[Congressional Record Volume 155, Number 159 (Thursday, October 29, 2009)]
[Senate]
[Pages S10871-S10877]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           HEALTH CARE REFORM

  Mr. GRASSLEY. Madam President, I am going to continue on a point that 
the Senator from Kentucky made, and that is tax increases. I want to be 
a little more specific about how the health care reform bill is going 
to very dramatically increase taxes--particularly for groups of people 
with under $250,000 a year in income, which group President Obama has 
promised would never have their taxes increased.
  On September 12, 2008, in Dover, NH, candidate Obama said:

       And I can make a firm pledge: No family making less than 
     $250,000 will see their taxes increase--not your income 
     taxes, not your payroll taxes, not your capital gains taxes, 
     not any of your taxes.

  You can see on the chart that quotation. It is very firm, very clear. 
Well, I believe we are at the point of abrogating that promise.
  President Obama's pledge has also been repeated by the President and 
his advisers numerous times since candidate Obama has been in office. 
However, the health care reform bill reported out of the Senate Finance 
Committee is loaded with tax hikes on ``the middle class.''

  President Obama, however, has defined the middle class as those 
making under $250,000. Candidate Obama stated that ``if you are making 
less than $250,000, then you are definitely somewhere in the middle 
class.''
  President Obama's budget tracks this definition by preserving the 
current income tax rate structure for families under $250,000 and 
singles under $200,000. And the Democratic leadership

[[Page S10872]]

budgets adopted President Obama's definition of the middle class.
  President Obama and congressional Democrats have adopted this 
definition of the middle class in the context of health care reform.
  As evidence, on August 3, 2009, President Obama's press secretary 
Robert Gibbs said:

       Let me be precise. The President's clear commitment is not 
     to raise taxes on those making less than $250,000 a year.

  In his Portsmouth, NH, townhall meeting, the President--referring to 
ways in which to pay for health care reform--said this:

       It should not burden people who make $250,000 a year or 
     less.

