[Congressional Record Volume 155, Number 184 (Wednesday, December 9, 2009)]
[Senate]
[Pages S12745-S12791]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of H.R. 3590, which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A bill (H.R. 3590) to amend the Internal Revenue Code of 
     1986 to modify the first-time home buyers credit in the case 
     of members of the Armed Forces and certain other Federal 
     employees, and for other purposes.

  Pending:

       Reid amendment No. 2786, in the nature of a substitute.
       Dorgan modified amendment No. 2793 (to amendment No. 2786), 
     to provide for the importation of prescription drugs.
       Crapo motion to commit the bill to the Committee on 
     Finance, with instructions.

  The ACTING PRESIDENT pro tempore. Under the previous order, following 
any remarks of the chairman and ranking member of the Finance Committee 
or their designees, for up to 10 minutes each, the next 2 hours will be 
for debate only, with the time equally divided and controlled between 
the two leaders or their designees, with Senators permitted to speak 
for up to 10 minutes each, with the Republicans controlling the first 
30 minutes, and the majority controlling the second 30 minutes, and 
with the remaining time equally divided and used in an alternating 
fashion.
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, for the benefit of all Senators, let me 
lay out today's program.
  It has been nearly 3 weeks since the majority leader moved to proceed 
to the health care reform bill. This is the 10th day of debate on the 
bill. The Senate has considered 18 amendments or motions. We have 
conducted 14 rollcall votes.
  Today the Senate will debate the amendment by the Senator from North 
Dakota, Mr. Dorgan, on prescription drug reimportation. At the same 
time, we will debate the motion by the Senator from Idaho, Mr. Crapo, 
on taxes.
  Under the previous order, the time until 12:30 p.m. today will be for 
debate only, with the time equally divided and controlled between the 
two leaders or their designees. Following the remarks of the ranking 
member of the Finance Committee or his designee, the Republicans will 
control the first 30 minutes and the majority will control the second 
30 minutes, with the remaining time equally divided and used in an 
alternating manner.
  We are hopeful the Senate will be able to conduct votes on or in 
relation to a second-degree amendment to the Dorgan amendment, the 
Dorgan amendment itself, a side by side to the Crapo motion, and the 
Crapo motion itself. Thereafter, we expect to turn to another 
Democratic first-degree amendment and another Republican first-degree 
amendment. We are working on lining those up.
  Over the course of the debate, there has been too much misinformation 
about what health care reform is and what it will do. I wish to set the 
record straight.
  The goal of health care reform is to lower costs and provide quality, 
affordable coverage to American families, businesses, and workers. 
According to the nonpartisan Congressional Budget Office, our bill, the 
Patient Protection and Affordable Care Act, is a success.
  According to the CBO, this bill provides health insurance coverage to 
31 million more Americans. That is a big success. It lowers health 
insurance premiums. Despite what some have said, what some have claimed 
about premiums rising, that is not true. CBO says this legislation 
lowers health insurance premiums but for 7 percent, and that 7 percent 
gets much higher quality health care insurance than otherwise they 
would get. CBO also says this legislation reduces the Federal deficit 
by $130 billion over the first 10 years--it reduces the Federal deficit 
by $130 billion over the first 10 years.
  In addition, as the President promised, this bill does not raise 
taxes on the middle class. In fact, this bill is a net tax cut. Over 
the next 10 years, this bill will provide a total of $441 billion in 
tax credits to help American families buy quality, affordable health 
care coverage they can count on. That is a tax cut, a total of $441 
billion in tax cuts. The chart behind me indicates

[[Page S12746]]

that. Over the next 10 years, this bill will provide a total of, as I 
said, $441 billion in tax cuts.
  The bill provides a net tax cut of $40 billion in the year 2017. You 
can see that basically on the chart: $40 billion of tax cuts in 2017. 
That is $440 for every taxpayer affected. These are individual tax 
cuts. Let me make that clear. American individuals will get tax cuts 
under this legislation in these amounts.
  That same year--2017--low- and middle-income taxpayers who earn 
between $20,000 and $30,000 a year will see an average Federal tax 
decrease of nearly 37 percent. That is CBO. Do not take my word for it. 
That is CBO and the Joint Committee on Taxation--an independent 
organization. The average taxpayer making less than $75,000 a year will 
receive a tax credit of more than $1,300, and that tax credit grows to 
more than $1,500 in 2019. Those are tax cuts. It is very important we 
all remember this bill is a net tax cut of this amount for American 
taxpayers. That is individual tax cuts.
  I have heard arguments that the responsibility to have health 
insurance amounts to a tax on the middle class. This is simply not 
true. In fact, this policy works to repeal the hidden tax of more than 
$1,000 in extra insurance premiums that American families with health 
insurance pay each year in order to cover the cost of caring for those 
without health insurance. It is a tax for uncompensated care. That is 
$1,000 per American family, on average, that they have to pay under the 
current system. This bill would virtually eliminate that.
  Additionally, this bill provides Americans with the tools they need 
to meet that responsibility by ensuring that all Americans have access 
to quality, affordable health insurance.
  The bill eliminates barriers that prevent Americans from getting 
insurance coverage, such as discrimination based on preexisting 
conditions. This bill eliminates that. We--all of us--either directly 
or through a family member or through a friend, have heard these horror 
stories of insurance companies denying coverage because of a 
preexisting condition. This legislation stops this. And this 
legislation makes quality insurance affordable to every American 
through tax cuts and help with copays and other out-of-pocket costs.
  If for some reason an individual still cannot afford to buy the 
health insurance coverage available to them, they are exempt from 
paying the penalty. Clearly, this penalty is not a tax. So if you 
cannot afford it, you do not have to pay--no penalty.
  I have also heard arguments that the excise tax on private insurance 
companies offering costly and excessive insurance plans will raise 
taxes on individuals. This claim is equally untrue. The Congressional 
Budget Office reaches the conclusion that is not true. In fact, the 
Congressional Budget Office reaches the conclusion it will lower 
premiums. I think the amount is 7 to 12 percent, if I remember 
correctly--the amount stated in their letter to us in the Congress.
  This policy, therefore, is not a tax on individuals. Rather, it is a 
tax on private insurance companies, and not passed on in the nature of 
higher premiums, according to CBO--in fact, lower premiums according to 
CBO.
  This legislation is designed to encourage private insurance companies 
to offer, and employers to choose, health insurance plans with lower 
premiums that are below the taxable threshold. The Congressional Budget 
Office noted how effective this policy is in a report when it said:

       . . . most people would avoid the cost of the excise tax by 
     enrolling in plans that had lower premiums.

  As a result, CBO says premiums will decrease and wages will increase 
as employers offer more money in workers' pockets instead of inflated 
health benefits. In fact, the bulk of the revenue raised by this 
provision--more than 83 percent--comes not from the tax itself but from 
increased wages, increased wages on account of this provision. MIT 
economist Jonathan Gruber estimates this provision will cause workers' 
wages to rise by $55 in 2019. That is $700 in additional income for 
every household with health insurance.
  The truth is, this bill is fully paid for--fully paid for; CBO says 
so--and it is paid for in a fiscally responsible way. It reduces the 
Federal deficit. It lowers the growth of health care costs. It provides 
quality, affordable health insurance to millions more Americans. And it 
is a net tax cut--net tax cut--for American families, businesses, and 
workers, which in these tough economic times means more than ever.
  The ACTING PRESIDENT pro tempore. The Senator from Oklahoma.
  Mr. COBURN. Mr. President, I stand confused from the statement of the 
chairman of the Finance Committee because we have all the reports that 
the bill he is talking about is not the bill we are going to be voting 
on because we are totally changing what we are doing. What is out there 
now is that we are going to expand Medicare to those down to 55 years 
of age, and we are going to expand Medicaid up to those of 150 percent 
of poverty. We are going to add billions of dollars of mandates, even 
at 90 percent copaid by the Federal Government, to the States over the 
next 10 years. We have a Medicare Program that you have taken $465 
billion out of, and you are going to add 34 million new people to under 
the new plan--the new plan we are talking about. You are talking about 
the plan we used to have.
  It is interesting, though, as you make those points, when you say it 
is net tax cut. Three-quarters of the net tax cut goes to people in 
this country who pay no taxes in the first place. The chairman cannot 
deny that. The fact is, according to the Joint Tax Committee--the 
chairman conveniently does not look at the other body that gives us 
information on taxes. According to the Joint Tax Committee, $288 
billion of the $394 billion will be refundable. That is a refundable 
tax credit to people who are paying no taxes now.
  Mr. BAUCUS. Mr. President, might I ask the Senator, it is a tax cut, 
whether or not it is refundable. And even if it is refundable, it is 
extra dollars in people's pockets.
  Mr. COBURN. The fact is, it is taxes to the average American family--
40 million of them. According to the Joint Tax Committee, taxes will 
rise on those who are making under $200,000 a year. The Joint Tax 
Committee said that.
  The point is, what you are talking about does not have any 
application because we do not have ``the bill,'' again, because we have 
a new ``the bill'' on the floor, which is going to take a bankrupt 
program that our children today are responsible for--if you are born 
today, based on the unfunded liabilities of Medicare, you are 
responsible for $350,000, if you are a new child born today, for what 
we have not paid for in Medicare. And now we have the new plan that is 
going to come out. We have cut $465 billion out of Medicare, or moved 
it out of Medicare, to create a new program. And we are going to add 34 
million new Americans to it, in a plan that has already mortgaged the 
future of our children.
  The other thing the chairman said is that costs in health care will 
go down and that premiums will go down. Well, there are 11 out of 12 
people who have studied ``the plan'' who say premiums will rise. What 
CBO says is, if you are in the individual market, your premiums are 
going to go up anywhere from 10 to 13 percent. In fact, they are not 
sure whether premiums will decline. They say on the other groups it is 
from a 1-percent increase to a 2-percent decrease over what they would 
have already increased.
  So our problem with health care is costs. That is the thing that 
stops access to health care in this country. And the plan--whether it 
is the new plan, which nobody has gotten to see the details of, or the 
plan we have seen the details of, the 2,074 pages we have seen the 
details of--raises the cost of health care in this country.
  But none of that is important because the most important thing is, it 
puts government in control of your health care through the task force 
on preventive health services, through the Medicare Advisory 
Commission, and through the cost comparative effectiveness panel. So 
with a wink and a nod we are going to put government in control of your 
health care; we are going to put 70 new bureaucracies between you and 
your doctor; we are going to put 20,000 new Federal employees between 
you and your doctor; and we are not going to lower the costs. The 
average American is not going to get a tax cut; they are going to see 
an

[[Page S12747]]

increase out of this bill. The average middle-income American is going 
to see a tax increase out of this bill.

  So, consequently, what we have heard sounds good on the surface. But 
the most important thing to remember is you are no longer going to be 
in control of your health care because once the government puts its 
nose under the tent, just as it did on breast cancer screening--and we 
have the gall to say we are going to recognize every time the agency 
does something that is harmful to a patient in their relationship with 
their doctor, that we are going to come to the Senate floor and correct 
it. The fact is, that isn't going to happen.
  So, ultimately, your health care is going to cost more and your 
premiums are going to rise. Eleven out of the twelve studies say 
premiums are going to rise under the bill that is before us, and the 
people who get the tax cuts are the people who aren't paying any taxes 
now. To pay for those tax cuts, taxes are going to rise on 40 million 
American families who earn under $200,000 a year.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Idaho.
  Mr. CRAPO. Mr. President, I ask unanimous consent to speak, as well 
as engage in a colloquy with several of my colleagues.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Mr. BAUCUS. Reserving the right to object, under the order of the 
day, what is the amount of time allocated to each side?
  The ACTING PRESIDENT pro tempore. The Republicans control the next 30 
minutes. Then the majority controls the next 30 minutes after that.
  Mr. BAUCUS. I thank the Chair.
  The ACTING PRESIDENT pro tempore. Is there objection? Without 
objection, it is so ordered.
  Mr. CRAPO. Thank you very much, Mr. President. I appreciate the 
opportunity to discuss the issue of taxes and jobs today as we focus on 
the critical legislation in front of us.
  I have proposed an amendment, actually a motion, to commit this bill 
back to the Finance Committee to help us honor the President's pledge 
on taxes. As we have discussed now for more than a week, 
notwithstanding all of the claims that are being made about this 
legislation, one of the irrefutable facts is that it grows the 
government dramatically. If you take the first full 10 years of 
spending, not counting the first 4 years that are not included in the 
spending--in other words, they are delayed in order to make the numbers 
look better--if you count the first full 10 years of implementation of 
this bill, it will result in $2.5 trillion of new Federal spending. It 
will grow the Federal Government by that much.
  Repeatedly, President Obama has told the American people he will not 
allow them to be taxed--those whom he describes as the middle class--in 
order to pay for this huge new increase in Federal spending.
  To use President Obama's own words:

       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 will not see any of your 
     taxes increase one single dime.

  Yet what does this bill do? It includes $493 billion of new taxes in 
just the first 10 years. If you use that full 10-year timeframe--that 
timeframe that starts after the 4 years of spending that have been 
suppressed in order to change the numbers and the calculations on the 
bill--the total number in that 10-year window is $1.2 trillion of new 
taxes.
  The question is, Do these taxes fall only on the wealthy or do they 
fall squarely on those in the middle class? The answer is the large 
majority of them fall on the middle class. In fact, the Joint Tax 
Committee has indicated that by 2019, individuals earning between 
$50,000 and $200,000 would, on average, see a tax increase of $595,000. 
Families earning between $75,000 and $200,000 would, on average, see a 
tax increase of $670,000.
  My colleague from Montana, the chairman of the Finance Committee, has 
argued that there is actually a net tax cut in the bill. How do we get 
to those numbers? Based on a Joint Committee on Taxation report, of the 
$394 billion that the government will spend on what are called tax 
credits--that is the tax cut that my colleague is talking about--$288 
billion of those $394 billion in credits will go to people who pay no 
taxes today.
  If you think about it, how can it be a tax cut if the money is spent 
from the Federal Treasury and sent to--or to somebody on behalf of--a 
person who is not paying taxes in the first place? You can call it a 
subsidy. You can call it a credit if you would like. I know the words 
used in the bill are a ``refundable tax credit,'' but the reality is it 
is nothing other than pure Federal spending. In fact, the Congressional 
Budget Office classifies this kind of benefit as government spending.
  Mr. BAUCUS. Will the Senator yield for a question?
  Mr. CRAPO. I will yield on the Senator's time.
  Mr. BAUCUS. That is fine.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. BAUCUS. The Senator says those are people who don't pay taxes. 
Don't most of those people pay a lot of taxes? Don't they pay payroll 
taxes, most of them, who work?
  Mr. CRAPO. There is a payroll tax. There is.
  Mr. BAUCUS. Are there not other taxes that people pay? It could be 
sales tax. There are all kinds of taxes that people pay. Particularly 
working people, there are a lot of taxes they pay.
  Mr. CRAPO. Reclaiming my time, although people do pay a lot of sales 
taxes--not Federal sales taxes, by the way--and although people do pay 
a lot of other types of taxes, they will pay penalties and fees--in 
fact, under this bill they will be paying a lot more taxes. The reality 
is I don't think that is what President Obama was talking about. When 
he made his pledge, I think his words were: ``You will not see any of 
your taxes go up.'' The bottom line is you can't say, well, if you 
offset this tax and you don't count the sales tax or if you add in the 
sales tax to counteract it--that is not what the President was talking 
about.
  Once again, as Joint Tax has said, by 2019 individuals making between 
$50,000 and $200,000 on average would see a tax increase of $590,000, 
and families making between $75,000 and $200,000 would see a net 
increase on average of $670,000.
  Let's go to the next chart.
  I note my colleague from Tennessee is here. If he would like to step 
in at any time, please feel free. I just have two other charts to show, 
and then I will toss the floor to the Senator. I see he has, I think, a 
question brewing.
  In the analysis that was done by the Joint Tax Committee, by 2019, 
these people whose taxes I have just described who are squarely in the 
middle class, there will be at least 73 million American households--
that is not individuals, that is households--73 million American 
households earning below the $200,000 that will face a tax increase. 
Sometimes the proponents of this bill say, well, that doesn't net out 
the subsidies we are providing to some of them. If you net out the 
subsidies--and I don't think that is necessarily an argument, but if 
you do net out the subsidies--it is still at least 42 million American 
households that will see their taxes increase under this legislation.
  How can that comply with the President's promise? All the motion I 
have brought does is say to commit this bill to the Finance Committee 
and make the bill fit the President's pledge. The President pledged 
that people in the middle class, which he defined as families making 
less than $250,000 or individuals making less than $200,000, would not 
see their taxes go up.
  With that, again, I see my colleague from Tennessee is ready to join 
in with me, and I would ask if he has any comments or questions to 
raise.
  Mr. ALEXANDER. I thank the Senator from Idaho. The point you are 
making is, if you are going to add $\1/2\ trillion--this bill as 
proposed is paid for by about half through Medicare cuts and about half 
through tax increases, and it is paid for some by sending huge new 
bills to State governments. But I guess the point the Senator is making 
basically is that we are going to add $\1/2\ trillion in taxes over 10 
years or much more than that when the bill is fully implemented. Who is 
going to end up paying those taxes? It is not going to be insurance 
companies. It is not going to be medical device

[[Page S12748]]

companies. It is going to be the people who--it is going to be us. 
Isn't that true? Don't you expect that most of the companies upon which 
the new taxes are imposed will pass those taxes along to the American 
people?
  Mr. CRAPO. Yes. As a matter of fact, in my own mind, I distinguish 
between taxes on the American people and fees that will be charged to 
companies and businesses in the private sector that are also being 
passed on to the American people. All of those will occur.

  One interesting clarification or explanation with regard to this 
refundable tax credit that is talked about so often: it isn't actually 
refunded to the taxpayer, as I understand it, or to the individual who 
doesn't pay taxes but is receiving the credit. It is paid directly to 
the insurance company, as I understand it. So even though some people 
could be claimed to be paying less taxes by this argument, because some 
of those who receive the subsidy will get a greater subsidy than they 
will a tax increase, the fact is even they still get a tax increase and 
even they still pay their taxes at the higher level. It is just that 
some of them will get a subsidy that will help to offset that.
  Mr. ALEXANDER. I wonder if I may take a minute to talk about another 
form of taxes, which would be State taxes. Now, people might be 
thinking: Well, you are talking about a Federal health care bill. How 
do you get State taxes in there? Well, let me try to explain that just 
a little bit.
  I remember as Governor of Tennessee some years ago, nothing used to 
make me madder than Washington politicians who would come up with a big 
idea, take credit for it, hold a press conference and announce it; call 
it, for example, historic, and then send the bill to me, the Governor, 
to pay it. Then usually those same politicians would come back to 
Tennessee and they would make a big speech about local control at the 
Jefferson Day dinner or the Jackson Day dinner. In fact, sometimes 
Republicans were just as bad as Democrats in doing it.
  I also remember that in 1994 there was a political revolution in the 
country. This body switched dramatically to the Republican side, and 
one of the main arguments was no more unfunded mandates. In other 
words, don't be coming up with big ideas in Washington and sending the 
bill to the Governor or to the State legislature or to the mayor or to 
the county commission and expect them to raise property taxes or cut 
services or raise college tuitions to make it up.
  So what I wish to say today is this: This legislation already 
includes a huge new bill for the State governments. As it is now 
written, Medicaid for low-income Americans is expanded, and there is a 
big bill to the States. Our Governor, who is a Democrat, by the way, 
has been very effective in pointing this out; that Senator Reid's bill 
will add $700 million over 5 years to our State. There is no way our 
State can pay this bill without a tax increase of significant size or 
seriously damaging higher education or seeing college tuition begin to 
go through the roof, just as we saw it do in California the other day 
when it went up 32 percent. Why did it go up? Because the State has had 
to spend so much of its money on health care bills, many of which are 
required by the Federal regulations of Medicaid.
  There is a rumor going around that there was a big deal cut last 
night that would pave the way for passage of this bill that says that 
instead of a new government-run program, we will simply expand two of 
the government-run programs we already have--Medicare for seniors and 
Medicaid for low-income Americans.
  I would ask these questions: First, with Medicare, how in the world 
can we take $1 trillion out of Medicare when the program is fully 
implemented and give 34 million or 35 million more Americans a chance 
to opt in it at a time when the trustees of Medicare have said it is 
going broke in 5 years. Insofar as Medicaid goes, if it is true that 
the idea is to expand Medicaid to 150 percent of the poverty level--
and, of course, we are not invited to any of the meetings; they were 
all written in the back room so we don't know the details--but if it is 
true we are going to expand Medicaid even more, our Governor has said 
in our State that doubles the cost of this legislation to our State.
  So down the road, in a few years, what we are going to see in 
Tennessee is a new State income tax, seriously damaging higher 
education, and I think it is--
  Mr. BAUCUS. Will the Senator yield on that point?
  Mr. ALEXANDER. On your time, yes.
  Mr. BAUCUS. I will quote from a letter basically to refute the 
allegations that this is a big obligation on the States. That is 
totally not true. The question is, Is it not true that on page 7 of the 
letter from the CBO, dated November 18, to Senator Reid, CBO says:

       The CBO estimates that State spending on Medicaid would 
     increase $25 billion over 10 years as a result of this 
     legislation.

  That is $2.5 billion a year, on average, for all States.
  Another figure I know is that the State increase will not be huge but 
about a 1 percent increase over the State obligation. Why? Because, as 
the Senator also noted, an expansion of the population in Medicaid--the 
Feds are paying virtually all of it. But on a net basis, it is a 1-
percent only increase in State obligation over 10 years. Does the 
Senator know that to be true?
  Mr. ALEXANDER. My understanding of the proposal by the Finance 
Committee bill and by the Reid bill is that the Federal Government 
expands Medicaid and pays for 100 percent of it for a few years, but 
after that, the State has a significant portion of the bill. Am I not 
correct in that?
  Mr. BAUCUS. We will have to divide this time. The division is 
correct. We are only talking--
  Mr. ALEXANDER. I am not going to divide the time.
  Mr. BAUCUS. Does the Senator ask a rhetorical question or an actual 
question?
  Mr. ALEXANDER. Mr. President, I will retain the floor, and then the 
Senator can make his statement later.
  The fact is, after 3, the Federal Government sends a big bill to the 
States. The fact is, the Governor of Tennessee, who is a Democrat and 
who has worked with other Governors and is actually leading the 
National Governors Association's effort to see the impact of this kind 
of legislation, says it will cost our State $700 billion over 5 years 
and $1.4 billion if we expand Medicaid up to 150 percent of federal 
poverty level. The State pays part of that bill. That means a big State 
tax increase. It means big higher education increases.
  As a former Governor, I guarantee that if this happens, a few years 
from now when the federal government shifts costs onto the states, 
there will be a revolt in the States and people will be asking who did 
this. I would seriously say that any Senator who votes to expand 
Medicaid and sends a significant part of the bill to the States ought 
to be sentenced to go home and be Governor and try to govern the State 
under those conditions.
  I think this kind of legislation, and especially the rumor I have 
heard regarding a dramatic increase in the expansion of Medicaid, will 
be a damaging blow to the American public's higher education from which 
it will never recover, tuition will go to a level where only the rich 
can afford to go to school, and the idea of public higher education 
will be left aside, all because Washington politicians ran up the bill, 
took the credit, made an announcement, and sent a huge bill to State 
governments that are struggling with their worst fiscal condition since 
the Great Depression.
  Mr. CRAPO. I thank my colleague. We will see State taxes as well as 
Federal taxes going up.
  Senator Johanns has joined us as well. Before I ask him to join in 
with questions and comments, I want to make one other clarification.
  Again, we have the President's pledge up here on the chart. The 
motion I have offered simply says: Make the bill comply with the 
President's pledge. If there are no new taxes, the bill doesn't have to 
be changed if we pass this motion. If there are, it does.
  Remember, I don't think that when the President made this pledge, he 
was saying he will not increase taxes on a net basis. In other words, I 
didn't hear the President say: I won't raise your taxes higher than I 
would cut them in some other areas. He specifically didn't say he would 
count subsidies being paid out to those who do not pay income taxes as 
an offset to any tax increases he wanted to raise somewhere else. The

[[Page S12749]]

President didn't get into all these nuances. He said he was not going 
to raise taxes on the middle class. The fact is, the middle class will 
see huge tax increases under this bill.
  Before I toss the floor to my colleague, I will say this: CBO 
estimates that only 7 percent of all Americans will receive any of 
these subsidies. Yet, specifically, out of the 282 million Americans 
with some type of health insurance, only 19 million of them will be 
eligible for the tax credit for their health insurance. The rest of the 
millions of Americans are going to be the ones paying those taxes. That 
is how it ends up. At minimum--and we are still going through the bill, 
and this number is growing--at least 42 million people who make less 
than $200,000--and, frankly, far less--are going to be paying a lot 
more taxes. That is the reason for the motion.
  I yield to my colleague, Senator Johanns.
  Mr. JOHANNS. Mr. President, Senator Alexander really has this right. 
I had the honor of being the Governor of Nebraska for 6 years. The 
whole idea of balancing a budget is not theoretical to a Governor. You 
have to do it.
  Let me tell you, if I might, about our State. Many years ago--decades 
and decades ago--when our founders wrote our State constitution, they 
were worried about the State getting itself embroiled in too much debt. 
So they said the politicians will be allowed to borrow some money. The 
limit they put in the State constitution was $50,000.
  So you see, in Nebraska, when you are faced with an unfunded mandate, 
like what is happening in this health care bill, I say you get three 
choices: You can cut programs like K-12 education, higher education, 
and much-needed services. No. 2, you can raise taxes, sales and income 
taxes. That is about what you are down to because that is really where 
the revenue comes from for States. The third choice is you get to do 
both. I guarantee you that none of those approaches is very popular.
  Just within the last few weeks, our Governor, dealing with the 
recession, like every Governor in the country, stepped in front of the 
unicameral, as I did as Governor, and he said: My friends, we have to 
cut the spending. It was just as clear as can be. He said: We have to 
cut the spending. People are hurting. They are laid off. If they are 
hurting, they are not spending as much; therefore, our revenues are 
down. We have to cut spending.
  They worked over a couple-week period of time, and they came up with 
a plan--I think it was unanimously approved--to cut the spending.
  Well, here we are in Washington, and when you pull the gimmicks out 
of this bill and score it realistically over 10 years, this is a 
multimillion-dollar hit to every State, including the State of 
Nebraska. So what are we handing off to the State? Guess what. We are 
saying: You get a chance to raise taxes--not because of any vote you 
took on the floor of the unicameral in Nebraska but because of what 
happened with Washington unfunded Federal mandates. That is what this 
bill is all about when you look at the expansion of Medicaid. I read 
the reports about the possibility this might go to 150 percent. Keep 
doing the math, keep loading the unfunded mandates on our State 
Governors.
  Do you know why we are doing this? We are doing it to try to convince 
the American people that this is a cheaper bill than it is. When they 
figure out that the Governor of their State has this problem to deal 
with and they come to figure out they are going to pay higher taxes or 
get fewer services and less education, it will become very real to 
them. I have said many times on this floor that with this bill, reality 
will set in. Here is another piece of reality.
  Then you look at the overall bill. About $\1/2\ trillion--in addition 
to this Medicaid mess we are going to push onto the States, there will 
be about $\1/2\ trillion in new taxes.
  Senator Crapo put up the promise the President has made. Well, gee, 
when he is done with that board, we can ceremoniously tear it up 
because, you know what, that promise isn't anywhere near being kept. 
When he said those things, quite honestly, there was no way he could 
deliver with this health care bill. Uninsured Americans get taxed. 
Insured Americans get taxed. Families with high-value plans get taxed. 
High-health-cost families get taxed. Flexible spending gets reduced. 
Small businesses get taxed. We can go on and on and on, to the tune of 
$\1/2\ trillion. That is not even counting the unfunded mandate hammer 
we are sending to every Governor in this Nation.
  Mr. CRAPO. Mr. President, I will add some statistics that I was 
reading while my colleagues were commenting. If you take out that CBO 
report, which is what actually analyzes this on a nonpartisan basis, 
the impact of these Medicaid expenditures, not including the proposed 
increase we heard about overnight, it clearly says:

       CBO estimates that State spending on Medicaid would 
     increase by about $25 billion over the 2010-2019 period as a 
     result of the provisions affecting coverage in table 3. That 
     estimate reflects States' flexibility to make programmatic 
     and other budgetary changes to Medicaid and CHIP.

