thereon (or both), but
only if--
``(i) such property was created by the personal efforts of
the taxpayer making such contribution no less than 18 months
prior to such contribution,
``(ii) the taxpayer--
``(I) has received a qualified appraisal of the fair market
value of such property in accordance with the regulations
under this section, and
``(II) attaches to the taxpayer's income tax return for the
taxable year in which such contribution was made a copy of
such appraisal,
``(iii) the donee is an organization described in
subsection (b)(1)(A),
``(iv) the use of such property by the donee is related to
the purpose or function constituting the basis for the
donee's exemption under section 501 (or, in the case of a
governmental unit, to any purpose or function described under
subsection (c)),
``(v) the taxpayer receives from the donee a written
statement representing that the donee's use of the property
will be in accordance with the provisions of clause (iv), and
``(vi) the written appraisal referred to in clause (ii)
includes evidence of the extent (if any) to which property
created by the personal efforts of the taxpayer and of the
same type as the donated property is or has been--
``(I) owned, maintained, and displayed by organizations
described in subsection (b)(1)(A), and
``(II) sold to or exchanged by persons other than the
taxpayer, donee, or any related person (as defined in section
465(b)(3)(C)).
``(C) Maximum dollar limitation; no carryover of increased
deduction.--The increase in the deduction under this section
by reason of this paragraph for any taxable year--
``(i) shall not exceed the artistic adjusted gross income
of the taxpayer for such taxable year, and
``(ii) shall not be taken into account in determining the
amount which may be carried from such taxable year under
subsection (d).
``(D) Artistic adjusted gross income.--For purposes of this
paragraph, the term `artistic adjusted gross income' means
that portion of the adjusted gross income of the taxpayer for
the taxable year attributable to--
``(i) income from the sale or use of property created by
the personal efforts of the taxpayer which is of the same
type as the donated property, and
``(ii) income from teaching, lecturing, performing, or
similar activity with respect to property described in clause
(i).
[[Page S1853]]
``(E) Paragraph not to apply to certain contributions.--
Subparagraph (A) shall not apply to any charitable
contribution of any letter, memorandum, or similar property
which was written, prepared, or produced by or for an
individual while the individual is an officer or employee of
any person (including any government agency or
instrumentality) unless such letter, memorandum, or similar
property is entirely personal.
``(F) Copyright treated as separate property for partial
interest rule.--In the case of a qualified artistic
charitable contribution, the tangible literary, musical,
artistic, or scholarly composition, or similar property and
the copyright on such work shall be treated as separate
properties for purposes of this paragraph and subsection
(f)(3).''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after the date of the
enactment of this Act in taxable years ending after such
date.
______
By Mr. KENNEDY (for himself, Ms. Snowe, Mr. Reed, and Mr. Brown):
S. 549. A bill to amend the Federal Food, Drug, and Cosmetic Act to
preserve the effectiveness of medically important antibiotics used in
the treatment of human and animal diseases; to the Committee on Health,
Education, Labor, and Pensions.
Mr. KENNEDY. Mr. President, it is a privilege to join Senator Snowe
in introducing ``The Preservation of Antibiotics for Medical Treatment
Act of 2007.'' I am also pleased that this year we are joined by
Senator Sherrod Brown, who championed this legislation so ably as a
member of the House of Representatives.
Our goal in this important initiative is to take needed action to
preserve the effectiveness of antibiotics in treating diseases. These
drugs are truly modern medical miracles. During World War II, the newly
developed ``wonder drug'' penicillin revolutionized care for our
soldiers wounded in battle. Since then, such drugs have become
indispensable in modern medicine, protecting all of us from deadly
infections. They are even more valuable today, safeguarding the Nation
from the threat of bioterrorism.
Unfortunately, in recent years, we have done too little to prevent
the emergence of antibiotic-resistant strains of bacteria and other
germs, and many of our most powerful drugs are no longer effective.
Partly, the resistance is the result of over-prescribing such drugs
in routine medical care. Mounting evidence shows that indiscriminate
use of such drugs in animal feed is also a major factor in the
development of antibiotic resistant germs.
Obviously, if animals are sick, whether as pets or livestock, they
should be treated with the best veterinary medications available. That
is not the problem. The problem is the widespread use of antibiotics to
promote growth and fatten healthy livestock. Such nontherapeutic use
clearly undermines the effectiveness of these important drugs, because
it leads to greater development of antibiotic-resistant bacteria that
can make infections in humans difficult or impossible to treat.
In 1998--nine years ago--a report prepared at the request of the
Department of Agriculture and the Food and Drug Administration by the
National Academy of Sciences, concluded: ``There is a link between the
use of antibiotics in food animals, the development of bacterial
resistance to these drugs, and human disease.'' The World Health
Organization has specifically recommended that antibiotics used to
treat humans should not be used to promote animal growth, although they
could still be used to treat sick animals.
In 2001, a Federal interagency task force on antibiotic resistance
concluded that ``drug-resistant pathogens are a growing menace to all
people, regardless of age, gender, or socio-economic background. If we
do not act to address the problem . . . [d]rug choices for the
treatment of common infections will become increasingly limited and
expensive--and, in some cases, nonexistent.''
The Union of Concerned Scientists estimates that 70 percent of all
U.S. antibiotics are used nontherapeutically in animal agriculture--8
times more than are used in all of human medicine. This indiscriminate
use clearly reduces their potency.
Major medical associations have been increasingly concerned, and have
taken strong stands against antibiotic use in animal agriculture. In
June 2001, the American Medical Association adopted a resolution
opposing nontherapeutic use of antibiotics in animals. Other
professional medical organizations that have taken similar stands
include the American College of Preventive Medicine, the American
Public Health Association, and the Council of State and Territorial
Epidemiologists. The legislation we are offering has been strongly
endorsed by the American Public Health Association and numerous other
groups and independent experts in the field.
Ending the current detrimental practice is feasible and cost-
effective. Last month an economic study by researchers at Johns Hopkins
University examined data from the poultry producer Perdue. In this
study of 7 million chickens, the slight benefit from the nontherapeutic
use of antibiotics was more than offset by the cost of purchasing
antibiotics.
In fact, most of the developed countries in the world, except for the
United States and Canada, already restrict the use of antibiotics to
promote growth in raising livestock. In 1999, the European Union banned
such use, and funds saved on drugs have been invested in improving
hygiene and animal husbandry practices. Researchers in Denmark found a
dramatic decline in the number of drug-resistant organisms in animals--
and no significant increase in animal diseases or consumer prices.
These results have encouraged clinicians and researchers to call for
a similar ban in the United States. The title of an editorial in the
New England Journal of Medicine 6 years ago said it all:
``Antimicrobial Use in Animal Feed--Time to Stop.''
In the last Congress, over 350 organizations representing scientific
and medical associations, consumer and environmental groups as well as
animal rights and religious groups endorsed this legislation and called
for an end to the reckless and irresponsible use of these critically
important medicines.
The Nation is clearly at risk of an epidemic outbreak of food
poisoning caused by drug-resistant bacteria or other germs. In recent
years, many nations, including the United States, have been plagued by
outbreaks of food-borne illnesses. Imagine the consequences of an
outbreak caused by a strain of bacteria immune to any drugs we have. It
is time to put public safety first and stop this promiscuous use of
drugs essential for protecting human health.
The bill we are introducing will phase out the non-therapeutic use in
livestock of medically important antibiotics, unless manufacturers can
demonstrate that such use is no danger to public health. The Act
applies this same strict standard to applications for approval of new
animal antibiotics. Such use is not restricted if the animals are sick,
or if they are pets or are animals not used for food. In addition, FDA
is also given authority to restrict the use of important drugs to treat
such animals, if risk to humans is in question.
According to the National Academy of Sciences, eliminating the use of
antibiotics as feed additives in agriculture will cost each American
consumer not more than five to ten dollars a year. The legislation
recognizes, however, that economic costs to farmers in making the
transition to antibiotic-free practices may be substantial. In such
cases, the Act provides for Federal payments to defray the cost of
shifting to antibiotic-free practices, with special preference for
family farms.
Antibiotics are one of the great miracles of modem medicine. Yet
today, we are destroying them faster than the pharmaceutical industry
can replace them with new discoveries. If doctors lose these vital
medications, the most vulnerable Americans will suffer the most--
children, the elderly, persons with HIV/AIDS, and others who are most
in danger of drug resistant infections. I urge my colleagues to support
this clearly needed legislation to protect the health of all Americans
from the reckless and unjustified use of antibiotics.
Ms. SNOWE. Mr. President, today we face concerns about infectious
disease which few could have anticipated. Over a half century ago,
following the development of modem antibiotics, Nobel Laureate Sir
McFarland Burnet
[[Page S1854]]
summed up what many experts believed when he stated, ``One can think of
the middle of the twentieth century as the end of one of the most
important social revolutions in history, the virtual elimination of
infectious diseases as a significant factor in social life.''
How things have changed! Today we face grave concern about pandemic
influenza, and in fact every day many of the most serious health
threats come from infectious diseases. When we consider the greatest
killers--HIV, tuberculosis, malaria--it is clear that infectious
diseases have not abated. At the same time we have seen an alarming
trend as existing antibiotics are becoming less effective in treating
infections. We know that resistance to drugs can be developed, and that
the more we expose bacteria to antibiotics, the more resistance we will
see. So it is critical to address preserving lifesaving antibiotic
drugs for use in treating disease.
Today over nine out of ten Americans understand that resistance to
antibiotics is a problem. Most Americans have learned that that colds
and flu are caused by viruses, and recognize that treating a cold with
an antibiotic is inappropriate. Our health care providers are more
careful to discriminate when to use antibiotics, because they know that
when a patient who has been inappropriately prescribed an antibiotic
actually develops a bacterial infection, it is more likely to be
resistant to treatment.
When we overuse antibiotics, we risk eliminating the very cures which
scientists fought so hard to develop. The threat of bioterrorism
amplifies the danger. I have supported increased NIH research funding,
as well as Bioshield legislation, in order to promote development of
essential drugs, both to address natural and man-made threats. It is so
counterproductive to develop antimicrobial drugs and see their misuse
render them ineffective.
Yet every day in America antibiotics continue to be used in huge
quantities for no treatment purpose whatsoever. I am speaking of the
non-therapeutic use of antibiotics in agriculture. Simply put, the
practice of feeding antibiotics to healthy animals jeopardizes the
effectiveness of these medicines in treating ill people and animals.
Recognizing the public health threat caused by antibiotic resistance,
Congress in 2000 amended the Public Health Threats and Emergencies Act
to curb antibiotic overuse in human medicine. Yet today, it is
estimated that 70 percent of the antimicrobials used in the United
States are fed to farm animals for non-therapeutic purposes including
growth promotion, poor management practices and crowded, unsanitary
conditions.
In March 2003, the National Academies of Sciences stated that a
decrease in antimicrobial use in human medicine alone will not solve
the problem of drug resistance.
Substantial efforts must be made to decrease inappropriate overuse of
antibiotics in animals and agriculture.
Two years ago five major medical and environmental groups--the
American Academy of Pediatrics, the American Public Health Association,
Environmental Defense, the Food Animal Concerns Trust and the Union of
Concerned Scientists--jointly filed a formal regulatory petition with
the U.S. Food and Drug Administration urging the agency to withdraw
approvals for seven classes of antibiotics which are used as
agricultural feed additives. They pointed out what we have known for
years--that antibiotics which are crucial to treating human disease
should never be used except for their intended purpose--to treat
disease.
In a study reported in the New England Journal of Medicine,
researchers at the Centers for Disease Control and Prevention found 17
percent of drug-resistant staph infections had no apparent links to
health-care settings. Nearly one in five of these resistant infections
arose in the community--not in the health care setting. We must do more
to address inappropriate antibiotic use in medicine, the use of these
drugs in our environment cannot be ignored.
This is why I have joined with Senator Kennedy in again introducing
the ``Preservation of Antibiotics for Medical Treatment Act''. This
bill phases out the nontherapeutic uses of critical medically important
antibiotics in livestock and poultry production, unless their
manufacturers can show that they pose no danger to public health.
Our legislation requires the Food and Drug Administration to withdraw
the approval for nontherapeutic agricultural use of antibiotics in
food-producing animals if the antibiotic is used for treating human
disease, unless the application is proven harmless within two years.
The same tough standard of safety will apply to new applications for
approval of animal antibiotics.
This legislation places no unreasonable burden on producers. It does
not restrict the use of antibiotics to treat sick animals, or for that
matter to treat pets and other animals not used for food. The Act
authorizes Federal payments to small family farms to defray their
costs, and it also establishes research and demonstration programs that
reduce the use of antibiotics in raising food-producing animals. The
Act also requires data collection from manufacturers so that the types
and amounts of antibiotics used in animals can be monitored.
As we are constantly reminded, the discovery and development of a new
drug can require great time and expense. It is simply common sense that
we preserve the use of the drugs which we already have, and use them
appropriately. I call on my colleagues to support us in this effort.
______
By Mr. AKAKA (for himself, Mr. Voinovich, and Mr. Lieberman):
S. 550. A bill to preserve existing judgeships on the Superior Court
of the District of Columbia; to the Committee on Homeland Security and
Governmental Affairs.
Mr. AKAKA. Mr. President, today I rise to introduce legislation that
would preserve existing seats on the District of Columbia Superior
Court. I am pleased that Senators Voinovich and Lieberman are joining
me in this effort.
As my colleagues know, the Superior Court is the trial court of
general jurisdiction over local matters in the District of Columbia.
When a vacancy on the court occurs, the District of Columbia Judicial
Nominations Commission solicits applicants to fill the vacancy and
sends three names to the President. The President then selects one
candidate and sends the individual's nomination to the Senate for
confirmation. Existing law caps the total number of judges on the
Superior Court at 59.