  The congressional Democratic leadership have made similar 
commitments. So the question is: When health care reform comes up, will 
it not increase taxes for people making under $250,000? Will the 
promises that the President made as a candidate be kept by the bills 
that may become law? I don't want to refer to this Senator's judgment 
of this. I want to use the words of the Joint Committee on Taxation and 
the Congressional Budget Office. These are people who are experts--
nonpartisan--and nobody questions their judgment. They are 
intellectually honest. They are not Republicans or Democrats.
  According to these official scorekeepers--Joint Tax and the 
Congressional Budget Office--the Finance Committee bill contains over 
$500 billion of taxes, increases, fees, and penalties on individuals 
and businesses.
  The Joint Committee on Taxation testified that a significant 
percentage of these tax increases, fees, and penalties will be borne by 
the middle-class taxpayers--those making under $250,000.
  Joint Tax also performed a distributional analysis of three tax 
provisions of the Senate Finance Committee bill for the year 2019--when 
these provisions are fully in effect. In other words, Joint Tax and the 
Congressional Budget Office look ahead 10 years. So we are talking 
about between now and 2019.
  The three provisions that Joint Tax made distributional analyses of 
are: the advance refundable insurance premium tax credit; second, the 
high cost plans tax, also known around here as the Cadillac health 
insurance plans--and that is the tax connected with it; third, the 
medical expense deduction tax increase.
  The Joint Committee on Taxation found that, on average, by 2019, 
singles making over $40,000 a year, and married couples making over 
$75,000 a year would have a net tax increase under the Finance 
Committee bill.
  Again, if you are single and making over $40,000 a year, or married 
and making over $75,000 a year, your taxes are going up, on average, 
under the Finance Committee bill. We have two charts up here that make 
that very clear.
  My colleagues on the other side of the aisle may say that the Finance 
Committee bill lowers people's taxes. Let's look at that. This may be a 
little bit true for some taxpayers. But for middle-class taxpayers, 
their taxes will go up. Further, Joint Tax--the official congressional 
tax scorekeeper--said so.
  So if the President signs the Senate Finance Committee bill, or some 
of the financing measures in that bill, into law, the President would 
break that campaign pledge.
  The President then would be raising taxes on families making $250,000 
and singles making $200,000. Now that we have established that the 
Finance Committee bill raises taxes on the middle class, I would like 
to dig a bit deeper.
  In looking to 2019, Joint Tax data leads to the conclusion that 77 
percent of the burden of the tax increases in the Finance bill would be 
borne by middle-class taxpayers. In 2019, out of these taxpayers making 
under $200,000 who are affected by the three provisions mentioned 
above, 54 percent of them will see tax increases. In other words, 46 
million middle-class families and individuals would pay higher taxes 
under the Finance Committee bill, contrary to what the President has 
said.
  Joint Tax data also finds that middle-class families who file joint 
returns are very dramatically affected. Specifically, in 2019, over 64 
percent of middle-class families filing joint tax returns would face a 
significant increase, and these families, obviously, make less than 
$250,000 a year.
  Once again, I have charts that will show the different divisions of 
people falling into those income categories.
  Another way to look at this is, there are four groups of middle-class 
taxpayers who are treated differently under the Finance Committee bill. 
The first is a group of 14.5 million who will receive refundable tax 
credits. These refundable credits represent government spending and not 
tax relief. That is the judgment of these official scorekeepers, not 
this Senator. In 2019, this government spending amounts to $77 billion 
alone.
  In the second group, some of the 25 million will see some tax relief. 
However, a substantial number of those 25 million in this second group 
will not see any tax relief under the bill.
  The third group, made up of 46 million middle-income taxpayers, will 
bear a large tax increase.
  A fourth group of 83 million will have a tax increase from provisions 
in the bill that Joint Tax has not yet analyzed, so I cannot go into 
depth about that group.
  For example, Joint Tax has not yet provided distribution analysis on 
the effect of the fees on health insurers that will be passed through 
and medical device manufacturers.
  The ACTING PRESIDENT pro tempore. The Senator's time has expired.
  Mr. GRASSLEY. I ask for 5 additional minutes.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. GRASSLEY. Because we do not have that analysis, we do not know 
how many of those 83 million will face tax increases. For instance, 
many of those 83 million buy health insurance themselves or their 
employers buy it for them, and they will bear the burden of the new 
insurance fees in the form of higher insurance premiums.
  During the Finance Committee debate, some Senators of the majority 
party described the Finance Committee bill as providing a net tax cut. 
Let's look at what is a net tax cut because the official scorers would 
not determine that is what it is.
  To understand whether these claims are accurate, one has to figure 
out what is meant by the words ``tax reduction.''
  The premium tax credit under the bill is refundable. That means tax 
return filers receive the tax credit, even if they have no income tax 
liability. If a tax filer has no income tax liability, how can their 
taxes go down? Joint Tax does not describe that as a tax reduction. 
Instead, Joint Tax says these filers receive a Federal benefit.
  Joint Tax also tells us that 73 percent of the $453 billion in the 
refundable tax credits for health insurance is, in fact, pure and 
simple, government spending. That leaves just 27 percent--or $122 
billion--that might legitimately be called a tax reduction, and we see 
it on the chart.
  Meanwhile, as mentioned above, there are over $500 billion in tax 
increases--$\1/2\ trillion is another way of saying it. Even if we add 
in the meager small business tax credit of $23 billion, which is the 
only other tax benefit in the bill, this bill contains a net tax 
increase of over $350 billion.
  Because the refundable insurance premium credit is called a tax 
credit, Democrats have argued the entire $453 billion is a tax credit. 
However, Joint Tax and the Congressional Budget Office scores 330 
billion of that $453 billion as pure and simple government spending.
  Colleagues on the other side of the aisle argue that such government 
spending is actually a tax cut. However, Joint Tax scores this as 
government spending, not tax cuts.
  An outlay results when the tax credit is larger than an individual's 
income tax liability, if any. That individual simply receives a check 
from the Internal Revenue Service. Sending a check to an individual who 
pays no income tax cannot credibly be called a tax cut. Some colleagues 
argue that the refundable tax credit offsets payroll taxes. However, 
payroll taxes are meant to be paid so individuals can receive benefits 
from Social Security and Medicare later in life.
  Even if you agree that individuals should not have to pay payroll 
taxes but should also receive Social Security and Medicare benefits, 
that rationale cannot be used over and over. It should only be used 
once.
  We already have a number of generous refundable tax credits. The 
child

[[Page S10873]]

tax credit, the earned-income tax credit, and the making work pay 
credit are all refundable tax credits.
  The insurance premium credit in the Finance bill is added to that 
list. Therefore, this same payroll tax cut rationale has been used four 
times to claim that this government spending is actually a tax cut. 
Joint Tax scores these outlays as government spending, not as a tax 
cut. That is not this Senator saying that; it is the professionals in 
Joint Tax who say it is government spending, not a tax cut.
  The interesting thing about the refundable tax credit for health 
insurance is, it does not go to the individual or family. Instead, this 
Federal tax benefit goes from the government directly to the insurance 
company providing health care coverage. That is a check from the 
Federal Government made out to your insurance company dated, signed, 
sealed, and delivered directly to that insurance company.
  I remember hearing President Obama criticize sending money directly 
to insurance companies. On October 4, before his election, in Newport 
News, VA, then-Candidate Obama criticized Senator McCain's health 
credit for health insurance by saying these words:

       But the new tax credit he is proposing? That wouldn't go to 
     you. It would go directly to your insurance company--not your 
     bank account.