  That is the statistic my colleague from Tennessee was looking for.
  Mr. ALEXANDER. I thank the Senator. It is true that in the 
legislation the estimate is that the Federal Government would pay 100 
percent of the increased expansion of Medicaid for 3 years and that it 
will cover about 90 percent of the cost after that, which sounds like a 
lot. But we throw so much money around up here, we have completely lost 
any appreciation of what that amount of money costs at the State level. 
In our State, our Governor has said that the 133-percent increase is 
about $700 million over 5 years, and that is a big, new tax or a big 
increase in college tuition.
  If I may, I ask unanimous consent to have printed in the Record an 
article from the Wall Street Journal of December 4 from the dean and 
CEO of Johns Hopkins Medicine.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Dec. 4, 2009]

  Health Reform Could Harm Medicaid Patients: A Vast Expansion of the 
      Program Will Impose Unsustainable Costs on Treatment Centers

                           (By Edward Miller)

       Baltimore, MD.--Both the House and Senate health-care 
     reform bills call for a large increase in Medicaid--about 18 
     million more people will begin enrolling in Medicaid under 
     the House bill starting in 2013, Centers for Medicare and 
     Medicaid Services (CMS) Actuary Richard Foster estimates.
       We at Johns Hopkins Medicine (JHM) endorse efforts to 
     improve the quality and reduce the cost of health care. But 
     we also understand all too well the impact a dramatic 
     expansion of Medicaid will have on us and our state--and 
     likely the country as a whole.
       A flood of new patients will be seeking health services, 
     many of whom have never seen a doctor on more than a sporadic 
     basis. Some will also have multiple and costly chronic 
     conditions. And almost all of them will come from poor or 
     disadvantaged backgrounds.
       We know this because we've been caring for Medicaid 
     patients in a managed-care setting for 14 years, as well as 
     providing world-class care to people from all over the 
     country and the world. Our experience provides a glimpse of 
     the acute cost bubble that the health-care system will suffer 
     with the reforms now being proposed.
       Like Intermountain Healthcare in Utah, Geisinger Medical 
     Center in Pennsylvania, and the Mayo Clinic, where, as 
     President Barack Obama notes, ``people fly from all over the 
     world to Rochester, Minnesota in order to get outstanding 
     care,'' people also fly from all over the world to obtain 
     care from JHM. But unlike those other institutions, we also 
     serve large numbers of people who can't afford cab fare to 
     the nearest hospital: poor, disadvantaged individuals, 
     150,000 of whom are in our Medicaid managed-care program, 
     Priority Partners.
       Priority Partners operates under a capitated system--that 
     is, it receives a set payment per individual per month from 
     the state. Over time, we've developed the ability to manage 
     the care of these individuals in a way that is both cost 
     effective and that provides them with quality care. We've 
     done it by tapping into our extensive delivery system, which 
     includes four hospitals, a nursing home, the largest 
     community-based primary care group in Maryland, and much 
     more.
       We've hit above-national benchmarks on all clinical quality 
     measures for our dialysis patients, reduced monthly costs for 
     patients with substance abuse and highly complex medical 
     needs, and 70% of our patients tell us they're satisfied with 
     our care. But the learning curve has been costly and steep, 
     and provides a cautionary tale for what will happen under the 
     health-care reforms currently in Congress.

  Mr. ALEXANDER. The dean, who writes a very sympathetic column which I 
will not read but a sentence or two of, is describing the current 
health care bill. He says:


[[Page S12750]]


       Even if only half those individuals seek Medicaid coverage, 
     such a large expansion would likely have an excruciating 
     impact on the State's budget. And Maryland is not alone. 
     According to a Kaiser Foundation survey conducted earlier 
     this year, three-quarters of the States have expressed 
     concern that expanding Medicaid could add to their fiscal 
     woes. Already, as Kaiser notes, 33 States cut or froze 
     payment rates to those who deliver health care to Medicaid 
     patients. . . .

  The proposal--and the Reid bill is maybe exacerbated by this deal we 
have been hearing about--is to shift millions more low-income Americans 
into a program called Medicaid, when only 50 percent of doctors will 
see new patients in that program, and then send a huge bill to the 
States, which will damage higher education.
  I remember, after I was Governor, I heard on the radio that the State 
of Tennessee had done a wonderful thing. It would double the number of 
children covered by Medicaid at the same amount of cost. It went 
through my mind that it would never happen. That program became the 
TennCare Program, which has nearly bankrupted our State.
  Mr. CRAPO. Mr. President, I thank my colleagues for their comments.
  How much time remains on our side?
  The ACTING PRESIDENT pro tempore. Six minutes.
  Mr. CRAPO. I will make a couple of other comments, and I will allow 
my colleagues to wrap up with their final comments. I want to raise an 
additional issue.
  On this chart, we show what is going to happen with the IRS. Right 
now, the CBO estimate indicates that because the IRS is in charge of 
the implementation of so many of the mandates and other requirements in 
this bill and because of the new taxes that will be forced onto the 
American people, there will need to be an expansion of the IRS. The CBO 
says that could mean as high as an additional $10 billion at the IRS.
  If there are no new taxes in this bill or no new mandates in the 
bill, if there is no increased role of the Federal Government in the 
management of the health care economy in this bill, why do we need to 
have the size of the IRS, which is a $12 billion institution today--why 
does it need to grow to almost double, up to $22 billion?
  The point is, the motion I have made is very simple and 
straightforward. We can argue back and forth about what the President 
said or whether this bill has tax cuts or tax increases in it or 
whether, in the net result, it does one thing or another.
  The bottom line is, with regard to about 157 million Americans who 
get their health insurance through their employer, by 2019, they are 
not going to be eligible for these tax credits people are talking 
about. They are going to be paying increased taxes.
  All this motion does is protect those 42 million people we were 
talking about who are going to see their taxes go up; 42 million 
households will see their taxes go up.
  If the other side is right and what we are talking about does not 
exist in the bill, then this motion should be harmless because all the 
motion says is commit the bill to the Finance Committee and tell the 
Finance Committee to take out the taxes that impact the middle class.
  I ask if either of my colleagues from Nebraska or Tennessee would 
like to make any concluding remarks.
  Mr. JOHANNS. Mr. President, let me offer a thought or two. Senator 
Crapo has hit the nail on the head. If this is not happening, if, in 
fact, the argument of the other side is accurate and this is not 
happening and this is some made-up sort of argument, then the Senator 
from Idaho is absolutely right, this motion will have no effect. So why 
would you not support the motion? Why wouldn't you want the health care 
bill to reflect the promise of the President of the United States? Why 
would you not stand and say: Look, it is a hard time out there. 
Unemployment is 10 percent. People are hurting. Unemployment and 
underemployment are 17.5 percent. This has been as tough a recession as 
we have seen in a long time, and it has hurt real people. Why wouldn't 
you want to stand for them and say: Man, we understand. We have heard 
you at our townhall meetings. We have heard you back home. We have 
heard you, and we are going to make sure we are not going to add to 
your burden.
  I appreciate Senator Alexander putting in that article. I thought 
that was a tremendous article. Medicaid is chewing up State budgets. I 
managed one of those budgets. Keep in mind, this is an entitlement 
program--no deductibles, no copays, no premiums. If you qualify, you 
get it. So there is no way you can manage this budget. It is 
exponentially growing. Forty percent of the docs do not take Medicaid 
patients. Why? Because they go broke on the reimbursement rate. 
Hospitals tell me all across the State of Nebraska: We cannot keep our 
doors open on the Medicaid reimbursement rate.
  So what are we doing? We are adding millions of people to that 
problem. They will have an access problem. State budgets will have a 
problem. They will be in crisis. Our hospitals are going to face the 
same crisis. It is the wrong policy. It is the wrong course of action. 
Let's start listening to the American people.
  Mr. ALEXANDER. Mr. President, how much time remains?
  The ACTING PRESIDENT pro tempore. There is 1\1/2\ minutes remaining.
  Mr. ALEXANDER. Mr. President, day in and day out Republicans have 
come to the floor and said: Instead of a comprehensive, 2,000-page 
approach to try to fix this massive health care system all at once in a 
way that raises taxes and premiums and makes Medicare cuts, why don't 
we, instead, identify the goal of reducing the cost of health care to 
individuals and to the government and take commonsense steps toward 
that goal.
  We have suggested small business health care plans which have been 
offered, scored by the CBO to save money and expand coverage. We have 
offered proposals to limit the number of junk lawsuits against doctors. 
There may be an argument about how much that saves, but there is no 
argument that would not drive down the costs. We have suggested 
allowing purchasing of health insurance across State lines to increase 
competition, and creating health insurance exchanges. There are efforts 
in wellness and prevention that we have made specific proposals 
concerning. In terms of corralling waste, fraud and abuse in Medicare 
and then spending the savings on Medicare, instead of a new program, 
that is the Republican agenda.
  Pick a goal: reducing health care costs and move step by step toward 
that goal in a way that reearns the trust of the American people, 
instead of a comprehensive, 2,000-page bill filled with taxes, 
mandates, surprises, and a Washington takeover of health care.
  There is a real choice. We regret the fact that we seem to be 
continuing to move on this track without the track we are offering. We 
want to defeat what is proposed, not in the debate. Change the debate 
toward reducing costs step by step.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Montana.
  Mr. BAUCUS. Mr. President, the Senator from Oklahoma and others on 
the other side of the aisle make the charge this bill increases 
government. That is not so. It does not increase government. This bill 
does not increase government. They made that allegation. It is a pure 
allegation. Anybody can allege anything, but let me get the facts. It 
is one thing to make an allegation; it is something else to get the 
facts.
  The best fact I have come up with is a quote from the Congressional 
Budget Office letter to Senator Reid on that point. The Congressional 
Budget Office says--and I quote from page 16 of the letter. I do not 
have the date of the letter. There are several letters to several of us 
in the Senate. I will quote the letter. It says:

       CBO expects that, during the decade following the 10-year 
     budget window, the increases and decreases in the federal 
     budgetary commitment to health care stemming from this 
     legislation would roughly balance out, so that there would be 
     no significant change in that commitment.

  ``Roughly balance out.'' ``No significant change in that 
commitment.'' That does not sound like an explosive growth in 
government to me. In fact, it sounds the opposite, listening to the 
Congressional Budget Office.
  Also, add to that this bill, in the first 10 years, decreases the 
deficit by $130 billion. But CBO says: No, no, no significant change. 
Things will roughly balance out, according to the Congressional Budget 
Office.
  Mr. CRAPO. Mr. President, will the Senator yield for a question?

[[Page S12751]]

  Mr. BAUCUS. This controls the government's role in health care. It 
does not increase it.
  I do not have any time, I say to the Senator from Idaho. We are an 
hour later--if we have another time agreement, we will take it out of 
the Senator's time. I will be willing to yield if the Senator from 
Idaho has a question.
  Mr. CRAPO. No, I will ask a question later, then.
  Mr. BAUCUS. Fine. Some of my colleagues on the other side of the 
aisle try to paint health care reform as bad for the economy. Nothing 
could be further from the truth. Health care reform will be good for 
the economy. Health care reform is a net tax cut for working 
Americans--a net tax cut. Health care reform is essential for long-term 
growth.
  Some say it is a tax increase. It is not. The Congressional Budget 
Office--I have a chart right in front of me--a net tax cut. If you take 
all the provisions of this bill that affect individuals, the Joint 
Committee on Tax concludes that the average tax break for affected 
filers with income under $75,000 is a cut every year. I will take one 
year, 2019: a $1,500 cut for those people in that category. Net tax 
break for affected overall is a $441 decrease. It is a long chart. I 
will not take the time to read it all.
  In summarizing the chart, affected taxpayers, as a percent of all 
taxpayers--it is over a majority--will see a net tax cut.
  Some say for some it will be a tax increase. Let me indicate why that 
is somewhat true. They are getting more wages. Of course, their taxes 
go up if they get more wages. Why are they getting more wages? Because 
these tend to be people affected by so-called Cadillac plans. The Joint 
Committee on Tax and the Congressional Budget Office say in that 
category, premiums go down and wages go up. Obviously, taxes are going 
to go up when wages go up. It is not fair to say that taxes are going 
up for those folks in that category unless you also say it is largely 
because their income is going up. I think that should be pointed out as 
well.

  Our bill will provide a substantial tax cut. It will cut taxes by $40 
billion in 2017 alone and cut taxes by $40 billion in 2019 alone and by 
substantial net tax cuts year after year. The average affected taxpayer 
with an income under $75,000 a year would get a tax cut of more than 
$1,500 in 2019. The bill would affect more than 92 million taxpayers a 
year by 2019. That is reductions. Our bill would affect most taxpayers 
by 2017, and the bill would give average taxpayers affected hundreds of 
dollars of tax relief.
  Not only would health care reform cut taxes for working Americans, it 
would also address the single largest challenge to our long-term fiscal 
future.
  Reforming health care is the single most important thing we can do to 
address long-term budget deficits. The Congressional Budget Office says 
we will succeed in doing that. CBO says our bill would reduce the 
Federal budget deficit by $130 billion in the first 10 years. CBO says 
our bill would reduce the budget deficit by roughly $650 billion in the 
second 10 years. That is roughly $780 billion in net deficit reduction. 
That is $800 billion in net deficit reduction over 20 years. I think 
that is progress. That is pretty good.
  Some of my colleagues say: Gee, Medicaid is pretty expensive, so be 
careful, Congress, with what you do with respect to imposing 
obligations on States. I remind my colleagues there currently is a 
formula each State must subscribe to with respect to Medicaid. The 
Federal Government pays a certain portion and States pay the other. On 
average--I could be off--the Federal Government pays 50 to 60 percent 
and the States pay the rest.
  Under this legislation, we are talking about the so-called 
transitional group, those where the poverty level is raised, in that 
category--I have forgotten the exact figure. But it is not the old 
formula, it is the new formula. Under the new formula, the Federal 
Government is paying virtually all of it--not quite all but virtually 
all of it. So the States will get a little bit of an increase in 
obligations. It is small. It is infinitesimal.
  The underlying point is, we have to reform health care. Why do 
Medicaid costs go up? Because health care costs are going up around the 
country--health care costs for seniors, low-income people, health care 
costs for everybody.
  There are so many parts of this bill which address that problem, 
which address health care costs, to get health care costs down. I would 
think all State Governors would want this bill to pass. Why? Because we 
are going to begin to go down the road of lowering health care costs. 
Then those Medicaid budgets will be more under control.
  We have to lower health care costs, and this legislation does that. 
Health care reform would very much help the economy, not just in the 
near term but with substantial net tax cuts but also help the economy 
long term with substantial deficit reduction--but also all the 
provisions we are putting in to lower health care costs overall.
  It is, clearly, the right thing to do. I, therefore, believe this 
legislation should definitely pass. To remind my colleagues who say: 
Gee, for folks making more than $250,000 a year, they will pay more 
taxes, let me make clear: Those folks are not seeing tax rate 
increases. Those folks are going to pay more taxes because they are 
going to get pay raises. That is why they are going to pay more taxes 
because, in effect, their incomes are going to go up. They are going to 
get pay increases.
  I have more to say, but I see my colleague from Vermont on the floor. 
How much time is remaining on in this block?
  The ACTING PRESIDENT pro tempore. There is 19\1/2\ minutes remaining.
  Mr. BAUCUS. I yield 15 minutes to my friend from Vermont.
  Mr. SANDERS. Mr. President, I thank the chairman for yielding. Before 
I get into the subject I wish to talk about, which is prescription drug 
reimportation and the absolute necessity of lowering the cost of 
prescription drugs in this country, I wish to say a word in general.
  I find it interesting that my Republican friends are spending a whole 
lot of time down here on the floor attacking the health care 
legislation. I suppose it is at least a positive thing that they are 
beginning to talk about health care. They ran the government from 2000 
to 2006. They had the President, they had the House and the Senate. At 
that time, health care premiums soared. Millions of Americans lost 
their health insurance. Where were they? Where were they in the 
beginning to come up with ideas to control health care costs and 
provide health care to more Americans? They weren't there.

  Now, having said that, let me also say I have problems with the bill 
that is currently on the Senate floor. Clearly, it does a lot of things 
that are good, but there are weaknesses in this bill in terms of cost 
containment that we have to address.
  When some of my friends talk about expanding Medicaid and the 
problems associated with that, they make a good point. We need to 
significantly expand our primary health care capabilities, which means 
more community health centers, which means more primary health care 
physicians. If we are not able to do that while we add 15 million more 
people to Medicaid, frankly, I am not sure how we are going to deal 
with the medical needs of those people.
  So I think one of the imperatives that has to happen as we proceed on 
this bill is we have to support the language in the House, which 
substantially increases funding for community health centers and for 
the National Health Service Corps, so that we give a primary health 
care infrastructure--clinics and doctors--to begin to serve the 
millions more Americans who are going to be coming into the health care 
system.
  That is one issue. The other issue I wanted to focus on today--and I 
am here because Senator Dorgan, who is the sponsor of this legislation, 
is unable to be on the floor of the Senate at this time--deals with 
prescription drug reimportation. This is an issue I have worked on for 
many years. When I was Vermont's Representative in the U.S. House, I 
believe I was the first Member of Congress to take American citizens 
over the Canadian border--in this case to Montreal--in order to 
purchase affordable prescription drugs.
  I will never forget--never forget--the bus trip we took over from St. 
Albans, VT, to Montreal, Canada. On that bus there were a number of 
lower income

[[Page S12752]]

women who were struggling with breast cancer. Many of them were using 
the widely used breast cancer drug called Tamoxifen. We got off the bus 
in Montreal, and we walked into the drugstore--and that had all been 
prearranged--and in there they purchased Tamoxifen. At that point in 
time--and I am thinking it was about 10 years ago, a while back--they 
paid, in American dollars, one-tenth of the price for Tamoxifen in 
Montreal, Canada, that they were paying in the United States of 
America--one-tenth of the price for lower income women who were 
struggling for their lives.
  So when you talk about morality, I want some of my friends to explain 
why it is that the American people are forced to pay by far the highest 
prices in the world for prescription drugs? Talk to physicians in 
Vermont. There is a doctor I know in northern Vermont, and when she 
writes a prescription, one-third of her patients cannot afford to fill 
the prescription. So what is the sense of an examination, a diagnosis, 
and writing a script when your patient can't even fill that script?
  The high cost of prescription drugs in this country is one of the 
major health care crises we face. It is an issue we have to deal with, 
and we simply have to ask ourselves why it is that the same exact 
medicine in this country costs substantially more than it does in 
Canada, in Australia, or all over Europe.
  There has been a lot of concern in this country about the lack of 
bipartisanship. Well, I have to say that on this issue there is 
bipartisanship. That was true when I was in the House, and that is true 
in the Senate.
  Let me just read to you the cosponsors of this legislation--
Democrats, Republicans, Independents. The bill is introduced by Senator 
Dorgan, and the cosponsors are Senator Begich, Senator Boxer, Senator 
Casey, Senator Conrad, Senator Feingold, Senator Inouye, Senator 
Klobuchar, Senator Leahy, Senator Lincoln, Senator McCaskill, Senator 
Sanders, Senator Snowe, Senator Stabenow, Senator Thune, Senator 
Bingaman, Senator Brown, Senator Collins, Senator Durbin, Senator 
Grassley, Senator Johnson, Senator Kerry, Senator Kohl, Senator Levin, 
Senator McCain, Senator Nelson, Senator Shaheen, Senator Specter, 
Senator Tester.
  So there is widespread bipartisan support for legislation which says: 
Let's end the absurdity of the American people having to pay 
substantially more for the same exact medicine that is sold in other 
countries around the world.
  Let's take a look at some of these charts. To begin with, we all 
understand when you deal with the drug companies and the pharmaceutical 
industry you are dealing with some of the most powerful lobbyists and 
forces right here in Washington, DC. These people spend huge amounts of 
money on campaign contributions, huge amounts of money in lobbying. 
Just recently, in order to make sure they got in under the wire, in 
case there was some real reform passed in Washington, they 
substantially raised their prices for particular drugs just in the year 
2009, and here is the chart reflecting that: Enbrel, a 12-percent 
increase; Singulair, 12 percent; Plavix, 8 percent, Nexium, 7 percent; 
Lipitor, 5 percent; Boniva, 18 percent.
  One of the reasons health care costs are soaring in America--and one 
of the reasons many seniors are having such a difficult time with 
health care costs--is precisely the rapid rise of prescription drugs.
  What I want to talk about now, through this chart, is something that 
is inexplicable to the average American. This is Lipitor, which is a 
widely used drug, and here is the cost of Lipitor. The same amount in 
Canada costs $33; in France, $53; Germany, $48; the Netherlands, $63; 
in Spain, $32; the United Kingdom, $40; and in the USA, $125, or four 
times as much as it costs in Canada.
  Now, you explain that to me. The same exact medicine made in the same 
exact factory, the same exact bottle. That is why, by the way, in the 
State of Vermont, and all across the northern tier, every day people 
are going over the Canadian border or using the Internet to buy those 
drugs. So what we are saying in this legislation is let's end this 
absurdity.
  We are living in a global economy. I have a lot of problems with the 
global economy in many ways, but if, when we go Christmas shopping, the 
only products we can find are made in China--because we don't do too 
much manufacturing in America--and if when we eat lunch we get lettuce 
and tomatoes from all over the world, what people are asking is, why is 
it we can't bring into this country FDA-safety-approved medicine? We 
can bring lettuce in from the backwoods of Mexico, and that is OK. But 
somehow, when we have a handful of major pharmaceutical companies, 
presumably it is just too difficult to be able to bring them safely 
into the United States. Nobody believes that for one moment.
  Let's take a look at another chart. Plavix, same story: Canada, $85; 
France, $77; Germany, $85; the Netherlands, $77; Spain, $58; the U.K. 
$59; and in the USA, $133. Somebody explain this to me. I really would 
appreciate it.
  Nexium: Canada, $65; Germany, $37; Spain, $36; the UK, $41; and the 
United States of America, $424. That is six times more than in the 
United Kingdom. People wonder why Americans are running over the 
Canadian border or they are on the Internet trying to get this 
medicine.
  Why is it that the drug companies charge $424 here and $41 in the UK? 
Well, the reason they are charging more here is because they can charge 
more. If you walk into your drugstore tomorrow, you can find the prices 
that you will pay are double, triple because we are the only country in 
the world that does not have, in one way or another, some kind of 
regulation on prices. All these other countries have national health 
care programs. That is another reason their drug prices are lower. We 
don't, of course.
  But at the very least, what reimportation is all about is, we are 
saying, in a global economy, when all kinds of products are brought in 
from all over the world and we let the consumer buy them every day, why 
not let the pharmacist, let the prescription drug distributor be able 
to take advantage of the global economy?
  I am not, I must confess, a great supporter of unfettered free trade. 
I think that has, in many ways, been a disaster for American workers. 
But to the degree that it is here, to the degree businesspeople can run 
to China and pay workers there 50 cents an hour or so, that is the 
global economy. Well, here is the global economy: Canada, $65; the UK, 
$41; and the USA, $424. Why can't prescription drug distributors 
purchase their products in the UK, bring them back into America, so we 
can substantially lower the cost of health care and prescription drugs 
for all Americans?

  Some of my friends in the pharmaceutical industry say: It is 
impossible to bring medicine in from abroad. It can't be done safely. 
Well, the Washington Post says:

       40 percent of active ingredients in U.S. prescription drugs 
     currently come from India and China.

  I guess that is OK for the pharmaceutical industry, when it adds to 
their profits, but we can't do that to lower the cost to the consumer.

  The Wall Street Journal, February 21, 2008, says:

       More than half the world's Heparin, the main ingredient in 
     the widely used anti-clotting medicine, gets its start in 
     China's poorly regulated supply chain.

  Well, I guess that is OK too.
  So here is where we are. One of the many health care crises we face 
in this country is the high cost of prescription drugs. I think there 
is a lot that we have to do. Whether the Congress is capable of 
standing up to the drug companies and all their money and all of their 
lobbyists remains to be seen. But this is, quite frankly, a no-brainer.
  For all my colleagues here who believe in unfettered free trade, 
please do not be total hypocrites. If you believe in unfettered free 
trade--which I happen not to--if you believe it is OK for American 
companies to shut down and run to China, if you think it is OK for 
people to buy any product anywhere in the world, tell me why we can do 
that for everything except for prescription drugs? There is no rational 
explanation.
  This is legislation which has been around for years. The drug 
companies have fought it successfully for years. We now have widespread 
tripartisan

[[Page S12753]]

support in the Senate and a lot of support, I know, in the House. Let's 
finally stand up for the average American. Let's substantially lower 
the cost of prescription drugs. Let's pass prescription drug 
reimportation.
  With that, Mr. President, I yield the floor, and I suggest the 
absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant bill clerk proceeded to call the roll.
  Mr. McCAIN. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. McCAIN. Is there a previous agreement on time?
  The ACTING PRESIDENT pro tempore. The next hour is equally divided, 
with 10-minute limits.


                           Amendment No. 2793

  Mr. McCAIN. Mr. President, I rise on behalf of the amendment which, 
according to the Congressional Budget Office, would provide an 
estimated $100 billion or more in consumer savings over 10 years. That 
is unique to this bill. It is unique to this legislation. It actually 
saves the taxpayers money.
  I think it is important for us to go back and see how we got here--
again, with the administration and the President reversing his previous 
position in favor of drug reimportation, the President's Chief of 
Staff, Mr. Rahm Emanuel, reversing his position on drug reimportation.
  Again, a lot of it has to do with the deals that have been made. I 
refer, to start with, to the August 6, 2009, New York Times article.

       Pressed by industry lobbyists, White House officials on 
     Wednesday assured drug makers that the administration stood 
     by a behind-the-scenes deal to block any Congressional effort 
     to extract cost savings from them beyond an agreed-upon $80 
     billion.

  Then it goes on to say:

       ``We were assured: We need somebody to come in first. If 
     you come in first, you will have a rock-solid deal,' Billy 
     Tauzin, the former Republican House member from Louisiana who 
     now leads the pharmaceutical trade group, said Wednesday. 
     ``Who is ever going to go into a deal with the White House 
     again if they don't keep their word? You are just going to 
     duke it out instead.''
       The pressure from Mr. Tauzin to affirm the deal offers a 
     window on the secretive and potentially risky game the Obama 
     administration has played as it tries to line up support from 
     industry groups typically hostile to government health care 
     initiatives, even as their lobbyists pushed to influence the 
     health measure for their benefit.