However, the District of Columbia Family Court Act of 2001 created
three new seats for the Family Court, which is a division of the
Superior Court, but failed to increase the overall cap on the number of
judges seated on the court. As a result, three existing seats in the
other divisions of the court--including the criminal, civil, probate,
and tax divisions--were effectively eliminated. Therefore, when
vacancies in those divisions occur, new judges cannot be seated.
Ever since the Family Court Act became law, the Homeland Security and
Governmental Affairs Committee and the Senate has been in the untenable
position of delaying the confirmation of judicial nominees when the cap
has been reached. The end result is that residents of DC will face
delay of justice due to a lack of judicial personnel.
The bill we introduce today would address this problem by amending
the DC Code to increase the cap on the number of associate judges on
the Superior Court. Similar legislation introduced by my good friend
Senator Collins in both the 108th and 109th Sessions of Congress was
favorably reported by the Committee on Homeland Security and
Governmental Affairs and passed by the Senate. I urge my colleagues to
once again support this important legislation.
I ask unanimous consent that the text of the legislation be printed
in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 550
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. COMPOSITION OF SUPERIOR COURT.
Section 903 of title 11 of the District of Columbia Code is
amended by striking ``fifty-eight'' and inserting ``61''.
______
By Ms. MURKOWSKI (for herself and Mr. Stevens):
[[Page S1855]]
S. 552. A bill to provide for the tax treatment of income received in
connection with the litigation concerning the Exxon Valdez oil spill
and for other purposes; to the Committee on Finance.
Ms. MURKOWSKI. Mr. President, I rise to introduce a bill that will
help the commercial fishermen and others whose livelihoods were
negatively impacted by the Exxon Valdez oil spill. I am pleased to have
Mr. Stevens join me in introducing this important legislation.
The Exxon Valdez ran aground on Bligh Reef on March 24, 1989,
spilling 11 million gallons of oil into Prince William Sound in Alaska.
A class action jury trial was held in Federal court in Anchorage, AK,
in 1994. The plaintiffs included 32,000 fishermen among others whose
livelihoods were gravely affected by this disaster. The jury awarded $5
billion in punitive damages to plaintiffs. The punitive damage award
has been on repeated appeal by the Exxon Corporation since 1994. Many
of the original plaintiffs, possibly more than 1,000 people, have
already died.
Once the punitive damage award of the Exxon Valdez litigation is
settled, many fishermen will receive payments to reimburse them for
fishing income lost due to the environmental consequences of the Exxon
Valdez oil spill. The eventual settlement could be as much as several
billion dollars.
My bill gives the affected fishermen, as well as other plaintiffs in
this case, a fair shake when it comes to contributions to retirement
plans and averaging of income for tax purposes.
With respect to retirement plan contributions, my bill increases the
caps on both deductions and income for traditional IRAs to the extent
of the income a plaintiff receives from the settlement or judgment.
Also, it allows the plaintiffs to make contributions to Roth IRAs and
other retirement plans to the extent of the income received from the
settlement or judgment.
Fishermen are currently allowed to average their income over three
years due to the often inconsistent nature of the fishing business. The
litigation stemming from the Exxon Valdez oil spill poses an even more
unique situation since fishermen and other plaintiffs have been waiting
to receive lost income--in the form of a settlement or judgment--since
1994. My bill allows plaintiffs to average their income for the period
of time between December 31 of the year they receive the settlement or
judgment payment and January 1, 1994--the year of the original jury
award in Federal court.
It is imperative that we address this important issue to help those
affected by the Exxon Valdez oil spill plan for their retirement.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 552
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 ``Exxon Valdez Oil Spill Tax
Treatment Act''.
SEC. 2. TAX TREATMENT OF INCOME RECEIVED IN CONNECTION WITH
THE EXXON VALDEZ LITIGATION.
(a) Income Averaging of Amounts Received From the Exxon
Valdez Litigation.--
(1) In general.--At the election of a qualified taxpayer
who receives qualified settlement income during a taxable
year, the tax imposed by chapter 1 of the Internal Revenue
Code of 1986 for such taxable year shall be equal to the sum
of--
(A) the tax which would be imposed under such chapter if--
(i) no amount of elected qualified settlement income were
included in gross income for such year, and
(ii) no deduction were allowed for such year for expenses
(otherwise allowable as a deduction to the taxpayer for such
year) attributable to such elected qualified settlement
income, plus
(B) the increase in tax under such chapter which would
result if taxable income for each of the years in the
applicable period were increased by an amount equal to the
applicable fraction of the elected qualified settlement
income reduced by any expenses (otherwise allowable as a
deduction to the taxpayer) attributable to such elected
qualified settlement income.
Any adjustment under this section for any taxable year shall
be taken into account in applying this section for any
subsequent taxable year.
(2) Coordination with farm income averaging.--If a
qualified taxpayer makes an election with respect to any
qualified settlement income under paragraph (1) for any
taxable year, such taxpayer may not elect to treat such
amount as elected farm income under section 1301 of the
Internal Revenue Code of 1986.
(3) Definitions.--For purposes of this subsection--
(A) Applicable period.--The term ``applicable period''
means the period beginning on January 1, 1994, and ending on
December 31 of the year in which the elected qualified
settlement income is received.
(B) Applicable fraction.--The term ``applicable fraction''
means the fraction the numerator of which is one and the
denominator of which is the number of years in the applicable
period.
(C) Elected qualified settlement income.--The term
``elected qualified settlement income'' means so much of the
taxable income for the taxable year which is--
(i) qualified settlement income, and
(ii) specified under the election under paragraph (1).
(b) Contributions of Amounts Received to Retirement
Accounts.--
(1) In general.--Any qualified taxpayer who receives
qualified settlement income during the taxable year may, at
any time before the end of the taxable year in which such
income was received, make one or more contributions to an
eligible retirement plan of which such qualified taxpayer is
a beneficiary in an aggregate amount not to exceed the amount
of qualified settlement income received during such year.
(2) Time when contributions deemed made.--For purposes of
paragraph (1), a qualified taxpayer shall be deemed to have
made a contribution to an eligible retirement plan on the
last day of the taxable year in which such income is received
if the contribution is made on account of such taxable year
and is made not later than the time prescribed by law for
filing the return for such taxable year (not including
extensions thereof).
(3) Treatment of contributions to eligible retirement
plans.--For purposes of the Internal Revenue Code of 1986, if
a contribution is made pursuant to paragraph (1) with respect
to qualified settlement income, then--
(A) except as provided in paragraph (4)--
(i) to the extent of such contribution, the qualified
settlement income shall not be included in taxable income,
and
(ii) for purposes of section 72 of such Code, such
contribution shall not be considered to be investment in the
contract, and
(B) the qualified taxpayer shall, to the extent of the
amount of the contribution, be treated--
(i) as having received the qualified settlement income--
(I) in the case of a contribution to an individual
retirement plan (as defined under section 7701(a)(37) of such
Code), in a distribution described in section 408(d)(3) of
such Code, and
(II) in the case of any other eligible retirement plan, in
an eligible rollover distribution (as defined under section
402(f)(2) of such Code), and
(ii) as having transferred the amount to the eligible
retirement plan in a direct trustee to trustee transfer
within 60 days of the distribution.
(4) Special rule for roth iras and roth 401(k)s.--For
purposes of the Internal Revenue Code of 1986, if a
contribution is made pursuant to paragraph (1) with respect
to qualified settlement income to a Roth IRA (as defined
under section 408A(b) of such Code) or as a designated Roth
contribution to an applicable retirement plan (within the
meaning of section 402A of such Code), then--
(A) the qualified settlement income shall be includible in
taxable income, and
(B) for purposes of section 72 of such Code, such
contribution shall be considered to be investment in the
contract.
(5) Eligible retirement plan.--For purpose of this
subsection, the term ``eligible retirement plan'' has the
meaning given such term under section 402(c)(8)(B) of the
Internal Revenue Code of 1986.
(c) Qualified Settlement Income Not Included in SECA.--For
purposes of chapter 2 of the Internal Revenue Code of 1986
and section 211 of the Social Security Act, no portion of
qualified settlement income received by a qualified taxpayer
shall be treated as self-employment income.
(d) Qualified Taxpayer.--For purposes of this section, the
term ``qualified taxpayer'' means--
(1) any plaintiff in the civil action In re Exxon Valdez,
No. 89-095-CV (HRH) (Consolidated) (D. Alaska); or
(2) any beneficiary of the estate of such a plaintiff who--
(A) acquired the right to receive qualified settlement
income from that plaintiff; and
(B) was the spouse or an immediate relative of that
plaintiff.
(e) Qualified Settlement Income.--For purposes of this
section, the term ``qualified settlement income'' means
income received (whether as lump sums or periodic payments)
in connection with the civil action In re Exxon Valdez, No.
89-095-CV (HRH) (Consolidated) (D. Alaska), including
interest (whether pre- or post judgment and whether related
to a settlement or judgment).
______
By Mr. DORGAN:
[[Page S1856]]
S. 554. A bill to reduce the Federal budget deficit, and for other
purposes; to the Committee on Finance.
Mr. DORGAN. Mr. President, this Nation was founded on the principle
that the future matters more than the past. It was the first Nation in
the world so conceived. The Founders took great pains to ensure that
each generation would get a fresh start, free of the encumbrances of
the past. They abolished primogeniture, entail, and hereditary titles.
Jefferson for one believed that every twenty years or so, the books of
the Federal Government should be wiped clean, so that prior generations
would not be able to fob their debts off upon later ones who would have
no say in the matter.
Over the last half dozen years, we have done exactly what the
Founders of this Nation did not intend. We have heaped debt upon debt
on the backs of our children and theirs--the very people the Founders
thought should be free of such debts. In just about every corner of
government and policy, the story has been the same--let's have a party
today, and let our kids and grandkids clean up the mess. We've done it
with energy, the environment, and, perhaps most of all, we have done it
with the Federal budget.
Just six years ago, we had our fiscal house in order. The government
had $5.6 trillion in projected surpluses between 2002 and 2011. We were
paying down the debt. But now it's changed. We racked up the second
largest deficit in our history in 2003, our largest deficit ever in
2004, the third highest deficit in 2005 and the seventh largest deficit
last year.
The administration can claim to be making progress only by leaving
out of its budget plans the full cost of the ongoing war against
terrorism, long term relief from the alternative minimum tax, using
Social Security surplus revenues for unrelated spending and by
generally setting expectations so low that even failure looks good by
comparison. But the reality, of course, is unless the Nation's fiscal
policies are dramatically changed, we are going to see large deficits
for many years in the future. At the current rate the accumulated debt
of this government will grow from $8.6 trillion today to over $12
trillion by 2012.
That projected debt is bigger than the economies of Japan, Germany,
France, the United Kingdom and Canada combined. It's almost $39,000 for
every man, woman and child in this country. Meanwhile, the
Administration has provided big tax cuts for people who use them to buy
third homes, pricey wines and three-hundred-dollar dungarees. This is
Me-Generation economics. It is economics that says, ``Let others make
the sacrifices while we have a bash.'' It is the total opposite of the
economics envisioned by the founders of this country, who said that we
should meet our own obligations, clean up our own messes and pay our
own way, so that those who come after us can have a future that is
clear and bright.
To this end, I rise today to introduce legislation called the Act For
Our Kids that I hope will help spark a serious discussion in the U.S.
Congress, and across our country, about putting the Federal
Government's balance sheet back in order. This legislation provides for
a package of Federal spending cuts and more revenue that would raise
nearly $76 billion the first full year and some $205 billion over five
years and every penny would be used to reduce the Federal deficit! It
is a real first step in acting like we are serious about fixing our
fiscal policies and paying our bills.
Last year on the Senate floor I spoke about an agenda that Congress
could be pursuing that would benefit all Americans. Among other things,
I said that two of our top priorities ought to be paying our bills and
taking care of our kids. Regrettably, however, the administration and
the majority in Congress at that time adopted a card credit mentality
to fiscal policy that would make even the most aggressive credit card
companies blush. If a part of the American dream is ensuring that one's
kids and grandkids get at least the same opportunities that we had to
climb the economic ladder to success, then the Federal Government's
recent approach to fiscal policy has been a full-blown nightmare.
Unless we change the direction of our fiscal policy, the Federal
Government will ``borrow'' trillions of dollars of Social Security
surplus revenues over the next decade to pay for tax cuts and other
spending. Social Security faces significant financial challenges as the
baby boomers retire in the years ahead. Loading up the country with
more debt and diverting needed revenues away from the Social Security
program will only make the program's fiscal problems worse, not better.
The real question is how are we going to dig ourselves out of this
fiscal quagmire? The solution offered by the White House and the
Republicans in Congress was simple: They said let's run up our Federal
credit card balances even more, while at the same time giving more
large tax cuts to the richest Americans.
And if President Bush is successful in permanently extending the bulk
of his previous tax cuts that mostly benefit the wealthiest Americans,
as he proposed in his Fiscal Year 2008 budget submission just this
week, another $2 trillion in revenues will be lost over the next
decade.
Frankly, I am not aware of any instance in the history of this great
country where those in charge of the Federal purse decided to cut
revenues on such a large scale while in the midst of war. Today we ask
our young men and women in uniform to sacrifice so much, yet the
wealthiest among us are not asked to contribute even a portion of their
tax cuts to what we are told every day is a noble cause.
In one of his famous fireside chats, President Franklin D. Roosevelt
described our obligation as citizens to support our troops during times
of war. He said:
Not all of us can have the privilege of fighting our enemies
in distant parts of the world. Not all of us can have the
privilege of working in a munitions factory or a ship yard,
or on the farms or in oil fields or mines, producing the
weapons or the raw materials that are needed by our armed
forces. But there is one front and one battle where everyone
in the United States--every man, woman and child--is in
action. . . . That front is right here at home, in our daily
lives, in our daily tasks. Here at home everyone will have
the privilege of making whatever self-denial is necessary,
not only to supply our fighting men, but to keep the economic
structure of our country fortified and secure during the war
and after the war.
The sentiments of President Roosevelt's remarks are truly lost on an
Administration that has borrowed every dollar it has used to pay for
the war in Iraq and the global fight against terrorism.