  That is what the President said in that quote. If Candidate Obama was 
against it then, how is President Obama for it now? But that is what is 
in this legislation.
  The ACTING PRESIDENT pro tempore. The Senator from Georgia.
  Mr. CHAMBLISS. Madam President, as we begin to slowly emerge from the 
economic pitfalls of the worst recession this country has seen in 
decades, the long-term issues that remain are real and affect Americans 
of all walks of life.
  Out-of-control government spending has resulted in a skyrocketing 
deficit, fueling fears of an unsustainable financial future for 
America. A stifled free market drags down our economic growth and 
impairs our ability to work toward reducing this enormous burden on our 
children's and grandchildren's future.
  In spite of this volatile forecast, there are some who feel that the 
best way to reinvigorate our economy is to impose heavier costs, higher 
fees, and greater taxes on businesses and individuals, while forcing 
the Federal Government to oversee and manage health care in the United 
States, ultimately adding an additional one-sixth of our economy to the 
government's balance sheet.
  Make no mistake, this financial instability is not disconnected from 
Americans' everyday lives. It is being felt at bill-paying time, 
discussed at dinner tables, and it is weighing on the minds of the very 
people who drive this country's economy.
  The other side would have you believe that greater government 
control, increased spending, and less money in Americans' pockets is 
the way toward economic stability and growth.
  Since there has been no legislative language circulated on the 
proposed government takeover of health care at this point, we can only 
consider the conceptual language as passed by the Senate Finance 
Committee.
  Here is 1,502 pages of conceptual language that has come out of the 
Finance Committee and is being proposed as meaningful health care 
reform.
  This phantom health care proposal imposes $\1/2\ trillion in new 
taxes, fees, and penalties on individuals and businesses. While some 
would have you believe these taxes will only be borne by the wealthy in 
the form of a 40-percent excise tax on high-value insurance plans, both 
the Congressional Budget Office and the Joint Committee on Taxation--as 
alluded to by the ranking member on the Finance Committee, the Senator 
from Iowa--have testified that these taxes will almost entirely be 
passed on to the consumer, irrespective of their tax bracket.
  Under the tax provisions of this health care proposal, in my home 
State of Georgia, a young, healthy individual under certain health 
plans would see his monthly premiums almost double.
  Additionally, $92 billion of this new burden will be in the form of 
new fees on manufacturers and importers of branded drugs and certain 
medical devices, as well as on health insurance providers. Again, all 
this is going to be passed on to consumers, resulting in higher health 
insurance premiums and higher costs for health-related products.
  While a majority of the health reforms in the Finance Committee bill 
do not go into effect until 2013, such as the tax credit for health 
insurance and the individual mandate, both of which are designed to 
lower health care costs, these so-called fees are effective on January 
1 of next year. This means health insurance, in general, will become 
more expensive before any government assistance or policies intended to 
make health insurance more affordable even take effect.
  Also included in the Senate finance proposal is a tax on individuals 
without essential health benefits coverage, which would subject 
individuals who fail to maintain government-approved health insurance 
coverage to a penalty of $750 per adult in the household.
  While Democrats complain this contains savings for low- to middle-
income families, CBO has stated that almost half those families paying 
this tax would be between 100 percent and 300 percent of the Federal 
poverty level--or a family of four earning between $22,800 and $68,400 
in 2013. Additionally, proponents of this bill say it reduces the 
deficit while providing relief from high health care costs from lower 
income families. However, what they do not tell you is, under their 
refundable tax credits, families who earn nearly four times the Federal 
poverty level will have almost 91 percent of their health care costs 
paid for by other taxpayers.
  The CBO--the Congressional Budget Office, the independent 
Congressional Budget Office--estimates that by 2019, out of 253 million 
Americans with health insurance, only 18 million will be eligible for 
these tax credits to purchase insurance. So this supposed health care 
cost-reducing tax credit at the heart of the Democrats' health care 
reform is only available to 7 percent of the population.
  Increasing taxes on 91 percent of Americans to pay for 7 percent of 
the population is not reform, it is business as usual. While I am in 
favor of tax credits to purchase health insurance, I do not support 
placing limitations on who can receive such credits or what type of 
coverage they can purchase.
  Madam President, as if increasing the size of government even more in 
the health care sphere isn't going to make matters worse, who do you 
think is going to administer, implement, and enforce these tax 
increases? None other than the Internal Revenue Service. With a new 
influx of complex health care policies being legislated through the Tax 
Code, the IRS would be tasked with overseeing all aspects of the 
millions of taxpayers now burdened with even more filings to the IRS.
  Additionally, the IRS would likely be entrusted with enforcing these 
new provisions as well as protecting against fraud in certain cases. 
These new responsibilities of the Internal Revenue Service would mean 
only one thing: a bigger and more intrusive IRS.
  As I continue to say, I am in support of reforming the health care 
system in this country because we do have problems. We need greater 
transparency in health care costs, increased competition, more 
individual portability for peace of mind for those who change jobs, a 
better focus on prevention and wellness and real reform of the health 
insurance industry. Republican-backed plans do exactly that. There are 
ways to lower health care costs and be more fiscally responsible, and 
there are opportunities to pay for this coverage without expanding 
entitlements and increasing taxes on middle-class Americans.
  Americans deserve a patient-centered approach to health care reform. 
The 1,502 pages being discussed this morning as we speak--behind closed 
doors, by the majority leader and other Democrats--puts politicians and 
bureaucrats in charge of the health care industry in this country, and 
that is not what the American people want or deserve.
  Madam President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Idaho.
  Mr. CRAPO. Madam President, I also rise to speak about the health 
care legislation the Senate is preparing to consider on the Senate 
floor. I will begin my remarks, as my colleague from Georgia has done, 
by referring to the bill which the Finance Committee has put out. This 
is it. It is 1,502