  Here is the important part of the article--and I ask unanimous 
consent the entire article from the New York Times be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the News York Times, Aug. 6, 2009]

                 White House Affirms Deal on Drug Cost

                       (By David D. Kirkpatrick)

       Washington.--Pressed by industry lobbyists, White House 
     officials on Wednesday assured drug makers that the 
     administration stood by a behind-the-scenes deal to block any 
     Congressional effort to extract cost savings from them beyond 
     an agreed-upon $80 billion.
       Drug industry lobbyists reacted with alarm this week to a 
     House health care overhaul measure that would allow the 
     government to negotiate drug prices and demand additional 
     rebates from drug manufacturers.
       In response, the industry successfully demanded that the 
     White House explicitly acknowledge for the first time that it 
     had committed to protect drug makers from bearing further 
     costs in the overhaul. The Obama administration had never 
     spelled out the details of the agreement.
       ``We were assured: `We need somebody to come in first. If 
     you come in first, you will have a rock-solid deal,' '' Billy 
     Tauzin, the former Republican House member from Louisiana who 
     now leads the pharmaceutical trade group, said Wednesday. 
     ``Who is ever going to go into a deal with the White House 
     again if they don't keep their word? You are just going to 
     duke it out instead.''
       A deputy White House chief of staff, Jim Messina, confirmed 
     Mr. Tauzin's account of the deal in an e-mail message on 
     Wednesday night.
       ``The president encouraged this approach,'' Mr. Messina 
     wrote. ``He wanted to bring all the parties to the table to 
     discuss health insurance reform.''
       The new attention to the agreement could prove embarrassing 
     to the White House, which has sought to keep lobbyists at a 
     distance, including by refusing to hire them to work in the 
     administration.
       The White House commitment to the deal with the drug 
     industry may also irk some of the administration's 
     Congressional allies who have an eye on drug companies' 
     profits as they search for ways to pay for the $1 trillion 
     cost of the health legislation.
       But failing to publicly confirm Mr. Tauzin's descriptions 
     of the deal risked alienating a powerful industry ally 
     currently helping to bankroll millions in television 
     commercials in favor of Mr. Obama's reforms.
       The pressure from Mr. Tauzin to affirm the deal offers a 
     window on the secretive and potentially risky game the Obama 
     administration has played as it tries to line up support from 
     industry groups typically hostile to government health care 
     initiatives, even as their lobbyists pushed to influence the 
     health measure for their benefit.
       In an interview on Wednesday, Representative Raul M. 
     Grijalva, the Arizona Democrat who is co-chairman of the 
     House progressive caucus, called Mr. Tauzin's comments 
     ``disturbing.''
        ``We have all been focused on the debate in Congress, but 
     perhaps the deal has already been cut,'' Mr. Grijalva said. 
     ``That would put us in the untenable position of trying to 
     scuttle it.''
       He added: ``It is a pivotal issue not just about health 
     care. Are industry groups going to be the ones at the table 
     who get the first big piece of the pie and we just fight over 
     the crust?''
       The Obama administration has hailed its agreements with 
     health care groups as evidence of broad support for the 
     overhaul among industry ``stakeholders,'' including doctors, 
     hospitals and insurers as well as drug companies.
       But as the debate has heated up over the last two weeks, 
     Mr. Obama and Congressional Democrats have signaled that they 
     value some of its industry enemies-turned-friends more than 
     others. Drug makers have been elevated to a seat of honor at 
     the negotiating table, while insurers have been pushed away.
       ``To their credit, the pharmaceutical companies have 
     already agreed to put up $80 billion'' in pledged cost 
     reductions, Mr. Obama reminded his listeners at a recent 
     town-hall-style meeting in Bristol, Va. But the health 
     insurance companies ``need to be held accountable,'' he said.
       ``We have a system that works well for the insurance 
     industry, but it doesn't always work for its customers,'' he 
     added, repeating a new refrain.
       Administration officials and Democratic lawmakers say the 
     growing divergence in tone toward the two groups reflects a 
     combination of policy priorities and political calculus.
       With polls showing that public doubts about the overhaul 
     are mounting, Democrats are pointedly reminding voters what 
     they may not like about their existing health coverage to 
     help convince skeptics that they have something to gain.
       ``You don't need a poll to tell you that people are paying 
     more and more out of pocket and, if they have some serious 
     illness, more than they can afford,'' said David Axelrod, Mr. 
     Obama's senior adviser.
       The insurers, however, have also stopped short of the drug 
     makers in their willingness to cut a firm deal. The health 
     insurers shook hands with Mr. Obama at the White House in 
     March over their own package of concessions, including ending 
     the exclusion of coverage for pre-existing ailments.
       But unlike the drug companies, the insurers have not 
     pledged specific cost cuts. And insurers have also 
     steadfastly vowed to block Mr. Obama's proposed government-
     sponsored insurance plan--the biggest sticking point in the 
     Congressional negotiations.
       The drug industry trade group, the Pharmaceutical Research 
     and Manufacturers of America, also opposes a public insurance 
     plan. But its lobbyists acknowledge privately that they have 
     no intention of fighting it, in part because their agreement 
     with the White House provides them other safeguards.
       Mr. Tauzin said the administration had approached him to 
     negotiate. ``They wanted a big player to come in and set the 
     bar for everybody else,'' he said. He said the White House 
     had directed him to negotiate with Senator Max Baucus, the 
     business-friendly Montana Democrat who leads the Senate 
     Finance Committee.
       Mr. Tauzin said the White House had tracked the 
     negotiations throughout, assenting to decisions to move away 
     from ideas like the government negotiation of prices or the 
     importation of cheaper drugs from Canada. The $80 billion in 
     savings would be over a 10-year period. ``80 billion is the 
     max, no more or less,'' he said. ``Adding other stuff changes 
     the deal.''
       After reaching an agreement with Mr. Baucus, Mr. Tauzin 
     said, he met twice at the White House with Rahm Emanuel, the 
     White House chief of staff; Mr. Messina, his deputy; and 
     Nancy-Ann DeParle, the aide overseeing the health care 
     overhaul, to confirm the administration's support for the 
     terms.
       ``They blessed the deal,'' Mr. Tauzin said. Speaker Nancy 
     Pelosi said the House was not bound by any industry deals 
     with the Senate or the White House.
       But, Mr. Tauzin said, ``as far we are concerned, that is a 
     done deal.'' He said, ``It's up to the White House and 
     Senator Baucus to follow through.''
       As for the administration's recent break with the insurance 
     industry, Mr. Tauzin said, ``The insurers never made any 
     deal.''

  Mr. McCAIN. The important quote is:

       Mr. Tauzin said the administration had approached him to 
     negotiate. ``They wanted a big player to come in and set the 
     bar for everybody else,'' he said. He said the White

[[Page S12754]]

     House had directed him to negotiate with Senator Max Baucus, 
     the business-friendly Montana Democrat who leads the Senate 
     Finance Committee.
       Mr. Tauzin said the White House had tracked the 
     negotiations throughout, assenting to decisions to move away 
     from ideas like the government negotiation of prices or the 
     importation of cheaper drugs from Canada.

  My goodness.

       ``They blessed the deal,'' Mr. Tauzin said.

  That is how we got here, with the administration coming over with a 
letter last night basically saying they would oppose or certainly 
impede the ability of Americans to import drugs from Canada. What have 
we seen happen in the interim? Here again is a New York Times article 
entitled ``Drug Makers Raise Prices in Face of Health Care Reform.''
  Here is a graphic demonstration of it. This little line right here, I 
would say to my colleagues, is inflation in this country. If you look 
at it for the year 2009, inflation is actually minus 1.3 percent.
  Now look at the wholesale drug prices. The annual change is 8.7 
percent. While inflation has gone down 1.3 percent, actual costs of 
drugs have gone up 8.7 percent.
  The article from the New York Times says:

       Even as drug makers promise to support Washington's health 
     care overhaul by shaving $8 billion a year off the nation's 
     drug costs after the legislation takes effect, the industry 
     has been raising its prices at the fastest rate in years. In 
     the last year, the industry has raised the wholesale prices 
     of brand-name prescription drugs by about 9 percent, 
     according to industry analysts. That will add more than $10 
     billion to the nation's drug bill. . . .

  Let's get the math right. The drug companies have offered to save the 
American consumer $8 billion a year, and guess what. They have 
increased their prices, where it will add more than $10 billion to the 
drug bill of America's citizens, including our seniors.
  The math is, they agreed to an $8 billion reduction. They actually 
already this year have seen an increase of more than $10 billion. So 
they are on track to make a $2 billion profit off their deal. No wonder 
they made a deal.

       That will add more than $10 billion to the nation's drug 
     bill, which is on track to exceed $300 billion this year. By 
     at least one analysis, it is the highest annual rate of 
     inflation for drug prices since 1992. . . .

  This is the consumer price index right here, which has fallen by 1.3 
percent.

       Drug makers say they have valid business reasons for the 
     price increases. Critics say the industry is trying to 
     establish a higher price base before Congress passes 
     legislation that tries to curb drug spending incoming years.

  That is what this is all about. They increase the prices so it 
reaches a certain level, and that is what they will negotiate on. They 
already are in line to experience $2 billion more in profits than the 
$8 billion they say they intend to cut. What a Ponzi scheme this is.

       ``When we have major legislation anticipated, we see a run-
     up in price increases,'' says Stephen W. Schondelmeyer, a 
     professor of pharmaceutical economics at the University of 
     Minnesota. He has analyzed drug pricing for AARP, the 
     advocacy group for seniors that supports the House health 
     care legislation that the drug industry opposes.
       A Harvard health economist, Joseph P. Newhouse, said he 
     found a similar pattern of unusual price increases after 
     Congress added drug benefits to Medicare a few years ago, 
     giving tens of millions of older Americans federally 
     subsidized drug insurance. Just as the program was taking 
     effect in 2006, the drug industry raised prices by the widest 
     margin in a half-dozen years.

  We have seen this scam before. What is the administration going to 
do? The administration sends a letter, I believe last night--not to the 
sponsor of this legislation, Senator Dorgan, but to another Member 
basically saying they would have to examine the health and safety.
  Since when is a prescription drug imported from Canada a threat to 
Americans' health, since they obviously have the same standards that we 
do? The letter is to Senator Carper. It is signed by Margaret Hamburg, 
Commissioner of Food and Drugs. It is--I am not making this up. I am 
not making this up. ``The Dorgan importation amendment seeks to address 
these risks.'' It talks about our amendment.

       We commend the sponsors for their efforts to include 
     numerous protective measures in the bill that address the 
     inherent risks of importing foreign products and other safety 
     concerns relating to the distribution system for drugs within 
     the U.S. However, as currently written, the resulting 
     structure would be logistically challenging to implement and 
     resource intensive.

  Let's get this straight. According to the CBO, if we pass this, we 
would save consumers $10 billion--excuse me--$100 billion. According to 
CBO, we would provide an estimated $100 billion in consumer savings 
over 10 years. That is what the CBO says.
  But what this obviously heavily overburdened Margaret Hamburg, the 
Commissioner of Food and Drug, says is:

       However, as currently written, the resulting structure 
     would be logistically challenging to implement and resource 
     intensive.

  Oh my God. I am going to have to include, for the Record, the number 
of employees over at the Food and Drug Administration. I am sure they 
are full up with their responsibilities at present.

       In addition, there are significant safety concerns related 
     to allowing the importation of non-bioequivalent products, 
     and safety issues relating to confusion in distribution and 
     labeling of foreign products--

  When we see something come in from foreign countries, it is so 
confusing when you look at the labeling of it. It is remarkably 
challenging for the American consumer----

     relating to the distribution and labeling of foreign products 
     and the domestic product that remain to be fully addressed in 
     the amendment.

  ``But''--she goes on to say, to Senator Carper, who is a fine and 
great Member of this body but not the sponsor of the amendment----
  The ACTING PRESIDENT pro tempore. The time of the Senator has 
expired.
  Mr. McCAIN. I ask for an additional 30 seconds to finish.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. McCAIN. ``We appreciate your fine leadership on this important 
issue and would look forward to working with you as we continue to 
explore policy options to develop an avenue for the importation of safe 
and effective prescription drugs from other countries.''
  Translated: The fix is in. We will be back on the floor on this. I 
strongly urge the adoption of the amendment.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Florida is 
recognized.
  Mr. NELSON of Florida. Mr. President, I am back on the floor on this, 
as I have been over the course of the last decade, because we have been 
like a yo-yo in my State of Florida on the importation of drugs, since 
we have quite a few senior citizens in our State. They have been 
accustomed to either going to Canada and bringing back prescriptions at 
half the price or phoning Canada to pharmacies and having those drugs 
shipped in the Postal Service or e-mailing to Canadian pharmacies. What 
happened over the course of the last 8 or 9 years is that the previous 
administration cracked down on the reimportation of these drugs. Of 
course, that was at a great expense to our senior citizens who can buy 
these drugs at roughly \1/2\ of what they pay by going into the 
pharmacies in the United States.
  Then an interesting thing happened along about 2006. This Senator 
started getting multiples of calls--I think up to something like 100 
complaints in that 1 year from senior citizens who had purchased the 
drugs, either by e-mail, telephone, or by going personally there and 
having them shipped. And lo and behold, under the previous 
administration, they gave the order to the Postal Service to confiscate 
these drugs. This happened, for example, to a couple from Mt. Dora, FL, 
Mr. and Mrs. Lee Eads. They had their drugs confiscated. We went after 
the Postal Service. We went after the Customs Bureau. We found, in 
fact, that a lot of these complaints we had received, those drugs had 
been confiscated when, in fact, the policy was supposed to be if it was 
pharmaceuticals for personal use--and they defined that as less than a 
90-day supply--the government, the U.S. Government, was going to let 
these senior citizens take advantage of getting that cost break of a 
50-percent reduction.
  It took us till late 2006--getting into this with Mr. and Mrs. Eads 
as the poster couple who had been getting their prescription drugs and 
then, all of

[[Page S12755]]

a sudden, they were confiscated--to get the Postal Service and Customs 
to reverse. This has supposedly been the policy, but we can't get it 
etched into law because people keep bringing up this Trojan horse that 
it is not safe. The very manufacturers we are buying our prescriptions 
from here in American pharmacies are the same manufacturers in 
identical locations with identical labeling of the drugs that are going 
to Canadian pharmacies. Why can't we give our senior citizens a break?
  Of course, what this Senator would like to do is to give them a 
bigger break. This Senator has an amendment, which is continuously 
being stated that I may not get to offer, that would cause the 
pharmaceutical industry to give discounts on the drugs sold under 
Medicare that are being sold to 6 million people who are eligible 
because of their low income for Medicaid but get their drugs through 
Medicare. Those 6 million people, Medicaid, poor people who are 
eligible to get government assistance, used to have a discount, a 
substantial discount. Therefore, the U.S. Government was paying less 
for the drugs it bought for those people. But 6 years ago, when the 
prescription drug benefit was passed, those 6 million people were 
suddenly made ineligible to get the drug discount because they were now 
getting their drugs under Medicare. That is absolutely ridiculous, that 
the U.S. Government is going to pay full price for the drugs now that 
they used to pay only a fraction.
  How much is that worth? According to CBO and the amendment I offered 
in the Finance Committee that was defeated 10 to 13, that is worth $106 
billion over 10 years that would be savings to the American taxpayer 
that we would be paying for those dual eligibles, Medicaid recipients 
who get their drugs in Medicare, $106 billion of savings that the U.S. 
Government would not have to pay for those drugs, if we followed the 
same policy we did back there before this prescription drug benefit for 
Medicare.
  That kind of makes common sense, doesn't it, that we would want to 
save the American taxpayer $106 billion? But we were defeated by a vote 
of 13 opposed to the amendment and 10 in favor in the Finance 
Committee.
  I know it is a tall order to bring this amendment out here on the 
floor and have to meet a 60-vote threshold, because 41 Senators can 
deny the American taxpayer from getting $106 billion of savings. One of 
the good things about our bill that has come to the floor is, we are 
going to reduce the deficit by $130 billion. That is over a 10-year 
period. That is a good thing. But if we would accept my amendment, we 
could reduce the deficit by $236 billion or we could use part of it--
say, half--to fill the rest of the doughnut hole that the AARP would 
like and so would this Senator. The AARP strongly supports my 
amendment. They have made it clear to the leadership of this Senate 
that they want to see that doughnut hole closed. But there is nothing 
coming out here on the floor that is going to do that.
  The amendment Senator Dorgan has offered, which in and of itself is 
good policy, reimporting drugs at half the cost from Canada, is a step 
in the right direction, but that doesn't close the doughnut hole.
  So here we are at a decision point. Who are we going to serve? Let me 
say at the outset I understand the political dynamics. I want to give 
credit where credit is due. The pharmaceutical industry is, in fact, 
supporting the leadership in trying to pass this bill. That is a good 
thing. We appreciate that very much. We need their support because we 
have all these other interest groups that are flaking off. At the end 
of the day, we have to get 60 votes in order to pass health care 
reform. That includes health insurance reform. We have the insurance 
industry totally, flat out trying to kill this legislation. I am 
grateful to the pharmaceutical industry for trying to help us. 
Therefore, my plea is, there has to be a balance. There has to be a 
compromise in the works. There has to be a way of the pharmaceutical 
industry stepping to the plate to help us totally fill the doughnut 
hole, that gaping $3,000 hole seniors have to pay for all of the drugs 
they need when they reach that level. There has to be a sweet spot, a 
compromise.
  I certainly support the Dorgan amendment. I hope the Senate will 
favorably consider my amendment later on.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Burris.) The Senator from Texas.
  Mrs. HUTCHISON. How much time remains on our side?
  The PRESIDING OFFICER. There is 19 minutes on the Republican side and 
Senators are limited to 10 minutes each.
  Mrs. HUTCHISON. I thank the Chair.
  Mr. President, we have been talking about the Crapo motion and the 
new taxes that are in this bill. There are so many new taxes that it is 
going to increase the cost of health care to every individual who has 
health insurance. It will also tax the people who don't have health 
insurance. It will tax the people who have too much health insurance. 
The taxes in this bill are almost mind-boggling.
  Yesterday we talked about the cuts in Medicare. But we are also 
talking now about the $\1/2\ trillion in tax increases, $500 billion of 
tax increases. What Senator Crapo's motion will do is to say that we 
want to go back to the promise made by the President that no one who 
makes under $200,000 or a couple who makes under $250,000 would have 
any tax increases. It recommits the bill and takes out everything that 
would tax individuals at that level because the promise was made to the 
American people.
  Senator Crapo's motion would certainly benefit those who have high-
benefit plans which are going to have a 40-percent excise tax in this 
bill. If your plan is considered high benefit and you make under 
$200,000 a year or you are a couple making under $250,000 a year, you 
should not have to pay, because your benefits are better than the 
government has said they should be.
  We would help the union member, for instance, because the unions do 
have high-benefit plans. We would help those union members who are 
making under $200,000 a year, if they are single, to make sure that 
they are not going to pay a tax for having too much coverage. Then 
there are the individuals who have no coverage or too little coverage 
who are going to have to pay an individual tax in this bill of $750. 
Surely if someone can't afford to have health insurance, we should not 
be taxing them. The Crapo motion will assure that when this goes back 
to the committee, someone would not be subject to the individual 
mandated tax, if they make under $200,000 a year, which they surely 
probably do, or if they have a high-benefit plan and they make under 
that amount. It is trying to say that promise that the President made 
would be kept.
  I also wish to talk about another issue in this bill. One would think 
that the bill takes effect in 2014, so the taxes would take effect in 
2014 as well, that everything will come together and start in 2014. 
That is what one would think, but they would be wrong. That is not the 
case. In fact, the biggest part of the taxes in this bill will take 
effect next month, less than 1 month from now. The taxes that are going 
to increase the cost of health care premiums, prescription drugs, 
equipment that you would use for medical care--the taxes start next 
month. The bill imposes taxes for 4 years before any person would be 
able to sign up for any of the plans that are going to be available, 
presumably, under this bill.
  Let's walk through this: $22 billion in taxes on prescription drug 
manufacturers would start next month; $19 billion in taxes on medical 
device manufacturers, next month; $60 billion in taxes on insurance 
companies across the board, next month. What is going to happen? Of 
course, the cost of all of those items will go up. Americans will start 
next month paying more in insurance premiums. Americans will pay more 
for their prescription drugs and more for their medical devices because 
those taxes start next month for supposed programs that are going to 
start in 2014. Well, maybe you would think the benefits would start 
coming in 2011, 2012, 2013. Not at all. Nothing starts in benefits or 
programs until 2014.

  But there are more taxes that come before 2014. In 2013, taxes on 
high-benefit plans take effect: $149 billion. This will affect union 
members, surely people making under $200,000. They will be affected 
starting in 2013, but any benefits from this bill would take effect a 
whole year later.

[[Page S12756]]

  The limit on itemized deductions for medical expenses is also 
changed. Under this bill, you would have to spend 10 percent of your 
income on medical expenses before you could take a deduction. This is 
for people who have a terrible accident or a debilitating high-cost 
disease, such as a cancer treatment, maybe a clinical trial. So present 
law is 7.5 percent of your income, and you can start deducting these 
expenses. But with the new bill, starting in 2013, you have to go to 
the 10-percent threshold before you can have those deductions. So that 
would be another $15 billion in taxes to individuals.
  Finally, in 2014, after 4 years of taxes and increases in premiums 
and medical devices and prescription drugs, then you would start seeing 
the rest of the bill take effect. In 2014, you still have more taxes. 
Mr. President, $28 billion in employer taxes will start in 2014. These 
are for employers who cannot afford to meet the threshold of what they 
will have to cover for their employees. Or individuals who cannot 
afford health care will have $8 billion in taxes. That starts in 2014.
  I am working with Senator Thune. There will be a Hutchison-Thune 
motion to commit this bill that will say the taxes start when the 
implementation of the bill starts. I think that is a matter of 
fairness. We want to commit the bill and say: Everything should start 
at once. How can we tax people for 4 years, raise their prices on 
insurance premiums, raise their prices on drugs, raise their prices on 
medical devices when they get none of the opportunities that would be 
in this bill until 2014?
  I am going to be working with Senator Thune, Senator Grassley, and 
Senator Hatch to try to make the corrections in this bill that will 
present transparency and fairness to the public about what these taxes 
are and when they start, then, when the implementation of the program 
starts.
  It is so important we have the ability to say to the American people, 
if this bill passes: You are not going to be taxed, your prices are not 
going to go up, your premiums are not going to go up--any more than 
they already have, caused by the increased taxes in this bill--at least 
until the bill is implemented. We are going to try to do that in the 
bill for the American people very soon. I am very much looking forward 
to talking about this issue.
  I talked to someone last night who heard us starting to talk about 
the taxes in this bill, and they were astounded.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mrs. HUTCHISON. They were astounded.
  We are going to try to give relief to the American people and have a 
bill that will truly not have the taxes and mandates that are there now 
that start 4 years before the bill is implemented.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I yield 10 minutes to the Senator from 
Michigan.
  The PRESIDING OFFICER. The Senator from Michigan is recognized.
  Ms. STABENOW. Mr. President, I thank the Presiding Officer and the 
chairman of the committee.
  Mr. President, I rise today to speak concerning an amendment on which 
I am proud to join the Senator from North Dakota, Mr. Byron Dorgan, and 
other colleagues in an effort to lower the cost of prescription drugs. 
But I do want to make one comment on Medicare before I do that.
  We know our plan, overall, is about saving lives, saving money, and 
saving Medicare. That is what this is about overall. That is what we 
are doing in our health care reform proposal for American families. But 
I do want to mention and stress again this is about saving Medicare. It 
is about strengthening Medicare and our commitment.
  I do have to say, we have been hearing from colleagues, and the 
distinguished Republican leader has said over and over again that, in 
fact, cutting Medicare is not what Americans want. Then last night he 
said here on the floor that expanding Medicare was a plan for financial 
ruin. So they do not want to cut, they do not want to expand. I am not 
sure where our colleagues on the other side are in terms of Medicare. 
But I know where we are. I know we are the party that created Medicare, 
with President Johnson at the time. We are the party that has continued 
to promote and to expand and to strengthen Medicare. We are the party 
that intends to make sure we save Medicare for the future, expanding 
prescription drug coverage, to be able to close the doughnut hole, to 
be able to expand the ability of seniors to have preventive care, and 
to extend the life of the Medicare trust fund, which is critically 
important.
  And to that, I want to speak now to the other two provisions we have 
as our priorities: saving lives and saving money. The Dorgan-and-others 
amendment, which I am proud to join Senator Dorgan on, does exactly 
that. It will save lives and save money. As a Senator from Michigan, I 
know that very well. We can look across the Detroit River into Windsor 
and know that the people of Michigan, by going across the bridge, would 
be able to drop their costs 30, 40, 50 percent.
  There is something wrong with the system where Americans are paying 
so much more than those in other countries for the same drug. The 
safety provisions are the same. The difference is there have been 
protections put up at the American border to stop Americans from 
getting the benefit of having our hospitals, our pharmacies, our 
schools of medicine, and others who use prescription drugs to be able 
to bring that back, to do business across the border.
  Everybody is always talking about open borders, open trade. Well, 
this is a trade issue about bringing back FDA-approved prescription 
drugs across the border to the American side, so Americans have access 
to lower priced medicines.
  It has been about 10 years now since I did my first bus trip to 
Canada with seniors. I have been doing that for a long time. I have 
been focused on this issue both in my days in the House of 
Representatives, where I took the lead on this issue, as well as now 
working with colleagues in the Senate. It is time to get this right in 
the context of health care reform because this is about saving lives 
and saving money.

  I want to share one story. I have heard so many over the years from 
people in Michigan. But here is one recent story of someone who has 
written to me.
  Joe is a 40-year-old father with heart disease. His family says 
despite his heart condition, he is doing well. He loves to work. His 
medicines cost over $4,800 a month. Can you imagine that? But his 
insurance has a family cap of $10,000 a year. In other words, after 
basically 2 months, he hits the cap, and he has to pay for everything 
out of pocket.
  By going over the bridge to Canada--and we have three bridges: up in 
the Upper Peninsula, we have a bridge; in Port Huron we have a bridge; 
and in Detroit we have a bridge, the largest cross-border bridge in 
terms of volume of goods and services on the northern border--but by 
simply going across the bridge, Joe would be able to save $2,000 a 
month.
  We should be able to do better for Joe and his family. He could save 
$2,000--almost half of his cost--by simply buying the same drug, FDA 
approved, from one side of the bridge instead of the other.
  We also know that the cholesterol-lowering drug Lipitor is about 40 
percent less, also the ulcer medication Prevacid is about 50 percent 
less, according to a search on Pharmacy Checker. I have to say that 
again. This is a trade issue and whether we are going to continue to 
have trade barriers. Because, for instance, Lipitor is made in Ireland 
and Pfizer is able to bring that back to America, they can bring it 
back. But if someone wants to go to Windsor, Canada, right across the 
bridge, and purchase a lower priced version of the very same drug, 
Lipitor, and bring it back as an individual or a business or a pharmacy 
or a hospital, it is illegal. It is illegal. That makes absolutely no 
sense.
  This amendment is about opening the border, allowing our pharmacies, 
allowing our wholesalers, allowing hospitals--I have gotten calls from 
medical schools at universities wanting to do business, to lower their 
cost, with wholesalers in other countries where it is FDA approved, 
safe to do that. That is what this bill is about.
  Right now, we are in a situation where if we do not pass the 
Pharmaceutical Market Access and Drug Safety Act, which we have 
introduced on a

[[Page S12757]]

bipartisan basis, we are going to continue to have a situation where 
people such as Joe, a 40-year-old father with heart disease, is going 
to be paying $4,800 a month out of his own pocket, when we could cut 
that down. It still would be tremendous, but we could cut that by 
$2,000 for him, by passing this legislation.
  The drug importation bill is supported conceptually. We have been 
working over time with many different groups such as AARP, the Alliance 
for Retired Americans, Families USA, and Cato Institute--very different 
groups philosophically, but they all agree we need more competition, we 
need to open the border to safe--and I emphasize and underline 
``safe''--FDA-approved prescription drugs so we are focused not on what 
is best for the pharmaceutical industry, the brand-name companies, but 
what is best for American citizens who are struggling, who see their 
prices go up 8 percent, 9 percent, 10 percent, 15 percent every year. 
Families cannot sustain that.
  How many of us have stood on this floor and talked about the fact 
that people are choosing between food and medicine? That is not just 
rhetoric. It is not rhetoric. It is real. It is real for people right 
now today. It is getting cold. It is getting very cold. People are 
deciding: Am I going to keep the heat on or am I going to be able to 
get my medicine? Am I going to be able to get my food? Am I able to get 
my medicine? Am I able to pay the rent, the mortgage, or get the 
medicine I need for my life or for my child's life or for my husband's 
or wife's ability to continue to live a healthy, successful life?
  That is what this is about. We have an easy, straightforward way to 
increase competition, to bring down prices, with safe, strong safety 
standards. This is something that makes sense. It will help seniors. It 
will help people with disabilities who are in the doughnut hole before 
we get that all closed under Medicare. It will help every family and 
every individual right now who needs medicine and is paying more and 
more, higher and higher prices every single year.
  I hope we will have a very strong bipartisan vote. This is a very 
important addition to what we are doing here. This truly will save 
lives and save money; and that is what we are all about: creating 
competition to bring prices down so the American people have access to 
the medicine and to the health care they need and deserve.
  Thank you, Mr. President.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. CORNYN. Mr. President, I want to speak briefly about keeping 
President Obama's promise to the American people when it comes to tax 
increases in this health care bill.
  You will recall on September 12, 2008, he said:

       I can make a firm pledge: Under my plan, 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.

  The problem we see, though, is this bill, as proposed, increases 
taxes for 25 percent of taxpayers earning less than $200,000 a year. 
That is 42 million individuals and families who will be taxed in a way 
that violates President Obama's pledge.
  According to the Congressional Budget Office, the Internal Revenue 
Service will need many more agents and workers in order to enforce the 
Reid bill. It will essentially need to double in size the Internal 
Revenue Service just to be able to raise those taxes called for in this 
big job-killing bill.
  The possibility of higher taxes is one reason job creators are 
currently standing on the sidelines. The President had a job summit. 
Yesterday he spoke at Brookings Institute and talked about initiatives 
he was going to undertake in order to help create jobs in this country. 
But the fact is, government doesn't create jobs except to the extent we 
grow the size of government. What we need to do in this country is to 
get out of the way, reduce the burden, and limit the uncertainty for 
the private sector--small business that is the primary job-creating 
engine in this country.
  But the fact is, job creators are nervous--I would strike that; they 
are not nervous, they are scared--about one job-killing proposal after 
another coming out of Washington. Not just the spending, not just the 
debt, but they see things such as this big health care bill and the 
increase in taxes that go along with it. Then they see the President 
going to Copenhagen and perhaps trying to obligate our country to some 
additional financial burdens that are going to make it harder for these 
job-creators, not easier.
  The debt, for example, is one looming disaster. The total public debt 
now stands at $12 trillion. Before the end of the month, the majority 
leader is going to come to the Senate floor, presumably on a Defense 
appropriations bill or some other vehicle, and ask us to lift the debt 
limit because Congress has maxed out the American people's credit card, 
and we can't keep running the government unless we increase the debt 
limit.
  Well, a number of us are not going to vote for that increase in debt 
limit until we receive firm assurances that the administration and the 
majority are going to get real about this increasing debt and unfunded 
Federal liabilities in Medicare, in Medicaid, and other entitlement 
programs.
  We are accumulating debt even faster during this fiscal year. For 
example, in just 2 months--2 months of this year--the Congressional 
Budget Office says an additional $292 billion in deficits were 
accumulated. Our deficits will average nearly $1 trillion for every 
year during the next decade, according to the Obama administration 
itself. Of course, I mentioned the other unfunded liabilities out 
there--things such as Medicare.
  I understand the majority has somehow cut a tentative deal to try to 
grow Medicare. Well, if you grow Medicare and grow Medicaid, what does 
that do to the already $38 trillion in unfunded liabilities? This $38 
trillion is three times our national debt. It means, in essence, a debt 
burden of $32,000 for every U.S. family. Yet my colleagues don't seem 
desirous of fixing this problem. They seem determined to make it worse.
  Yesterday the Washington Post reported on our Nation's deteriorating 
fiscal situation. They said:

       The problem is that, if investors think the United States 
     isn't fiscally responsible--

  I wonder why they would conclude that? But they go on to say--

     they could start demanding much higher interest rates when 
     they bid on Treasury securities.