I think the American public understands that one of our obligations
as U.S. citizens is helping to defend this country in whatever way is
best. But what we have been missing is leadership and at least some
measure of fiscal discipline in paying our war debt and getting other
parts of our fiscal house in order.
It is unfair to pile up this massive debt and heave it onto the
shoulders of working families and their children. The Federal
Government is expected to pay $3.3 trillion in interest payments on the
debt alone during the 10-year period ending in 2017.
The legislation I am introducing today includes a number of proposals
that, taken together, would reduce the Federal deficit by my estimate
$205 billion over the next five years.
First and foremost, this bill requires Federal agencies to tighten
their belts by cutting their administrative overhead expenses. Before
we ask others to make sacrifices needed to reduce the Nation's debt
load, Federal agencies must do their part.
My legislation includes other targeted cuts in Federal spending and
will make changes to the tax code to ensure that the wealthiest
Americans and most profitable multinational companies that do business
in this country pay their fair share of taxes--revenues that are needed
to defend this Nation and keep our economy strong and growing.
Among other things, the Act For Our Kids would do the following: Cut
Federal agency administrative overhead by 5 percent for fiscal years
2008 through 2012 and save taxpayers an estimated $30 billion. This
proposal would reduce ``nuts and bolts'' expenditures, including those
relating to agency travel and transportation, advertising, office
supplies, conferences and equipment. These savings must come from the
bureaucracy, not programs. It is generally understood that
administrative expenses do not include personnel compensation and
benefits.
[[Page S1857]]
Eliminate $3.5 billion that remains in a giveaway fund in the
Medicare drug plan. The 2003 Medicare drug bill included a $10 billion
``slush'' fund that the Secretary of the U.S. Department of Health and
Human Services could tap to entice regional preferred provider
organizations (PPOs) to participate in Medicare. This fund has been
roundly criticized by policy experts as an inappropriate use of Federal
resources. The Senate has previously supported eliminating this fund
altogether and legislation enacted by Congress late last year used $6.5
billion of the $10 billion in the fund for the physician payment fix.
Make drug importation legal and safe. This will not only help
consumers by reducing the cost they pay for prescription drugs, but
will save the Federal Government and therefore taxpayers an estimated
$1.6 billion in Federal health program costs in the five years after
its enactment.
Stop providing Federal funding for TV Marti broadcasts into Cuba that
are jammed and therefore are not watched by their intended recipients.
This provision would save U.S. taxpayers an estimated $100 million in
the next half decade.
Restore honesty and accountability in Federal contracting by, among
other things, reinstating a Federal rule that would deny Federal
contracts to companies with a pattern of overcharging the government or
violating other Federal laws, including tax, labor and consumer
protections. Other provisions in the bill would crack down on corporate
cheaters and require full disclosure of contracting abuses. It requires
real contract competition, bans corporate cronyism and takes other
significant steps to ensure that Federal contractors. large or small,
are not gouging American taxpayers. Based on information derived from
similar experiences in the past, and more recently, one could easily
expect these reforms would save the Federal Government some $6 billion
over a five-year period.
Abolish the U.S. Court of Federal Claims. The docket of the Court of
Federal Claims includes a hodgepodge of cases, including patent cases,
claims involving Indian property, vaccine injury cases, claims arising
from the interment of Japanese Americans, and cases arising under the
Fifth Amendment's takings clause. The light caseload of this court
could be handled more efficiently by Federal district courts. This
elimination of the Claims Court would result in additional taxpayer
savings of tens of millions of dollars over five years.
Impose a temporary 2 percent emergency tariff on all imports for two
years to help correct our country's $800-billion-plus trade deficit.
Article XII of the GATT, which has been incorporated into the World
Trade Organization, specifically allows member countries to impose
tariffs to correct a balance of payment crisis. Temporary emergency
tariffs over two years would help address this crisis, while raising an
estimated $66 billion for deficit reduction.
Prevent tax avoidance for U.S. multinational companies that move
profits to offshore tax havens by generally treating their controlled
``paper or shell'' subsidiaries set up in foreign tax-haven countries
as domestic companies for U.S. tax purposes. This proposal would save
taxpayers another $5.8 billion over five years.
Repeal the perverse Federal tax subsidy called tax deferral for U.S.
companies that shut down manufacturing plants in the U.S. and move jobs
abroad, only to ship their now foreign-made products back into our
country. Killing this ill-advised tax break for runaway manufacturing
plants would help level the financial playing field for domestic
manufacturers while saving taxpayers some $4.2 billion over a five-year
period.
Clarify and enhance the application of the economic substance
doctrine that courts apply to deny tax benefits from business tax
shelter transactions that do not result in a meaningful change to the
taxpayer's economic position other than a reduction in their Federal
income tax. This proposal would save taxpayers an estimated $5.8
billion over the next five years.
Rescind on a prospective basis a portion of the major tax cuts passed
by Congress since 2001 for individuals who are earning more than $1
million annually. Providing some $90 billion in additional large tax
cuts over the next five years for millionaires when the Nation is still
accruing massive debt and paying ongoing war costs is irresponsible in
my judgment.
Disallow the tax deduction for punitive damages that are paid or
incurred by taxpayers as a result of a judgment or in settlement of a
claim. Allowing a tax deduction for punitive damages undermines the use
of punitive damages to discourage and penalize the activities or
actions for which punitive damages are imposed. Making this change
would save taxpayers about $130 million over a 5-year period.
Lift the U.S. ban on travel to Cuba by U.S. citizens. Repealing this
obsolete and ineffective restriction on travel to Cuba would raise an
estimated $1 billion in U.S. tax revenues over five years from
increased U.S. business activity.
Extend permanently the Federal Communications Commission's (FCC's)
authority to auction licenses to those using the radio spectrum. This
FCC authority was recently extended by Congress through 2011. A
permanent extension of this authority would raise $1 billion between
2012 to 2016, about $200 million annually starting in 2012.
The provisions I have highlighted above and others in the bill would
help reduce the Federal debt by what I roughly calculate is $205
billion over the next half decade. I understand that this package does
not fully cover our outstanding debt obligations. But I think it is a
reasonable and balanced package of spending cuts and revenue
enhancements that offer a first installment that will help us begin a
thoughtful process of curbing our addiction to deficit spending and
hopefully head us once again toward truly a balanced budget not
counting Social Security surplus revenue that should be set aside for
future beneficiaries, and not used for unrelated spending.
Garrison Keillor once said, ``Nothing you do for children is ever
wasted. They seem not to notice us, hovering, averting our eyes, and
they seldom offer thanks, but what we do for them is never wasted.'' I
believe that one of the greatest gifts we can give for our kids is a
future without a mountain of debt from under which they may never dig
out. To make this happen, however, we need to set aside our differences
and come together, Republicans and Democrats, conservatives and
liberals alike, and begin to confront our recent obsession with debt
financing. When we decide to do so, our Nation will be better for it,
and so will the future of our children.
______
By Ms. SNOWE (for herself, Mr. Bond, and Mr. Bingaman):
S. 555. A bill to amend the Internal Revenue Code of 1986 to allow
small businesses to set up simple cafeteria plans to provide nontaxable
employee benefits to their employees, to make changes in the
requirements for cafeteria plans, flexible spending accounts, and
benefits provided under such plans or accounts, and for other purposes;
to the Committee on Finance.
Ms. SNOWE. Mr. President, I rise today to introduce the ``SIMPLE
Cafeteria Plan Act of 2007,'' which will increase the access to
quality, affordable health care for millions of small business owners
and their employees. I am pleased that my good friend Senator Bond from
Missouri, as well as my good friend from New Mexico, Senator Bingaman,
have agreed to co-sponsor this critical piece of legislation.
Regrettably, our Nation's healthcare system is in the midst of a
crisis. Each year, more and more Americans are unable to purchase
health insurance, and there are no signs that things are improving. As
evidence, the United States Census Bureau estimates that nearly 47
million people did not have health insurance coverage in 2005. Sadly,
this number rose from 41.2 million uninsured persons in 2001--a 13
percent increase.
The lack of health insurance is even more troubling when we look
specifically at the small business sector of our economy. In 2005,
according to the Employee Benefit Research Institute, a non-partisan
health policy group, nearly 63 percent of all uninsured workers were
either self-employed or working for private-sector firms with fewer
than 100 employees. In comparison, only 13.4 percent of workers in
firms with more than 1,000 employees do not have health insurance.
These numbers
[[Page S1858]]
demonstrate that the majority of uninsured Americans work for small
enterprises.
So why are our Nation's small businesses, which are our country's job
creators and the true engine of our economic growth, so disadvantaged
when it comes to purchasing health insurance?
The main reason that small business owners do not offer their
employees health insurance is because many of them cannot afford to
provide any health insurance, or other benefits to their employees.
Many other small companies can only afford to pay a portion of their
employees' health insurance premiums. As a result, many small business
employees must acquire health insurance from the private sector rather
than through their work place. This more expensive alternative is not
practical or possible for the majority of the uninsured.
Clearly, we have a problem on our hands. While we can debate among
ourselves why this crisis exists, and how we ended up here, what is not
open for debate is that we need to start identifying ways to fix the
system. It is simply unconscionable to do nothing while more and more
Americans find themselves without health insurance and health care.
Currently, many large companies, and even the Federal Government,
allow their employees to purchase health insurance, and other qualified
benefits, with tax-free dollars. Larger companies are able to offer
these accounts because they meet the specific qualifications outlined
in the tax code.
Cafeteria plans is one means for employers to offer health benefits
with pretax dollars. As the name suggests, cafeteria plans are programs
where employees can purchase a range of qualified benefits.
Specifically, cafeteria plans offer employees great flexibility in
selecting their desired benefits while allowing them to disregard those
benefits that do not fit their particular needs. Moreover, the
employees are usually purchasing benefits at a lower cost because their
employers are often able to obtain a reduced group rate price for their
benefits.
Typically, in cafeteria plans, a combination of employer
contributions and employee contributions are used to fund the accounts
that employees used to buy specific benefits. Under current law,
qualified benefits include health insurance, dependent-care
reimbursement, life and disability insurance. Unfortunately, long term
care insurance is NOT currently a qualified benefit available for
purchase in cafeteria plans. I will come back to long term care
insurance in a moment.
Clearly, cafeteria plans play a critical role in our Nation's health
care system. The problem though, is that in order for companies to
qualify for cafeteria plans they must satisfy the tax code's strict
non-discrimination rules. These rules exist to ensure that companies
offer the same benefits to their non-highly compensated employees that
they offer to their highly compensated employees. These rules strive to
ensure that non-highly compensated employees in fact receive a
substantial portion of the employee benefits companies provide.
Now, I want to be clear. I believe that these non-discrimination
rules serve a legitimate purpose and are necessary employee
protections. Indeed, we need to ensure that employers are not able to
game the tax system so that the cafeteria plans that qualify for
preferential tax treatment are used by a majority of a companies'
employees. At the same time these benefits must be made available to
small companies and not just large companies.
Unfortunately, we often hear that small businesses lose skilled
employees to larger companies simply because the bigger firm is able to
offer a more generous employee benefit package. Many small firms have
relatively few employees and a high proportion of owners or highly
compensated individuals. Right now, if these small companies opened
cafeteria plans they will likely violate the nondiscrimination rules,
and subject their workers and organizations to taxable penalties.
Consequently, many small companies simply forgo opening cafeteria
plans and offering more comprehensive employee benefits because they
fear they will violate the non-discrimination rules. According to the
Employers' Council on Flexible Compensation, though roughly 38 million
U.S. workers had access to cafeteria plans, only 19 percent of those
workers were employees of small businesses.
Allowing small business to offer cafeteria plans would provide them
with much needed employee recruiting and retention tools. If more small
business owners are able to offer their employees the chance to enjoy a
variety of employee benefits these firms will be more likely to
attract, recruit, and retain talented workers. This will ultimately
increase their business output.
In order to help small companies increase their employees access to
health insurance and other benefits, and help them compete for talented
professionals, I am introducing the SIMPLE Cafeteria Plan Act. This
bill will enable small business employees to purchase health insurance
with tax-free dollars in the same way that many employees of large
companies already do in their cafeteria plans. My bill accomplishes
this by creating a SIMPLE Cafeteria Plan, which is modeled after the
Savings Incentive Match Plan for Employees, SIMPLE, pension plan.
As with the SIMPLE pension plan, a small business employer that is
willing to make a minimum contribution for all employees, or who is
willing to match contributions, will be permitted to waive the non-
discrimination rules that currently prevent them from otherwise
offering these benefits. This structure has worked extraordinarily well
in the pension area with little risk of abuse. I am confident that it
will be just as successful when it comes to broad-based benefits
offered through cafeteria plans.
In addition my bill will expand the types of qualified benefits that
can be offered in SIMPLE cafeteria plans and existing cafeteria plans.
These modifications will increase the benefits provided for all
employees and the likelihood that employees will utilize their
cafeteria plans to purchase these benefits.
This legislation modifies rules that pertain to employer-provided
dependent-care assistance plans. First, it would increase the current
$5,000 annual contribution limitation of these plans to $10,000 for
employees that claim two or more dependents on their tax return. This
increase is significant because it will allow taxpayers to use their
cafeteria accounts to pay for the care of their children and their
elderly dependent family members. As the current baby-boomer generation
continues to age, this scenario will become increasingly more common.
The bill also works to address our aging populations' need for long-
term care insurance. Here in the United States, nearly half of all
seniors age 65 or older will need long-term care at some point in their
life. Unfortunately, most seniors have not adequately prepared for this
possibility, just as many working age individuals have not given much
thought to their eventual long-term care needs. With the cost of a
private room in a nursing home averaging more than $72,000 annually,
many Americans risk losing their life savings--and jeopardizing their
children's inheritance--by failing to properly plan for the long-term
care services they will need as they grow older.