[[Page S10874]]

pages which, interestingly, we did not have before us when we 
considered it in the Finance Committee.
  I think most people in the country realize right now that as the 
Finance Committee proceeded through 2 full weeks of markup on this 
legislation, the legislation had not actually been written. Even though 
the very first amendment, which we brought, was an amendment to say 
that before we would be forced to vote on a bill, we should see the 
bill for 72 hours and have the CBO, the Congressional Budget Office, 
score on the bill for 72 hours so that we and the American public could 
understand what was in it, that was not allowed. We cast our final 
votes in the Finance Committee on the Finance Committee's bill--well, 
the Finance Committee's concept paper. This bill didn't yet exist. We 
did have an idea about what concepts were intended to be in it, but the 
bill itself didn't exist.
  The reason I bring that up right now is because this is actually not 
going to be the bill we consider on the Senate floor. As soon as the 
Senate Finance Committee finished with this bill, the majority leader 
and the chairmen of a couple of the relevant committees--I presume with 
some personnel from the White House--got together behind closed doors 
in the Capitol Building and began drafting a new bill to merge this 
bill with a previous bill that had come out of the HELP Committee bill 
in the Senate. That new bill has now been sent to CBO for a score, but 
we don't know what is in it either.
  In fact, we are told it is concepts and options that are being 
submitted to CBO. I am not even sure if that new bill has yet been 
written, but I do know no one, except those who have submitted it to 
CBO, know what is in it.
  Well, we have a good idea of what is in the health care bill the 
Senate Finance Committee put out, and I expect a lot of what was in 
this Senate Finance Committee bill will make it into this new bill that 
someday maybe the American public and the rest of the Members of this 
Chamber will be able to see. As we approach the health care issue, I 
think it is important for us to understand exactly what it is we are 
expected to do by the American people and what it is we are doing with 
the health care legislation.
  Most Americans want health care reform. But when they say that, the 
vast majority of them mean they want Congress to take swift and 
decisive action to bring under control the spiraling costs of health 
care and the spiraling costs of health care insurance. As a part of 
that, they want to see increased access for those who are uninsured, 
whose burden of coverage and health care falls on the taxpayers. That 
is the core focus, the purpose behind the drive in America for health 
care reform.
  Well, what does the legislation we passed out of the Finance 
Committee do? With regard to the cost of insurance, it will not cause 
the cost of insurance to go down. It will, in fact, drive up the cost 
of insurance at even faster rates of growth than would have occurred 
without the legislation. What does it do for coverage of those who are 
uninsured? It establishes an extremely expensive new government program 
that would provide tax credits--or what are called renewable tax 
credits--for those at certain income levels to provide the ability for 
them to obtain coverage. But of the 47 million who are uninsured in the 
United States today, the bill still leaves approximately 25 million of 
them uninsured.
  What it does put into place for these two outcomes on the major 
reasons for reform--increased cost of insurance and only about 50 
percent reduction of the uninsured--is a massive new amount of Federal 
control over the health care industry, a massive new entitlement 
program that will cost, according to CBO, approximately $829 billion of 
new spending, and then offsets that try to address the growing costs of 
the Federal Government that it represents by about $404 billion worth 
of cuts in Medicare and $506-or-so billion of new taxes, fees, and 
penalties.
  Remember the discussion I started with about the fact that the 
American people wanted to see the cost curve on health care bend down? 
We will hear it said that this bill bends down the cost curve. Well, it 
doesn't bend down the health care cost curve, and it doesn't bend down 
the health care insurance cost curve. All it does is try to address the 
impact of the phenomenal amount of new spending--$829 billion--by 
raising taxes and cutting Medicare in amounts that are greater than the 
amount of the cost in the bill.
  Well, what kind of impact will these increases in taxes have? First 
and foremost, I want to return to what my colleague, Senator Grassley, 
recently pointed out. In the discussion of this issue, President Obama 
made it clear as a candidate, and he has repeatedly made it clear as 
President, that he will not sign legislation that imposes a tax 
increase on people making less than $250,000 in the United States. 
These are his remarks on September 12 during the campaign in New 
Hampshire, which, again, he has repeated consistently:

       And I can make a firm pledge: No family making less than 
     $250,000 will see their taxes increase--not your income 
     taxes, not your payroll taxes, not your capital gains taxes, 
     not any of your taxes.

