[Congressional Record Volume 155, Number 159 (Thursday, October 29, 2009)]
[Extensions of Remarks]
[Page E2666]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          PREVENTING EXTORTION

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                         HON. PETER A. DeFAZIO

                               of oregon

                    in the house of representatives

                       Thursday, October 29, 2009

  Mr. DeFAZIO. Madam Speaker, the following essay was presented to me 
at a health care townhall. I believe this historical analogy is very 
sound.

                          Preventing Extortion

                          (By Jack Churchill)

       The debate about a public health insurance option mirrors 
     the debate about public power in the 1920's and 30's. The 
     arguments then were very similar to the arguments we hear 
     today.
       The principal issue then was whether the federal government 
     should enter the public power business by investing 
     taxpayers' money to build the Tennessee Valley Authority and 
     to harness the Columbia and other rivers for electrical 
     energy or the sites should be transferred to the private 
     sector. A second issue was who should build transmission 
     lines and set wholesale prices when the Federal government 
     built dams.
       The answer to the second question was first enunciated on 
     the Senate floor In the fight over the Wilson Dam in 1920 by 
     Senator John Sharp Williams of Tennessee. He said ``The 
     government should have somewhere a producer of these things 
     that should furnish a productive element to stop and check 
     private profiteering.'' Thus was born the yardstick federal 
     policy which later found its way into TVA legislation through 
     the efforts of Nebraska's Senator George Norris. In a 1932 
     campaign speech in Portland, Oregon, Franklin Roosevelt 
     referred to his TVA and other regional proposals as 
     ``yardsticks to prevent extortion against the public.''
       Roosevelt's statement enunciated America's public power 
     agenda, which through the years has saved the federal 
     government and electrical consumers hundreds of billions of 
     today's dollars. This public investment provided the 
     electrical energy to build the bombers and the atomic bomb 
     and was a critical factor in winning World War II.
       At the time of the Yardstick Public Power legislation of 
     the 1930's, most of the farms and homes in rural America were 
     without electrical power. Only in the cities could private 
     power companies make a profit selling electrical energy. With 
     the launching of the New Deal yardstick pricing, together 
     with publicly owned electrical cooperatives and public 
     utility districts, rural America was electrified and private 
     utilities ended up serving a large majority of rural 
     consumers.
       Because we adopted yardstick pricing back in the 30's, 
     today America possesses a healthy and balanced mix of 
     private, public, and cooperative electrical systems.
       The public power analogy might be a useful device in 
     combating the brutal campaign against a federal public health 
     insurance option. History is repeating itself. We see the 
     same epithets of socialism, unfair competition, and 
     government interference with private enterprise.
       Both America's constitutional system of government and our 
     free enterprise economic system are built upon the 
     fundamental notion of balancing power between institutions. 
     It is only when there is an imbalance of power within one of 
     the two systems or the share of power between them that we 
     fail. Recent disasters created by imbalance, including 
     Enron and California energy manipulation and the collapse 
     of the American banking system, wiping out our citizens' 
     retirement accounts, are painful examples.
       Most importantly and perhaps most painful for great numbers 
     of our citizens today, America trails all developed countries 
     by many years in fashioning an effective national health 
     services delivery system.
       There is no industry that has a more shared and complex mix 
     of nonprofit, government, and private for-profit delivery 
     systems. Yet we have a system that is neither cost-effective 
     nor meets the needs of our citizens whether insured or not. 
     It is a system that is out of balance. It desperately needs 
     an effective yardstick
       The imbalance in our system began in 1975 when the Supreme 
     Court gave the green light to commercialization of medicine 
     by removing medicine from protection of the antitrust laws. 
     The imbalance was greatly exacerbated in 1980 when the 
     American Medical Association changed its ethical guidelines 
     to declare that medicine was no longer a professional service 
     but both a business and a profession. The other factor of 
     great influence that has led to imbalance is the dominance of 
     investor-owned private insurance companies born from the 
     establishment of employer-based health insurance systems.
       Thus began the corporatizing and domination of Wall Street 
     in organizing and pricing for-profit medical services. Rather 
     than a system organized to deliver cost-effective medical 
     services to patients, today we have a system designed for 
     profit.
       Despite the roles of federal Medicare, state Medicaid, 
     members of Congress health care programs, federal delivery 
     systems such as the Veterans Administration, and nonprofit 
     group health cooperative associations, the balance of power 
     in our national health care delivery system is now largely in 
     the hands of Wall Street-driven for-profit enterprises. Every 
     medical procedure from putting on surgical gloves to sending 
     bills to the insurance company has become a profit center. 
     And the pricing for all the services are set largely in an 
     oligarchical framework of administered pricing. There is 
     absolutely no competitive pricing. Have you or anyone you 
     know ever negotiated the price of medical service?
       So history repeats itself. The Democratic party is charged 
     with formulating another national yardstick policy that will 
     have enormous consequences for the health and welfare of our 
     citizens in generations to come. Like Franklin Roosevelt, 
     President Obama is simply leading the nation to create 
     sufficient power in the public sector to balance against the 
     private sector and the Wall Street pricing effect. Or in 
     President Roosevelt's words, ``a yardstick to prevent 
     extortion against the public.''And as President Obama stated 
     the issue ``to keep insurance companies honest.''
       The failure of Congress to build in an effective market 
     yardstick for pricing medical services would cost future 
     generations trillions and fail to deliver cost-effective 
     medical care to all our citizens. No amount of regulation 
     will suffice. Only the market mechanism will provide 
     effective cost reduction to pay for universal coverage.

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