  That is, when they start buying our debt, as a result of all of this 
spending and the money we have to borrow from China and other countries 
that buy our debt, those countries could begin to demand higher 
interest rates.
  The Washington Post goes on to say:

       The feedback loop could get ugly. The Nation could have to 
     borrow hundreds of billions of dollars just to pay interest 
     on what it owes. This has been touted as a classic path to 
     irreversible national decline.

  The Post cited Leonard Burman, an economist at Syracuse University, 
who said:

       Right now, this year, we have $1.6 trillion in debt coming 
     due--

  And that is before we pass this ill-conceived health care bill.
  He said:

       That's roughly twice individual income tax revenue. Our 
     only plausible strategy for paying that back is to borrow 
     more money.

  The Post also cited David M. Walker, a former Comptroller of the 
United States, who recently testified:

       Our total Federal financial hole is about $10 trillion more 
     than the current estimated net worth of all Americans and the 
     gap has been growing.

  Then, adding insult to injury, yesterday Moody's Investors Service 
said its debt ratings on U.S. Treasury securities ``may test the 
Triple-A boundaries'' because the government's fiscal status is 
worsening.
  Well, the fact is, this Reid health care bill makes this much worse. 
My colleagues say the CBO--the Congressional Budget Office--has scored 
the bill as deficit-neutral. Well, any bill can be called deficit-
neutral if you are willing to raise taxes enough and cut programs such 
as Medicare, both of which this bill does.
  The Congressional Budget Office said in their score of the Reid bill:

       The long-term budgetary impact could be quite different if 
     key provisions of the bill were ultimately changed or not 
     fully implemented.

  Well, what could they mean by that? What they mean is some of the 
assumptions about the cuts and other things that range over a 10-year 
budget window, if they don't come true, then all bets are off.

[[Page S12758]]

  We know the Reid bill relies on budget gimmicks to hide the true cost 
of this Washington takeover. One gimmick is, for example, not including 
the Medicare provider fix, the so-called doc fix, which costs $210 
billion over 10 years. In other words, this bill leaves that out 
entirely. I know--I am confident because Congress has only failed to 
act to reverse those cuts on one occasion--that if we let this cut in 
provider payments to physicians be fully implemented--a 23-percent cut 
come January--then many Medicare beneficiaries, including the vastly 
expanded rolls that would be included under this deal we have read 
about in the paper, patients will not be able to find a doctor to see 
them because doctors will not be able to continue seeing patients with 
a 23-percent cut in the payments they are entitled to under Medicare.

  The other issue is the time shift. This is really sort of the classic 
shell game. The Reid bill starts the tax increases and the Medicare 
cuts in 2010, but as we know, the expanded coverage doesn't start until 
2014. Someone said that is like buying a house, closing on the sale of 
a house, and being told: Well, you can't move in for 4 years. You have 
to start paying the bill today, but you don't get the benefits for 4 
years.
  The Congressional Budget Office score focuses on the budgetary impact 
to the government, not on the total cost to the American people. The 
CBO said the Reid bill increases the Federal budgetary commitments to 
health care. In other words, rather than trying to bend the cost curve 
as we have heard should be the goal, this makes it worse. We end up 
bending the cost curve in the wrong direction. The Reid bill will 
increase premiums for American families purchasing insurance in the 
individual market. The Congressional Budget Office hasn't yet been 
given time to estimate the total cost on the economy as a whole.
  David Broder, one of the deans of the Washington Press Corps, did a 
nice roundup of nonpartisan experts last week. He cited Robert Bixby of 
the Concord Coalition, Maya MacGuineas of the Committee for a 
Responsible Federal Budget, and he concluded this:

       Every expert I have talked to says that these bills as they 
     stand are budget-busters.

  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. CORNYN. So I hope my colleagues will pass the Crapo motion to 
commit this bill to the Finance Committee so the President can keep his 
commitment not to raise taxes on the American people.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Ms. KLOBUCHAR. Mr. President, I wish to speak in support of the 
Dorgan-Snowe importation amendment No. 2793, which provides some much-
needed relief to Americans who are being crushed by ever-higher 
prescription drug costs. I wish to first note I am eagerly awaiting the 
details of some of the proposals that were put out there last night. I 
appreciate the work of my colleagues, but I do want to hear the 
response from the Congressional Budget Office. As I have said on this 
floor many times, I am concerned about expanding Medicare unless we do 
something about the geographic disparities that are already present in 
our system. When we look at some of the numbers, the average patient 
got $6,600 in Minnesota in 2006, and Texas is something like $9,300. 
What we want to try to do with this bill, and what I like about this 
bill, is all of the cost reform measures that are going to push us 
toward rewarding States that are participating in systems that provide 
more efficient care. If we don't do something about these geographic 
disparities, we are going to further exacerbate this by expanding 
Medicare.
  So I have some concerns about this, and I look forward to hearing 
from my colleagues as well as, of course, the solvency of the Medicare 
Program, which is scheduled to go in the red by 2017 under existing 
circumstances.
  Back to the Dorgan-Snowe amendment. This amendment not only would 
allow American pharmacies and drug wholesalers to import FDA-approved 
medications from Canada and several other countries and pass the 
savings on to consumers, it would also import some much-needed 
competition into the American pharmaceutical market. It is estimated 
that the amendment, which enjoys both Democratic and Republican 
sponsors, would result in Federal savings of $19.4 billion over 10 
years, just at a time when we are looking for these kinds of savings.
  Millions of Americans depend on prescription drugs to help them 
manage chronic disease or other illnesses, but drug prices continue to 
skyrocket with annual increases well above the general inflation rate. 
From 1997 to 2007, retail drug prices increased an average of 6.9 
percent per year, more than 2\1/2\ times the general rate of inflation, 
which was 2.6 percent per year over the same period.
  Look at that difference: 6.9 percent per year compared to 2.6 percent 
per year. As a result of these rising prices, many patients are forced 
to split pills, skip doses, or not fill their prescriptions at all. Yet 
right across the northern border of Minnesota and Canada, many of these 
same brand-name prescription drugs are available at a much lower cost.
  For example, according to one recent comparison, a 90-day supply of 
Lipitor costs $256 in the United States. In Canada, it is available for 
$188. In other words, Canadians pay 26 percent less than Americans for 
the very same drug.
  Here is another example: A 90-day supply of Nitroderm patches cost 
$303 in the United States but $125 in Canada. The Canadian price is 59 
percent cheaper. We can go right down the line of major brand-name 
drugs and see these dramatic price disparities. In fact, every year, 
Canada's pharmaceutical pricing board compares Canadian prices for 
patented drug products with prices in a number of other countries. 
Consistently, prices in the United States are higher by double-digit 
percentages. In 2008 U.S. prices were, on the average, 63 percent 
higher than Canadian prices.
  Now, current Federal law says no one except the manufacturer can 
import a drug into the United States. Wholesale and retail pharmacies 
aren't allowed to. State and local governments aren't allowed to. 
Individual Americans aren't allowed to, even for personal use. But, of 
course, they do, and they have been doing it for a number of years.
  My State, as I noted, happens to be on the border of Canada. Every 
day Canadians cross over to Minnesota to work and make purchases and 
fish and do all kinds of things. Likewise, Minnesotans cross over to 
Canada every day to work and make purchases and fish. It is no big 
deal. We are not afraid of Canadians. Minnesotans know that Canadians 
pay less--much less--for many of their prescription drugs.
  Beginning in the 1990s, the Minnesota Senior Federation started 
organizing bus trips for seniors to go up and cross the border into 
Canada so they could get affordable prices for the drugs they depend 
on.
  The Senior Federation also introduced a prescription drug importation 
program and used its buying power to negotiate directly with Canadian 
mail order pharmacies to provide lower cost prescription drugs to 
Minnesota seniors. But drug prices in the United States just continue 
to go higher and higher and higher so the pressure to find some relief 
kept growing.
  Finally, some State governments decided to take their own initiative 
to help their residents purchase lower cost drugs from Canada. 
Minnesota was one of the very first. There was broad bipartisan support 
for this with a Republican Governor and Democrats and Republicans in 
the legislature.
  In February 2004, the State of Minnesota established RX-Connect, the 
first State-run Web site to provide citizens with information on how to 
safely purchase drugs from Canada. The Web site lists prices for 
hundreds of brand-name and generic medications as well as voicemail and 
e-mail contact information.
  The American pharmaceutical industry likes to use scare tactics to 
keep people from buying their medications in Canada. Look at what is 
happening. You don't see a lot of problems there with their drugs.
  The Dorgan-Snowe amendment takes on renewed importance and urgency 
because the American pharmaceutical industry has been imposing 
suspicious drug price increases this year. Last month, the New York 
Times reported that drugmakers have been busy raising prices for the 
most common prescribed medicines in anticipation of

[[Page S12759]]

possible health care reform. The newspaper quoted industry analysts as 
saying that in the 12 months ending September 30, drugmakers have 
raised the wholesale prices of brand-name prescription drugs by about 9 
percent. Overall, that means an additional $10 billion in health care 
spending. That is the largest increase since 1992, and it happened even 
as the consumer price index declined during the same 12-month period. 
Some analysts suggest that these prices are being inflated artificially 
in expectation of new reform that could otherwise reduce prescription 
drug prices. A similar trend was observed just before Medicare Part D 
took effect.
  Just last week, an economist at the University of Minnesota said:

       Curiously, prescription drug prices appear to rise more 
     rapidly in periods just prior to major policy changes. Brand-
     name and specialty drug prices accelerated before the 
     Medicare Part D program was enacted and implemented.

  That is what we are talking about here.
  This amendment would allow U.S. licensed pharmacies and drug 
wholesalers to import FDA-approved medications from Canada, Europe, 
Australia, New Zealand, and Japan and then pass on the savings to 
consumers.
  Real health care reform requires real changes from business as usual. 
This amendment would start to bring some real changes--opening up new 
choices to American consumers and injecting new competition into the 
pharmaceutical marketplace.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana is recognized.
  Mr. VITTER. Mr. President, I rise in strong support of the Dorgan 
reimportation amendment of which I am a cosponsor. I am very glad to 
support this important amendment. It is a bipartisan effort.
  Unfortunately, most of this debate and effort about the underlying 
bill is anything but bipartisan. This is a welcome contrast to that, a 
bipartisan effort around a very important reform proposal--
reimportation of prescription drugs.
  We face an interesting situation. The United States is, by far, the 
biggest market for prescription drugs in the world. Yet with all that 
buying power and all that activity, we pay, by far, the highest prices 
in the world.
  It is for a simple reason: We don't have a true worldwide free market 
in prescription drugs. We need to do that, in part, through 
reimportation.
  Americans need lower prices. They need the sorts of prices being 
offered elsewhere. We need to break down this system by which the big 
drug companies can and do offer the same drugs at very different prices 
in different countries, and, of course, they offer them at the highest 
prices in the world in the United States. Americans should not have to 
choose between their lifesaving medicines and other basic needs, such 
as food and utility bills.
  By voting for the Dorgan amendment and enacting comprehensive 
reimportation, we can directly address access to health care and truly 
lower health care costs, which I believe should be our top goal in this 
entire debate. That is what this amendment does. It gives Americans 
immediate relief from outrageously high prescription drug prices.
  Our amendment allows individuals the freedom to buy their 
prescription drugs at affordable prices, while providing oversight to 
ensure that only FDA-approved and safe drugs are permitted.
  Our amendment closes loopholes that big pharma has been using to 
fight reimportation, such as shutting down drugs to wholesalers who 
participate in reimportation.
  Our amendment would close the poison-pill loophole requiring HHS 
certification, which has left it up to administrations to deny 
reimportation by making that comprehensive reimportation discretionary. 
It would shut down that poison-pill loophole.
  We would make it mandatory that Americans have affordable choices for 
prescription drugs.
  Many of us, Democrats and Republicans, and certainly including and 
starting with Senators Dorgan and Snowe, have long fought for this 
comprehensive solution. We have made important steps forward. The 
Senate has adopted amendments to allow personal reimportation. Just 
last year, we voted overwhelmingly, 73 to 23, that we need to enact 
this sort of comprehensive reimportation reform, and we have taken 
concrete steps, such as the personal reimportation provisions, some of 
which I have authored and passed through the Senate. But we need to go 
further, and we need this comprehensive approach.
  Obviously, the big stumbling block in the way is the powerful 
pharmaceutical lobby, big pharma, which has spent millions in lobbying 
to stop this comprehensive approach. Just this past summer, Senator 
McCain read an e-mail on the Senate floor from a big pharma lobbyist 
outlining their strategy to derail those efforts in the Senate. More 
recently, there are reports that they may have struck a deal with the 
White House to derail these sorts of efforts and offered to spend tens 
of millions in support of so-called health care reform, perhaps with a 
deal to derail these efforts.
  That is why I am so glad Democrats and Republicans are coming 
together around this amendment to say that enough is enough. We need to 
fight all of these backroom deals. We need to fight this pervasive 
influence by pharma and finally stand with average Americans and pass 
real, comprehensive reimportation reform that will bring down prices, 
bring down health care costs, which should be the top priority of all 
of us.
  We all say we want to lower health care costs. That has been a big 
issue in this overall debate. Well, this amendment will absolutely do 
that. The Congressional Budget Office says that and independent 
analyses say that. Let's take an important step and do what we all say 
should be a top priority--actually lowering, in real terms, health care 
costs.
  Again, I urge all of my colleagues, Democrats and Republicans, to 
come together in a bipartisan way. I wish more of this debate and this 
effort was designed from the beginning to be truly bipartisan. But this 
amendment and this effort is. This amendment and this effort have been 
discussed for years. Let's finally get it done with a bipartisan vote 
to pass comprehensive reimportation.
  With that, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BAUCUS. 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. BAUCUS. Mr. President, I ask unanimous consent that we extend the 
period for debate only until 2 p.m., with the time equally divided, 
with Senators permitted to speak therein for up to 10 minutes each, 
with no amendments in order during that time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, the Senator from Texas and others talked 
about premiums. I wish to discuss the effect on premiums of health care 
reform.
  Affordability is at the crux of this debate. In fact, reducing costs 
and making health care premiums more affordable and predictable, while 
improving quality, is the impetus for this bill. This bill cuts cost 
and improves quality.
  Two analyses have been released that show Americans will pay less and 
have more choices under this bill. The first is by the CBO. It found 
that the legislation will lower premiums for millions of Americans. 
According to the CBO--and there are a lot of claims around here to the 
contrary, but they are just claims, and it is not documented--according 
to the CBO, in the individual market health insurance premiums under 
the Senate plan would fall by 14 to 20 percent compared with the same 
plan under current law. If you compare apples with apples, premiums 
under the Senate plan will fall in the individual market by 14 to 20 
percent. These savings come from lower administrative costs, from 
increased competition, and better pooling of risk to include healthier 
people. Again, in the individual market, premiums will fall 14 to 20 
percent.
  Let me be clear. CBO does say that those buying health care in the 
individual market will pay 14 to 20 percent

[[Page S12760]]

less under this bill than they would for the same plan under current 
law. If you currently have coverage you like, you can keep it. You will 
pay 14 to 20 percent less for that coverage than you would pay under 
current law. If, on the other hand, people in the individual market are 
unhappy with their coverage, what can they do? They can choose to 
purchase the more comprehensive coverage available in the exchange. You 
can keep what you have, but if you don't like it, you can choose to buy 
something else in the exchange.
  Unlike most of the coverage available in the individual market today, 
the coverage in the exchange will ensure access to preventive benefits. 
This is a very important point. Unlike most of the insurance available 
today in the individual market, that is, people buying just for 
themselves, the quality of insurance they will get, because of very 
dramatic insurance market reforms, will be much greater than what they 
have today. The quality will be much better.
  What are some of those quality improvements? First of all, the bill 
will ensure that insurance companies cannot deny coverage based on 
preexisting conditions. Moreover, people will have access to preventive 
benefits. The plan--the bill we are debating--will guarantee that every 
policy has an out-of-pocket limit. That is not true today. Most plans 
don't have limits on that. This legislation says you have a limit on 
out-of-pocket coverage. Insurance companies have to provide the 
insurance. They cannot provide a policy that says: We can only pay so 
much.
  The legislation will eliminate discrimination by insurance companies 
against those who have been sick in the past or have a preexisting 
condition. They cannot deny coverage based on health status. They 
cannot do that anymore. They do that today.
  This health legislation will preclude insurance companies from 
rescinding your policy if you get sick.
  How many times have we heard that happen under current law, insurance 
companies rescinding a policy when you get sick because they find a 
little something that has nothing to do with your illness that you 
perhaps did not report, a preexisting condition someplace else.
  For small businesses, the Congressional Budget Office estimates that 
premiums in the small group market could be 2 percent lower than under 
current law. For workers in small firms that are eligible for the small 
business tax credits, premiums would be 8 to 11 percent lower than 
under current law. Those savings alone make this legislation worthwhile 
for small business.
  Another enormous benefit for small businesses under this bill is 
predictable premiums. Under current law, if you are a small employer 
and one of your employees gets sick, your premiums could double, triple 
next year. I have experienced that many times. I am sure most Senators 
have. They talk to small businessmen at home and a businessman says: My 
gosh, my insurance premiums have doubled, tripled, quadrupled over the 
past year. Why? Because one of my employees has a preexisting 
condition, and I am placed in this terrible dilemma. This is a key 
employee. I cannot fire that person to get lower premiums. I cannot pay 
the increase in premiums. What do I do?
  There is one contractor at home in Montana I talked to about this. He 
felt so bad, he could not let somebody go, one of his best employees. 
He kept that employee. He kept shopping around, shopping around, and 
found a carrier that did increase his premiums because this employee 
had a preexisting condition but not as much as his regular carrier. It 
was a 20-percent increase rather than a 30-percent increase. That 
happens today, and it is wrong, wrong, wrong, wrong.
  So if you are a small businessperson, under this bill, you are going 
to find your premiums are going to be much more stable, and there is 
going to be a greater pool of people so your premiums, the 
Congressional Budget Office said, will be less--not by a lot but a 
little less. You don't have to worry about the insurance company coming 
to you next year and saying: We are going to charge you much more.
  Under this legislation, insurance companies can no longer 
discriminate against small employers that have an employee who gets 
sick. I mention all the time I hear from small businesses that say they 
want to buy health insurance for their employees, but it is too 
expensive and the cost is too unpredictable. They cannot do it. They 
want to. They cannot afford it. This legislation helps solve that 
problem. This bill creates a requirement that allows small businesses 
to provide health coverage to their workers. There is a little 
reduction in premiums, according to CBO, and also much more 
predictability and higher quality of insurance all at the same time.
  In the large group market--that is companies with more than 50 
employees--what does CBO say about their premiums? I have heard all 
these allegations about people who work for larger companies are going 
to find their premiums will increase. That is the assertion. That is 
flatly not true, at least not true according to the Congressional 
Budget Office. The Congressional Budget Office estimates that premiums 
could be up to 3 percent lower than under current law. Again, that is 
not a big reduction, but it is a reduction, nonetheless. CBO says 
employees who work for larger companies will find their premiums will 
go down by a little bit. The assertion is, premiums will go up. CBO 
says they will go down, to be honest, not by a huge amount but down a 
little bit. That is better, lower premiums. That 3 percent could make 
the difference whether an employer decides to keep employees. A 3-
percent reduction in premiums will keep that employee, or a bunch of 
employees, working for him.
  According to the Congressional Budget Office, five out of six 
Americans get their coverage through employers of this size. Five out 
of six Americans work for larger companies. This means 83 percent of 
Americans will see no change or perhaps a slight decrease in their 
premiums. That is the Congressional Budget Office. That is what they 
say. It is in black-and-white print. It is right there. The remaining 
individuals--that is 17 percent--purchase their coverage on their own 
in the individual market.
  Of those, many will choose to retain the coverage they have and will 
see a reduction of 14 to 20 percent in their premiums. Those who choose 
to purchase more comprehensive coverage in the individual market, the 
vast majority--nearly 60 percent--will see a reduction in premiums. 
Guess what. That is a big reduction in premiums. They will see a 
decrease of 56 to 59 percent due to the tax credits provided in this 
bill.
  Let me restate that point. For the majority of those who choose to 
buy insurance in the exchange, in the individual market, a majority 
will see a reduction in premiums, according to the Congressional Budget 
Office, a whopping reduction of between 56 and 59 percent due to the 
tax credits provided in this bill. That is pretty important. The 
remaining few individuals may see an increase of up to 13 percent. But 
those who experience an increase in premiums, let's remember, will do 
so because they have much better insurance. The increased quality of 
the insurance they are going to get, in my judgment, is going to 
outweigh the increase in premiums they have to pay because they are 
going to get a lot more for the buck, a lot better insurance than they 
otherwise would get today.
  If you buy a new car rather than a used car, most people think maybe 
they will pay more for a new car as opposed to a used car because it is 
newer and better. That is what is happening today. You might pay more, 
but you are getting a lot better insurance.
  The Congressional Budget Office analysis, therefore, is good news for 
health care reform. The analysis does not take into account some of the 
Senate bill's other policies, such as a catastrophic option available 
to young adults, otherwise known as ``young invincibles.'' They think: 
I am not going to get sick, so I will get a catastrophic plan and pay 
very low premiums. That is available in this legislation.
  The Congressional Budget Office analysis does not incorporate the 
potential effect of the proposal on the level or growth rate of 
spending for health care. In other words, CBO's analysis does not fully 
capture the effects of the excise tax on high-cost plans, which will 
also help.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BAUCUS. I have more to say, too much more to ask for an 
additional minute. I will continue at a later time.
  The PRESIDING OFFICER. The Senator from Nevada is recognized.
  Mr. ENSIGN. Mr. President, I rise to speak about Senator Crapo's 
motion to commit the bill to the Committee on Finance in order that 
this bill does not increase taxes for individuals with incomes of less 
than $200,000 or families with incomes of less than $250,000.

[[Page S12761]]

  Let's start by looking at three basic promises President Obama 
campaigned on to get elected--promises that almost no one on the other 
side of the aisle talks about anymore. Here are those promises. These 
are his quotes.
  He says:

       But let me [be] perfectly clear . . . if your family earns 
     less than $250,000 a year, you will not see your taxes 
     increased a single dime. I repeat: not a single dime.

  Promise No. 2:

       . . . nothing in this plan will require you or your 
     employer to change the coverage or the doctor you have. Let 
     me repeat this: nothing in our plan requires you to change 
     what you have.

  His third promise:

       Under the plan, if you like your current health insurance, 
     nothing changes, except your costs will go down by as much as 
     $2,500 per year.

  I think these are three promises that should be the test when we are 
judging this health care bill. I certainly agree with President Obama 
on all three of these points. The nonpartisan Joint Committee on 
Taxation has recently confirmed that this bill, in no uncertain terms, 
is a middle-class tax nightmare. Even after you account for taxpayers 
who receive the tax credit, 24 percent of tax filers--so that is a 
quarter of all tax filers--who make under $200,000 will, on average, 
see their taxes go up. Only 8 percent of all taxpayers receive the 
premium tax credit, which, by the way, is a new entitlement program, 
not a tax cut, as Democrats claim.
  This news should not be a surprise to anyone. We have known for a 
long time that the largest tax in the bill, the so-called Cadillac 
insurance plan tax, falls heavily on the middle class. Eighty-four 
percent--let me repeat this--84 percent of the people who pay the tax 
have incomes of less than $200,000 per year.
  What is wrong with this bill? This bill contains nine--that is right, 
nine--new taxes that will affect every American. I wish to walk you 
through those brandnew taxes.
  First, we have the 40-percent insurance plan tax. This is the biggest 
tax, and it is designed to make insurance companies and employers drop 
their premium insurance plans and leave people to buy cheaper plans. As 
a result, this tax violates promise No. 2 and promise No. 3 that the 
President made that I showed in my first chart. It also violates the 
first promise because 84 percent of the people paying this tax are in 
the middle class, according to the nonpartisan Joint Committee on 
Taxation.
  The insurance tax, tax No. 2, is another tax that will raise the cost 
of everyone's insurance plans. According to the analysis from the 
nonpartisan Congressional Budget Office, which I will quote, these 
taxes ``would increase costs for the affected firms, which would be 
passed on to purchasers''--in other words, the employees--``and would 
ultimately raise insurance premiums by a corresponding amount.''
  In addition to violating the first promise not to raise taxes on 
middle-class Americans, it also raises insurance premiums and violates 
the third promise. This is not a good start for the American people.
  Tax No. 3, the employer tax. For businesses that are struggling to 
stay afloat and to not lay off employees, especially during these tough 
economic times, this tax will make it much harder and may result in 
further layoffs in our weakened economy.
  I thought our goal was to create jobs and to strengthen our economy.
  The drug tax--this is tax No. 4. This tax will increase 
pharmaceutical prices. In fact, my colleagues should not be surprised 
that drug companies are already increasing their prices ahead of this 
bill because they know they are going to be taxed.
  Tax No. 5, the lab tax. If you need clinical laboratory tests, then 
here is another way the government is going to pick your pocket.
  Tax No. 6, the medical device tax. If you need surgery, there is a 
new tax on medical devices, such as pacemakers and other lifesaving 
devices.
  Tax No. 7, failure to buy insurance tax. If you do not buy insurance, 
as this bill mandates, then you must pay a penalty tax. Do not be 
fooled by the new bill as it changes the name from ``tax'' to 
``penalty.'' It is still money out of your pocket. By the way, 75 
percent of that tax is on people who make less than $200,000 a year--
once again violating President Obama's first promise.
  I also wish to note that unlike the protection we included in the 
committee's bill to waive interest on criminal and civil penalties on 
people who do not pay this tax, the current bill on the floor only 
stops criminal penalties and certain enforcement mechanisms. This bill 
still allows the IRS to go after people who do not buy insurance.
  What is the maximum penalty allowed? For a civil penalty in this 
bill, $25,000 for not paying this tax. That is what Americans can be 
penalized if they just fundamentally do not agree with this tax. Some 
people, such as myself, do not believe it is constitutional that the 
Federal Government can require us to buy health insurance. If you 
believe strongly in the Constitution and you do not believe this is a 
constitutional provision, the IRS can come after you and require up to 
a $25,000 fine.
  The next tax to talk about is the cosmetic surgery tax. Ironically, 
Democrats want to tax the most market-oriented aspect of medicine that 
has resulted in lower prices, safer procedures, and more consumer 
satisfaction by taxing cosmetic surgery procedures.
  Tax No. 9, increased employee Medicare tax. Lastly, for the first 
time, some Americans will pay higher Medicare taxes and that money will 
finance an entirely new entitlement program.
  According to the nonpartisan Joint Committee on Taxation, as I 
mentioned before, 84 percent of the people who pay the so-called 
Cadillac insurance plan tax are in the middle class.
  Let's consider the whole taxpaying population of the United States. 
According, once again, to the nonpartisan Joint Committee on Taxation, 
8 percent of the population, or slightly more than 13 million, will get 
benefits that the Democrats tout under this bill. That is about 8 
percent of our population.
  The other side is wrong to say that this bill delivers a broad tax 
cut to all Americans. It does this for only 8 percent, and only after 
shifting $\1/2\ billion worth of new taxes around to the rest of 
Americans. And what about the rest of Americans? They are either clear 
losers under this bill or come out roughly even by getting a tax credit 
to balance their tax hike. Even after you account for taxpayers who 
receive the tax credit, about one-quarter of all tax filers under 
$200,000 will, on average, see their taxes go up, not down.
  About 157 million Americans who get health insurance from their 
employers will not be eligible for the tax credit. This does not take 
into account the higher premiums, medical devices, drugs, lab tests 
that the nonpartisan Joint Committee on Taxation says will be shifted 
to consumers. They did not break those tax impacts down by income 
level, so we can't tell you exactly where they fall. But since most 
Americans make less than $200,000 a year, common sense tells you that 
most of those taxes will be borne by Americans making under $200,000 a 
year.
  Most of the nine brand new taxes in this legislation violate the 
President's promise that middle-class families will not have to pay 
more taxes. The purpose of the Crapo amendment is to inject honesty 
into the health care debate and to hold Congress to the promises that 
were made to the American people.
  Before we vote on this, I want to remind my colleagues of a very 
similar vote we had last year. I had an amendment to the Budget Act 
that was passed 98 to 0 by this body. My amendment last year said: It 
shall not be in order in the Senate to consider any bill, resolution, 
amendment between Houses, motion----
  The PRESIDING OFFICER (Mrs. Hagan). The Senator has used his 10 
minutes.
  Mr. ENSIGN. Madam President, I ask unanimous consent for an 
additional 1 minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ENSIGN. It shall not be in order in the Senate to consider any 
bill, resolution, amendment between Houses, motion or conference report 
that includes a Federal tax increase which would have widespread 
applicability on middle-income taxpayers. That passed 98 to zero. That 
provision was adopted. Unfortunately, it was stripped later when the 
budget resolution went to conference.