  Well, what does this bill do? This bill squarely increases the taxes 
on the middle class in the United States. The full tax burden of this 
bill, including all of the taxes and fees and penalties that are 
included in it, is over $\1/2\ trillion. Experts have now told us that 
the majority, in fact the significant majority of those taxes and those 
increased fees and penalties, will fall on the backs of those who make 
less than $250,000. We don't have the data yet, but, in fact, the 
impact on people who make less than $120,000 will be a huge portion of 
these new taxes and fees. Yet how can that be allowed to happen with 
the President making this pledge?
  I think the American people need to pay attention. In essence, what 
we have represented is a huge increase in spending in the Federal 
Treasury--$829 billion under the Finance Committee plan. It is expected 
to be closer to $900 billion under the plan that was devised recently 
and submitted to CBO. Nonetheless, it is a massive increase in Federal 
spending, matched by equally massive cuts and tax increases--cuts in 
Medicare and tax increases--to make it appear that the impact on the 
deficit is marginal. But don't be fooled. When those who support this 
approach defend it, they will tell us it bends the cost curve. The cost 
curve they are talking about is the cost to the Federal Government. 
They are not telling us the cost of the Federal Government--the 
expenditures of the Federal Government--will be going down. What they 
are telling us is the expenditures will not be going up faster than the 
taxes and the cuts in Medicare are going up.
  It is important for the American public to recognize that this 
legislation represents yet again one huge step of the Federal 
Government into management and control of the health care economy, and 
that huge new step of the Federal Government into management of the 
economy will be financed squarely on the backs of the middle class with 
a huge tax increase. That is not what America was asking for.
  So to summarize, Madam President, what do we have? We have a proposal 
that will not bend the cost curve; it will, in fact, cause the cost 
curve on which everyone in America is focusing--the cost of health care 
and the cost of insurance--to go up. It will not achieve universal 
coverage for those who do not have access to insurance today, but it 
will put the Federal Government much more in charge and control of our 
health care economy and will grow the Federal Government by nearly $1 
trillion of new spending at the expense of $\1/2\ trillion of tax 
increases and $400 billion of Medicare cuts.
  That is not the kind of health care reform our Nation needs. It is 
not the kind of health care reform the American people have asked for. 
We should change the debate, and we should begin focusing on those 
kinds of common ground areas that we know how to identify where we can 
bend the cost curve--the true cost curve--down, where we can do so 
without raising taxes on the American people, and we can do so without 
devastating the Medicare programs of our country.
  With that, Madam President, I yield the floor.
  The PRESIDING OFFICER (Mr. Kirk). The Senator from Kansas is 
recognized.
  Mr. ROBERTS. Mr. President, I understand I am allowed 10 minutes of 
this morning business period; is that correct?

[[Page S10875]]