To address this problem, this bill would allow employees to purchase
long-term care insurance coverage through their cafeteria plans and
flexible spending arrangements. Allowing employers to offer long-term
care benefits through these accounts would make long-term care
insurance more affordable and help Americans prepare for their future
long-term care needs.
Additionally, by including long-term care insurance as a qualified
benefit available for purchase in cafeteria plans employers will be
able to include information about long-term care options in their
employee benefit packages. This will help increase employee
understanding of the need to plan for their care while also increasing
their access to long-term care insurance.
Small businesses are the backbone of the American economy. According
to the Small Business Administration, small businesses represent 99
percent of all employers, pay more than 45 percent of the private-
sector's payroll, and generated 60 to 80 percent of net new jobs
annually over the last decade. It is critical that small businesses are
able to offer their employees cafeteria plans so that they may purchase
the health care and other benefits that will provide security for their
families.
[[Page S1859]]
The ``SIMPLE Cafeteria Plan Act of 2007'' achieves these objectives,
in a manner that employers and employees can afford. Although the use
of pre-tax dollars to acquire these benefits reduces current Federal
revenues, the opportunity to provide small business employees these
same benefits currently enjoyed by the employees of the Federal
Government, and larger companies, more than justifies this minimal
investment. Therefore, I urge my colleagues to join me in supporting
this important legislation as we work with you to enact this bill into
law.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 555
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) Short Title.--This Act may be cited as the ``SIMPLE
Cafeteria Plan Act of 2007''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
SEC. 2. ESTABLISHMENT OF SIMPLE CAFETERIA PLANS FOR SMALL
BUSINESSES.
(a) In General.--Section 125 (relating to cafeteria plans)
is amended by redesignating subsections (h) and (i) as
subsections (i) and (j), respectively, and by inserting after
subsection (g) the following new subsection:
``(h) Simple Cafeteria Plans for Small Businesses.--
``(1) In general.--An eligible employer maintaining a
simple cafeteria plan with respect to which the requirements
of this subsection are met for any year shall be treated as
meeting any applicable nondiscrimination requirement with
respect to benefits provided under the plan during such year.
``(2) Simple cafeteria plan.--For purposes of this
subsection, the term `simple cafeteria plan' means a
cafeteria plan--
``(A) which is established and maintained by an eligible
employer, and
``(B) with respect to which the contribution requirements
of paragraph (3), and the eligibility and participation
requirements of paragraph (4), are met.
``(3) Contributions requirements.--
``(A) In general.--The requirements of this paragraph are
met if, under the plan--
``(i) the employer makes matching contributions on behalf
of each employee who is eligible to participate in the plan
and who is not a highly compensated or key employee in an
amount equal to the elective plan contributions of the
employee to the plan to the extent the employee's elective
plan contributions do not exceed 3 percent of the employee's
compensation, or
``(ii) the employer is required, without regard to whether
an employee makes any elective plan contribution, to make a
contribution to the plan on behalf of each employee who is
not a highly compensated or key employee and who is eligible
to participate in the plan in an amount equal to at least 2
percent of the employee's compensation.
``(B) Matching contributions on behalf of highly
compensated and key employees.--The requirements of
subparagraph (A)(i) shall not be treated as met if, under the
plan, the rate of matching contribution with respect to any
elective plan contribution of a highly compensated or key
employee at any rate of contribution is greater than that
with respect to an employee who is not a highly compensated
or key employee.
``(C) Special rules.--
``(i) Time for making contributions.--An employer shall not
be treated as failing to meet the requirements of this
paragraph with respect to any elective plan contributions of
any compensation, or employer contributions required under
this paragraph with respect to any compensation, if such
contributions are made no later than the 15th day of the
month following the last day of the calendar quarter which
includes the date of payment of the compensation.
``(ii) Form of contributions.--Employer contributions
required under this paragraph may be made either to the plan
to provide benefits offered under the plan or to any person
as payment for providing benefits offered under the plan.
``(iii) Additional contributions.--Subject to subparagraph
(B), nothing in this paragraph shall be treated as
prohibiting an employer from making contributions to the plan
in addition to contributions required under subparagraph (A).
``(D) Definitions.--For purposes of this paragraph--
``(i) Elective plan contribution.--The term `elective plan
contribution' means any amount which is contributed at the
election of the employee and which is not includible in gross
income by reason of this section.
``(ii) Highly compensated employee.--The term `highly
compensated employee' has the meaning given such term by
section 414(q).
``(iii) Key employee.--The term `key employee' has the
meaning given such term by section 416(i).
``(4) Minimum eligibility and participation requirements.--
``(A) In general.--The requirements of this paragraph shall
be treated as met with respect to any year if, under the
plan--
``(i) all employees who had at least 1,000 hours of service
for the preceding plan year are eligible to participate, and
``(ii) each employee eligible to participate in the plan
may, subject to terms and conditions applicable to all
participants, elect any benefit available under the plan.
``(B) Certain employees may be excluded.--For purposes of
subparagraph (A)(i), an employer may elect to exclude under
the plan employees--
``(i) who have less than 1 year of service with the
employer as of any day during the plan year,
``(ii) who have not attained the age of 21 before the close
of a plan year,
``(iii) who are covered under an agreement which the
Secretary of Labor finds to be a collective bargaining
agreement if there is evidence that the benefits covered
under the cafeteria plan were the subject of good faith
bargaining between employee representatives and the employer,
or
``(iv) who are described in section 410(b)(3)(C) (relating
to nonresident aliens working outside the United States).
A plan may provide a shorter period of service or younger age
for purposes of clause (i) or (ii).
``(5) Eligible employer.--For purposes of this subsection--
``(A) In general.--The term `eligible employer' means, with
respect to any year, any employer if such employer employed
an average of 100 or fewer employees on business days during
either of the 2 preceding years. For purposes of this
subparagraph, a year may only be taken into account if the
employer was in existence throughout the year.
``(B) Employers not in existence during preceding year.--If
an employer was not in existence throughout the preceding
year, the determination under subparagraph (A) shall be based
on the average number of employees that it is reasonably
expected such employer will employ on business days in the
current year.
``(C) Growing employers retain treatment as small
employer.--If--
``(i) an employer was an eligible employer for any year (a
`qualified year'), and
``(ii) such employer establishes a simple cafeteria plan
for its employees for such year, then, notwithstanding the
fact the employer fails to meet the requirements of
subparagraph (A) for any subsequent year, such employer shall
be treated as an eligible employer for such subsequent year
with respect to employees (whether or not employees during a
qualified year) of any trade or business which was covered by
the plan during any qualified year. This subparagraph shall
cease to apply if the employer employs an average of 200 more
employees on business days during any year preceding any such
subsequent year.
``(D) Special rules.--
``(i) Predecessors.--Any reference in this paragraph to an
employer shall include a reference to any predecessor of such
employer.
``(ii) Aggregation rules.--All persons treated as a single
employer under subsection (a) or (b) of section 52, or
subsection (n) or (o) of section 414, shall be treated as one
person.
``(6) Applicable nondiscrimination requirement.--For
purposes of this subsection, the term `applicable
nondiscrimination requirement' means any requirement under
subsection (b) of this section, section 79(d), section
105(h), or paragraph (2), (3), (4), or (8) of section 129(d).
``(7) Compensation.--The term `compensation' has the
meaning given such term by section 414(s).''.
(b) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2006.
SEC. 3. MODIFICATIONS OF RULES APPLICABLE TO CAFETERIA PLANS.
(a) Application to Self-Employed Individuals.--
(1) In general.--Section 125(d) (defining cafeteria plan)
is amended by adding at the end the following new paragraph:
``(3) Employee to include self-employed.--
``(A) In general.--The term `employee' includes an
individual who is an employee within the meaning of section
401(c)(1) (relating to self-employed individuals).
``(B) Limitation.--The amount which may be excluded under
subsection (a) with respect to a participant in a cafeteria
plan by reason of being an employee under subparagraph (A)
shall not exceed the employee's earned income (within the
meaning of section 401(c)) derived from the trade or business
with respect to which the cafeteria plan is established.''.
(2) Application to benefits which may be provided under
cafeteria plan.--
(A) Group-term life insurance.--Section 79 (relating to
group-term life insurance provided to employees) is amended
by adding at the end the following new subsection:
``(f) Employee Includes Self-Employed.--
``(1) In general.--For purposes of this section, the term
`employee' includes an individual who is an employee within
the meaning of section 401(c)(1) (relating to self-employed
individuals).
``(2) Limitation.--The amount which may be excluded under
the exceptions contained
[[Page S1860]]
in subsection (a) or (b) with respect to an individual
treated as an employee by reason of paragraph (1) shall not
exceed the employee's earned income (within the meaning of
section 401(c)) derived from the trade or business with
respect to which the individual is so treated.''.
(B) Accident and health plans.--Section 105(g) is amended
to read as follows:
``(g) Employee Includes Self-Employed.--
``(1) In general.--For purposes of this section, the term
`employee' includes an individual who is an employee within
the meaning of section 401(c)(1) (relating to self-employed
individuals).
``(2) Limitation.--The amount which may be excluded under
this section by reason of subsection (b) or (c) with respect
to an individual treated as an employee by reason of
paragraph (1) shall not exceed the employee's earned income
(within the meaning of section 401(c)) derived from the trade
or business with respect to which the accident or health
insurance was established.''.
(C) Contributions by employers to accident and health
plans.--
(i) In general.--Section 106, as amended by subsection (b),
is amended by adding after subsection (b) the following new
subsection:
``(c) Employer to Include Self-Employed.--
``(1) In general.--For purposes of this section, the term
`employee' includes an individual who is an employee within
the meaning of section 401(c)(1) (relating to self-employed
individuals).
``(2) Limitation.--The amount which may be excluded under
subsection (a) with respect to an individual treated as an
employee by reason of paragraph (1) shall not exceed the
employee's earned income (within the meaning of section
401(c)) derived from the trade or business with respect to
which the accident or health insurance was established.''.
(ii) Clarification of limitations on other coverage.--The
first sentence of section 162(l)(2)(B) is amended to read as
follows: ``Paragraph (1) shall not apply to any taxpayer for
any calendar month for which the taxpayer participates in any
subsidized health plan maintained by any employer (other than
an employer described in section 401(c)(4)) of the taxpayer
or the spouse of the taxpayer.''.
(b) Long-Term Care Insurance Permitted to Be Offered Under
Cafeteria Plans and Flexible Spending Arrangements.--
(1) Cafeteria plans.--The last sentence of section 125(f)
(defining qualified benefits) is amended to read as follows:
``Such term shall include the payment of premiums for any
qualified long-term care insurance contract (as defined in
section 7702B) to the extent the amount of such payment does
not exceed the eligible long-term care premiums (as defined
in section 213(d)(10)) for such contract.''.
(2) Flexible spending arrangements.--Section 106 (relating
to contributions by employer to accident and health plans) is
amended by striking subsection (c).
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
SEC. 4. MODIFICATION OF RULES APPLICABLE TO FLEXIBLE SPENDING
ARRANGEMENTS.
(a) Modification of Rules.--
(1) In general.--Section 125 of the Internal Revenue Code
of 1986, as amended by section 2, is amended by redesignating
subsections (i) and (j) as subsections (j) and (k),
respectively, and by inserting after subsection (h) the
following new subsection:
``(i) Special Rules Applicable to Flexible Spending
Arrangements.--
``(1) In general.--For purposes of this title, a plan or
other arrangement shall not fail to be treated as a flexible
spending or similar arrangement solely because under the plan
or arrangement--
``(A) the amount of the reimbursement for covered expenses
at any time may not exceed the balance in the participant's
account for the covered expenses as of such time,
``(B) except as provided in paragraph (4)(A)(ii), a
participant may elect at any time specified by the plan or
arrangement to make or modify any election regarding the
covered benefits, or the level of covered benefits, of the
participant under the plan, and
``(C) a participant is permitted access to any unused
balance in the participant's accounts under such plan or
arrangement in the manner provided under paragraph (2) or
(3).
``(2) Carryovers and rollovers of unused benefits in health
and dependent care arrangements.--
``(A) In general.--A plan or arrangement may permit a
participant in a health flexible spending arrangement or
dependent care flexible spending arrangement to elect--
``(i) to carry forward any aggregate unused balances in the
participant's accounts under such arrangement as of the close
of any year to the succeeding year, or
``(ii) to have such balance transferred to a plan described
in subparagraph (E)
.Such carryforward or transfer shall be treated as having
occurred within 30 days of the close of the year.
``(B) Dollar limit on carryforwards.--
``(i) In general.--The amount which a participant may elect
to carry forward under subparagraph (A)(i) from any year
shall not exceed $500. For purposes of this paragraph, all
plans and arrangements maintained by an employer or any
related person shall be treated as 1 plan.
``(ii) Cost-of-living adjustment.--In the case of any
taxable year beginning in a calendar year after 2007, the
$500 amount under clause (i) shall be increased by an amount
equal to--
``(I) $500, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `2006' for `1992' in subparagraph (B) thereof
.If any dollar amount as increased under this clause is not a
multiple of $100, such amount shall be rounded to the next
lowest multiple of $100.
``(C) Exclusion from gross income.--No amount shall be
required to be included in gross income under this chapter by
reason of any carryforward or transfer under this paragraph.
``(D) Coordination with limits.--
``(i) Carryforwards.--The maximum amount which may be
contributed to a health flexible spending arrangement or
dependent care flexible spending arrangement for any year to
which an unused amount is carried under this paragraph shall
be reduced by such amount.
``(ii) Rollovers.--Any amount transferred under
subparagraph (A)(ii) shall be treated as an eligible rollover
under section 219, 223(f)(5), 401(k), 403(b), or 457,
whichever is applicable, except that--
``(I) the amount of the contributions which a participant
may make to the plan under any such section for the taxable
year including the transfer shall be reduced by the amount
transferred, and
``(II) in the case of a transfer to a plan described in
clause (ii) or (iii) of subparagraph (E), the transferred
amounts shall be treated as elective deferrals for such
taxable year.