[[Page S12762]]

  Let me say in conclusion, despite the actions my colleagues on the 
other side of the aisle made toward following that policy of not 
raising taxes on middle-income families, we continue to see legislative 
proposals--and the bill before us is exactly one of those legislative 
proposals--that do just that. So I support Senator Crapo's motion to 
commit this bill in order to remove these onerous tax burdens on the 
American people.
  My argument is simple: Let's do what we said we would do and protect 
middle-income families from these taxes.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. CASEY. Madam President, I rise this morning--or this afternoon, I 
guess it is--to speak about health care, but in a very particular 
context--an area of our health care debate which we, unfortunately, 
haven't spent enough time on.
  The purpose of my remarks today will focus on an amendment that I 
will be filing today that is entitled ``Support for Pregnant and 
Parenting Teens and Women.'' It is a challenge within our health care 
system which I think has gone largely unaddressed, or at least for a 
segment or a category of pregnant women in our society. We know many 
teens and women who face an unplanned pregnancy do so with little or no 
support. This amendment--the Pregnant and Parenting Teens and Women 
amendment--offers teens and young women the support they need to finish 
their education and provide for their children. This is especially 
important to those teenagers or women who are victims of domestic 
violence or other kinds of violence, and also women on college 
campuses.
  Just a quick overview of the amendment, and then I will walk through 
some of the main reasons why I think it is important we make this a 
priority.
  First of all, the amendment will provide assistance and support for 
pregnant and parenting college students. Secondly, the amendment will 
provide assistance and support for pregnant and parenting teens. Third, 
it will improve services for pregnant women who are, as I mentioned 
before, victims of domestic violence, sexual violence, and stalking. 
Fourth and finally, it will increase public awareness of the resources 
available to pregnant and parenting teens and women.
  I will go through some of the background in the time I have, but the 
way I look at this--and I think the way a lot of families look at this 
challenge in America--is that often after a woman becomes pregnant, she 
has a decision to make. Under our law, she can carry the child to term 
or not. We want to make sure if she decides to carry that child to term 
she has all of the help she needs. And not just a little help--not just 
a program or two here and there--but the full range of help that we can 
provide, in addition to what so many people and so many organizations 
do so well.
  There are many individuals and organizations in the nonprofit sector, 
and there are great programs out there right now that help women with 
their pregnancies, but I look upon this challenge as one that is faced 
by pregnant women of all incomes, of all backgrounds, and of all 
circumstances. Even a woman who has the resources and the means often 
feels that she has to walk that path alone. Sometimes her family 
abandons her or doesn't provide her the help she needs. But it is 
especially urgent and especially difficult when a woman is both 
pregnant and without means or is pregnant and poor, pregnant and 
vulnerable to all of the challenges she will face.
  If a woman makes the decision to bring a child to term and to raise 
the child, she often does that all alone. What I believe we have to do 
here--not just as Democrats and Republicans, because that doesn't 
matter, candidly, on this--we have to do as Americans, if we mean what 
we all say, that we want to help people who are vulnerable, and we want 
to help people with their health care, and many of us say that over and 
over--people in both parties say that--then we have to help women 
during what can be a very difficult time in their lives.
  I realize for some people this is not an issue. Pregnancy is a time 
of joy and a time when they have no challenges and they bring a child 
into the world with a lot of support and all the help they need. But 
there are plenty of women out there who have to walk this road all 
alone--all alone. And so if we mean what we say about helping, as 
Americans--forget parties here--we should do everything possible to 
walk that road with her, if she wants the help and if she can benefit 
from the services we are talking about.
  Why should a woman on a college campus who makes a decision to have a 
baby be left alone? Why shouldn't we be giving her help? We don't do it 
now. I know some do it, and I will hear from others that this group 
does this and this group does that, but unfortunately it is not nearly 
enough, especially for someone who happens to be a teenager, a woman 
who is pregnant, or a young woman who is pregnant as a teenager or 
before the age of 18. Are we doing enough to help that woman who 
happens to be pregnant get through the challenge of a pregnancy?
  Finally, and most horrifically, if a woman is both pregnant and the 
victim of domestic violence, sexual violence, or stalking, what are we 
doing to help her? Unfortunately, the answer to that is very little--
very little. I think this is a criticism I am making of both political 
parties. We could have a debate about who is doing more, and that might 
be instructive, but neither party is doing enough for at least those 
three categories of pregnant women--teens, women on college campuses, 
and women who are victims of violence.
  I believe we are going to have an awful lot of support for this 
amendment. I think it is an essential part of this health care debate, 
and I believe it is an opportunity to bring people together to agree on 
something around here when we have a lot of disagreement. But also I 
think it is vitally important to our society in general. It is not just 
a good thing to do, it is not just the right thing to do or the 
compassionate thing to do, it is, I believe, a very important part of 
how we deliver health care and how we help people through what is often 
a crisis.
  Think of the kind of life that mother will have during her pregnancy 
and after her pregnancy. Think of the life that child will have, while 
the child is in the womb and then after the child is born. If the 
pregnancy goes well, the child will learn more. If the pregnancy goes 
well, the child will grow and develop appropriately so that he or she 
can be healthy. If a pregnancy goes well, the child will contribute a 
lot more to society. The real challenge, the urgent question for us is: 
What are we doing to help pregnant women, especially in these 
particular categories?
  I have been so fortunate, and I am grateful to have worked with 
Senator Klobuchar on this amendment. We will be talking about it more, 
but I wanted to provide a summary of it now.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. JOHANNS. Madam President, over the weeks and months we have been 
here, we have talked a lot about the economy and the challenges we face 
in the economy. We have spent time trying to figure out the best 
approach when it comes to job creation. We went through a debate 
earlier this year regarding a stimulus package that, when you add on 
interest, was eye popping--$1 trillion. We were promised by the 
President that if you pass this gargantuan stimulus package, the 
unemployment rate won't go over 8 percent. Well, we stand here today 
with unemployment at 10 percent.
  We look at that and we recognize that the 10-percent number doesn't 
tell the true story of the suffering that is going on out there. When 
you read much farther in the analysis, you begin to realize it is not 
10 percent. When you add in those who have flat given up, those who are 
underemployed, and those who may be piecing one or two or three jobs 
together to try to pay the bills, we are closer to the 17.5 percent 
range. And in spite of that, over the last days, we have been talking 
about a piece of legislation that, because of mandates and tax 
increases and burdens placed upon the middle class and our job 
creators--our small businesses--we can see very clearly we are going to 
end up with adding to the misery of the American people.
  Let me, if I might, start out by focusing on a specific piece of this 
to get started; that is, the employer mandate.

[[Page S12763]]

  The bill here and the bill in the House have a common element--
certainly different mandates, certainly different amounts of the 
mandate, but the common element is that under both pieces of 
legislation there is a ``Washington way or the highway'' sort of 
approach. It basically says to employers: Thou shalt do it our way or 
there is the highway. It basically says to our job creators out there 
that our medium-size, even some of our small job creators are going to 
be pulled into this. It says: Look, you either do it the Washington way 
or we are going to penalize you. We are going to use the Internal 
Revenue Code, the full force and effect of this mammoth government 
bureaucracy called the Internal Revenue Service, to get you, to get 
that money out of your business because you have not complied with the 
Washington way of this legislation. We are going to put a tax on job 
creators, a penalty on job creators who are already facing the dilemma 
of how do they keep their employment steady at a time when unemployment 
is 10 percent and real unemployment is actually in the vicinity of 17.5 
percent. The result is obvious. You don't have to study this very long 
to figure out that if this bill is passed, you are hammering the very 
people who are supposed to be creating the jobs.
  According to our Congressional Research Service:

       Economic theory suggests the penalty [and by that they mean 
     the employer mandate] should ultimately be passed through to 
     lower wages . . . if firms cannot pass on the costs in lower 
     wages, the higher cost of workers may lead firms to reduce 
     output and the number of workers.

  Let me kind of pierce through that fancy language, if I might. It 
kind of sounds like Washington-speak to me. What the Congressional 
Research Service is saying is this: If you are a worker out there in 
the United States, you are literally going to be faced with lower 
wages. If that doesn't work, then it may be your job that is at stake.
  Like every Senator in this body, I get across my State. I try to 
listen to people. I have townhall meetings. We try to keep an open-door 
policy so if somebody wants to talk to me, they can. The human misery 
of losing a job is just unbelievable. It does something to a person. It 
makes them look at themselves very differently. It makes them wonder, 
is there hope out there?
  This administration ran on this notion of hope and promise. According 
to our Congressional Research Service, when you pierce through that 
Washington-speak language, what it really says is that this bill by 
this administration is going to create more human misery because it 
will impact jobs. Nonpartisan analysis says employer mandates will 
either decrease wages or lead to layoffs.
  This is my first year in the Senate. What a legacy for your first 
year, that you get to go home at some point and you say: You know, I 
voted for a bill that, according to the Congressional Research Service, 
will either cause more layoffs in my State or reduce wages.
  Employers will look at their balance sheet--they have to. They don't 
have the ridiculous opportunity we have here of just spending crazily 
and running up the Federal deficit. They have to make it work or they 
go out of business. For them, it has to be a cost-benefit analysis. How 
many have looked at this bill and said: I think I have figured 
something out here. I don't like the mandate, they tell me. But then 
they say: But we have studied this, and if there has to be that result, 
it is cheaper for us to try to figure out a way to drop our health 
coverage and pay the penalty. The average employer that provides a 
health care plan pays about $4,000 per employee for health coverage. If 
the mandate were something like $750--do the math--a cost-benefit 
analysis is going to lead to one conclusion: Drop the health plan. We 
know employers are already considering it. My office recently met with 
a human resources manager from one of Nebraska's largest cities. She 
noted how much cheaper it would be if they could just do that. Many 
employees will lose their coverage. If that happens, then all of a 
sudden the doctor-patient relationship is impacted.
  Remember all those promises: Your taxes are not going to go up; you 
get to keep the doctor you like; if you like your plan, you are not 
going to lose it. We have ripped those promises up with this 
legislation. You would think at some point somebody in the 
administration would stand up and say: Hold everything here, we are 
making shambles out of what we thought we could do.
  True health care reform should lower costs for businesses so they 
have more capital to work with, so they can hire workers, not dismiss 
them. I suggest this bill just completely misses the mark.
  I also suggest that this is a step in the wrong direction in terms of 
health care. Making matters worse, the people this bill supposedly 
helps will be disproportionately impacted. A professor studying 
employer mandates recently said this:

       Workers who would lose their jobs are disproportionately 
     likely to be high school dropouts, minorities and females. 
     Among the uninsured, those with the least education face the 
     highest risk of losing their jobs under employer mandates.

  Is it a surprise that business groups are opposing this legislation? 
The U.S. Chamber, Wholesale Distributors, General Contractors, 
Independent Electrical Contractors--all sent a letter recently, and 
they said this:

       Perhaps no sector has been more passionate, more active 
     than the small business community in working to advance 
     reforms that lower health coverage costs.

  The PRESIDING OFFICER. The Senator has used 10 minutes.
  Mr. JOHANNS. May I have an additional minute, by unanimous consent?
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. JOHANNS. The Senate health care bill `` . . . will lead to higher 
costs and increased burdens on small businesses. The bill will cause 
greater damage to our economy and health care system.''
  We all agree on some basic premises. One is that about 60 to 70 
percent of our jobs in this country are dependent upon small 
businesses. Isn't this a time for us to take a step back and ask what 
are we doing to our economy here, what are we doing to these job 
creators, and work together to get a truly bipartisan bill that builds 
our economy and protects our jobs?
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. It is alleged here on the floor that the underlying bill 
raises taxes. The legislation does not increase taxes--essentially. 
There was a slight modification to that, but I will explain that later. 
In fact, the bill represents a tax cut. The bill does two things: It 
provides tax credits to low- and middle-income individuals and families 
to help purchase health insurance and it results in increased wages for 
those receiving employer-sponsored insurance.
  Let me first speak about how the bill provides a tax cut. The chart 
behind me basically shows that for a family of four with an income of 
$66,000, the light blue indicates that the cost of that health 
insurance is going to be about $14,100. That is basically what health 
insurance costs today for a family of four. That is what people pay 
today. After this legislation, look at the bar there on the right. 
Again, a family of four, income $66,000. Those persons will receive an 
$8,000 tax cut, in terms of credits that family will get, with a net 
result of a health insurance policy that costs $6,100. Health insurance 
is going to cost less for a family of four with an income of $66,000. 
That is fairly representative, a family of four with $66,000.
  Just to repeat, on the left, the health insurance policy for a family 
of four with that income level is about $14,000. After the tax credit 
kicks in, once this legislation kicks in, the same family, same four 
people, will find they are paying only $6,100 net for their health 
insurance. Why? Because they get a tax cut of $8,000.
  I might add--look at the next chart, ``Who Gets A Tax Cut? An 
individual with an income of $32,000.'' Earlier, it was a family of 
four with $66,000. This is an individual with an income of $32,400. 
Currently, today, before health care reform is passed, that individual 
will pay roughly $5,000 in health insurance. But after this bill is 
passed, that same individual with an income of $32,400 will find that 
health insurance will not cost $5,000 but much less--$3,000. Why? 
Because that person gets a tax cut in terms of a credit of $2,200. I 
think that is a very important point to make.

[[Page S12764]]

  While we are at it, we might as well get the next chart.
  There are some who are saying this legislation will result in 
increased taxes for higher income people; that is, people whose income 
is, say, around $200,000. There is something to that argument, but that 
is not the whole story. Let's look at the whole story.
  This legislation as portrayed by this chart shows:

       High-cost insurance excise tax leads to increased wages.

  Why increased wages? Because the Congressional Budget Office or maybe 
it is the Joint Committee on Taxation--the Joint Committee on Taxation 
concludes that because of that provision of the bill; that is, the 
excise tax on companies that provide more expensive policies, in effect 
those policies will be modified or changed, and in effect the premiums 
for those policies, the so-called Cadillac plans, will actually go 
down, according to the Congressional Budget Office, between 7 and 12 
percent. But that is premiums. The discussion right now is on taxes. 
Those folks will be paying a little more taxes. That is true under this 
legislation. But, again, what is the whole story? Why are they going to 
be paying more taxes? They are going to be paying more taxes because 
they will get more income. Their wages and salaries will increase 
tremendously.
  Look at the bar on the left. In the year 2013, the percent of the 
total tax revenue due to increased wages will be about 90 percent, but 
that person will also pay a 10-percent increase in taxes. The wage 
increase, salary increase is far greater than the tax increase. That is 
true for every year--2013, 2014, 2015, all the way up to 2019. It is 
proportionately basically the same--roughly around an 80-percent 
increase in wages and roughly maybe about less than a 20-percent 
increase in taxes. So on a net basis, those persons are going to be 
doing pretty well.
  Consider the example of Joe who works for ACME Company. He is married 
and has two children. Together, he and his spouse earn $100,000 a year 
in taxable wages.
  In 2012, ACME Company provides family health coverage to Joe at a 
cost of $25,000. Because of the high cost insurance excise tax, ACME 
Company finds different coverage that costs only $21,000 in 2013. Thus, 
ACME Company can afford to pay Joe an extra $4,000 each year.
  Now, even though Joe has to pay income and payroll taxes, he will 
still have an extra $2,076 in his pocket. That is $4,000 -$1,000 in 
Federal tax -$612 FICA tax -$312 in State tax.
  I don't believe Joe would refuse a pay increase just because he has 
to pay taxes on that raise.
  Or consider Sally, a single mother of two working for XYZ Company. 
She makes $50,000 in 2013 and receives family health insurance coverage 
costing $27,000.
  When XYZ Company restructures their plan to $22,000 as a result of 
the high-cost insurance tax, Sally will get an extra $5,000 in wages. 
That is $3,095 in take-home pay after taxes. That is $5,000 -$750 in 
Federal income tax -$765 FICA tax -$390 State tax.
  I have no doubt that Sally will be able to put that extra money to 
good use.
  Also, I would like to remind everyone about this legislation on 
premiums. Earlier, I discussed what the Congressional Budget Office 
said about premiums under our bill. Let me repeat, this is what the 
Congressional Budget Office says: In summary, the Congressional Budget 
Office concludes that 93 percent of Americans receive decreases in 
premiums. About 93 percent of Americans net will see a decrease in 
premiums.
  That is not from these charts; that is from the CBO letter. Of that 
93 percent, 10 percent will see decreases of 56 percent to 59 percent 
because of new tax credits. We are talking about on the individual 
market. About 60 percent of those who are getting insurance in the 
individual market on the exchange will get tax credits which will 
result in roughly a 60-percent reduction in premiums. It is between 56 
and 59, which is pretty close to 60 percent. The remaining 7 percent 
will pay slightly higher--100 less 93. Seven percent will pay slightly 
higher, but they also get much better insurance for that same dollar. 
When you have a choice between buying a used car or a new car, you 
probably expect to pay a little bit more when you buy the new car. 
Hopefully, it is a little better, higher quality, drives faster, safer, 
all those things. You expect to pay a little more for a new car, but 
you get more. The same thing here. You are going to pay a little more. 
But only 7 percent will see their premiums go up according to the CBO. 
Those 7 percent are people who do not get tax credits because their 
incomes are a little higher, but they will get much better insurance, 
higher quality insurance. CBO says that, much higher quality insurance.
  So, in effect, they will probably get at least the same, maybe no 
increase at all, maybe a reduction in premium, if we calculate in the 
higher quality insurance they will have.
  In addition to CBO, MIT's Jon Gruber has also done a study on 
premiums. And what does he conclude? He concludes, using Congressional 
Budget Office data, the Senate bill could mean people purchasing 
individual insurance would save every year $200 for single coverage and 
$500 for family coverage in 2009 dollars. Most people think he is one 
of the best outside experts. He has big computer models. He takes the 
CBO data and, in some respects, he has helped CBO by giving some 
information to CBO that it otherwise does not have.
  Mr. Gruber also points out that people with low incomes would receive 
premium tax credits that will reduce the price they pay for health 
insurance by as much as $2,500 to $7,500.
  We have also seen several studies funded by the insurance industry. I 
don't want to be disparaging but to some degree you have to consider 
the source. I have been citing CBO. I think most people think they are 
a highly professional outfit, no axe to grind. Sometimes they upset 
those against health insurance reform. Sometimes they upset those for 
health insurance reform. They are a very professional group of people. 
But I have also seen studies paid for by the private sector, by the 
insurance industry. Those studies find that premiums will increase 
under the bill before us for all Americans. These studies are flawed 
and, frankly, some of them, the authors of these studies admitted they 
are flawed. They were just looking at selective parts of the 
legislation, not all parts, and they were pushed by the industry to 
issue a report quickly. They have admitted that. Each of them failed to 
take into account all aspects of the proposal. They selectively chose 
the provisions that will increase premiums, and they ignored those 
provisions that will lower premiums.
  Why do they do that? Basically, the insurance industry wants to kill 
this bill. I can understand it. If I were the insurance industry, I 
wouldn't want my apple cart upset either. They do just fine under the 
status quo, thank you very much. They don't want to see any changes. 
Some insurance companies want to continue their current practices of 
denying coverage if you have a preexisting condition. That is how they 
made their money in the past. They made most of their money by denying 
coverage, by underwriting insurance rather than making money on 
conventional insurance. Anyway these companies want to continue their 
current practice of denying you coverage if you have a preexisting 
condition. Some want to continue charging unaffordable premiums if you 
have been sick in the past, and some want to be able to rescind your 
coverage once you get sick. That is their MO, and they have done pretty 
well under the status quo.
  The Congressional Budget Office and Professor Gruber are both 
credible and unbiased sources that are not bought and sold by the 
insurance industry. The Congressional Budget Office and MIT's Gruber 
have confirmed what many of us have known: that the bill before us will 
lower premiums and provide a great many options for more comprehensive 
coverage. That is very important. With the exchange set up and with 
other provisions that will be in this bill, there are many more options 
for individuals to buy insurance with. It creates a lot of competition. 
With health insurance market reform, insurance companies will be 
competing more on price than they are on quality of coverage.
  This legislation provides much needed assistance as well to lower 
middle-income Americans struggling to pay their health insurance 
premiums.
  The Senator from Nevada, Mr. Ensign, a few moments ago said people

[[Page S12765]]

would pay more because of industry fees in this bill. Let's address 
that point. The reductions in premiums determined by the CBO that I 
described earlier took into account any impact of the industry fees. 
The Congressional Budget Office took that into account. I note for the 
record, there is no lab fee. I know that was an honest mistake on his 
part, but I want to indicate there is no lab fees in this bill. He was 
talking about lab fees.
  The bottom line is that for the overwhelming majority of Americans, 
this bill means lower premiums. I don't have it with me, but also a 
section in one of the CBO letters basically says these fees will have a 
very negligible impact on consumers. Frankly, I was a bit surprised. I 
was concerned that some of these studies might, as determined by the 
CBO or other outside analysts, conclude that there would be a 
significant impact on consumers and on premiums, basically, what these 
companies would otherwise charge. But the CBO says no; the fees on 
hospitals, the pharmaceutical industry, even the insurance industry 
will have a very negligible effect on increased costs for consumers. It 
is negligible according to the CBO. I thought, frankly, that would not 
be the case.
  Here is the letter. It is on page 15. I don't have the date of this 
letter, but it is from the Congressional Budget Office. It is under the 
section ``New Fees Would Increase Premiums Slightly.'' The operable 
sentence is:

       Because that fee would not impose an additional cost for 
     drugs sold on the private market, CBO and [Joint Tax] 
     estimate that it would not result in measurably higher 
     premiums for private coverage.

  To be fair, I don't know if they also address the effect of hospital 
fees or other provider fees. But I think it is noteworthy in that 
context for us to remember, it wasn't too long ago when the health 
insurance industry got together at the White House with the President 
and promised the President they could reduce their costs by $2 trillion 
over 10 years. If they believed they could reduce their reimbursement 
by $2 trillion over 10 years, you would think they would kind of know 
what they are talking about. After all, they have to report to 
stockholders. They have certain obligations.
  They said they could reduce their reimbursement by $2 trillion. This 
bill cuts down their reimbursement increases not by $2 trillion but by 
one-quarter of that. That is roughly 4,500 billion over that same 10-
year period. They have agreed to that. I can understand why they would 
agree to that because that is about one-quarter of what they promised 
earlier.
  If they have agreed to it, they are probably going to do OK under 
this legislation. It is not going to result in reduced quality of care 
to people because they have agreed to it essentially. As I pointed out, 
CBO says, at least with respect to the pharmaceutical industry, very 
little of that will be passed on to consumers. Why is that? The basic 
reason is, there is waste in our current health care system. These 
companies know where the waste is. They can find it. They know it is 
out there.
  But, second, with increased coverage, many more Americans will have 
health insurance. Currently, 84 percent have health insurance. Under 
this legislation, 94, 95 percent of Americans will have health 
insurance. If many more Americans have health insurance, there are more 
patients for the hospitals, more patients for home health care, more 
medical equipment sold, more drugs provided by the pharmaceutical 
industry. That is the second main reason they know that with provisions 
in this bill, the reduction in reimbursement to them is numbers they 
can live with.
  I know the next two speakers, Senator Grassley and Senator Dorgan, 
both intend to speak for more than 10 minutes. I ask unanimous consent 
they be allowed to speak longer under the time under the control of the 
respective sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Iowa.
  Mr. GRASSLEY. Madam President, I thank the Senator from Montana for 
arranging that for me. I hope this afternoon to speak on the issue of 
importation of drugs because I support the Dorgan amendment. Right now 
I wish to address the issue of the Crapo motion to commit.
  This generally deals with all of the tax provisions in this 2,074-
page bill. If Senator Crapo prevails--and he should--the unrelated 
House bill, along with the Reid amendment, would be sent to the Senate 
Finance Committee. The Finance Committee, under the motion, would be 
empowered to return the bill to the full Senate with an amendment that 
eliminates the heavy taxes that are in this bill. Senator Crapo has 
discussed the impact of the Reid amendment on middle-class families. I 
will lay out all the taxes that are in this bill.
  In farm country, many of us who work the land often observe big 
freight trains rumbling across the terrain. Sometimes they scare 
cattle, hogs, and other animals. Those freight trains are impressive in 
their power, in their speed, and now the length of the trains. It is 
very common to see a 100-car train, 150-car trains. The partisan force 
with which the majority is powering this bill through the Congress is 
equally as impressive as that of a freight train. The speed that is 
being displayed for such complex legislation is something to behold. 
Most importantly, the sheer number and breadth of the new taxes in this 
bill reminds me of a very long train.
  Almost $\1/2\ trillion in taxes, fees, and penalties, and I think 
they all have the same economic impact, whether it is a tax, a fee, or 
a penalty--a negative impact on the economy. These taxes, fees, and 
penalties are so imposing, I am calling this 2,074-page bill the tax 
increase express.
  The locomotive driving this train is health care reform, driven by 
the Democratic leadership. So we have the locomotive that drives this 
tax increase. I don't think the American public knows the bill would 
impose that much, $\1/2\ trillion worth of new taxes, new fees, and new 
penalties on the American people.
  The American public, who supported President Obama with a majority of 
votes 13 months ago, heard the President loudly and clearly, and that 
is why they gave him such an overwhelming majority.
  They understood our President pledged he would not raise taxes on 
people making less than $250,000 a year. Unfortunately, the Democrats' 
leadership bill would violate that clear pledge.
  What are the tax increases and the fees and penalties in Senator 
Reid's amendment? Let me take a moment to highlight them because every 
locomotive needs power to run. The first power source, the first car of 
the tax increase express, is the so-called fees on health insurance 
companies, medical device manufacturers, and drug manufacturers.
  That might not sound like something the grassroots of America would 
worry about--taxes on insurance companies, medical device 
manufacturers, drug manufacturers--because maybe they think businesses 
pay taxes. But businesses and corporations do not pay taxes, only 
people pay taxes. So when people find out they are going to be paying 
these, it puts a whole new light on what is a fee and what is a tax.
  There have been numerous studies that have shown that these fees on, 
for example, health insurers will increase health insurance premiums. 
Some say premiums would increase by $488 for a family, other studies 
say $500. Most Members on the other side of the aisle take issue with 
these studies. They argue these studies were performed at the request 
of insurance companies or conducted by independent experts with ties to 
that same industry.
  Let me ask my Democratic friends this: Do you question the work of 
the Congressional Budget Office and the Joint Committee on Taxation? 
Well, you should not because they are like a god around here. When the 
CBO says something is going to cost something, that stands, unless 
there are 60 votes to override it in the Senate. So most everything the 
CBO says stands. They have respect because of the intellectual honesty 
of their research and the nonpartisanship they have. So these 
agencies--the Congressional Budget Office and the Joint Committee on 
Taxation--have testified that these fees will actually be passed on to 
health care consumers. Check the record. No one can dispute it.
  The Congressional Budget Office and the Joint Committee on Taxation 
have also testified that the fees will increase