  The PRESIDING OFFICER. The Senator is correct.
  Mr. ROBERTS. Mr. President, I rise today to share my concerns about 
the tax increases called for in the health care reform bill that is now 
being finalized behind closed doors. I want to make sure the American 
people truly understand what these tax increases will mean for them and 
their families. This bill calls for an incredible and shocking $500 
billion in taxes, in massive new taxes, taxes that will fall on average 
Americans who already know their tax burden is too high.
  We hear a lot about the efforts behind the closed doors to merge 
three different bills and all the costs and all the efforts to get more 
voters onboard. But we do not really hear much about the tax increases. 
They really should make the taxpayer sit up and take notice.
  The behind-the-doors crowd has tried to disguise some of the new 
taxes in this bill by presenting them as being paid for by targeted 
health care industries. However, the reality is that average Americans 
who purchase health insurance and use medical services, from 
prescription drugs to hearing aids, are the ones who will foot the bill 
for this tax-and-spending spree. The higher taxes called for in this 
bill come straight out of Americans' pocketbooks. American taxpayers, 
Americans, have the right to know, they have the right to be informed, 
they have the right to understand, and they have the right to be 
heard--not only on the spending, not only on the health care reform 
bill, but in regard to the taxes they will pay.
  Let me give just a few examples of the new taxes called for and who 
will actually pay them.
  The bill imposes a 40-percent excise tax on health insurance 
providers that offer high-cost health insurance plans. This provision 
is the largest tax hike in the bill. It raises $201 billion. Of this 
amount, an analysis by the Joint Committee on Taxation, or the JCT, 
finds that more than 80 percent or $164 billion of the tax will come 
from increased income and payroll taxes on higher wages. When the bill 
is implemented, however, the excise tax is likely to hit 40 percent of 
American families, so the reality is that these families, not the 
insurance providers, will be on the hook for the $164 billion.
  The bill raises taxes on those who pay for their health care out of 
pocket by raising the floor for deducting catastrophic medical expenses 
from 7.5 percent to 10 percent of adjusted gross income. Those who take 
this deduction are most often seniors and those with serious medical 
issues. Eighty-seven percent of taxpayers who claim this deduction have 
income under $100,000.
  While an amendment to exempt taxpayers 65 or older from the higher 
threshold was approved in committee, thank goodness, don't be fooled: 
the exemption is only in effect in the first 3 years. As a result, in 
the following years roughly 50 percent of the taxpayers affected by 
this proposal will be over the age of 65. This makes no sense.
  The bill raises taxes on the more than 35 million Americans who 
participate in flexible spending accounts. The median income of a 
flexible spending account participant is $55,000. This program is a 
very important benefit for many families for whom health insurance does 
not cover, or does not sufficiently cover, some of the highest cost 
health care expenses, such as dental, vision, and also prescription 
drug costs. It is also important for individuals who manage chronic 
diseases such as diabetes, heart disease, or cancer. FSAs allows 
participants to set aside money out of their own pockets to pay for 
these necessary expenses. However, under this bill the government caps 
how much can be set aside in a flexible spending account, a person's 
own account, effectively raising the tax burden on certain FSA 
participants and increasing their health care costs--typical of a 
disguised tax in this bill.
  Another tax attack: It also eliminates the ability of individuals to 
use money from their accounts, the FSA accounts, to purchase over-the-
counter medications. Here we are, trying to put downward pressure on 
health care costs. Rather than maintaining current law that gives 
consumers the option to purchase over-the-counter medications through a 
flexible spending account that they have chosen to put money into, the 
bill instead directs them to more costly alternatives and increased use 
of the health care system and limits the consumers' ability to fully 
use their own accounts.
  Another example of the stealth taxes called for in this bill is the 
individual mandate penalty. Although the President has said this 
penalty is not a tax, the Finance Committee bill adds this provision 
under a section called the ``Excise Tax on Individuals Without 
Essential Health Benefits Coverage.'' The government expects to collect 
$4 billion from this tax.
  In 2013, almost half of those Americans who will be paying the 
penalty tax will have incomes between $22,800 and $68,400 for a family 
of four. This penalty essentially means the IRS will now tax you if you 
do not buy a health care plan approved by the government. Let me repeat 
that. This penalty essentially means the IRS will now tax you if you 
don't buy a health care plan approved by the government.
  Not only that, this bill also expands the reach of the IRS even 
further into the lives of ordinary Americans, allowing them to collect 
more information than ever before about you and your health care 
choices in order to tax you based on these choices. This provision 
highlights one of the most disturbing aspects of this bill: the 
increased role the IRS will play in the lives and health care choices 
of every American.
  Under this bill, the IRS will gain unprecedented new powers. But here 
is the clincher. There is no money in this bill to pay for the 
expansion of the IRS that will have to occur for the IRS to administer 
and enforce these new tax provisions--emphasis on ``enforce.'' How much 
will that cost? How many billions will be needed to pay for this growth 
in government? How many more employees will the IRS have to hire? We 
don't know. But make no mistake, every American should understand that 
the IRS will be playing a bigger role in their life and their health 
care decisions.
  Question, for all those who braved the townhall meetings. Everyone 
who wants more IRS involvement in their lives, raise your hands. I 
don't think in these townhall meetings you will hear many hands 
clapping. Under this bill, not only will Americans see massive new 
taxes, they will also see an unprecedented expansion of the Internal 
Revenue Service and a further reach by government into their lives.
  This is the wrong solution to health care reform. Americans are 
looking for real reform that preserves their health care choices. But 
reform that comes with a $500 billion tax increase and is supervised, 
if not more, by the Internal Revenue Service is simply not the answer.
  Mr. President, I yield the remainder of my time.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. HATCH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HATCH. Mr. President, this health care debate is one of the most 
important debates we have ever had in this country. We are talking 
about one-sixth of the American economy. We better get it right because 
if we do not, this economy will never be able to recover. If we go down 
the wrong path and we spend too much time building the government at 
the expense of the individuals in this country, we will never be able 
to change it. So this is a very important time, and I am calling upon 
all my colleagues in both the Senate and the House to try to work 
together so we can come up with a program, a system that literally will 
work.
  We can build upon things we already agree upon. Things such as 
preexisting conditions should be covered, automatically covered. That 
is a very difficult issue; it is not something you can just say glibly. 
The fact is, we have to resolve this problem so people will not just 
wait until they get sick to buy insurance because they have a right to 
do so under any new policy we are coming up with. But they should be 
able to get into the insurance market now.
  Having said that, there are many on the other side who would like to 
have what they call a public plan or what I