``(E) Plans.--A plan is described in this subparagraph if
it is--
``(i) an individual retirement plan,
``(ii) a qualified cash or deferred arrangement described
in section 401(k),
``(iii) a plan under which amounts are contributed by an
individual's employer for an annuity contract described in
section 403(b),
``(iv) an eligible deferred compensation plan described in
section 457, or
``(v) a health savings account described in section 223.
``(3) Distribution upon termination.--
``(A) In general.--A plan or arrangement may permit a
participant (or any designated heir of the participant) to
receive a cash payment equal to the aggregate unused account
balances in the plan or arrangement as of the date the
individual is separated (including by death or disability)
from employment with the employer maintaining the plan or
arrangement.
``(B) Inclusion in income.--Any payment under subparagraph
(A) shall be includible in gross income for the taxable year
in which such payment is distributed to the employee.
``(4) Terms relating to flexible spending arrangements.--
``(A) Flexible spending arrangements.--
``(i) In general.--For purposes of this subsection, a
flexible spending arrangement is a benefit program which
provides employees with coverage under which specified
incurred expenses may be reimbursed (subject to reimbursement
maximums and other reasonable conditions).
``(ii) Elections required.--A plan or arrangement shall not
be treated as a flexible spending arrangement unless a
participant may at least 4 times during any year make or
modify any election regarding covered benefits or the level
of covered benefits.
``(B) Health and dependent care arrangements.--The terms
`health flexible spending arrangement' and `dependent care
flexible spending arrangement' means any flexible spending
arrangement (or portion thereof) which provides payments for
expenses incurred for medical care (as defined in section
213(d)) or dependent care (within the meaning of section
129), respectively.''.
(2) Conforming amendments.--
(A) The heading for section 125 of the Internal Revenue
Code of 1986 is amended by inserting ``AND FLEXIBLE SPENDING
ARRANGEMENTS'' after ``PLANS''.
(B) The item relating to section 125 of such Code in the
table of sections for part III of subchapter B of chapter 1
is amended by inserting ``and flexible spending
arrangements'' after ``plans''.
(b) Technical Amendments.--
(1) Section 106 is amended by striking subsection (e)
(relating to FSA and HRA Terminations to Fund HSAs).
(2) Section 223(c)(1)(A)(iii)(II) is amended to read as
follows:
``(II) the individual is transferring the entire balance of
such arrangement as of the end of the plan year to a health
savings account pursuant to section 125(i)(2)(A)(ii), in
accordance with rules prescribed by the Secretary.''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 5. RULES RELATING TO EMPLOYER-PROVIDED HEALTH AND
DEPENDENT CARE BENEFITS.
(a) Health Benefits.--Section 106, as amended by section
4(b), is amended by adding at the end the following new
subsection:
``(e) Limitation on Contributions to Health Flexible
Spending Arrangements.--
``(1) In general.--Gross income of an employee for any
taxable year shall include employer-provided coverage
provided through 1 or more health flexible spending
arrangements (within the meaning of section 125(i))
[[Page S1861]]
to the extent that the amount otherwise excludable under
subsection (a) with regard to such coverage exceeds the
applicable dollar limit for the taxable year.
``(2) Applicable dollar limit.--For purposes of this
subsection--
``(A) In general.--The applicable dollar limit for any
taxable year is an amount equal to the sum of--
``(i) $7,500, plus
``(ii) if the arrangement provides coverage for 1 or more
individuals in addition to the employee, an amount equal to
one-third of the amount in effect under clause (i) (after
adjustment under subparagraph (B)).
``(B) Cost-of-living adjustment.--In the case of taxable
years beginning in any calendar year after 2007, the $7,500
amount under subparagraph (A) shall be increased by an amount
equal to--
``(i) $7,500, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year, determined by
substituting `2006' for `1992' in subparagraph (B) thereof.
If any dollar amount as increased under this subparagraph is
not a multiple of $100, such dollar amount shall be rounded
to the next lowest multiple of $100.''.
(b) Dependent Care.--
(1) Exclusion limit.--
(A) In general.--Section 129(a)(2) (relating to limitation
on exclusion) is amended--
(i) by striking ``$5,000'' and inserting ``the applicable
dollar limit'', and
(ii) by striking ``$2,500'' and inserting ``one-half of
such limit''.
(B) Applicable dollar limit.--Section 129(a) is amended by
adding at the end the following new paragraph:
``(3) Applicable dollar limit.--For purposes of this
subsection--
``(A) In general.--The applicable dollar limit is $5,000
($10,000 if dependent care assistance is provided under the
program to 2 or more qualifying individuals of the employee).
``(B) Cost-of-living adjustments.--
``(i) $5,000 amount.--In the case of taxable years
beginning after 2007, the $5,000 amount under subparagraph
(A) shall be increased by an amount equal to--
``(I) $5,000, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `2006' for `1992' in
subparagraph (B) thereof.
If any dollar amount as increased under this clause is not a
multiple of $100, such dollar amount shall be rounded to the
next lowest multiple of $100.
``(ii) $10,000 amount.--The $10,000 amount under
subparagraph (A) for taxable years beginning after 2005 shall
be increased to an amount equal to twice the amount the
$5,000 amount is increased to under clause (i).''.
(2) Average benefits test.--
(A) In general.--Section 129(d)(8)(A) (relating to
benefits) is amended--
(i) by striking ``55 percent'' and inserting ``60
percent'', and
(ii) by striking ``highly compensated employees'' the
second place it appears and inserting ``employees receiving
benefits''.
(B) Salary reduction agreements.--Section 129(d)(8)(B)
(relating to salary reduction agreements) is amended--
(i) by striking ``$25,000'' and inserting ``$30,000'', and
(ii) by adding at the end the following: ``In the case of
years beginning after 2007, the $30,000 amount in the first
sentence shall be adjusted at the same time, and in the same
manner, as the applicable dollar amount is adjusted under
subsection (a)(3)(B).''.
(3) Principal shareholders or owners.--Section 129(d)(4)
(relating to principal shareholders and owners) is amended by
adding at the end the following: ``In the case of any failure
to meet the requirements of this paragraph for any year,
amounts shall only be required by reason of the failure to be
included in gross income of the shareholders or owners who
are members of the class described in the preceding
sentence.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
______
By Mr. KENNEDY (for himself, Mr. Enzi, Mr. Dodd, and Mr.
Alexander):
S. 556. A bill to reauthorize the Head Start Act, and for other
purposes; to the Committee on Health, Education, Labor, and Pensions.
Mr. KENNEDY. Mr. President, it is a privilege to join Senators Enzi,
Dodd, and Alexander in introducing the Head Start for School Readiness
Act. Our goal is to reauthorize Head Start and continue our bipartisan
support for this very successful program to prepare low-income children
for school.
For over forty years, Head Start has given disadvantaged children the
assistance they need to arrive at school ready to learn. It's
comprehensive services guarantee balanced meals for children, and a
well-defined curriculum to see that children develop early skills in
reading, writing, and math, and positive social skills as well. It
provides visits to doctors and dentists, and outreach to parents to
encourage them to participate actively in their child's early
development.
It is clear that Head Start works. A federal evaluation found that
Head Start children make gains during the program itself, and the gains
continue when the children enter kindergarten. Once Head Start children
complete their kindergarten year, they are near the national average of
100 in key areas, with scores of 93 in vocabulary, 96 in early writing,
and 92 in early math.
We've made tremendous, bipartisan progress this year in our effort to
reauthorize Head Start and build upon a program that serves as a
lifeline for the neediest families and children across the Nation.
In this legislation, we build on Head Start's proven track record and
expand it to include thousands of low-income children who are not yet
served by the program. We provide for better coordination of Head Start
with state programs for low-income children. We strengthen Head Start's
focus on school readiness and early literacy. We enhance the
educational goals for Head Start teachers. And we provide greater
accountability for the program, including new policies to ensure
improved monitoring visits and new policies to address programs with
serious deficiencies.
To strengthen Head Start, we have to begin by providing more
resources for it. The need for Head Start is greater than ever. Child
poverty is on the rise again. Today, less than 50 percent of children
eligible for Head Start participate in the program. Hundreds of
thousands of three- and four-year-olds are left out because of the
inadequate funding level of the program. Early Head Start serves only 3
percent of eligible infants and toddlers. It is shameful that 97
percent of the children eligible for Early Head Start have no access to
it. It's long past time for Congress to expand access to Head Start to
serve as many infants, toddlers, and preschool children as possible.
The bill that we introduce today will set a goal to expand Head Start
over the next several years. We call for increases in funding, from
$6.9 billion in the current fiscal year, to $7.3 billion in FY 2008,
$7.5 billion in FY 2009, and $7.9 billion in 2010. These funding levels
are critical to advance the essential reforms in this legislation, and
to serve thousands of additional children in the Head Start program.
Early Head Start is an especially important program for needy infants
and toddlers. Research clearly shows its benefit to infants and
toddlers and their families. Early Head Start children have larger
vocabularies, lower levels of aggressive behavior, and higher levels of
sustained attention than children not enrolled in the program. Parents
are more likely to play with their children and read to them.
This bill will double the size of Early Head Start over the course of
this authorization, and deliver services to over 56,000 additional
children over the course of this authorization.
Our bill establishes a Head Start Collaboration Office in every state
to maximize services to Head Start children, align Head Start with
kindergarten classrooms, and strengthen its local partnerships with
other agencies. These offices will work hand in hand with the Head
Start network of training and technical assistance to support Head
Start grantees in better meeting the goals of preparing children for
school.
States will also have an active role in coordinating their system of
early childhood programs, and increasing the quality of those programs.
Our bill designates an Early Care and Education Council in each State
to conduct an inventory of children's needs, develop plans for data
collection and for supporting early childhood educators, review and
upgrade early learning standards, and make recommendations on technical
assistance and training. For those States ready to move forward and
implement their statewide plan, our bill will offer a one-time
incentive grant to implement these important efforts.
Over the past four decades, Head Start has built up quality and
performance standards to guarantee a full range of services, so that
children are educated in the basics about letters and numbers and
books, and are also healthy, well-fed, and supported in stable and
nurturing relationships. Head Start is a model program, and we can
enhance its quality even more.
[[Page S1862]]
One way to do that is to strengthen Head Start's current literacy
initiative. We know the key to later reading success is to get young
children excited about letters and books and numbers. Our bill
emphasizes language and literacy, by enhancing the literacy training
required of Head Start teachers, by continuing to promote parent
literacy, and by working to put more books into Head Start classrooms
and into children's homes.
We also make a commitment in this bill to upgrade all of the
educational components of Head Start, and ensure that services are
aligned with expectations for children's kindergarten year and continue
to be driven by the effective Head Start Child Outcomes Framework.
At the heart of Head Start's success are its teachers and staff. They
are caring, committed persons who know the children they serve and are
dedicated to improving their lives. They help children learn to
identify letters of the alphabet and arrange the pieces of puzzles.
They teach them to brush their teeth, wash their hands, make friends
and follow rules. Yet their salary is still half the salary of
kindergarten teachers, and turnover is high--11 percent a year.
Because a teacher's quality is directly related to a child's outcome,
our bill establishes a goal to ensue that every Head Start teacher have
their A.A. degree and 50 percent earn their B.A. degree over the course
of this authorization. Head Start teachers and staff are the greatest
resource to children and families in the program, and we must match
these ambitious reforms and improvements with the funding needed to see
that Head Start programs can meet these goals.
We have also granted additional flexibility in this bill for Head
Start programs to serve families and children that need services at the
local level. We've lifted the eligibility requirements so that families
living below 130 percent of the federal poverty rate can qualify and
participate in Head Start. Often, these are the neighbors of Head Start
children with similar needs, but currently remain barred from
participating in the program.
Under this bill, Head Start programs will be empowered with greater
authority to determine the needs of families in their local communities
and define services to meet those needs. If programs determine that
there is a greater share infants and toddlers in need of services, our
bill allows them to apply to the Secretary to convert and expand Head
Start to serve those youngest children, consistent with Early Head
Start standards. If programs identify a need to provide full-day or
full-year care for children and families, they can take steps to do so.
Accountability is a cornerstone of excellence in education and should
start early. Head Start should be accountable for its promise to
provide safe and healthy learning environments, to support each child's
individual pattern of development and learning, to cement community
partnerships in services for children, and to involve parents in their
child's growth.
Head Start reviews are already among the most extensive in the field.
Every 3 years, a federal and local team spends a week thoroughly
examining every aspect of every Head Start program. They check
everything from batteries in flashlights to how parents feel about the
program. Our bill takes a further step to improve the monitoring of
Head Start programs, ensures that programs receive useful and timely
feedback and information, and strengthens annual reviews and plans for
improvement.
Our bill also takes an important step to suspend the Head Start
National Reporting System. Four years ago, I insisted that instead of
rushing forward with a national assessment for every four- and five-
year-old in Head Start, this Administration should instead move more
deliberately to develop and implement an assessment tool that would
help guide and improve Head Start programs. Unfortunately, they
rejected that call and proceeded with an assessment--absent sufficient
authorization or oversight from Congress--that was later proven by a
GAO study to be flawed and inconsistent with professional standards for
testing and measurement.
Any assessment used in Head Start must be held to the highest
standard. It must be valid and reliable, fair to children from all
backgrounds, balanced in what it measures, and address the development
of the whole child. Our bill calls on the National Academy of Sciences
to continue their work in surveying assessments and outcomes
appropriate for early childhood programs, and to make recommendations
to the Secretary and to Congress on the use of assessments and outcomes
in Head Start programs. I hope the National Academy's work will be
helpful as we consider future improvements in the Head Start program.