[[Page S12766]]

health insurance premiums. Check the record. No one can dispute it.
  My friends in the Democratic leadership may say, once their health 
reforms are in place, premiums will go down, net of the fees. They will 
hail a recent CBO report highlighting the winners but somehow ignoring 
the losers. They will say these fees will not affect premiums for the 
vast majority of Americans. But here is the flaw in that assertion. The 
Congressional Budget Office analyzed premium costs, what they are 
projected to be in 2016 under this legislation.
  What about premium costs right now in the years before these programs 
take effect--2010 and 2013? Why is this question important? The answer 
is, these fees go into effect in the year 2010, not when most of the 
expenditures go into effect in 2014.
  The majority of the Democratic reforms which are intended to lower 
costs do not go into effect until 2014--4 years from now. I ought to 
say that 10 times because that is very important to how this bill came 
out to be revenue neutral.
  So we ought to look at what happens in the years 2010, 2011, 2012, 
and 2013. Premiums will go up. Why? Because, for one, the Democrats are 
adding costs to the health insurance you buy by imposing these fees on 
health insurers, and they are giving you no government assistance to 
help with these added costs.
  I would ask my friends in the media, dig a little bit deeper on this 
point, and you ought to be reporting on it. Why? Because the American 
public does not understand that in the short term premiums will go up. 
Instead, the public is simply hearing some media reports on a portion 
of the premiums, in 2016 and beyond. Of course, that is a very long 
time from now. The American public does not want to wait for their 
premiums to go down, if they go down at all. It appears my friends in 
the Democratic leadership want the tax increase express to barrel 
through Congress before the public realizes what health care reform 
actually means; that is, higher premiums as early as 2010.
  Let me turn to the second car of the tax increase express. This car 
is the proposal to restrict the eligibility criteria for claiming the 
itemized deductions for medical expenses. This proposal says you can no 
longer deduct expenses that exceed 7.5 percent of your adjusted gross 
income. Instead, you can only deduct expenses that exceed 10 percent of 
your adjusted gross income.
  In plain English, this proposal limits tax deductions you can take 
for medical expenses. In other words, you will lose a portion of your 
tax deductions. Even the New York Times calls proposals that would take 
away a portion of your tax deduction a tax increase.
  Mr. President, I ask unanimous consent that article from the New York 
Times, dated February 26, 2009, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the New York Times, Feb. 26, 2009]

        To Pay for Health Care, Obama Looks to Taxes on Affluent

                   (By Jackie Calmes and Robert Pear)

       Washington.--President Obama will propose further tax 
     increases on the affluent to help pay for his promise to make 
     health care more accessible and affordable, calling for 
     stricter limits on the benefits of itemized deductions taken 
     by the wealthiest households, administration officials said 
     Wednesday.
       The tax proposal, coming after recent years in which wealth 
     has become more concentrated at the top of the income scale, 
     introduces a politically volatile edge to the Congressional 
     debate over Mr. Obama's domestic priorities.
       The president will also propose, in the 10-year budget he 
     is to release Thursday, to use revenues from the centerpiece 
     of his environmental policy--a plan under which companies 
     must buy permits to exceed pollution emission caps--to pay 
     for an extension of a two-year tax credit that benefits low-
     wage and middle-income people.
       The combined effect of the two revenue-raising proposals, 
     on top of Mr. Obama's existing plan to roll back the Bush-era 
     income tax reductions on households with income exceeding 
     $250,000 a year, would be a pronounced move to redistribute 
     wealth by reimposing a larger share of the tax burden on 
     corporations and the most affluent taxpayers.
       Administration officials said Mr. Obama would propose to 
     reduce the value of itemized tax deductions for everyone in 
     the top income tax bracket, 35 percent, and many of those in 
     the 33 percent bracket--roughly speaking, starting at 
     $250,000 in annual income for a married couple.
       Under existing law, the tax benefit of itemizing deductions 
     rises with a taxpayer's marginal tax bracket (the bracket 
     that applies to the last dollar of income). For example, 
     $10,000 in itemized deductions reduces tax liability by 
     $3,500 for someone in the 35 percent bracket.
       Mr. Obama would allow a saving of only $2,800--as if the 
     person were in the 28 percent bracket.
       The White House says it is unfair for high-income people to 
     get a bigger tax break than middle-income people for claiming 
     the same deductions or making the same charitable 
     contributions.
       The officials said the resulting increase in revenues, 
     estimated at $318 billion over 10 years, would account for 
     about half of a $634 billion ``reserve fund'' that Mr. Obama 
     will set aside in his budget to address changes in the health 
     care system. The other half would come from proposed cost 
     savings in Medicare, Medicaid and other health programs.
       In a document summarizing its proposals, the White House 
     said it would finance coverage for the uninsured in part by 
     ``rebalancing the tax code so that the wealthiest pay more.''
       Mr. Obama's blueprint, which will project spending and 
     revenues for the next decade, will flesh out the president's 
     thinking on his energy plans both to cap the emissions of 
     gases, particularly carbon dioxide, that are blamed for 
     climate change and to spur development of nonpolluting energy 
     alternatives.
       The budget will show the government beginning by 2012 to 
     collect billions of dollars in revenues from selling permits 
     to businesses that emit the polluting gases, assuming the 
     president's energy initiative becomes law as soon as this 
     year, officials said.
       Because utilities and other businesses would presumably 
     pass on their costs to customers, Mr. Obama will propose to 
     use most of the government's revenues from the permits to 
     finance an extension of the new ``Making Work Pay'' tax 
     credit beyond the two years covered in the $787 billion 
     economic recovery plan that was just enacted.
       That tax relief, the administration will argue, will offset 
     households' higher costs for utilities and other products and 
     services from businesses' passing on their permit expenses.
       That tax credit annually will provide $400 to low-wage and 
     middle-income workers or $800 to couples; Mr. Obama would 
     like to increase those figures to $500 and $1,000. The credit 
     phases out for those with incomes above $75,000 a year and 
     for couples with incomes of more than $150,000; no benefit 
     would go to individuals with more than $100,000 income and 
     couples with $200,000.
       The tax credit will begin showing up in the form of lower 
     withholding for eligible workers beginning April 1.
       The remainder of the projected revenues from the permits 
     will finance Mr. Obama's campaign promise for $15 billion a 
     year over 10 years to subsidize research and development of 
     alternative energy sources, officials said. The stimulus 
     package included a multibillion-dollar down payment to 
     develop a national electricity grid to harness and distribute 
     energy from such sources, including wind farms.
       Behind the numbers in Mr. Obama's first budget is one of 
     the most far-reaching domestic agendas in years, and at a 
     time when the president and Congress are already grappling 
     with an economic crisis worse than any in decades. The 
     environmental permits would not take effect until 2012, at 
     which point the administration expects the economy to have 
     recovered. Similarly, some of the tax increases would not 
     take effect until 2011.
       Democratic Congressional leaders promised to push the 
     agenda, which parallels their own. ``By the end of this year, 
     I want to do something significant dealing with health 
     care,'' the Senate majority leader, Harry Reid of Nevada, 
     told reporters.
       The tax proposals, however, could galvanize Republican 
     opposition and give conservatives a concrete target for 
     taking on Mr. Obama, who despite his political strength could 
     find some members of his own party reluctant to embrace tax 
     increases.
       Senator Max Baucus, Democrat of Montana and chairman of the 
     Senate Finance Committee, who has been drafting a health 
     plan, predicted in an interview that the Senate could pass 
     legislation by its August recess.
       Mr. Baucus acknowledged that ``there has to be revenue'' to 
     offset the costs of expanded coverage initially, but he did 
     not endorse the proposal for limiting wealthy taxpayers' 
     deductions.
       ``There will be lots of options to pay it, not necessarily 
     that one,'' Mr. Baucus said.
       He would not say what revenue options he would support. But 
     he said tax increases of some kind would not prevent some 
     Senate Republicans from aligning with Democrats to pass a 
     health plan.
       In the House, the Republican leader, Representative John A. 
     Boehner of Ohio, telegraphed his side's opposition to any tax 
     increases.
       ``Everyone agrees that all Americans deserve access to 
     affordable health care,'' Mr. Boehner said in a statement, 
     ``but is increasing taxes during an economic recession, 
     especially on small businesses, the right way to accomplish 
     that goal?''
       Mr. Boehner likewise criticized Mr. Obama's cap-and-trade 
     emissions permits proposal, saying, ``Cap-and-trade is code 
     for increasing taxes and killing American jobs,

[[Page S12767]]

     and that's the last thing we need to do during these troubled 
     economic times.''
       To finance health care reform, administration officials 
     suggested to senior aides in Congress on Wednesday that 
     revenues could be raised by ending the policy of excluding 
     the value of employer-provided health insurance from income 
     taxes.
       But the officials emphasized that the administration was 
     not advocating that option, which not only is anathema to 
     some in organized labor and business but also conflicts with 
     Mr. Obama's position in last fall's presidential campaign.
       The administration is proposing a number of other 
     politically contentious ways of offsetting the costs of the 
     health care initiative. Mr. Obama wants to require drug 
     companies to give bigger discounts, or rebates, to Medicaid, 
     the health program for low-income people.
       Drug makers now must provide Medicaid with a discount equal 
     to at least 15.1 percent of the average manufacturer price 
     for a brand-name product. Mr. Obama wants to require 
     discounts of at least 22.1 percent. Pharmaceutical companies 
     have strenuously resisted such proposals in recent years.
       Mr. Obama will also propose cutting Medicare payments to 
     health insurance companies that provide comprehensive care to 
     more than 10 million of the 44 million Medicare 
     beneficiaries. He says he can save $175 billion over 10 years 
     with a new competitive bidding system, under which payments 
     to private Medicare Advantage plans would be based on an 
     average of the bids they submit to Medicare.

  Mr. GRASSLEY. In the top line, the article says: ``President Obama 
will propose further tax increases on the affluent to help pay for . . 
. health care reform.''
  I am highlighting this article because the President is also 
proposing to take away a portion of a person's tax deduction. The 
President wants to limit the itemized deductions people making more 
than $250,000 a year can take. The only difference between the two 
proposals is the medical expense deduction limitation affects people 
who make less than $250,000 a year--the same class of people the 
President promised in the election he was not going to increase taxes 
on.
  So, again, do not take my word for it. Data from the Joint Committee 
on Taxation tells us that in the year 2013, the largest concentration 
of taxpayers claiming the medical expense deduction will earn between 
$50,000 and $75,000--people who never thought they were going to have 
their taxes increased based upon what the President said during the 
campaign.
  The analysis shows, a good number of taxpayers earning between 
$75,000 and $200,000 also claim the medical expense deduction.
  My friends on the other side of the aisle will argue that their 
government-subsidized tax credit for health insurance will wipe clean 
any new taxes for those people below 400 percent of poverty. They will 
also argue that people purchasing insurance through the new exchange 
will be protected from catastrophic expenses as a result of annual out-
of-pocket limits. For this reason, my friends on the other side argue 
those middle-class taxpayers will not need to rely on medical expense 
deductions.
  I hate to break it to my colleagues, but the Congressional Budget 
Office--again, that god of Capitol Hill--estimates that in 2014 only 4 
percent of Americans will be purchasing exchange insurance and only 3 
percent of Americans will be receiving a tax credit. By 2019, when the 
Reid bill is in full effect, only 7 percent of Americans with exchange 
insurance will be receiving the tax credit. That leaves a heck of a lot 
of people below 400 percent of poverty with higher taxes.
  What about those individuals and families above 400 percent of 
poverty? These people earn income below the President's magic $250,000 
level, and somehow they do not qualify for this tax credit. What they 
do qualify for, though, is a tax increase. After all, there is reason 
why this proposal raises $15 billion over 10 years, and that is a heck 
of a lot of money.
  Let me now turn to the third car of the tax increase express. This 
car is the high-cost plan tax. The Congressional Budget Office has 
consistently cited the two most powerful ways to bend the cost curve 
downward, meaning the cost curve of health care inflation: No. 1 is to 
cap the tax preference for employer-provided health coverage or the so-
called exclusion; and, secondly, Medicare delivery system reforms.
  A recent letter sent to the White House by respected economists also 
contends that placing a limit on high-cost employer plans would slow 
health care spending and reduce costs.
  Well, some of my colleagues have come out squarely in support of a 
cap on the exclusion. That was an intellectually honest position. My 
friends, the chairman of the Budget Committee and the chairman of the 
Finance Committee, took the intellectually honest position. The 
Democratic leadership, however, has squarely opposed a cap on the 
exclusion. They argue that a cap on the exclusion would hurt middle-
class workers.
  But in a sleight of hand, this bill--this 2,074-page bill--and its 
authors, the Democratic leadership, came up with a proposal that would 
tax insurance companies for offering high-cost plans. It is a more 
complicated way of taxing the same workers. It is a sleight of hand 
because the Democratic leadership knows the tax will be passed through 
to the worker.
  My friends simply did not want to say they were taxing the workers 
directly. So they have decided to tax those same workers very 
indirectly. In the end, the worker would be paying the tax, and these 
workers would be middle-income workers.
  Again, do not take my word for it. The Joint Committee on Taxation 
testified before our very Senate Finance Committee that the high-cost 
plan tax would be passed on to whom--the workers.
  Joint Committee on Taxation data also indicates that in 2019, 84 
percent of the revenue generated from the high-cost plan tax comes 
from--guess who--individuals and families earning less than $200,000 a 
year, contrary to the President's promise in the last campaign that 
these folks would not pay any additional tax.
  So whether you agree or disagree with the policy of limiting the tax 
benefit for employer-provided coverage, middle-class workers would see 
a tax increase.
  Let's go to the fourth car of the tax increase express. This car is 
going to carry two new tax increases. The first tax increase is on 
workers who contribute to a flexible spending account, better known as 
an FSA.
  Under the current tax laws, a worker may contribute to an FSA on a 
pretax basis and use those FSA contributions to pay for copays and 
deductibles tax free. Currently, there is no limit on how much a worker 
may contribute to an FSA. This 2,074-page bill, put together by Senator 
Reid, would limit the contribution amounts to $2,500. Statistics show, 
the average FSA contribution is $1,800 a year. So this $2,500 limit 
does not sound that bad, right? Well, I say wrong. A great number of 
workers who have serious illnesses contribute significantly more than 
$1,800 and, let me say, more than $2,500.
  On average--on average--these workers whom I am talking about with 
serious health problems earn about $55,000 a year. If I were to connect 
the dots, I would see a tax increase on workers with serious illnesses 
who earn $55,000 a year. Well, here is how. These workers would now 
have to pay taxes on their FSA contributions in excess of $2,500. The 
Democratic leadership is taxing health benefits for the first time 
ever--at least this benefit for the first time ever.

  The second tax increase in this fourth car is the elimination of the 
taxfree reimbursement for over-the-counter medicine. Under the current 
tax rules, payments for over-the-counter medicine may be reimbursed 
taxfree if a worker is covered under a flexible savings account or 
under a health savings account. This 2,074-page bill takes away that 
tax benefit.
  The fifth car of the tax increase express is the new Medicare payroll 
taxes. Since the New Deal, the United States has put into place several 
social insurance programs. They are part of the social fabric of 
America. Included in those programs are Social Security, unemployment 
insurance, and Medicare. They are all founded on the social insurance 
concepts. As Senator Moynihan, when he represented New York, used to 
remind us, to ensure their constitutionality, these programs were 
designed to be financed with payroll taxes instead of insurance 
premiums. But to maintain the closest appearance possible to social 
insurance, the payroll tax looks a lot like a premium for insurance.
  This analogy is very intentional. It is not accidental. It is bedrock 
to the sustainability and universality of social

[[Page S12768]]

insurance programs that we all support: Social Security on the one 
hand, Medicare on the other.
  The Reid amendment breaks that precedent, muddies the premium 
analogy, and could start us on a tax-hike-only journey to dealing with 
our unsustainable entitlement programs.
  Let me explain that. The way the payroll tax works now is that every 
worker pays in based on his or her salary, wages, or small business 
income. That is a single, simple, and consistent tax base. Also, one 
tax rate applies to that payroll tax base. Now, for the first time--for 
the very first time--an additional second tax rate will apply to the 
payroll tax base. Also, for the first time in the almost 45-year 
history of this great social insurance program, we have before us a 
proposal that creates a marriage penalty in the payroll tax. Now think 
of the negative comments you get from a marriage penalty from 
grassroots America. So here we have a proposal that creates such a 
marriage penalty in the payroll tax. In other words, some married 
couples will be paying higher payroll taxes due solely to the fact that 
they are married. A tax on marriage? This is a direct result of this 
addition to the second tax rate.
  Here is another matter that boggles the mind. The second tax rate 
kicks in if your wages exceed $200,000 if you are single and $250,000 
if you are married. These dollar thresholds are not indexed. They are 
not indexed, so what happens then when you have inflation?
  Another tax where the tax base is not indexed is the AMT. That ought 
to bring back all the horror stories about not indexing something 
timely when you first pass it. I think every Member of Congress knows 
that is an annual problem for us. In the late 1990s, commentators 
called the AMT the tax system's ``ticking timebomb.'' Fortunately, my 
friend, the chairman, and I started to diffuse this bomb in the 2001 
tax legislation. It appears that my friends on the other side of the 
aisle have created another tax system ticking timebomb problem.
  Finally, we have a caboose of this tax increase express. The caboose 
is the individual mandate penalty tax. It is a tax. It can be called a 
penalty, but it is a tax. All you have to do is have the IRS collecting 
it, as it does, and you know it is a tax. President Obama does not want 
to acknowledge that the penalty for failing to maintain a government-
approved health insurance program is a tax, but it is right here in 
black and white. The Reid bill amends the Tax Code by adding a new 
excise tax. It is payable by those Americans who do not purchase 
government-approved health insurance.
  I ask unanimous consent to place section 1501 of the Reid amendment 
in the Record, which adds this new excise tax to our tax laws.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           Subtitle F--Shared Responsibility for Health Care

                   PART I--INDIVIDUAL RESPONSIBILITY

     SEC. 1501. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL 
                   COVERAGE.

       (a) Findings.--Congress makes the following findings:
       (1) In general.--The individual responsibility requirement 
     provided for in this section (in this subsection referred to 
     as the ``requirement'') is commercial and economic in nature, 
     and substantially affects interstate commerce, as a result of 
     the effects described in paragraph (2).
       (2) Effects on the national economy and interstate 
     commerce.--The effects described in this paragraph are the 
     following:
       (A) The requirement regulates activity that is commercial 
     and economic in nature: economic and financial decisions 
     about how and when health care is paid for, and when health 
     insurance is purchased.
       (B) Health insurance and health care services are a 
     significant part of the national economy. National health 
     spending is projected to increase from $2,500,000,000,000, or 
     17.6 percent of the economy, in 2009 to $4,700,000,000,000 in 
     2019. Private health insurance spending is projected to be 
     $854,000,000,000 in 2009, and pays for medical supplies, 
     drugs, and equipment that are shipped in interstate commerce. 
     Since most health insurance is sold by national or regional 
     health insurance companies, health insurance is sold in 
     interstate commerce and claims payments flow through 
     interstate commerce.
       (C) The requirement, together with the other provisions of 
     this Act, will add millions of new consumers to the health 
     insurance market, increasing the supply of, and demand for, 
     health care services. According to the Congressional Budget 
     Office, the requirement will increase the number and share of 
     Americans who are insured.
       (D) The requirement achieves near-universal coverage by 
     building upon and strengthening the private employer-based 
     health insurance system, which covers 176,000,000 Americans 
     nationwide. In Massachusetts, a similar requirement has 
     strengthened private employer-based coverage: despite the 
     economic downturn, the number of workers offered employer-
     based coverage has actually increased.
       (E) Half of all personal bankruptcies are caused in part by 
     medical expenses. By significantly increasing health 
     insurance coverage, the requirement, together with the other 
     provisions of this Act, will improve financial security for 
     families.
       (F) Under the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1001 et seq.), the Public Health Service Act 
     (42 U.S.C. 201 et seq.), and this Act, the Federal Government 
     has a significant role in regulating health insurance which 
     is in interstate commerce.
       (G) Under sections 2704 and 2705 of the Public Health 
     Service Act (as added by section 1201 of this Act), if there 
     were no requirement, many individuals would wait to purchase 
     health insurance until they needed care. By significantly 
     increasing health insurance coverage, the requirement, 
     together with the other provisions of this Act, will minimize 
     this adverse selection and broaden the health insurance risk 
     pool to include healthy individuals, which will lower health 
     insurance premiums. The requirement is essential to creating 
     effective health insurance markets in which improved health 
     insurance products that are guaranteed issue and do not 
     exclude coverage of pre-existing conditions can be sold.
       (H) Administrative costs for private health insurance, 
     which were $90,000,000,000 in 2006, are 26 to 30 percent of 
     premiums in the current individual and small group markets. 
     By significantly increasing health insurance coverage and the 
     size of purchasing pools, which will increase economies of 
     scale, the requirement, together with the other provisions of 
     this Act, will significantly reduce administrative costs and 
     lower health insurance premiums. The requirement is essential 
     to creating effective health insurance markets that do not 
     require underwriting and eliminate its associated 
     administrative costs.
       (3) Supreme court ruling.--In United States v. South-
     Eastern Underwriters Association (322 U.S. 533 (1944)), the 
     Supreme Court of the United States ruled that insurance is 
     interstate commerce subject to Federal regulation.
       (b) In General.--Subtitle D of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     chapter:

        ``CHAPTER 48--MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE

``Sec. 5000A. Requirement to maintain minimum essential coverage.

     ``SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL 
                   COVERAGE.

       ``(a) Requirement to Maintain Minimum Essential Coverage.--
     An applicable individual shall for each month beginning after 
     2013 ensure that the individual, and any dependent of the 
     individual who is an applicable individual, is covered under 
     minimum essential coverage for such month.
       ``(b) Shared Responsibility Payment.--
       ``(1) In general.--If an applicable individual fails to 
     meet the requirement of subsection (a) for 1 or more months 
     during any calendar year beginning after 2013, then, except 
     as provided in subsection (d), there is hereby imposed a 
     penalty with respect to the individual in the amount 
     determined under subsection (c).
       ``(2) Inclusion with return.--Any penalty imposed by this 
     section with respect to any month shall be included with a 
     taxpayer's return under chapter 1 for the taxable year which 
     includes such month.
       ``(3) Payment of penalty.--If an individual with respect to 
     whom a penalty is imposed by this section for any month--
       ``(A) is a dependent (as defined in section 152) of another 
     taxpayer for the other taxpayer's taxable year including such 
     month, such other taxpayer shall be liable for such penalty, 
     or
       ``(B) files a joint return for the taxable year including 
     such month, such individual and the spouse of such individual 
     shall be jointly liable for such penalty.
       ``(c) Amount of Penalty.--
       ``(1) In general.--The penalty determined under this 
     subsection for any month with respect to any individual is an 
     amount equal to \1/12\ of the applicable dollar amount for 
     the calendar year.
       ``(2) Dollar limitation.--The amount of the penalty imposed 
     by this section on any taxpayer for any taxable year with 
     respect to all individuals for whom the taxpayer is liable 
     under subsection (b)(3) shall not exceed an amount equal to 
     300 percent the applicable dollar amount (determined without 
     regard to paragraph (3)(C)) for the calendar year with or 
     within which the taxable year ends.
       ``(3) Applicable dollar amount.--For purposes of paragraph 
     (1)--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), the applicable dollar amount is $750.
       ``(B) Phase in.--The applicable dollar amount is $95 for 
     2014 and $350 for 2015.
       ``(C) Special rule for individuals under age 18.--If an 
     applicable individual has not attained the age of 18 as of 
     the beginning of

[[Page S12769]]

     a month, the applicable dollar amount with respect to such 
     individual for the month shall be equal to one-half of the 
     applicable dollar amount for the calendar year in which the 
     month occurs.
       ``(D) Indexing of amount.--In the case of any calendar year 
     beginning after 2016, the applicable dollar amount shall be 
     equal to $750, increased by an amount equal to--
       ``(i) $750, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year, determined by 
     substituting `calendar year 2015' for `calendar year 1992' in 
     subparagraph (B) thereof.
     If the amount of any increase under clause (i) is not a 
     multiple of $50, such increase shall be rounded to the next 
     lowest multiple of $50.
       ``(4) Terms relating to income and families.--For purposes 
     of this section--
       ``(A) Family size.--The family size involved with respect 
     to any taxpayer shall be equal to the number of individuals 
     for whom the taxpayer is allowed a deduction under section 
     151 (relating to allowance of deduction for personal 
     exemptions) for the taxable year.
       ``(B) Household income.--The term `household income' means, 
     with respect to any taxpayer for any taxable year, an amount 
     equal to the sum of--
       ``(i) the modified gross income of the taxpayer, plus
       ``(ii) the aggregate modified gross incomes of all other 
     individuals who--

       ``(I) were taken into account in determining the taxpayer's 
     family size under paragraph (1), and
       ``(II) were required to file a return of tax imposed by 
     section 1 for the taxable year.

       ``(C) Modified gross income.--The term `modified gross 
     income' means gross income--
       ``(i) decreased by the amount of any deduction allowable 
     under paragraph (1), (3), (4), or (10) of section 62(a),
       ``(ii) increased by the amount of interest received or 
     accrued during the taxable year which is exempt from tax 
     imposed by this chapter, and
       ``(iii) determined without regard to sections 911, 931, and 
     933.
       ``(D) Poverty line.--
       ``(i) In general.--The term `poverty line' has the meaning 
     given that term in section 2110(c)(5) of the Social Security 
     Act (42 U.S.C. 1397jj(c)(5)).
       ``(ii) Poverty line used.--In the case of any taxable year 
     ending with or within a calendar year, the poverty line used 
     shall be the most recently published poverty line as of the 
     1st day of such calendar year.
       ``(d) Applicable Individual.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable individual' means, 
     with respect to any month, an individual other than an 
     individual described in paragraph (2), (3), or (4).
       ``(2) Religious exemptions.--
       ``(A) Religious conscience exemption.--Such term shall not 
     include any individual for any month if such individual has 
     in effect an exemption under section 1311(d)(4)(H) of the 
     Patient Protection and Affordable Care Act which certifies 
     that such individual is a member of a recognized religious 
     sect or division thereof described in section 1402(g)(1) and 
     an adherent of established tenets or teachings of such sect 
     or division as described in such section.
       ``(B) Health care sharing ministry.--
       ``(i) In general.--Such term shall not include any 
     individual for any month if such individual is a member of a 
     health care sharing ministry for the month.
       ``(ii) Health care sharing ministry.--The term `health care 
     sharing ministry' means an organization--

       ``(I) which is described in section 501(c)(3) and is exempt 
     from taxation under section 501(a),
       ``(II) members of which share a common set of ethical or 
     religious beliefs and share medical expenses among members in 
     accordance with those beliefs and without regard to the State 
     in which a member resides or is employed,
       ``(III) members of which retain membership even after they 
     develop a medical condition,
       ``(IV) which (or a predecessor of which) has been in 
     existence at all times since December 31, 1999, and medical 
     expenses of its members have been shared continuously and 
     without interruption since at least December 31, 1999, and
       ``(V) which conducts an annual audit which is performed by 
     an independent certified public accounting firm in accordance 
     with generally accepted accounting principles and which is 
     made available to the public upon request.