[[Page S10876]]

call a government plan. The problem with the government plan is that 
the central force would be right here in Washington, filled with 
bureaucracy, filled with expenses, filled with all of the clogs that 
occur in Washington, DC. And we will not be solving the individual 
problems of the various States, each of which has its own demographics. 
I have often pointed out that Utah's demographics are not the same as 
New York's or California's or those of Massachusetts. But neither are 
New York's the same as those of Massachusetts or California. Each State 
has its own demographic problems.
  Utah is considered one of the top three States in the delivery of 
health care. There is a good reason for that; that is, we thought it 
through and we basically bring health care closer to the people. We 
already have an exchange in Utah which is working to a large degree. It 
is just starting, but the fact is, it has been embraced and accepted by 
people. We would bitterly resent a one-size-fits-all Federal Government 
program to resolve all problems.
  This business of making sure preexisting conditions are covered is 
fraught with all kinds of difficulties if we do not do this right. 
There are all kinds of expenses if we fail to observe the past and, I 
might add, all kinds of bureaucratic problems if we do not work 
together to get this problem solved.
  On the other hand, are we going to go to a system where government 
tells people they have to buy insurance, whether it be a public plan or 
otherwise? I am not sure constitutionally that the government has that 
kind of power. If the government has that kind of power, to tell people 
they have to have insurance even if they don't want it--and that 
includes the public plan insurance--then what limitations are there on 
government? What happens to all the freedoms we all take for granted? 
What happens to the liberties we have embedded in the Constitution?
  These are important issues. They are not issues you just brush aside 
because one side or the other wants to have the Federal Government take 
over all control of our health care system.
  I might add, I think most of us agree there should be transparency in 
the system. If we had transparency over all of the hospitals, all of 
the physicians, and we could tell which ones are great, which ones 
aren't, we could make our own decisions as to where to go for 
particular types of care, especially very serious care. I think most of 
us would like to provide a system where our constituents could do that.
  What about medical liability reform? As a former medical liability 
defense lawyer, I defended doctors, hospitals, nurses, and health care 
providers who needed defending, many of whom did not commit negligence 
but were finding themselves suddenly in court in front of juries that 
may be empathetic to somebody who did not have a good result even 
though there was no negligence involved. I estimated 25 years ago that, 
in unnecessary defensive medicine, we are probably wasting upwards of 
$300 billion a year.
  That sounds very high. But I am finding more and more people are 
starting to come to the conclusion that we waste an awful lot of money 
on what is unnecessary defensive medicine. We all want defensive 
medicine because we all want the doctors to do what they should do. Our 
advice to the doctors back in those days happened to be, if somebody 
comes to you with a common disease or injury, you cannot afford to just 
give them--tell them to just do the minimum. You better have every test 
and every procedure you possibly can in your history, so if you ever do 
get sued, you will be able to say you went way beyond the standard of 
practice in the community and did everything you possibly could to try 
to help this person with their problems and that you should not have 
liability because of that.
  Well, I have to say we can go on and on. It was interesting to me, 
when I first asked Dr. Elmendorf, who heads our CBO, the Congressional 
Budget Office, what does unnecessary defensive medicine cost us, Dr. 
Elmendorf came up with an extremely low figure over 10 years. I think 
it was something like $10 billion.
  I chatted with him and I said: That cannot be so. I explained to him 
what my experience was and the experience of almost anybody who has any 
experience in this field, and he went back. He said: Well, I am going 
to go back and review it. He did go back and review it and came up with 
a figure of $54 billion over 10 years, just for Federal Government 
unnecessary defensive medicine. So it is much more than that if you add 
in everything else and extrapolate it all out.
  We should be able to save some of these dollars. That also would help 
us to be able to pay for real health care that needs to be done.
  We know the health care reform bill has been basically written in the 
office of the majority leader. While we do not know what this bill will 
look like, because it apparently has been written in the secrecy of the 
majority leader's office, and by very few people, by the way--and the 
same over in the House--every indication is, it will be similar to the 
bill reported out by the Finance Committee earlier this month.
  That bill, which would drastically change the very fabric of an 
industry that affects every American in the most personal way and 
represents one-sixth of our economy, contains roughly $409 billion in 
new taxes that are going to be passed on to the average taxpayer. Many 
Utahns are asking me who is going to have to pay these new taxes? 
Unfortunately, I have to tell them that it will not just be the 
wealthiest among us, but middle and even lower income American families 
as well.
  Perhaps the most solid promise that President Obama made during his 
campaign was that ``no [one] making less than $250,000 a year will see 
any form of tax increase!'' He further pledged that the 98 percent of 
Americans earning less than this amount would not see any tax increase 
on income and savings. Let me repeat that: The President promised that 
98 percent of Americans earning less than $250,000 would not see any 
tax increase on income and savings.
  The majority leader is preparing a partisan proposal to which he 
hopes to attract at least a modicum of Republican support. Thus far, 
however, he has no takers from my side of the aisle, and support from 
some on his side appears to be waning. Perhaps a major reason for this 
is that everyone knows the bill would break the President's promises 
not to raise taxes on average Americans. That is not the only thing it 
would do.
  The Finance Committee product offers a cornucopia of revenue raisers 
that would fund health care reform. Some of these provisions include 
direct taxes on lower and middle income wage earners, while others 
would hit average families indirectly through penalties, fees, and 
higher costs.
  If your employer offers you a higher cost insurance plan, your taxes 
will likely rise under this plan. If you have a flexible spending 
account or a health savings account, your taxes will likely rise. If 
you or your family use a medical device costing more than $100, such as 
a hearing aid or an insulator, or if you purchase prescription drugs, 
the cost of those items will likely rise.
  And ironically, in a bill that is designed to lower the costs of 
health care, the cost of health insurance itself is likely to rise 
under this plan. And if you do not have insurance, the cost of not 
having health insurance will rise because the bill will impose a tax if 
you do not get insurance.
  My friends on the other side of the aisle will probably paint this 
rise in penalties, fees, and higher costs as Republican hocus-pocus. 
But do not take it from me or my colleagues; take it from the 
nonpartisan Congressional Budget Office and the Joint Committee on 
Taxation.
  Looking first at the direct taxes on the middle class, the Democrats' 
bill declares war on savings accounts for health care. For example, the 
bill would limit the amount that employees can set aside of their own 
money into flexible spending accounts. In addition, over-the-counter 
medicine would no longer be qualified expenses for FSAs and health 
savings accounts, unless you have a doctor's note. Lastly, the proposal 
includes an increase from 10 percent to 20 percent for the penalty for 
withdrawals that are not used for qualified medical expenses. All 
together, this means that employees could be facing a 55-percent 
Federal tax on a bottle of aspirin. I thought we were trying to make 
health care more affordable, not more expensive.