Finally, this bill appropriately rejects earlier calls to block grant
Head Start services, preserving the community-based structure of the
program. It makes no sense to turn Head Start into a block grant to the
states. To do so would have dismantled the program and undermined Head
Start's guarantees that children can see doctors and dentists, eat
nutritious meals, and learn early academic and social skills. The
current Federal-to-local structure of Head Start enables it to tailor
its services to meet local community needs. Performance standards
guarantee a high level of quality across all programs. Yet each program
is unique and specifically adapted to the local community. Head Start
is successful in serving Inuit children in Alaska, migrant-workers'
children in Tennessee, and inner-city children in Boston. It is
essential to maintain the ability of local Head Start programs to
tailor their services to meet the needs of local neighborhoods and
their children.
The Head Start for School Readiness Act we are introducing today will
keep Head Start on its successful path, and enable this vital program
to continue to thrive and improve. I urge our colleagues on both sides
of the aisle to join us in advancing and strengthening this program,
and give children the head start they need and deserve to prepare for
school and for life.
Mr. ENZI. Mr. President, I rise to join my colleagues in introducing
the Head Start for School Readiness Act.
Head Start programs are critical to ensuring that all children,
regardless of their background, enter school ready to learn and
succeed. I want to thank Senator Kennedy and his staff for his ongoing
commitment to our bipartisan approach, which has resulted in a bill
that meets the needs of children and families who participate in the
Head Start program throughout our Nation. I would also like to thank
our colleagues Senators Alexander and Dodd and their staff for their
fine work as well.
This legislation would reauthorize the Head Start program and help
ensure that children in this important program will be better prepared
to enter school with the skills to succeed. Success in life depends a
great deal on the preparation for that success, which comes early in
life. It is well documented in early childhood education research that
students who are not reading well by the third grade will struggle with
reading most of their lives. Head Start provides early education for
over 900,000 children each year, most of whom would not have the
opportunity to attend preschool programs elsewhere. It is because of
these 900,000 children we have all worked so hard to improve and
strengthen this Act.
I am particularly pleased with the accountability provisions we put
forth in this legislation. The legislation we introduce today limits
the timeframe for Head Start grantees to appeal decisions made by the
Secretary to terminate grants. In some instances, Head Start grantees
have been found to be operating programs that are unsafe or misusing
Federal funds--and are often continuing those bad practices for months,
as long as 600 days in some cases--during the termination process. This
equates to children not receiving quality services, and instead of
being prepared for success, they fall further behind.
Additional steps have been taken in this legislation to increase the
quality of the Head Start program including providing the Secretary the
authority to terminate a grantee that has multiple and recurring
deficiencies that has not made significant and substantial progress
toward correcting those deficiencies.
We recognize that a vast majority of the Head Start agencies provide
high quality, comprehensive services for
[[Page S1863]]
children in the Head Start programs. However, the provisions in this
bill will create an important incentive for programs to operate at
their best, and in the best interest of the children they serve.
Senator Dodd has provided valuable leadership as we worked to develop
a clear policy on the roles and responsibilities of the governing body
and policy councils. We have worked together to clarify and strengthen
the roles of the governing body and policy councils. After careful
review, the Committee found that many of the important fiscal and legal
responsibilities of Head Start grantees were not explicitly assigned.
The bill clarifies those responsibilities leading to more consistent,
high quality fiscal and legal management, which will ensure these
programs are serving children in the best possible way.
I want to particularly note emphasis we have placed on the role of
parents in Head Start programs. It is vital to remember that this
program provides services to children and their families. Parents
provide valuable insight and experience as to what a Head Start program
should do for children.
Senators Alexander, Kennedy, and Dodd have worked tirelessly on this
legislation and championed increasing coordination, collaboration, and
excellence in early childhood education and care programs. I wish to
thank my colleagues on the Committee, particularly Senators Kennedy,
Alexander, and Dodd, for their work in drafting this bipartisan
legislation to reauthorize the Head Start Act. I believe the
legislation we are introducing today will improve the quality and
effectiveness of the Head Start program for generations of children to
come. It is my hope that our bipartisan efforts will continue to
produce results as we move the bill through the Senate and into
Conference.
Mr. DODD. Mr. President, I rise today to join my colleagues, Senator
Kennedy, Senator Enzi, and Senator Alexander in introducing the Head
Start for School Readiness Act. I am pleased that we are beginning the
process of reauthorizing this important legislation early in the 110th
Congress.
Since 1965, Head Start has provided comprehensive early childhood
development services to low-income children. The evidence is clear:
Head Start works for the more than 900,000 children enrolled in centers
throughout the country. As we reauthorize this bill, we have the
opportunity to refine and improve the program to make it work even
better.
This reauthorization bill maintains the important characteristics of
Head Start that have made it such an important program, aiding in the
social, emotional, physical and cognitive development of low-income
preschool children. The program is successful because each center
addresses the needs of the local community. It is more than just a
school readiness program; it addresses the comprehensive needs of
children and their families by providing health and other services to
the enrolled children. Families play the most important role in
ensuring the success of their children, and our bill maintains an
integral role for parents in the decision-making and day to day
operations of the program. Parent involvement is a centerpiece of Head
Start and I believe this bill strengthens that component.
This reauthorization bill expands eligibility, improves
accountability by clarifying program governance, strengthens school
readiness for children and enhances teacher quality. In addition,
collaboration and coordination with other early childhood development
programs and outreach to underserved populations is greatly improved.
The bill we're introducing enables more low-income children to get a
head start by allowing programs to serve families with incomes up to
130 percent of the poverty level, while ensuring that the most
vulnerable families below the poverty level are served first. This is
important for Connecticut and other States where the cost of living is
especially high and many working poor families aren't able to access
services because they earn just above the poverty level. In addition,
the bill expands access to services for infants and toddlers in Early
Head Start by increasing the set-aside from 10 percent to 20 percent
over the next 5 years. Programs are also provided more discretion to
serve eligible individuals based on the needs of the each community.
Although we do not go as far as I would personally like to see in
funding for Head Start, we do authorize additional resources in this
bill. Despite the tight budget situation, we authorize an increase of
six percent from $6.9 billion to $7.35 billion in Fiscal Year 2008, to
$7.65 billion in Fiscal Year 2009 and to $7.995 billion in Fiscal Year
2009. I continue to be gravely concerned about the lack of resources
for Head Start--funding levels have been essentially flat since 2002.
Currently, only half of eligible children are served in Head Start and
fewer than 5 percent are served in Early Head Start.
Across the country, Head Start providers are reporting rising costs
in transportation, some more than 15 percent due to fuel prices. Other
budget concerns include higher unemployment and health care premiums,
facilities maintenance and training for staff. Rising operating costs
are coinciding with State, local and private funding partners cutting
back their contributions to local Head Start programs. This terrible
budget crunch has caused providers to make deep cuts in already tight
budgets, as they try desperately to not remove children from their
enrollments. I understand the challenges facing the Federal budget and
look forward to continuing to work with my colleagues on the budget and
appropriations committees to increase vital resources for Head Start.
Research shows that child outcomes are directly related to the
quality of the teachers and professionals who work with them on a daily
basis. I am pleased that we establish goals in this Head Start bill for
improving educational standards for Head Start teachers, curriculum
specialists and teacher assistants. Understanding that dedicated Head
Start teachers and staff work hard for relatively low wages, there will
not be penalties associated with programs not meeting the goal we have
established. I would hope that we could offer funding to help teachers
meet these goals, but that is not possible at this juncture. I will
continue to work toward increased funding to assist teachers in
pursuing additional educational goals.
When Head Start began more than 40 years ago, it was the only
preschool program available for low-income children; now there are many
approaches. Collaboration and coordination with other early childhood
programs is also an essential piece of this Head Start bill, reducing
duplication and encouraging opportunities for shared information and
resources.
I look forward to working with my colleagues as we move this bill
through the Senate.
______
By Mr. SCHUMER (for himself, Mr. Roberts, Mr. Nelson of Florida,
Mrs. Dole, Ms. Stabenow, and Mr. Kyl):
S. 557. A bill to amend the Internal Revenue Code of 1986 to make
permanent the depreciation classification of motorsports entertainment
complexes; to the Committee on Finance.
Mr. SCHUMER. Mr. President, I rise today to introduce ``The
Motorsports Fairness and Permanency Act.'' This bill extends the
current tax treatment for speedways and race tracks around the country.
Just over two years ago, Congress codified the seven-year depreciation
classification for motorsports facilities. However, this provision of
the tax code expires at the end of 2007. The bill I am introducing
today would make the seven-year classification permanent, providing
much needed clarity and certainty for facility owners who are planning
capital investments.
There are over fifty motorsports facilities in every part of New York
State: from Long Island Motorsports Park to Poughkeepsie Speedway to
Utica-Rome Speedway to Wyoming County International Speedway. These
tracks provide entertainment for thousands of fans and are important
engines of local and regional economic development.
The highest profile facility in New York State is Watkins Glen
International. This storied road course has played an important role in
open wheel and stock car racing since it opened in 1956. The Glen has
hosted NASCAR racing since 1986, and this year's schedule will include
the Grand-Am Rolex Sports Car Series, the IndyCar Series and the NASCAR
Nextel Cup. With
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these high profile events drawing thousands of out-of-state racing fans
to Schuyler County it is no surprise that the Glen's economic impact
has been estimated at over $200 million a year.
Watkins Glen is also a prime example of the need for continual
capital reinvestment at motorsports facilities. Since 2005, the Glen
has added new grandstands and spectator suites and upgraded and repaved
the track. Planning multi-million dollar capital projects requires a
certain and stable tax regime governing these investments. In order to
provide this stability and certainty, I am introducing the Motorsports
Fairness and Permanency Act, and I am pleased to be joined by Senators
Roberts, Bill Nelson, Dole, Stabenow, and Kyl as original cosponsors.
Enacting this legislation will be crucial to supporting the economic
benefits that motorsports facilities provide across New York State and
across the country. I hope that my colleagues will join me in
supporting this legislation, and I look forward to working with my
colleague from Kansas to have it considered in the Finance Committee.
______
By Mr. DOMENICI (for himself, Mr. Kennedy, Mr. Enzi, Mr. Brown,
Mr. Smith, Mr. Feingold, Mr. Coleman, Mr. Lautenberg, Mr.
Warner, Mrs. Boxer, Ms. Murkowski, Mr. Akaka, Mr. Roberts, Mr.
Cardin, Mr. Hatch, Ms. Cantwell, Ms. Collins, Ms. Stabenow, Ms.
Snowe, Mr. Biden, Mr. Graham, and Mr. Nelson of Nebraska):
S. 558. A bill to provide parity between health insurance coverage of
mental health benefits and benefits for medical and surgical services;
to the Committee on Health, Education, Labor, and Pensions.
Mr. KENNEDY. Access to mental health services is one of the most
important and most neglected civil rights issues facing the Nation. For
too long, persons living with mental disorders have suffered
discriminatory treatment at all levels of society. They have been
forced to pay more for the services they need and to worry about their
job security if their employer finds out about their condition. Sadly,
in America today, patients with biochemical problems in their liver are
treated with better care and greater compassion than patients with
biochemical problems in their brain.
That kind of discrimination must end. No one questions the need for
affordable treatment of physical illnesses. But those who suffer from
mental illnesses face serious barriers in obtaining the care they need
at a cost they can afford. Like those suffering from physical
illnesses, persons with mental disorders deserve the opportunity for
quality care. The failure to obtain treatment can mean years of
shattered dreams and unfulfilled potential.
Eleven years ago, Congress passed the first Mental Health Parity Act.
That legislation was an important first step in bringing attention to
discriminatory practices against the mentally ill, but it did little to
correct the injustices that so many Americans continue to face. The
1996 legislation required that annual and lifetime dollar limits for
mental health coverage must be no less than the limits for medical and
surgical coverage. But more steps are clearly needed to guarantee that
Americans suffering from mental illness are not forced to pay more for
the services they need, do not face harsher limitations on treatment,
and are not denied access to care.
This bill is a chance to take the actions needed to end the
longstanding discrimination against persons with mental illness. The
late Senator Paul Wellstone and Senator Pete Domenici deserve great
credit for their bipartisan leadership on mental health parity. If it
were not for them, we would not be here today.
The bill prohibits group health plans from imposing treatment
limitations or financial requirements on the coverage of mental health
conditions that do not also apply to physical conditions. That means no
limits on days or treatment visits, and no exorbitant co-payments or
deductibles. The bill was negotiated by and has the support of the
mental health community, the business community, and the insurance
industry.
The need is clear. One in five Americans will suffer some form of
mental illness this year--but only a third of them will receive
treatment. Millions of our fellow citizens are unnecessarily enduring
the pain and sadness of seeing a family member, friend, or loved one
suffer illnesses that seize the mind and break the spirit.
Battling mental illness is itself a painful process, but
discrimination against persons with such illnesses is especially cruel,
since the success rates for treatment often equal or surpass those for
physical conditions. According to the National Institute of Mental
Health, clinical depression treatment can be 70 percent successful, and
treatment for schizophrenia can be 60 percent successful.
Over the years we've heard compelling testimony from experts,
activists, and patients about the need to equalize coverage of physical
and mental illnesses. The Office of Personnel Management talks us that
providing full parity to 8.5 million federal employees has led to
minimal premium increases. We heard dramatic testimony about the
economic and social advantages of parity, including a healthier, more
productive workforce.
Some of the most compelling testimony came several years ago from
Lisa Cohen, a hardworking American from New Jersey, who suffers from
both physical and mental illnesses, and is forced to pay exorbitant
costs for treating her mental disorder, while paying little for her
physical disorder. She is typical of millions of Americans who not only
face the cruel burden of mental illness, but also the cruel burden of
discriminatory treatment. No Americans should be denied equal treatment
of an illness because it starts in the brain instead of the heart,
lungs, or other parts of their body. No patients should be denied
access to the treatment that can cure their illness because of where
they live or work.
A number of States have already enacted mental health parity laws,
but 86 million workers under ERISA have no protection under state
mental health statutes.
Mental health parity is a good investment for the Nation. The costs
from lost worker productivity and extra physical care outweigh the
costs of implementing parity for mental health treatment.