       ``(3) Individuals not lawfully present.--Such term shall 
     not include an individual for any month if for the month the 
     individual is not a citizen or national of the United States 
     or an alien lawfully present in the United States.
       ``(4) Incarcerated individuals.--Such term shall not 
     include an individual for any month if for the month the 
     individual is incarcerated, other than incarceration pending 
     the disposition of charges.
       ``(e) Exemptions.--No penalty shall be imposed under 
     subsection (a) with respect to--
       ``(1) Individuals who cannot afford coverage.--
       ``(A) In general.--Any applicable individual for any month 
     if the applicable individual's required contribution 
     (determined on an annual basis) for coverage for the month 
     exceeds 8 percent of such individual's household income for 
     the taxable year described in section 1412(b)(1)(B) of the 
     Patient Protection and Affordable Care Act. For purposes of 
     applying this subparagraph, the taxpayer's household income 
     shall be increased by any exclusion from gross income for any 
     portion of the required contribution made through a salary 
     reduction arrangement.
       ``(B) Required contribution.--For purposes of this 
     paragraph, the term `required contribution' means--
       ``(i) in the case of an individual eligible to purchase 
     minimum essential coverage consisting of coverage through an 
     eligible-employer-sponsored plan, the portion of the annual 
     premium which would be paid by the individual (without regard 
     to whether paid through salary reduction or otherwise) for 
     self-only coverage, or
       ``(ii) in the case of an individual eligible only to 
     purchase minimum essential coverage described in subsection 
     (f)(1)(C), the annual premium for the lowest cost bronze plan 
     available in the individual market through the Exchange in 
     the State in the rating area in which the individual resides 
     (without regard to whether the individual purchased a 
     qualified health plan through the Exchange), reduced by the 
     amount of the credit allowable under section 36B for the 
     taxable year (determined as if the individual was covered by 
     a qualified health plan offered through the Exchange for the 
     entire taxable year).
       ``(C) Special rules for individuals related to employees.--
     For purposes of subparagraph (B)(i), if an applicable 
     individual is eligible for minimum essential coverage through 
     an employer by reason of a relationship to an employee, the 
     determination shall be made by reference to the affordability 
     of the coverage to the employee.
       ``(D) Indexing.--In the case of plan years beginning in any 
     calendar year after 2014, subparagraph (A) shall be applied 
     by substituting for `8 percent' the percentage the Secretary 
     of Health and Human Services determines reflects the excess 
     of the rate of premium growth between the preceding calendar 
     year and 2013 over the rate of income growth for such period.
       ``(2) Taxpayers with income under 100 percent of poverty 
     line.--Any applicable individual for any month during a 
     calendar year if the individual's household income for the 
     taxable year described in section 1412(b)(1)(B) of the 
     Patient Protection and Affordable Care Act is less than 100 
     percent of the poverty line for the size of the family 
     involved (determined in the same manner as under subsection 
     (b)(4)).
       ``(3) Members of indian tribes.--Any applicable individual 
     for any month during which the individual is a member of an 
     Indian tribe (as defined in section 45A(c)(6)).
       ``(4) Months during short coverage gaps.--
       ``(A) In general.--Any month the last day of which occurred 
     during a period in which the applicable individual was not 
     covered by minimum essential coverage for a continuous period 
     of less than 3 months.
       ``(B) Special rules.--For purposes of applying this 
     paragraph--
       ``(i) the length of a continuous period shall be determined 
     without regard to the calendar years in which months in such 
     period occur,
       ``(ii) if a continuous period is greater than the period 
     allowed under subparagraph (A), no exception shall be 
     provided under this paragraph for any month in the period, 
     and
       ``(iii) if there is more than 1 continuous period described 
     in subparagraph (A) covering months in a calendar year, the 
     exception provided by this paragraph shall only apply to 
     months in the first of such periods.
     The Secretary shall prescribe rules for the collection of the 
     penalty imposed by this section in cases where continuous 
     periods include months in more than 1 taxable year.
       ``(5) Hardships.--Any applicable individual who for any 
     month is determined by the Secretary of Health and Human 
     Services under section 1311(d)(4)(H) to have suffered a 
     hardship with respect to the capability to obtain coverage 
     under a qualified health plan.
       ``(f) Minimum Essential Coverage.--For purposes of this 
     section--
       ``(1) In general.--The term `minimum essential coverage' 
     means any of the following:
       ``(A) Government sponsored programs.--Coverage under--
       ``(i) the Medicare program under part A of title XVIII of 
     the Social Security Act,
       ``(ii) the Medicaid program under title XIX of the Social 
     Security Act,
       ``(iii) the CHIP program under title XXI of the Social 
     Security Act,
       ``(iv) the TRICARE for Life program,
       ``(v) the veteran's health care program under chapter 17 of 
     title 38, United States Code, or
       ``(vi) a health plan under section 2504(e) of title 22, 
     United States Code (relating to Peace Corps volunteers).
       ``(B) Employer-sponsored plan.--Coverage under an eligible 
     employer-sponsored plan.
       ``(C) Plans in the individual market.--Coverage under a 
     health plan offered in the individual market within a State.
       ``(D) Grandfathered health plan.--Coverage under a 
     grandfathered health plan.
       ``(E) Other coverage.--Such other health benefits coverage, 
     such as a State health benefits risk pool, as the Secretary 
     of Health and Human Services, in coordination with

[[Page S12770]]

     the Secretary, recognizes for purposes of this subsection.
       ``(2) Eligible employer-sponsored plan.--The term `eligible 
     employer-sponsored plan' means, with respect to any employee, 
     a group health plan or group health insurance coverage 
     offered by an employer to the employee which is--
       ``(A) a governmental plan (within the meaning of section 
     2791(d)(8) of the Public Health Service Act), or
       ``(B) any other plan or coverage offered in the small or 
     large group market within a State.
     Such term shall include a grandfathered health plan described 
     in paragraph (1)(D) offered in a group market.
       ``(3) Excepted benefits not treated as minimum essential 
     coverage.--The term `minimum essential coverage' shall not 
     include health insurance coverage which consists of coverage 
     of excepted benefits--
       ``(A) described in paragraph (1) of subsection (c) of 
     section 2791 of the Public Health Service Act; or
       ``(B) described in paragraph (2), (3), or (4) of such 
     subsection if the benefits are provided under a separate 
     policy, certificate, or contract of insurance.
       ``(4) Individuals residing outside united states or 
     residents of territories.--Any applicable individual shall be 
     treated as having minimum essential coverage for any month--
       ``(A) if such month occurs during any period described in 
     subparagraph (A) or (B) of section 911(d)(1) which is 
     applicable to the individual, or
       ``(B) if such individual is a bona fide resident of any 
     possession of the United States (as determined under section 
     937(a)) for such month.
       ``(5) Insurance-related terms.--Any term used in this 
     section which is also used in title I of the Patient 
     Protection and Affordable Care Act shall have the same 
     meaning as when used in such title.
       ``(g) Administration and Procedure.--
       ``(1) In general.--The penalty provided by this section 
     shall be paid upon notice and demand by the Secretary, and 
     except as provided in paragraph (2), shall be assessed and 
     collected in the same manner as an assessable penalty under 
     subchapter B of chapter 68.
       ``(2) Special rules.--Notwithstanding any other provision 
     of law--
       ``(A) Waiver of criminal penalties.--In the case of any 
     failure by a taxpayer to timely pay any penalty imposed by 
     this section, such taxpayer shall not be subject to any 
     criminal prosecution or penalty with respect to such failure.
       ``(B) Limitations on liens and levies.--The Secretary shall 
     not--
       ``(i) file notice of lien with respect to any property of a 
     taxpayer by reason of any failure to pay the penalty imposed 
     by this section, or
       ``(ii) levy on any such property with respect to such 
     failure.''.
       (c) Clerical Amendment.--The table of chapters for subtitle 
     D of the Internal Revenue Code of 1986 is amended by 
     inserting after the item relating to chapter 47 the following 
     new item:

      ``Chapter 48--Maintenance of Minimum Essential Coverage.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2013.

  Mr. GRASSLEY. The kicker here is that CBO has told Congress that 
roughly one-half of those Americans who will pay this tax are 
individuals between 100 and 300 percent of poverty. These folks earn 
less than $250,000 a year. I see the light at the end of the tunnel 
that this tax increase express is going through. Unfortunately, that 
light at the end of the tunnel is the tax increase express.
  We can derail the tax increase express if we want to.
  That is why today I am supporting Senator Crapo's motion to commit 
the Reid amendment to the Senate Finance Committee. Senator Crapo's 
motion would require the Finance Committee report a bill back to the 
Senate that does not include tax increases, fees, and penalties 
included in the Reid bill.
  Why should my Democratic friends vote in favor of the motion? Because 
they shouldn't want to bear the fallout of legislation that was rushed 
through Congress as the economic stimulus package was back in February. 
They shouldn't want to tell their constituents they voted in favor of a 
bill that increased their premiums. They shouldn't want to vote for a 
bill that raises taxes on many, only to provide benefit for a few. They 
shouldn't want to break President Obama's pledge not to tax people 
making less than $250,000 a year.
  What my friends should want is real health care reform, the kind of 
reform that has broad bipartisan support. I have consistently said that 
if Congress wants to restructure one-sixth of the economy, it ought to 
be done on a bipartisan basis, and that is not one or two Republicans 
voting with Democrats. That is not happening around here on a 
bipartisan basis. We are debating this 2,074-page bill, a partisan 
product, a bill that was cobbled together by the Democratic leadership, 
a bill that has not received approval of the Senate Finance Committee.
  I ask my Democratic friends to stop this process foul right now. Vote 
in favor of Senator Crapo's motion so we can do health care reform in 
the right way: on a bipartisan basis, in a transparent and open way, so 
that the American public can understand what we are doing; so the 
American public can be a part of the process; so that we can find a way 
to reform our health care system without burdening our constituents 
with these higher taxes, fees, and penalties.
  Let's reduce the out-of-control spending in the Reid amendment and 
find savings within the health care system. Let's derail the tax 
increase express before it steamrolls over hard-working Americans and 
discourages employment, particularly employment in small business, 
where 70 percent of the new jobs are created. The taxes, fees, and 
penalties don't need to be the fuel of this locomotive fire.
  I ask all of my colleagues to support Senator Crapo's motion to 
commit the Reid bill to the Finance Committee.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Madam President, the amendment we are now considering is 
an amendment I have offered that deals with drug importation; that is, 
the importation of prescription drugs from other countries. One might 
ask the question: Well, why would we want to import drugs from other 
countries? FDA-approved drugs are made all over the world and they are 
shipped all over the world; again, FDA-approved drugs, approved by our 
Food and Drug Administration, produced in plants that are inspected by 
our Food and Drug Administration. The difference is--the only 
difference is--when they are shipped around the world, the American 
consumer is charged the highest prices in the world by far.
  Here is an example of the drug Lipitor. There are plenty of examples 
and I will go through a number of them today, but this is an example of 
Lipitor. For an equivalent amount of Lipitor, 20 milligram tablets, the 
U.S. consumer pays $125, the British pay $40, the Spanish pay $32, the 
Canadians pay $33, the Germans pay $48. We are charged the highest 
prices in the world for Lipitor. Lipitor, by the way, is the most 
popular cholesterol-lowering drug. I have a couple of empty bottles in 
the desk drawer here that demonstrates this drug was produced in 
Ireland. It was sent all around the world. The same pill put in the 
same bottle made by the same company, approved by our Food and Drug 
Administration, this was sent to Canada, this was sent to the United 
States. The difference? Well, the American consumer was allowed to pay 
three times as much as the Canadian consumer. I shouldn't say 
``allowed,'' I should say forced. But it is not just United States 
versus Canada. As we can see, it is United States versus every other 
country.
  The question is, Should that be the case? Should the American 
consumer be charged the highest prices in the world? My answer to that 
is no. Why is it the case that we are charged the highest prices in the 
world? Because we are the only country in which there is a special 
little law that prevents our citizens from accessing that FDA-approved 
drug from wherever it is sold at the most advantageous price. We have a 
provision in law that says the American people don't have the freedom 
to import a prescription drug, an FDA-approved drug that they find for 
half the price or 20 percent of the price in some other country. I say, 
give the American people the freedom. I hear so much discussion on the 
floor of the Senate about freedom. This is the ultimate freedom: the 
freedom of the American people to access those prescription drugs that 
are sold virtually everywhere else, brand-name prescription drugs at 
the fraction of the price.
  I have examples of other prescription drugs as well to show you. It 
is not just Lipitor, although Lipitor is the most popular cholesterol-
lowering drug.
  This is Plavix. Plavix is an anticoagulant. You will see that we pay 
higher than all of these countries by

[[Page S12771]]

far; more than double what the British pay, more than double what the 
Spanish pay.
  This is Nexium. If you are someone who has ulcers and you are taking 
Nexium, for an equivalent amount of the same drug, Nexium, you are 
charged $424 if you are an American citizen, $40 for the British, $36 
for the Spanish, $37 for the Germans, $67 for the French. The American 
consumer, trying to control their condition of ulcers, pays $424--10 
times the amount of money that others are paying for the identical 
drug--10 times.
  This kind of what I believe is gouging--that is, a pricing strategy 
that gouges the American consumer--can largely be resolved by the 
amendment I have offered. It removes that little sweetheart impediment 
in law and says to the American people: You may import prescription 
drugs that are FDA-approved from registered enterprises in other 
countries. We specifically delineate which countries those are--there 
are a handful of them--that have a nearly identical drug approval 
process that we have in our country. Identical. We also put in this 
amendment unbelievable safety provisions dealing with pedigree and 
batch lots and tracers that don't exist now in our domestic drug 
supply, let alone importation.
  So if we were allowing the American people to do this, the 
Congressional Budget Office says my amendment will save $19 billion--
$19 billion--for the Federal Government over the next 10 years, but 
about somewhere around $80 billion for American consumers above that. 
That is a pretty big savings.

  Here is another chart that shows what has happened in addition to the 
fact that we are charged the highest drug prices in the world. What has 
happened in recent months, in 2009, is that brand-name prescription 
drugs have increased in price over 9 percent, at a time when there is 
virtually no inflation. For Enbrel, for arthritis, you get to pay 12 
percent more; for Singulair, 12 percent more; and for Boniva, for 
osteoporosis, by the way, you are paying 18 percent more just this 
year. That is what is happening. There is nothing in any of the health 
care plans considered by the Senate or the House that addresses the 
escalating price of prescription drugs.
  There are a whole lot of folks in this country who are not senior 
citizens and are taking drugs to manage their disease. They may take 
cholesterol-lowering medicine or medicine to lower their blood 
pressure. They manage their health issues, and they don't have to go to 
a hospital because they are doing the right things. They are doing it 
with pharmaceuticals. The problem is, pharmaceutical prices are going 
up, up, up, way up above what other people in the world are paying for 
the identical drugs. I am saying it is just not fair. The issue is not 
that the pharmaceutical industry is a bad one or that they are infested 
with bad companies. I just think they have bad pricing policies. They 
are able to, and therefore they do, charge the American people, by far, 
the highest prices in the world.
  I wish to talk about a couple of important issues with respect to 
this issue of giving the American people the freedom to access or 
purchase that FDA-approved drug in selected countries in which the drug 
safety regulatory system is identical to ours, which is in our bill. 
And our bill includes, as I said, the establishment of pedigrees for 
batch lots and tracers that don't exist today for our drug supply.
  Some say and allege that you cannot do this safely, that it causes 
all kinds of problems with counterfeiting and so on. The fact is, the 
Europeans have been doing it safely for 20 years. For over two decades, 
in Europe, under what is called parallel trading, if you are a German 
and want to buy a prescription drug in Spain, you can do it through the 
parallel trading system. If you are in Italy and you want to buy a 
prescription drug from France, there is no problem, you can do it. They 
have done that safely for a long time. To suggest that we don't have 
the skill and capability to do what the Europeans have been doing 
routinely for 20 years is, in my judgment, shortchanging our country 
and certainly our consumers. I think we will, however, have people 
allege again that this is risky, it is just risky.
  I would like to make a point about risk because I want to demonstrate 
something that I think most people don't know. Forty percent of the 
active ingredients of our existing prescription drugs come from China 
and India. Again, 40 percent of those active ingredients come from 
China and India and in most instances from areas that have never been 
inspected. My amendment doesn't allow drugs to be imported into this 
country from China or India. I am talking about the ingredients the 
pharmaceutical industry acquires with which to make their drugs. We 
don't allow drugs to be imported from China or India as a matter of 
this amendment; only FDA-approved drugs from FDA-inspected plants in 
Canada, the European countries, Japan, New Zealand, or Australia. That 
is all. Why? Because they have similar drug safety standards. That is 
the basis on which we determine how importation could work safely.
  I wish to describe a recent scandal that illustrates the double 
standard some want to apply to this question. The scandal was about a 
drug called Heparin, a blood thinner that is commonly used by dialysis 
patients, which was linked to more than 62 deaths last year. Heparin 
was ultimately pulled from the market. According to Baxter, which 
markets Heparin in the United States, the allergic reactions to Heparin 
that caused the deaths appear to be caused by a contaminant added in 
place of the active ingredient in Heparin somewhere during the 
manufacturing process, most likely in China.
  The Wall Street Journal did a very important story on the Heparin 
contamination. They reported that more than half of the world's Heparin 
gets its start in China's poorly regulated supply chain. This is what 
the Wall Street Journal, after its investigation, concluded:

       More than half of the world's Heparin, the main ingredient 
     in this widely used anti-clotting medicine, gets its start in 
     China's totally unregulated supply chain.

  The Wall Street Journal published a series of pictures that I want to 
show--photographs of the intestine encasing factory which processes pig 
intestines used to make Heparin. I want to show some photographs that 
came from the Wall Street Journal. This is a photograph of a facility, 
and that is the outside. Here is a photograph of someone in the 
facility who is stirring a rusty vat full of Heparin ingredients with a 
tree branch. So this is the processing of Heparin from pig intestines 
in a facility in China, in which a worker is stirring this rusty vat 
with a tree branch. Are the ingredients that are used to make medicine 
with respect to blood clotting an issue?
  When the industry and others say we can't have drug importation 
safely from Canada or Ireland, the point is that they are getting a lot 
of their ingredients from China and India. All you have to do is simply 
look at this and ask yourself whether the domestic drug supply with 
respect to that ingredient and those inputs has sufficient safety.
  While the record keeping at these Chinese facilities makes it almost 
impossible to trace the contaminant from this particular factory, these 
pictures by the Wall Street Journal show the unsanitary conditions in 
which pig intestines are processed for that particular medicine. Again, 
by contrast, the amendment we offer would allow the importation of FDA-
approved medicines only, with a chain of custody to ensure the drugs 
are handled properly. It gives the FDA the authority to inspect all 
facilities in the chain of custody.
  The amendment mandates the use of anticounterfeiting technology to 
track and trace imported and domestic drugs to ensure product 
integrity. That doesn't exist today, but that is required in the 
amendment. The amendment also requires pharmacies and drug wholesalers 
to register with the FDA and to be subject to strict requirements to 
ensure the safety of imported medications, including frequent random 
inspections.
  The amendment I am offering would ensure safety and, in fact, provide 
a much greater margin of safety than now exists with all of our drug 
supply. We need to have these improvements, in my judgment, because our 
own prescription drug distribution system is not as good as we think it 
is.
  Here is an excellent example of something that took place in the 
United States. This is a picture of Mr. Tim

[[Page S12772]]

Fagan, a young 16-year-old boy from Long Island, NY. He received a 
liver transplant. He was prescribed a drug called Epogen to boost his 
red blood cells and fight the anemia after the operation. He received 
daily inspections, but his red blood cell count wasn't improving and 
the doctors could not figure out why, what was happening. After 2 
months, his mom went to the local CVS pharmacy, where she was told: By 
the way, the Epogen your son has been taking may have been counterfeit.
  Here is an example of counterfeiting in the existing domestic drug 
supply--counterfeiting in which this container held the counterfeit 
medicine and this one held the real medicine. There were subtle 
differences but not many. It turned out that the vial Tim was injecting 
was one-twentieth the strength of what he was supposed to be taking and 
what was disclosed on the label.
  How did that happen? The weaker drug sells for $22 a bottle, and the 
high-strength version goes for $445 a bottle. Investigators found that 
110,000 of the bogus bottles of that medicine reached the market in 
this country, and it is estimated that the criminals involved with that 
counterfeiting in that particular case made $46 million.
  The manufacturer of that drug, a company called Amgen, had 
distributed some of the product through a complicated network of 
secondary distributors. Although nobody knew it at the time, some of 
the Epogen that was eventually resold had most likely run through a 
cooler in the back of this strip club, a seedy Miami strip club called 
Playpen South.
  Here is a chart that shows the distribution system this particular 
counterfeit drug went through. Again, this is not an import; this is a 
domestic drug. You can see this unbelievable and complicated 
distribution system. At the end of that, it traveled through strip 
clubs, through homes, and through trunks of cars without proper 
cooling.

  This story was told in great detail by some outstanding investigation 
by Katherine Eban in a book called ``Dangerous Doses.''
  The PRESIDING OFFICER. The majority's time has expired.
  Mr. DORGAN. I ask unanimous consent to extend the period of debate 
until 3 p.m., with the time to be equally divided, with Senators 
permitted to speak therein for up to 10 minutes each, with no 
amendments in order during this time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. I ask unanimous consent to speak for as much time as I 
may consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, again talking about the issue I just 
described:

       They traveled through strip clubs. They traveled through 
     homes. They traveled through trunks of cars, without proper 
     cooling.

  I am talking about a domestic counterfeit drug supply.
  The amendment we are offering would fix this supply chain problem. It 
will require a pedigree for all drugs, not just those imported. It 
should have been done long ago. Some of us have been trying for a long 
time. It will allow us to track every single drug from where it is made 
to the pharmacy in which it is sold.
  My amendment will require a set of anti-counterfeiting measures that 
are not in place now. If you think of it, I have a twenty-dollar bill 
here, and most people who have looked at them understand there is 
sophisticated and substantial anti-counterfeiting technology in new 
twenty-dollar bills. That doesn't exist today, by the way. That 
sophistication, that relentless search for the ability to detect 
counterfeiting does not exist today, regrettably, in our drug supply. 
The pedigree that we require, the tracing capability, the batch lots 
will make that a requirement on our entire drug supply.
  This amendment will make our entire drug supply safer. It will allow 
Americans to benefit from lower prices--the prices at which these 
identical drugs are sold in other countries. In many cases they are 
half the price and in some cases much lower--10 percent of the price at 
which they are sold in this country.
  I wish to talk for a moment about the issue of drug price inflation 
because the drug price--what is happening to us in this country is drug 
price inflation, the relentless increases year after year, which is the 
red line here on the chart. It is 9.3 percent this year. This yellow 
line is the rate of inflation. If we don't do anything to deal with the 
price of prescription drugs, we will have missed the opportunity to do 
something to help the American people.
  Let me describe a few stories about the need for the amendment.
  In my home State, in Aneta, ND, Maryanne wrote to me:

       My husband has Parkinson's Disease, so he takes a drug 
     called Mirapex. We have Medicare Part D, but in September, he 
     ends up in the so-called donut hole. In 2008, when this 
     happened, we paid $106 for his medication. It increased to 
     $187 in October and November, $198 in December. Now, in 
     September 2009, the price was $286--a $180 increase in one 
     year.

  Mr. McCAIN. Will the Senator yield for a question?
  Mr. DORGAN. Yes.
  Mr. McCAIN. The Senator, I know, is aware and has talked about this. 
How does the Senator account for the fact that there is a nearly 9-
percent increase in the cost of pharmaceutical drugs, while the 
consumer price index this year has gone down 1.3 percent?
  I understand this is the highest increase in the history, or in most 
recent years, in the cost of prescription drugs. What is the 
explanation between the divergence of those two lines?
  Mr. DORGAN. The explanation, I suppose, is probably better addressed 
to the pharmaceutical industry of how and why do they increase these 
prices this way. My guess is they do it because they can.
  The fact is, the cost-of-living index--the inflation rate is the 
yellow line. The price of prescription drugs is the red line.
  Mr. McCAIN. Would that have anything to do with the anticipation of 
incoming reductions or reductions in the increase of costs of 
pharmaceuticals?
  Mr. DORGAN. I say to the Senator from Arizona, my expectation is the 
pharmaceutical industry has said this is the time to increase these 
prices. The most important element is there is no restraint. No one has 
any capability of restraining them. The only way you would provide 
restraint on this is if you said to the American consumer: You know 
what. You don't have to buy it from these people at these prices 
because it is sold in virtually every other country at half the price. 
If we say to the American people, we will give them the freedom to 
access that drug elsewhere, I think quickly the pharmaceutical industry 
would not be able to impose those price increases because then you 
would have competition. Freedom equals competition, in my judgment, on 
this issue.
  Mr. McCAIN. May I ask the Senator another question. We understand you 
can buy lettuce from overseas. You can buy many other products from 
overseas. You can buy dairy products. You can buy almost any item 
except perhaps prescription drugs. Yet the Canadians, in particular, as 
well as the countries that are included in the Senator's amendment, all 
adhere to the same standards or higher standards than the United States 
of America does.
  Now I understand one of the Senators--not the Senator from North 
Dakota--has received a letter saying this is still a problem.
  I don't get it. Maybe the Senator from North Dakota can explain it a 
little better.
  Mr. DORGAN. I say to the Senator from Arizona, there is not a safety 
issue here. To the extent there is any safety issue, it is that we 
intend to increase the safety of both domestic supply of prescription 
drugs and the imported prescription drugs because the fact is, there is 
nothing at this point dealing with batch lots and pedigrees and tracing 
capability. That does not exist at this point. We will insist on it in 
this amendment.
  For anybody to suggest that somehow we are going to end up with 
prescription drug products that are less safe, that is just not the 
fact. As I indicated before the Senator came to the floor, Europe has 
been doing this for 20 years in something called parallel trading. For 
20 years, they have done it. If you are in Germany and want to buy a 
prescription drug that is approved, you can. If you are in Italy and 
want to buy

[[Page S12773]]

it from France, you can. They do it successfully.
  I do not believe anybody should tell us we are not capable of doing 
what the Europeans have done for 20 years, and that is giving people 
the freedom to access prescription drugs where they are sold at a 
better price.
  Mr. McCAIN. May I ask the Senator another question. Isn't it true a 
letter was written to one of our colleagues from the Administrator of 
the FDA, the organization that would basically make sure any product 
that goes to American consumers along these lines, that go through that 
bureaucracy, said it would require a significant amount of assets and 
resources?
  I have since been told there are 11,000 employees of that 
bureaucracy. I wonder what he thinks about that argument; and, again, 
was the Senator from North Dakota informed about this position, which, 
by the way, is the same position as the previous administration?
  Mr. DORGAN. Madam President, the Senator from Arizona is correct. 
There was a letter from the Food and Drug Administration. The fact is, 
we have seen this over the years. They say: We don't have the resources 
or it will pose more risk.
  The fact is, this amendment provides the resources for them because 
those who are going to register to ship FDA-approved drugs into this 
country at a better price are going to have to pay a fee. The people 
who are selling will pay a fee, and those pharmacies and others in our 
country that will be receiving them will also pay a fee.
  Mr. McCAIN. So it would require no additional funding from the 
taxpayers.
  Mr. DORGAN. No additional funding from the taxpayers at all. Those 
who decide they are going to offer these lower price prescription drugs 
would be paying a fee for the purpose of being able to do that. This is 
not a taxpayer-funded issue at all. It will provide the additional 
resources and pay for those resources without asking the taxpayers to 
come up with the money.
  Mr. McCAIN. Do these countries that are included in the Senator's 
amendment--do we have absolute assurance, can we look at the American 
people and say: Those countries and the agreements we would have with 
them, you can have products that are safe, you can safely buy, and it 
would not pose any hazard to anyone's health?
  Mr. DORGAN. The countries that are involved in this amendment--and 
they are limited--are countries that have nearly identical drug safety 
standards to our country. These are countries that are accessing the 
same drugs.
  I just mentioned--let me do it again--two bottles of medicine. They 
are empty, obviously. Both of these bottles contain Lipitor. Most of my 
colleagues know what Lipitor is. This was made by an American company 
in Ireland and then shipped all over the world. This little bottle was 
shipped to the United States. This little bottle was shipped to Canada. 
Same bottle. One was blue, one has red in the label. Same bottle, same 
company, inspected by the FDA. What is the difference? The price.
  The American consumer is told: Guess what you get to do. You get to 
pay almost triple. Why? And it is not just the American consumer, if I 
can hold up a chart that shows two drugs--one is Nexium. This is 
advertised substantially. Nexium is an example. I also have one on 
Lipitor. Here is the price for Nexium.
  Do you think the pharmaceutical industry is selling Nexium at $37 for 
the equivalent quantity in Germany and losing money? I don't think they 
are losing money at that. Instead of $37, they charge the American 
consumer $424.
  My point is my beef with the industry is their pricing policy.
  Mr. McCAIN. Wouldn't the pharmaceutical companies say it costs $424 
because we have to absorb the cost of all the research that went into 
developing Nexium?
  Mr. DORGAN. I would say that is also always raised. They say: If you 
don't allow us to charge the American consumers the highest prices in 
the world, we don't get to do the research and development that 
produces the next new miracle drug.
  Most of the recent studies have shown that the pharmaceutical 
industry spends more money on promotion, marketing, and advertising 
than they do on research. I want them to do research. But there is one 
other piece. The Congress gave, without my support, a proposal that 
said those American companies that have money overseas should bring it 
back and we will let them pay a lower tax rate. Guess which industry 
was one of the largest industries with repatriated profits from abroad? 
The pharmaceutical industry. If they are making big profits abroad and 
charging lower prices to those consumers abroad, why can't the American 
people have access to those prices?
  It is not because they are going to lose money because they made a 
lot of money abroad. That is why they repatriated at a lower rate.
  Mr. McCAIN. Do the seniors from his State and other citizens from his 
State travel to Canada and buy these prescription drugs because they 
know and are confident that they are getting, at a much lower price, 
the same product? Unfortunately, citizens in my State have to go south, 
and it is unfortunate when they have to do that because we do have a 
much larger problem there, I am sorry to say.
  Mr. DORGAN. Madam President, the citizens from North Dakota often 
have to go to Canada to buy a prescription drug. I have told the story 
about the old codger who was sitting on a hay bale in a farmyard when I 
had a town meeting. He was nibbling on a piece of straw. He said to me: 
My wife--he was about 80 years old--my wife has been fighting breast 
cancer for 3 years. He said: The only way we could pay for our 
prescription drugs was to drive to Canada once every 3 months because 
when you buy tamoxifen in Canada, you pay like one-tenth the price or 
one-fifth of the price you pay in the United States. He said: We did 
that every 3 months so my wife could keep fighting breast cancer.