[[Page S10877]]

  This year, 35 million employees participate in employer-sponsored, 
employee-funded flexible spending accounts. These accounts provide 
relief for the ever-increasing amount of health care that families must 
pay out of their own pockets. How does cutting back on FSA accounts 
lower the costs of health care? These accounts are not just provided to 
the wealthy. On the contrary, the average income for flexible spending 
account participants is just $55,000 per year.
  Another clear increase on taxes for middle income families is the 
raising of the threshold for the itemized medical expense deduction 
from 7.5 percent of adjusted gross income to 10 percent. This tax 
deduction is already means-tested so that it only kicks in when medical 
expenses are catastrophic or nearly so. This is not a tax benefit for 
the wealthy. The Joint Committee on Taxation estimates that in 2013, 
approximately 11.5 million taxpayers would be affected by this 
proposal. Of that number, about half have incomes less than $75,000.
  Perhaps even worse are the indirect tax increases in the bill. One of 
the most troubling ones to me is an unprecedented fee levied on entire 
segments of the health care industry, including pharmaceuticals, 
medical devices, and health insurance. While these fees would be paid 
by corporations, they will ultimately be passed on to consumers in the 
form of higher prices or on to employees in the form of lower pay, or 
even layoffs. Under this plan, the cost of everything from contact 
lenses to hearing aids to thermometers would rise for consumers, 
creating one more unfair burden on middle income families seeking 
affordable health care.
  And if you decide to either not have health insurance or if you need 
a more expensive plan than is allowed, the Democratic plan would raise 
taxes on you, even if you do not make anywhere near $250,000 per year. 
This is part of the so-called individual mandate, which requires 
individuals to obtain health care coverage or pay an extra tax. The 
amount of tax could reach as much as $750 per uninsured adult. Some may 
say this is simply a penalty for not doing what Uncle Sam wants you to 
do, but let us face it, it is nothing more than a new tax.
  There are at least two provisions in the Finance Committee bill that 
raise serious constitutional questions. First, is the transition relief 
for the high-cost insurance plans that is granted to 17 yet-to-be 
determined States. This means that a different tax rate will apply 
depending on where you live. Second, is the individual mandate itself. 
The constitutionality of the mandate, as pointed out by the 
Congressional Research Service, has never been addressed. We are 
treading into new waters. Are we just going to simply ignore these 
serious constitutional questions?
  Again, President Obama promised from the beginning that he would not 
raise taxes on the 98 percent of Americans who make less than $250,000. 
Unfortunately, the Democratic proposal we will soon be debating would 
break that promise. We are all for real health care reform, everybody, 
Republicans, Democrats and Independents, but not all of us are willing 
to pass it on the backs of middle-income taxpayers. At a time when we 
have trillion-dollar-plus deficits and an unemployment rate nearing 
double digits, this would be a colossal mistake.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The minority's time has expired.
  Mr. HATCH. I yield the floor.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.
  (The remarks of Mr. UDALL of Colorado pertaining to the introduction 
of S. 2052 are printed in today's Record under ``Statements on 
Introduced Bills and Joint Resolutions.'')
  The PRESIDING OFFICER. The Senator from Maryland.

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