Over the years study after study has shown that parity makes good
financial sense. An analysis of more than 46,000 workers at major
companies showed that employees who report being depressed or under
stress are likely to have substantially higher health costs than co-
workers without such conditions. Employees who reported being depressed
had health bills 70 percent higher than those who did not suffer from
depression. Those reporting high stress had 46 percent higher health
costs. McDonnell Douglas found a 4 to 1 return on investment after
accounting for lower medical claims, reduced absenteeism, and smaller
turnover.
Mental illness also imposes a huge financial burden on the Nation. It
costs us $300 billion each year in treatment expenses, lost worker
productivity, and crime. This country can afford mental health parity.
What we can't afford is to continue denying persons with mental
disorders the care they need.
Today is a turning point. We are finally moving toward ending this
shameful form of discrimination in our society--discrimination against
mental illness. This bill has been seven years in the making, and
brings first class medicine to millions of Americans who have been
second class patients for too long.
Today, we begin to right that wrong, by guaranteeing equal treatment
to the 11 million people receiving mental health services, and
promising equal treatment to the remaining 100 million insured workers
and their families who never know the day they may need their mental
health benefit.
The 1996 Act, was an important step towards ending health insurance
discrimination against mental illness. This bill will take another
large step forward by closing the loopholes that remain.
It guarantees co-payments, deductibles, coinsurance, out of pocket
expenses and annual and lifetime limits that apply to mental health
benefits are no different than those applied to medical and surgical
benefits.
[[Page S1865]]
It guarantees that the frequency of treatment, number of visits, days
of coverage and other limits on scope and duration of treatment for
mental health services are no different than those applied to medical
and surgical benefits.
This equal treatment and financial equity is also applied to
substance abuse.
Features of State law that require coverage of mental disorders are
protected, to assure those currently protected by state parity laws
that their needs will be met.
The medical management strategies needed to prevent denial of
medically needed services for patients remain intact.
Finally, the bill is modeled on the parity that is already guaranteed
to the 8.5 million persons, including Members of Congress, under the
Federal Employee Benefits Program,
Equal treatment of those affected by mental illness is not just an
insurance issue. It's a civil rights issue. At its heart, mental health
parity is a question of simple justice.
It is long past time to end insurance discrimination and guarantee
all people with mental illness the coverage they deserve.
I urge my colleagues to support this important principle, and end the
unacceptable double standards that have unfairly plagued our health
care systems for so long.
Mr. DOMENICI. Mr. President, I rise today along with my colleagues
Senator Kennedy and Senator Enzi to introduce the Mental Health Parity
Act of 2007. I want to thank my colleagues for all of their hard work
on this issue and I am glad we are able to introduce this paramount
legislation.
Simply put, our legislation will provide parity between mental health
coverage and medical and surgical coverage. No longer will people be
treated differently only because they suffer from a mental illness.
This means 113 million people in group health plans will benefit from
our bill.
We are here today after years of hard work. We have worked with the
mental health community, the business community, and insurance groups
to carefully construct a fair bill. A sampling of the groups include
the National Alliance on Mental Illness, the American Psychological
Association, the American Psychiatric Association, the National Retail
Federation, and Aetna Insurance.
This bill will no longer apply a more restrictive standard to mental
health coverage and another more lenient standard be applied to medical
and surgical coverage. What we are doing is a matter of simple
fairness. Statistics demonstrate that there is a significant need for
this change in policy. Currently, 26 percent of American adults or
nearly 58 million people suffer from a diagnosable mental illness each
year. Six percent of those adults suffer from a serious mental illness.
Additionally, more than 30,000 people commit suicide each year in the
United States. We need to reduce these numbers, and I believe expanding
access to mental health services will allow us to do so.
This bill will provide mental health parity for about 113 million
Americans who work for employers with 50 or more employees and ensure
health plans do not place more restrictive conditions on mental health
coverage than on medical and surgical coverage. Additionally, the
legislation includes parity for financial requirements such as
deductibles, copayments, and annual lifetime limits. Also, this bill
includes parity for treatment limitations regarding the number of
covered hospital days and visits. This bill does not Mandate the
coverage of mental health nor does it prohibit a health plan from
managing mental health benefits in order to ensure only medically
necessary treatments are covered.
Again, I would like to thank everyone who contributed to the
development of this legislation. I believe we are making a difference
today and I look forward to working with my colleagues to move this
bill forward.
I ask for unanimous consent that the text of the bill to be printed
in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 558
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 ``Mental Health Parity Act of
2007''.
SEC. 2. MENTAL HEALTH PARITY.
(a) Amendments of ERISA.--Subpart B of part 7 of title I of
the Employee Retirement Income Security Act of 1974 is
amended by inserting after section 712 (29 U.S.C. 1185a) the
following:
``SEC. 712A. MENTAL HEALTH PARITY.
``(a) In General.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health benefits, such plan or coverage shall ensure
that--
``(1) the financial requirements applicable to such mental
health benefits are no more restrictive than the financial
requirements applied to substantially all medical and
surgical benefits covered by the plan (or coverage),
including deductibles, copayments, coinsurance, out-of-pocket
expenses, and annual and lifetime limits, except that the
plan (or coverage) may not establish separate cost sharing
requirements that are applicable only with respect to mental
health benefits; and
``(2) the treatment limitations applicable to such mental
health benefits are no more restrictive than the treatment
limitations applied to substantially all medical and surgical
benefits covered by the plan (or coverage), including limits
on the frequency of treatment, number of visits, days of
coverage, or other similar limits on the scope or duration of
treatment.
``(b) Clarifications.--In the case of a group health plan
(or health insurance coverage offered in connection with such
a plan) that provides both medical and surgical benefits and
mental health benefits, such plan or coverage shall not be
prohibited from--
``(1) negotiating separate reimbursement or provider
payment rates and service delivery systems for different
benefits consistent with subsection (a);
``(2) managing the provision of mental health benefits in
order to provide medically necessary services for covered
benefits, including through the use of any utilization
review, authorization or management practices, the
application of medical necessity and appropriateness criteria
applicable to behavioral health, and the contracting with and
use of a network of providers; or
``(3) applying the provisions of this section in a manner
that takes into consideration similar treatment settings or
similar treatments.
``(c) In- and Out-of-Network.--
``(1) In general.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health benefits, and that provides such benefits on
both an in- and out-of-network basis pursuant to the terms of
the plan (or coverage), such plan (or coverage) shall ensure
that the requirements of this section are applied to both in-
and out-of-network services by comparing in-network medical
and surgical benefits to in-network mental health benefits
and out-of-network medical and surgical benefits to out-of-
network mental health benefits, except that in no event shall
this subsection require the provision of out-of-network
coverage for mental health benefits even in the case where
out-of-network coverage is provided for medical and surgical
benefits.
``(2) Clarification.--Nothing in paragraph (1) shall be
construed as requiring that a group health plan (or coverage
in connection with such a plan) eliminate an out-of-network
provider option from such plan (or coverage) pursuant to the
terms of the plan (or coverage).
``(d) Small Employer Exemption.--
``(1) In general.--This section shall not apply to any
group health plan (and group health insurance coverage
offered in connection with a group health plan) for any plan
year of any employer who employed an average of at least 2
(or 1 in the case of an employer residing in a State that
permits small groups to include a single individual) but not
more than 50 employees on business days during the preceding
calendar year.
``(2) Application of certain rules in determination of
employer size.--For purposes of this subsection:
``(A) Application of aggregation rule for employers.--Rules
similar to the rules under subsections (b), (c), (m), and (o)
of section 414 of the Internal Revenue Code of 1986 shall
apply for purposes of treating persons as a single employer.
``(B) Employers not in existence in preceding year.--In the
case of an employer which was not in existence throughout the
preceding calendar year, the determination of whether such
employer is a small employer shall be based on the average
number of employees that it is reasonably expected such
employer will employ on business days in the current calendar
year.
``(C) Predecessors.--Any reference in this paragraph to an
employer shall include a reference to any predecessor of such
employer.
``(e) Cost Exemption.--
``(1) In general.--With respect to a group health plan (or
health insurance coverage offered in connections with such a
plan), if the application of this section to such plan (or
coverage) results in an increase for the plan year involved
of the actual total costs of coverage with respect to medical
and surgical benefits and mental health benefits under the
plan (as determined and certified
[[Page S1866]]
under paragraph (3)) by an amount that exceeds the applicable
percentage described in paragraph (2) of the actual total
plan costs, the provisions of this section shall not apply to
such plan (or coverage) during the following plan year, and
such exemption shall apply to the plan (or coverage) for 1
plan year. An employer may elect to continue to apply mental
health parity pursuant to this section with respect to the
group health plan (or coverage) involved regardless of any
increase in total costs.
``(2) Applicable percentage.--With respect to a plan (or
coverage), the applicable percentage described in this
paragraph shall be--
``(A) 2 percent in the case of the first plan year in which
this section is applied; and
``(B) 1 percent in the case of each subsequent plan year.
``(3) Determinations by actuaries.--Determinations as to
increases in actual costs under a plan (or coverage) for
purposes of this section shall be made by a qualified actuary
who is a member in good standing of the American Academy of
Actuaries. Such determinations shall be certified by the
actuary and be made available to the general public.
``(4) 6-month determinations.--If a group health plan (or a
health insurance issuer offering coverage in connections with
a group health plan) seeks an exemption under this
subsection, determinations under paragraph (1) shall be made
after such plan (or coverage) has complied with this section
for the first 6 months of the plan year involved.
``(5) Notification.--An election to modify coverage of
mental health benefits as permitted under this subsection
shall be treated as a material modification in the terms of
the plan as described in section 102(a)(1) and shall be
subject to the applicable notice requirements under section
104(b)(1).
``(f) Rule of Construction.--Nothing in this section shall
be construed to require a group health plan (or health
insurance coverage offered in connection with such a plan) to
provide any mental health benefits.
``(g) Mental Health Benefits.--In this section, the term
`mental health benefits' means benefits with respect to
mental health services (including substance abuse treatment)
as defined under the terms of the group health plan or
coverage.''.
(b) Public Health Service Act.--Subpart 1 of part A of
title XXVII of the Public Health Service Act is amended by
inserting after section 2705 (42 U.S.C. 300gg-5) the
following:
``SEC. 2705A. MENTAL HEALTH PARITY.
``(a) In General.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health benefits, such plan or coverage shall ensure
that--
``(1) the financial requirements applicable to such mental
health benefits are no more restrictive than the financial
requirements applied to substantially all medical and
surgical benefits covered by the plan (or coverage),
including deductibles, copayments, coinsurance, out-of-pocket
expenses, and annual and lifetime limits, except that the
plan (or coverage) may not establish separate cost sharing
requirements that are applicable only with respect to mental
health benefits; and
``(2) the treatment limitations applicable to such mental
health benefits are no more restrictive than the treatment
limitations applied to substantially all medical and surgical
benefits covered by the plan (or coverage), including limits
on the frequency of treatment, number of visits, days of
coverage, or other similar limits on the scope or duration of
treatment.
``(b) Clarifications.--In the case of a group health plan
(or health insurance coverage offered in connection with such
a plan) that provides both medical and surgical benefits and
mental health benefits, such plan or coverage shall not be
prohibited from--
``(1) negotiating separate reimbursement or provider
payment rates and service delivery systems for different
benefits consistent with subsection (a);
``(2) managing the provision of mental health benefits in
order to provide medically necessary services for covered
benefits, including through the use of any utilization
review, authorization or management practices, the
application of medical necessity and appropriateness criteria
applicable to behavioral health, and the contracting with and
use of a network of providers; or
``(3) be prohibited from applying the provisions of this
section in a manner that takes into consideration similar
treatment settings or similar treatments.
``(c) In- and Out-of-Network.--
``(1) In general.--In the case of a group health plan (or
health insurance coverage offered in connection with such a
plan) that provides both medical and surgical benefits and
mental health benefits, and that provides such benefits on
both an in- and out-of-network basis pursuant to the terms of
the plan (or coverage), such plan (or coverage) shall ensure
that the requirements of this section are applied to both in-
and out-of-network services by comparing in-network medical
and surgical benefits to in-network mental health benefits
and out-of-network medical and surgical benefits to out-of-
network mental health benefits, except that in no event shall
this subsection require the provision of out-of-network
coverage for mental health benefits even in the case where
out-of-network coverage is provided for medical and surgical
benefits.
``(2) Clarification.--Nothing in paragraph (1) shall be
construed as requiring that a group health plan (or coverage
in connection with such a plan) eliminate an out-of-network
provider option from such plan (or coverage) pursuant to the
terms of the plan (or coverage).
``(d) Small Employer Exemption.--
``(1) In general.--This section shall not apply to any
group health plan (and group health insurance coverage
offered in connection with a group health plan) for any plan
year of any employer who employed an average of at least 2
(or 1 in the case of an employer residing in a State that
permits small groups to include a single individual) but not
more than 50 employees on business days during the preceding
calendar year.
``(2) Application of certain rules in determination of
employer size.--For purposes of this subsection:
``(A) Application of aggregation rule for employers.--Rules
similar to the rules under subsections (b), (c), (m), and (o)
of section 414 of the Internal Revenue Code of 1986 shall
apply for purposes of treating persons as a single employer.
``(B) Employers not in existence in preceding year.--In the
case of an employer which was not in existence throughout the
preceding calendar year, the determination of whether such
employer is a small employer shall be based on the average
number of employees that it is reasonably expected such
employer will employ on business days in the current calendar
year.
``(C) Predecessors.--Any reference in this paragraph to an
employer shall include a reference to any predecessor of such
employer.
``(e) Cost Exemption.--
``(1) In general.--With respect to a group health plan (or
health insurance coverage offered in connections with such a
plan), if the application of this section to such plan (or
coverage) results in an increase for the plan year involved
of the actual total costs of coverage with respect to medical
and surgical benefits and mental health benefits under the
plan (as determined and certified under paragraph (3)) by an
amount that exceeds the applicable percentage described in
paragraph (2) of the actual total plan costs, the provisions
of this section shall not apply to such plan (or coverage)
during the following plan year, and such exemption shall
apply to the plan (or coverage) for 1 plan year. An employer
may elect to continue to apply mental health parity pursuant
to this section with respect to the group health plan (or
coverage) involved regardless of any increase in total costs.
``(2) Applicable percentage.--With respect to a plan (or
coverage), the applicable percentage described in this
paragraph shall be--
``(A) 2 percent in the case of the first plan year in which
this section is applied; and
``(B) 1 percent in the case of each subsequent plan year.
``(3) Determinations by actuaries.--Determinations as to
increases in actual costs under a plan (or coverage) for
purposes of this section shall be made by a qualified actuary
who is a member in good standing of the American Academy of
Actuaries. Such determinations shall be certified by the
actuary and be made available to the general public.
``(4) 6-month determinations.--If a group health plan (or a
health insurance issuer offering coverage in connections with
a group health plan) seeks an exemption under this
subsection, determinations under paragraph (1) shall be made
after such plan (or coverage) has complied with this section
for the first 6 months of the plan year involved.
``(5) Notification.--An election to modify coverage of
mental health benefits as permitted under this subsection
shall be treated as a material modification in the terms of
the plan as described in section 102(a)(1) and shall be
subject to the applicable notice requirements under section
104(b)(1).
``(f) Rule of Construction.--Nothing in this section shall
be construed to require a group health plan (or health
insurance coverage offered in connection with such a plan) to
provide any mental health benefits.
``(g) Mental Health Benefits.--In this section, the term
`mental health benefits' means benefits with respect to
mental health services (including substance abuse treatment)
as defined under the terms of the group health plan or
coverage, and when applicable as may be defined under State
law when applicable to health insurance coverage offered in
connection with a group health plan.''.
SEC. 3. EFFECTIVE DATE.
(a) In General.--The provisions of this Act shall apply to
group health plans (or health insurance coverage offered in
connection with such plans) beginning in the first plan year
that begins on or after January 1 of the first calendar year
that begins more than 1 year after the date of the enactment
of this Act.
(b) Termination of Certain Provisions.--
(1) ERISA.--Section 712 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1185a) is amended by striking
subsection (f) and inserting the following:
``(f) Sunset.--This section shall not apply to benefits for
services furnished after the effective date described in
section 3(a) of the Mental Health Parity Act of 2007.''.
(2) PHSA.--Section 2705 of the Public Health Service Act
(42 U.S.C. 300gg-5) is amended by striking subsection (f) and
inserting the following:
[[Page S1867]]
``(f) Sunset.--This section shall not apply to benefits for
services furnished after the effective date described in
section 3(a) of the Mental Health Parity Act of 2007.''.
SEC. 4. SPECIAL PREEMPTION RULE.
(a) ERISA Preemption.--Section 731 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1191) is
amended--
(1) by redesignating subsections (c) and (d) as subsections
(e) and (f), respectively; and
(2) by inserting after subsection (b), the following:
``(c) Special Rule in Case of Mental Health Parity
Requirements.--
``(1) In general.--Notwithstanding any provision of section
514 to the contrary, the provisions of this part relating to
a group health plan or a health insurance issuer offering
coverage in connection with a group health plan shall
supercede any provision of State law that establishes,
implements, or continues in effect any standard or
requirement which differs from the specific standards or
requirements contained in subsections (a), (b), (c), or (e)
of section 712A.
``(2) Clarifications.--Nothing in this subsection shall be
construed to preempt State insurance laws relating to the
individual insurance market or to small employers (as such
term is defined for purposes of section 712A(d)).''.
(b) PHSA Preemption.--Section 2723 of the Public Health
Service Act (42 U.S.C. 300gg-23) is amended--
(1) by redesignating subsections (c) and (d) as subsections
(e) and (f), respectively; and
(2) by inserting after subsection (b), the following:
``(c) Special Rule in Case of Mental Health Parity
Requirements.--
``(1) In general.--Notwithstanding any provision of section
514 of the Employee Retirement Income Security Act of 1974 to
the contrary, the provisions of this part relating to a group
health plan or a health insurance issuer offering coverage in
connection with a group health plan shall supercede any
provisions of State law that establishes, implements, or
continues in effect any standard or requirement which differs
from the specific standards or requirements contained in
subsections (a), (b), (c), or (e) of section 2705A.
``(2) Clarifications.--Nothing in this subsection shall be
construed to preempt State insurance laws relating to the
individual insurance market or to small employers (as such
term is defined for purposes of section 2705A(d)).''.
(c) Effective Date.--The provisions of this section shall
take effect with respect to a State, on the date on which the
provisions of section 2 apply with respect to group health
plans and health insurance coverage offered in connection
with group health plans.
SEC. 5. FEDERAL ADMINISTRATIVE RESPONSIBILITIES.
(a) Group Health Plan Ombudsman.--
(1) Department of labor.--The Secretary of Labor shall
designate an individual within the Department of Labor to
serve as the group health plan ombudsman for the Department.
Such ombudsman shall serve as an initial point of contact to
permit individuals to obtain information and provide
assistance concerning coverage of mental health services
under group health plans in accordance with this Act.
(2) Department of health and human services.--The Secretary
of Health and Human Services shall designate an individual
within the Department of Health and Human Services to serve
as the group health plan ombudsman for the Department. Such
ombudsman shall serve as an initial point of contact to
permit individuals to obtain information and provide
assistance concerning coverage of mental health services
under health insurance coverage issued in connection with
group health plans in accordance with this Act.
(b) Audits.--The Secretary of Labor and the Secretary of
Health and Human Services shall each provide for the conduct
of random audits of group health plans (and health insurance
coverage offered in connection with such plans) to ensure
that such plans are in compliance with this Act (and the
amendments made by this Act).
(c) Government Accountability Office Study.--
(1) Study.--The Comptroller General shall conduct a study
that evaluates the effect of the implementation of the
amendments made by this Act on the cost of health insurance
coverage, access to health insurance coverage (including the
availability of in-network providers), the quality of health
care, the impact on benefits and coverage for mental health
and substance abuse, the impact of any additional cost or
savings to the plan, the impact on State mental health
benefit mandate laws, other impact on the business community
and the Federal Government, and other issues as determined
appropriate by the Comptroller General.
(2) Report.--Not later than 2 years after the date of
enactment of this Act, the Comptroller General shall prepare
and submit to the appropriate committees of Congress a report
containing the results of the study conducted under paragraph
(1).
(d) Regulations.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Labor and the
Secretary of Health and Human Services shall jointly
promulgate final regulations to carry out this Act.
Mr. ENZI. Mr. President, first and foremost I want to thank my
respective colleagues Senator Kennedy and Senator Domenici for their
dedication and leadership on the issues of mental health parity. Your
commitment and willingness to compromise has gotten us to the point
where we are today--introducing a mental health parity bill that has
the potential to be signed into law this year.
For many this is monumental. Parity for mental health benefits was
first championed by the late Senator Paul Wellstone. Senator Domenici
in memory of our late colleague took over as the lead advocate for this
legislation after the passing of Senator Wellstone.
Today is a reflection of your hard work, Senator Domenici, as well as
the groundwork that was laid by the late Senator Paul Wellstone.
The advocacy of my good colleagues Senator Wellstone and Domenici
helped to get the Mental Health Parity Act of 1996 signed into law.
This legislation acted as a catalyst for many states to take action in
passing their own mental health parity laws. To date 38 States have
passed some sort of mental health parity or benefit law. Many of these
laws go much farther than the 1996 Act. However, there is a concern
that while the 1996 Act requires parity for annual and lifetime dollar
limits on coverage, group plans may impose more restrictive treatment
and cost sharing requirements. This is a legit concern. There is a also
a valid concern that requiring parity or mental health benefits will
drive up the cost of insurance, and result in group plans offering less
coverage or even worse dropping coverage for both mental and physical
health. The bill introduced today recognizes both of these concerns and
addresses them. This in turn breaks the log jam that has halted efforts
in the past three Congress's to pass a Mental Health Parity Act that is
more widely known as the Paul Wellston Mental Health Equitable
Treatment Act.
The Mental Health Parity Act we are introducing today is a compromise
between the proponents and those who opposed the Paul Wellstone Mental
Health Equitable Treatment Act. It is a result of two years of
discussion and compromise between the business and insurer industry and
the mental health community. I want to thank both of you for coming
together in good faith to find a middle ground on an issue has
polarized stakeholders. Your support and input has been critical to
making this process work. Your willingness to work together to
accommodate each others concerns, makes it possible for a mental health
parity law to be enacted this Congress.
A vital component of the Mental Health Parity Act introduced today
recognizes the importance and need for treating mental health equal to
physical health, without unfairly mandating group health plans offer
mental health coverage. The legislation applies only to those group
health plans that already offer physical and surgical benefits as well
as mental health benefits. It does not mandate what types of mental
health benefits must receive parity, but leaves that to be defined
under the terms of the plan or coverage or as defined under State law.
What this legislation does do, is require a plan to provide financial
requirements and treatment limitations applied to mental health
benefits equal to the financial requirements and treatment limitations
applied to medical and surgical benefits that the plan covers. For
example, deductibles, co-payments, coinsurance, out of pocket expenses,
frequency of treatment, number of visits and days of coverage will now
be treated equally for mental health and physical health. To allow for
health plans to adequately manage the new parity requirement mechanisms
are authorized to allow for medical management tools to be used by
health plans. Provisions of this law will preempt provisions of State
law that differ. But again, this bill would not preempt State laws
mandating that mental health benefits be covered. Furthermore, States
that elect to adopt the Federal standards would not be subject to
preemption.
In addition, the legislation recognizes the stress many small
business employers are under to provide health care to their employees,
thus, this bill does exempts small employers. Any employer with 50 or
less employees will not be affected by the Federal law, but must still
comply with its State law or regulation.
[[Page S1868]]
Another critical component of this compromised legislation is a cost
exemption. Under the provision, an employer may elect to continue to
offer mental health parity if a group plan results in an increase of 2
percent in the case of the first plan year and 1 percent in the case of
each subsequent plan year.
The compromises made in this legislation are of great importance to
making sure this legislation will not burden employers struggling with
health care costs, while not compromising the significance or effect
this legislation will have in ensuring individuals have better access
to critical mental health services. Approximately 1 in 5 Americans ages
18 and older, have a mental disorder that can be diagnosed in a given
year according to the Substance Abuse and Mental Health Service
Administration. However, their ability to receive treatment may be
hindered due to cost issues or the stigma attached to mental illness.
This legislation will help to address both by sending the message that
mental health is just as important as physical health, and needs to be
treated with the same amount of importance. This bill signals to an
individual diagnosed with schizophrenia that his or her illness is as
real as an individual diagnosed with diabetes and that they should not
have to pay more for the mental illness than the physical. This
legislation will help an employee covered by an affected plan who has a
child with bipolar disorder better access to the treatment that child
needs. In the past 20 years new technologies and treatments have
advanced our understanding and ability to treat a mental illness. We
now know with the right diagnoses, support, treatment and case
management a person with mental illness can be a contributing member of
society. It is time to update our laws to reflect this.
While introduction today is a huge step forward for a Mental Health
Parity law, much more needs to be done to secure its passage. The
legislation, as it is currently crafted, still must pass through the
Senate Health, Education, Labor and Pensions Committee as early as
Wednesday, the full Senate and then the House. At this point, a process
has been created that allows for open and honest discussion. I
encourage my colleagues and the stakeholders to continue this process
and to remain together throughout each step of the way. By working
together, instead of against each other, we can achieve passage of this
legislation.
Mr. SMITH. Mr. President, I rise today with my colleagues Senator
Domenici and Senator Kennedy to introduce a bill that will have
tremendous impact for the millions of Americans who will suffer from
mental illness in their lifetime. The Mental Health Parity Act of 2007
is an important bill and I look forward to its passage.
Mental illness can affect people of any age, of any race, and of any
income. As a parent with a son who struggled with mental illness, I
know all too well the indiscriminate nature of the illness and the
frightening statistics of its regular occurrence for those we love. The
statistics on the prevalence of mental illness are indeed startling. We
know that in any given year, more than a quarter of our nation's
adults--60 million people--suffer from a diagnosable mental disorder,
many of whom suffer in silence. We also know that mental disorders can
disrupt lives and are the leading cause of disability for those aged
15-44 in the United States and in Canada.
Mental illness is just as deadly and serious as a physical illness.
Suicide takes the lives of more than 30,000 people each year, with more
than 700,000 attempts. We also know that suicides outnumber homicides
three to one each year. We also know that people who suffer from mental
illness suffer from much higher rates of other chronic conditions, such
as cardiovascular disease. However, unlike heart attacks and strokes,
mental illness is not something that we, as a nation, want to talk
about.
However, we know that effective treatment exists for most people
suffering. Help is out there, and this bill will help make it
available. Mental health is not a Democratic issue or a Republican
issue. Too much is at stake when we talk about mental health care
reform to get caught up in partisan politics. We need to work together
to find solutions. This bill is a big step and an important step in
moving that needed reform forward. Through parity, we can alleviate
some of the burden on the public mental health system that results when
families are forced to turn to the public system when they do not have
access to treatment through private plans.
My home State of Oregon had the wisdom and foresight to see that
mental health parity was necessary. I am proud that this year they are
implementing parity for the people of Oregon. In a 2004 report by the
Governor's Mental Health Taskforce, they found that in any given year
175,00 adults and 75,000 children under the age of 18 are in need of
mental health services. It also listed as one of the major problems
facing the Oregon mental health system the fact that mental health
parity was not, at that time, in effect. That is no longer the case and
I look forward to seeing significant improvements in the mental health
system in Oregon as a result of the hard work done there.
The introduction of this federal legislation is hard fought and so
important. I look forward to working with my colleagues to ensure its
passage. I urge my colleagues on both sides of the aisle to support
this bill.
____________________