  Of course they do that. What is happening is consumers are allowed to 
bring back as an informal strategy about 90 days' worth of supply of 
prescription drugs for personal use only. Most American consumers 
cannot do that. They do not live anywhere close to a border.
  The question is, Can the rest of the American people have access to 
the same prescription drugs sold at a fraction of the price?
  Mr. McCAIN. May I ask the Senator, isn't it true the Congressional 
Budget Office has determined that this measure of the Senator from 
North Dakota, this modest measure of only countries that are of the 
highest level of quality of inspection, of all the standards that we 
have, would save the American consumer $100 billion; is that true?
  Mr. DORGAN. Madam President, the Congressional Budget office says it 
will save the Federal Government about $19 billion, and then about 
another $80 billion will be saved by the consumers. That is about $100 
billion, nearly $100 billion in savings in total, $19 billion of which 
will be saved by the Federal Government for its purchases, and the rest 
by the American consumers.
  Mr. McCAIN. Finally, I wish to ask the Senator, what is the basis of 
the argument against the Senator's amendment? What possible reason, 
frankly, except for the influence of a special interest in this, our 
Nation's Capitol?
  Mr. DORGAN. I am not a very good advocate for the other side. If one 
were to ask what is the best argument opposed to my amendment, I would 
say there are not any arguments that are the best. There is a range of 
poor arguments or arguments that do not hold much water.
  I started by saying I do not have a beef against the pharmaceutical 
industry. I want them to do well. I want them to be successful. I want 
them to keep finding and searching for miracle drugs. By the way, much 
of the work they do comes from the National Institutes of Health and 
the massive investments we make in health. I want them all to be 
successful.
  My beef with them is a pricing strategy that says to the American 
people: Here is what you pay, and you can do nothing about it because 
we decided that is what you pay, and we are going to offer everything 
around the world at lower prices. That is my beef. This is a pricing 
issue. They are wrong about it.
  The way to correct it is to give the American people a little bit of 
freedom. We will save money for the government and save money for the 
American people.

[[Page S12774]]

  I want to raise one additional point while the Senator is here. If 
the Senator from Arizona is like me, when I am brushing my teeth in the 
morning, I have a television blaring and I hear all these ads: Go ask 
the doctor if the purple pill is right for you. I haven't the foggiest 
idea what a purple pill will do for me. The ads are so compelling you 
almost feel: I have to get out of here. I have to stop brushing my 
teeth, go get a phone, and call my doctor to see if my life might be 
improved by taking a purple pill.
  I read a whole series of advertisements:

       Does your restless mind keep you from sleeping? Do you lie 
     awake exhausted? Maybe it's time to ask if Lunesta is right 
     for you. Ask your doctor how to get 7 nights of Lunesta free 
     . . .

  I read a bunch of these. I will not now. Bladder problems, Flomax, 
Ambien--you name it and they advertise it all day and every morning. I 
say knock off a little of that. Give us some better prices. God bless 
you for doing all you do, I would say to the industry, but give us fair 
prices. Give fair prices to the American consumer and knock off a 
little of the advertising. The advertising is only for a product that 
only a doctor can prescribe. You cannot get this product unless a 
doctor thinks you need it. Stop asking me if the purple pill is right 
for me, asking me to ask a doctor if the purple pill is right for 
Senator McCain. Knock it off.
  Mr. McCAIN. Mr. President, I ask unanimous consent to make an 
additional comment.
  The PRESIDING OFFICER (Mr. Udall of New Mexico). Without objection, 
it is so ordered.
  Mr. McCAIN. I thank the Senator from North Dakota who has been 
pursuing this issue for a number of years. I believe we are on the 
verge of success.
  I appreciate his eloquence, I appreciate his passion, but most of 
all, on behalf of the citizens of my State who can't get up to Canada, 
who now are experiencing unprecedented economic difficulties, and who 
need these lifesaving prescription drugs--many of them senior 
citizens--I just wish to say thank you for your advocacy.
  I think you have made an eloquent case, and I hope my colleagues have 
paid attention and will vote in the affirmative for the Senator's 
amendment today.
  Mr. DORGAN. Mr. President, let me say that Senator McCain has been a 
part of this effort for a long time. It is interesting, with all the 
action on floor of the Senate in recent weeks, this is one of the few 
examples of a significant policy that is bipartisan. We have 
Republicans and Democrats--over 30 cosponsors--who have worked with us 
to make certain we can do this, do it safely, and give the American 
people the opportunity they deserve. This is very bipartisan. I 
appreciate that a lot.
  I wish to say, the National Federation of Independent Businesses 
supports this; the AARP supports this. We have a long list of 
organizations that are strong supporters of this amendment, and so I 
hope, today, perhaps at last--at long last, after 8 or 10 years--we 
might finally achieve a breakthrough and get this through the Senate.
  I have said previously that the pharmaceutical industry is a 
formidable opponent. I understand that. We have had difficulty getting 
this in a piece of legislation to get it signed and give the American 
people freedom and give them fair pricing. When we do this--Senator 
McCain, myself, and others--it is suggested that somehow we have no 
regard for this industry. That is not the case at all. It just is not. 
We have no regard for a pricing policy, however, that we believe is 
unfair to the American people. It has been that way for too long--a 
long time too long. Perhaps today--with the vote on this amendment, 
which I expect later this afternoon--will be the first step in getting 
that changed.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. KYL. Mr. President, I believe if I am to speak for more than 10 
minutes I need to ask unanimous consent. If that is correct, I ask 
unanimous consent to speak for 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KYL. Mr. President, I wish to speak to the Crapo motion--an 
amendment that, hopefully, we will be voting on a little later today--
and I urge my colleagues to support the motion of the Senator from 
Idaho.
  This is about jobs and it is about taxes. I think one thing Americans 
don't expect out of this legislation is that they are going to have a 
pay a lot of taxes and that jobs are going to be killed rather than 
created. The President is talking about creating more jobs. Everyone in 
America is focused on putting people back to work, ending this 
recession, and bringing unemployment down so we can get jobs and go 
back to work. One of the problems with this bill is it kills jobs. It 
kills job creation. One of the ways it does that is through the many 
new taxes and mandates it imposes.
  Naturally, we want to be sure that whatever we do, we don't harm our 
economy or job creation, but this $2.5 trillion legislation is filled 
with new taxes and mandates that will ultimately be borne by small 
businesses and the American workers. I will talk about just three.
  First, a new employer mandate that says that employers have to 
provide insurance to their employees or face a penalty. This would hurt 
low-income workers especially, according to a Harvard economist, and I 
will be talking about that.
  Second, there is a new Medicare payroll tax. Incidentally, the 
revenue raised doesn't go back to Medicare. It would be nice if we 
could help with the Medicare solvency, but this too threatens the 
creation of jobs, particularly in small businesses, because it is a 
direct tax on hiring more people.
  Finally, new taxes on the health care industry could undermine its 
ongoing job creation gains. By the way, it is the only industry to have 
gained jobs since the start of the recession and this legislation will 
actually cause job losses.
  I will describe all three of these. First, the employer mandate. The 
bill imposes a requirement--a costly new mandate--on employers that 
will have the perverse impact of actually hurting employees, especially 
low-cost employees. How so? Any employer with more than 50 employees 
who does not offer health care coverage would be required to pay an 
assessment for each employee who receives a tax credit for purchasing 
coverage through a newly created exchange. Those are folks in the lower 
income brackets who qualify for tax credits. So this becomes a direct 
tax on hiring people.
  According to the Center on Budget and Policy Priorities,

       . . . the particular employee provision in the Finance 
     Committee bill would pose significant problems by imposing a 
     tax on employers for hiring people from low- and moderate-
     income families who would qualify for subsidies in the new 
     health insurance exchanges, it would discourage firms from 
     hiring such individuals, and would favor the hiring--for the 
     same jobs--of people who don't qualify for the subsidies 
     (primarily people from families at higher income levels.)

  To conclude:

       It would [also] provide an incentive for employers to 
     convert full-time workers (i.e., workers employed at least 30 
     hours per week) to part-time workers.

  So here you have it--a mandate in the bill that would directly impact 
the hiring of low-income workers--precisely the opposite of what we 
want to be doing these days.
  Harvard economist Kate Baicker examined the effect of an employer 
mandate similar to the one in the Reid bill. She estimated the cost of 
hiring a low-wage worker would rise by 33 percent--or $2 per hour on a 
worker earning $6 per hour. Think about that. She concluded that 
224,000 workers would lose their jobs as a result of a mandate with 
these costs.
  In addition to all the other problems we have with growing 
unemployment, here is another one-quarter million people who would lose 
their jobs because of this bill. It makes no sense.
  There was a recent letter sent to the two Senate leaders from the 
National Federation of Independent Businesses which states:

       Mandates destroy job creation opportunities for employees. 
     The job loss, whether through lost hiring or greater reliance 
     on part-time employees, harms low-wage or entry-level workers 
     the most.

  That is exactly what the other study said. By the way, the NFIB is a 
nonprofit, non-partisan organization, defining itself as the voice of 
small business. We are all familiar with the good work it does. I think 
it would know

[[Page S12775]]

what is best for American business and workers.
  The second way this bill imposes taxes and hurts workers is it 
actually creates a payroll tax; in other words, a tax on hiring people 
or keeping them on your payroll. It raises the Medicare payroll tax by 
0.5 percent on small businesses with taxable receipts of $200,000 a 
year or $250,000 or more, if the small business employer filer is 
married.
  Because many small businesses pay taxes at the individual level, 
imposing higher individual income taxes hurts these engines of job 
creation. The Joint Committee on Taxation recently estimated that one-
third of the income that would be taxed under a similar House proposal 
comes from small businesses. Let us remember, as President Obama 
reminded us earlier this week, small businesses generated 65 percent of 
the job growth between 1993 and 2008 and represent about half the 
private sector employment of the United States.
  So this huge potential engine for job creation is going to get 
whacked by the imposition of a new tax, which is a direct tax on the 
hiring or retaining of employees. The Joint Committee estimates that 
this increase in the Medicare tax would raise $54 billion over the next 
10 years. That is $54 billion of resources that could have better been 
used in the private economy, in these small businesses, to expand job 
creation.
  Each new tax dollar paid by these small businesses is one less dollar 
that could go toward the hiring of new employees or, for that matter, 
preventing layoffs or even giving raises to their existing employees.
  A group of organizations recently told us in a letter--by the way, 
these are all organizations that represent small businesses in their 
communities--they oppose this bill because of what it would do to these 
small businesses. I wish to read the names of the groups that represent 
these folks: the Associated Builders and Contractors, the Associated 
General Contractors, the International Food Service Distributors 
Association, the National Association of Manufacturers, the National 
Association of Wholesaler-Distributors, the National Retail Federation, 
the Small Business and Entrepreneurship Council, and the U.S. Chamber 
of Commerce.
  Here is a telling quotation from their letter:

       In order to finance part of its $2.5 trillion price tag, 
     H.R. 3590 imposes new taxes, fees, and penalties totaling 
     nearly half a trillion dollars. This financial burden falls 
     disproportionately on the backs of small business. Small 
     firms are in desperate need of this precious capital for job 
     creation, investment, and business.

  That is exactly what President Obama said yesterday. We have to get 
more capital into the hands of these small businesses so they can 
either continue their businesses with their employees or, potentially 
at least, soon begin hiring more. Yet as this letter points out, this 
bill imposes taxes with a burden that falls disproportionately on the 
very firms we are trying to help.
  In a November 19 statement, the National Federation of Independent 
Businesses said of the bill's impact on small businesses:

       We oppose [the Reid bill] due to the amount of new taxes, 
     the creation of new mandates, and the establishment of new 
     entitlement programs. There is no doubt all these burdens 
     will be paid for on the backs of small business. It is clear 
     to us that, at the end of the day, the costs to small 
     business more than outweigh the benefits they may have 
     realized.

  They go on:

       The impact from these new taxes, a rich benefit package 
     that is more costly than what they can afford today, a new 
     government entitlement program, and a hard employer mandate 
     equals disaster for small business.

  They know what they are talking about. These are the folks whom we 
are depending upon to create jobs and we are punching them right in the 
stomach, right where it hurts, with respect to their ability to create 
these new jobs with the new taxes and mandates imposed in this bill.
  Let me share a brief letter from one of my constituents. He is a 
small business owner in Tempe, AZ. His name is Justin Page. He would 
like to be able to grow his business, but the burdensome new taxes in 
this bill would force him to lay off workers and cut hours from his 
payroll. Here is what he says:

       Dear Senator Kyl, As a long time Tempe and Arizona 
     resident, who has been operating a small business for the 
     past 19 years, I urge you to not vote for the healthcare bill 
     as it is currently proposed and as recently passed by the 
     House of Representatives. My business has taken a severe 
     financial hit in the past 18 months with several employee 
     layoffs, reduced hours for current employees, heavier 
     workloads, et cetera. My answer to increased health care 
     costs and additional small business taxes is to lay more 
     people off . . . not good for [my employees], and not good 
     for me! But survival is my primary goal right now! Reform is 
     necessary, but please do it in a bipartisan manner and within 
     a timetable that allows for constructive debate. This is too 
     important.

  So small businesses have some very real concerns about this 
legislation and good reason to worry that they will be victims of its 
destructive policies. Obviously, it is not the kind of legislation 
small business owners or the American worker wants and, of course, not 
particularly in times of double-digit unemployment. We need to listen 
to the people out there who are actually creating jobs, who have to 
meet a payroll, balance a budget, and know what is necessary to run a 
successful small business. They are not happy with this legislation.
  The third and final point is the new taxes on the health care 
industry, which of course get passed through to the people who 
ultimately have to buy insurance. Let me just discuss one--the medical 
device tax. This medical device tax is a tax on things that are used to 
treat us, to give us health care every day. The $110 billion in new 
taxes on industries such as this--the pharmaceutical, the insurance, 
and medical device industries--is a direct passthrough in terms of what 
we will end up having to pay in insurance premiums.
  For example, this medical device tax will be assessed against 
thousands of products, such as contact lenses, stethoscopes, hospital 
beds, artificial heart valves, and advanced diagnostic equipment. Why 
would you impose a tax on these things that help us? I could maybe see 
a tax against liquor or a tax against tobacco but a tax on things such 
as this--these advanced technologies that help us? Why do we want to 
make them more expensive? These have been invented so we can have an 
extension of our lives; so our families can have better health care.
  We all know when you tax something, you get less of it. In fact, a 
UBS Investment Research paper recently confirmed:

       If the plan passes as proposed and our estimates are 
     correct, the initial years would be a financial challenge for 
     medical device manufacturers, as the full industry fee 
     becomes due before newly covered patients impact volumes.

  What they are saying here is, first, before they can even begin to 
pass these costs on, it could kill this particular industry.
  These taxes will hit smaller firms particularly hard since some of 
the smaller companies don't start out with a lot of profits. They rely 
almost entirely for domestic sales on their revenues.
  I note my colleagues on the other side of the aisle, Senators 
Klobuchar, Bayh, Franken, and in addition Senator Lugar from this side 
of the aisle, recently sent a letter in which they said:

       Independent estimates indicate that this tax could 
     translate into an annual income tax surcharge of between 10 
     and 30 percent on medical device manufacturers.

  Think about that, a 10- to 30-percent tax on folks who are inventing 
these kinds of things to help us.
  These Senators go on in their letter:

       This provision would harm economic development and health 
     care innovation nationwide.

  This was a letter to the chairman of the Finance Committee.
  I know there some who argue that lost jobs in the private health care 
sector will be made up with new jobs in the government with health care 
bureaucrats here in Washington. Wonderful, I say.
  That is not a good thing. We need jobs in the private sector. That 
should be our primary goal and that certainly is what President Obama 
was talking about yesterday when he talked about creating more jobs in 
the private sector.
  In conclusion, I have described three ways in which this legislation 
through its mandates and its new taxes will

[[Page S12776]]

cripple our ability to come back out of this recession. It will make it 
very difficult for us to retain, let alone hire, new employees.
  All of us here in the Senate I know want to do what we can to bring 
down the current very high unemployment. It is obvious that this health 
care bill makes things worse, not better. At every turn its new taxes 
and mandates put us on the wrong course. I think it is very hard to 
justify support for this legislation that threatens job creation, 
especially job creation for low-income workers.
  I urge my colleagues, when we vote on the Crapo motion here pretty 
soon, to consider its impact. It will enable at least people in the 
lower income levels to avoid the kind of taxes that are imposed here, 
one of which, for example, is the tax that IRS will enforce if you do 
not buy the insurance policy that the government, under this bill, will 
mandate that you buy. If you cannot afford the insurance the Government 
has, you have to buy it anyway. If you do not, we will impose a new tax 
on you, enforced by the IRS. The Crapo motion would say no, not so 
fast, IRS, we are going to protect folks from that new tax. That is why 
it is important to support the Crapo motion.
  I urge my colleagues, even though I know we have had a lot of votes 
here where very few Democrats have supported Republican amendments, 
this is one which I hope all of us could support.
  The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
  Mr. FEINGOLD. Mr. President, I rise in strong support of the 
amendment offered by Senator Dorgan. Frankly, this amendment should be 
a no-brainer--it saves taxpayers and consumers money by bringing down 
prices for prescription drugs. I don't think American consumers should 
have to pay the highest prices in the world for prescription drugs, 
particularly when those prices keep going up.
  The Congressional Budget Office has stated that brand-name drugs 
cost, on average, 35 to 55 percent less in other industrialized nations 
than they do in the United States. And the AARP released a study 
recently that found that the price of drugs most commonly used by 
seniors has risen faster than the general inflation rate every year 
since 2004. In 2007, the price spiked by 8.7 percent--three times the 
general inflation rate of 2.9 percent.
  It is no wonder that Americans turn to Canada to buy more affordable, 
and entirely safe, prescription drugs. Americans are now importing more 
than $1 billion in prescription drugs from Canada alone. Consumers 
would not go to such lengths to buy their medicines this way if they 
were not saving money.
  Now, the drug industry has said that drug importation can't be done 
safely. I give PhRMA credit. They have gone to great lengths to scare 
the public. The reality is drug importation has occurred within 
European Union countries--called parallel trade--for the last 25 years. 
The pharmaceutical industry should know drug importation is safe. The 
industry has imported drugs and sold them in the U.S. for decades. One-
quarter of the drugs consumed by Americans today are made in foreign 
manufacturing plants.
  The Dorgan amendment includes a number of protections to ensure that 
imported drugs are safe--and certainly safer than the completely 
unregulated system we have today.
  I don't need to remind my colleagues about the deficit hole we are 
in. Federal spending is one of the top concerns I hear about from my 
constituents--they want to know what we are doing to get our deficit 
under control. That is why I introduced legislation, the Control 
Spending Now Act, to propose concrete ways to bring down runaway 
government spending. And one of the proposals I included was Senator 
Dorgan's drug importation legislation, because it is such a commonsense 
and effective way to save the government tens of billions of dollars. I 
am pleased that the health care reform bill we are debating already 
includes three other proposals in my control spending bill, championed 
by Senator Bingaman and others, that would slash Federal spending on 
prescription drugs by billions of dollars.
  With passage of the Dorgan amendment we can make it four.
  We do a lot of things in Congress that leave our constituents 
scratching their heads. Now we have a chance to show them we are 
listening to them, that we understand their concerns, and that we want 
to bring down Federal spending while ensuring the prescription drugs 
they need are more affordable. Again, that sounds like a no-brainer to 
me.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that we extend the 
period for debate until 4 p.m. with the time equally divided, with 
Senators permitted to speak up to 10 minutes each, with no amendments 
in order during this period of time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ENZI. Mr. President, I yield myself 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, Americans across this country are facing the 
reality of an economy that is in trouble. The unemployment rate is now 
10 percent. According to the Department of Labor's broadest measure, 
some 17.5 percent of Americans are without a job entirely or are 
underemployed.
  We have shed 3\1/2\ million jobs since January of this year and the 
average work week is now down to 33 hours for the American worker. 
Americans are struggling to find good jobs and, because of that, they 
are having trouble making their mortgage payments. Fourteen percent of 
all mortgage loans, meaning 7.4 million households, were delinquent or 
in foreclosure in the last quarter. That is the highest number since 
the mortgage bankers industry began this survey in 1972.
  Many economic indicators point toward a slow, unsteady and jobless 
recovery, and the American people know it. In a recent survey, 82 
percent of Americans said our Nation's economic conditions are poor. In 
recent weeks, President Obama has convened a summit at the White House 
to discuss jobs and economic issues. He has given speeches to discuss 
proposals for job creation and economic recovery. There has even been 
discussion about spending additional billions of dollars on another 
economic stimulus bill.
  Unfortunately, the President has not advocated for the single 
quickest and simplest way to promote economic growth. If the President 
wants to save jobs and grow the economy, all he needs to do is tell the 
majority leader and the Senate Democrats to scrap this $2.5 trillion 
Reid health care reform bill and work it over, step by step, to get it 
right and to save costs.
  Senator Reid's prescription for our economic troubles is a $2.5 
trillion bill full of tax increases, higher health care costs, and $500 
billion in Medicare cuts. The Reid bill contains $500 billion in new 
taxes. Primarily that is how it is being paid for--steal money from 
Medicare and tax people additionally. There are new taxes on 
individuals, new taxes on small businesses, and new taxes on health 
care providers.
  These new taxes will raise health care costs. They will be passed on 
to the individuals in the form of higher premiums. According to the 
Congressional Budget Office, the Reid bill will drive premiums up by 10 
percent to 13 percent.
  I know the other side likes to relate to those pieces of the bill 
that talk about--one section that brings it down by 7 percent and 
another one that brings it down by 7 percent, but they fail to notice 
that the bill actually raises it to 27 percent to begin with. When you 
subtract that out, it still winds up with a 10-percent to 13-percent 
increase.
  Who gets taxed under the Reid bill? If you don't have a government-
approved health insurance, you get taxed. Incidentally, we are going to 
tell you--Washington is going to tell you what the minimum requirement 
is. That will be higher than most people have for insurance at the 
present time. The government will tell you what you need and they will 
fine you if you do not agree.
  The total amount of new taxes on uninsured Americans is $8 billion. 
According to the Congressional Budget Office, half of the new taxes on 
the uninsured will be paid by families earning less than $68,000 a 
year.
  If you do not have insurance, you will get taxed. If you have 
insurance, you can get hit twice by new taxes in

[[Page S12777]]

the Reid bill. First, new taxes on health care providers will be passed 
on to consumers in the form of higher premiums. Second, if the 
government bureaucrats decide your employer-sponsored insurance is too 
generous, you will get taxed for that too.
  The Reid bill contains $150 billion in new taxes on employer-
sponsored health benefits. These new taxes on benefits fall 
disproportionately on middle-income Americans. According to the Joint 
Committee on Taxation, 73 percent of those hit with new taxes on 
benefits earn less than $200,000--73 percent. That is a whole bunch of 
people down there in that category.
  The Reid bill also contains new taxes on businesses that cannot 
afford to provide health insurance. Most employers do provide health 
insurance to their employees, but there are some who simply cannot 
afford to and stay in business. Senator Reid's health care plan will 
mean they will have to pay $28 billion in new taxes. These are the same 
businesses that are barely making it. These are the same businesses 
that are having to lay off workers to keep the company afloat, the same 
businesses that are cutting shifts to prevent further layoffs, and they 
are cutting wages to keep their employees on the payroll.
  With our Nation's unemployment in double digits and millions more 
Americans worried about keeping their jobs and paying their bills, it 
is unthinkable to me that any Member of this body would support new 
taxes on businesses that are already struggling. These are the small 
businesses that absorb the extra employees that get laid off from the 
big businesses--and hopefully it is the small businesses that become 
the future big businesses.
  In addition to the job-killing taxes, the Reid bill raises Medicare 
payroll taxes by $50 billion. These will fall disproportionately on 
small businesses. Approximately one-third of America's small businesses 
will be hit with this tax increase. These are the same small businesses 
that employ 30 million Americans.
  I have to say, when you talk about taxing the rich, we are also 
talking about taxing the owners of small business corporations, because 
the money flows right through to them, even though they have to put 
most of it back into the business in order to keep the business going.
  Not only will small businesses see their taxes go up under the Reid 
bill, they will see their health insurance premiums go up as a result 
of new taxes on health care providers. Beginning in 2010--that is 3\1/
2\ years before many of the health reforms go into effect--new fees 
will be imposed on health insurance companies. That is right now, 3\1/
2\ years before the reforms go into effect. The Congressional Budget 
Office and the Joint Committee on Taxation have characterized these as 
excise taxes. They have also testified that these fees will be passed 
through to consumers in the form of higher premiums.
  If you need prescription drugs, you get taxed. Beginning in 2010, new 
fees will be imposed on prescription drug manufacturers. Similar to the 
health insurer fee, CBO and Joint Tax say it will be more expensive to 
buy prescription drugs.
  If you need a medical device, you get taxed. Medical device 
manufacturers will be subject to a 2\1/2\-percent excise tax on sales. 
Again, the Congressional Budget Office and Joint Tax have testified 
that this tax will increase the cost of medical devices. Just like 
prescription drug costs and health insurance, this new tax on devices 
will drive premiums up. If you have high out-of-pocket drug expenses, 
you will get taxed. A family will no longer be able to deduct medical 
expenses that exceed 7\1/2\ percent of their gross income as they can 
now. Instead, they can only deduct expenses that exceed 10 percent. In 
plain English, this proposal limits the tax deductions a family can 
take for medical expenses. For example, a family of four earning 
$57,000 in 2013 would lose a tax deduction of $1,425. A family of four 
earning $92,000 in 2013 would lose a tax deduction of $2,300.

  Instead of working toward a bipartisan solution to our economic 
problems, Senator Reid has brought a bill before us that spends $2.5 
trillion over 10 years, raises taxes on middle-class families and small 
businesses. I support health care form, and I will continue to work to 
enact real reforms that lower the cost of health care. I cannot, 
however, support higher taxes that further jeopardize our economic 
recovery by punishing small businesses and raising health care costs 
for working families.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.
  Mr. BROWNBACK. How much time do I have allotted? I thought there was 
an agreement that I had a certain amount of time.
  The PRESIDING OFFICER. The minority side has 46 minutes 59 seconds, 
with the 10-minute time limit therein.
  Mr. BROWNBACK. I yield myself 10 minutes to speak on the Dorgan 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BROWNBACK. Mr. President, the Senator from North Dakota is a 
strong, good, talented legislator. He has a good amendment, one I have 
looked at. It has been around for a long time. I have to rise in 
opposition to it.
  I am ranking member on the Appropriations Subcommittee on 
Agriculture, Rural Development, and the Food and Drug Administration. 
The FDA is in the purview of our subcommittee, so I work on the issues 
of the FDA. If I may brag, the University of Kansas is one of the best 
pharmaceutical schools in the world and is often rated No. 1 as a 
pharmacy school. For anybody interested in that field of study or work, 
it is a good place to go. They are very concerned about what is in the 
Dorgan amendment.
  The United States currently has one of the safest drug supply systems 
in the world that allows the Federal Food and Drug Administration to 
monitor and regulate the manufacture and distribution of approved 
medicines. The legal authority to import drugs already exists in this 
country. However, no HHS Secretary, Democrat or Republican, has been 
able to certify that the importation of prescription drugs from foreign 
nations is safe or will lead to cost savings. None have been able to.
  The Dorgan amendment will allow for the importation of drugs from 
outside our current regulatory system, established and enforced by the 
FDA without certification from the Secretary of HHS or the Food and 
Drug Administration. Allowing drug importation from foreign nations 
could threaten public health and result in unsafe, unapproved, and 
counterfeit drugs being placed on pharmacy shelves in the United 
States.
  I want to develop that thought. The FDA has been tasked with the 
responsibility of safeguarding this country's prescription drug supply 
and has executed that responsibility quite well. But as this country 
and the Food and Drug Administration struggle to prevent the growing 
threat posed by imported, foreign-produced goods, as evidenced by 
recent failures to detect polluted products such as infant formula, pet 
food, and toothpaste, permitting the importation of drugs from foreign 
nations without the complete assurance from the FDA that it will not 
jeopardize public safety is irresponsible and threatens this Nation's 
safety and proven drug supply.
  Toward that end, I ask unanimous consent that a letter that Senator 
Carper received from the Health and Human Services agency, the FDA 
Director, be printed in the Record at the conclusion of my comments.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. BROWNBACK. This letter states in particular:

       We commend the sponsors for their efforts to include 
     numerous protective measures in the bill that address the 
     inherent risks of importing foreign products and other safety 
     products relating to the distribution system of drugs within 
     the U.S. However, as currently written, the resulting 
     structure would be logistically challenging to implement and 
     resource intensive. In addition, there are significant safety 
     concerns related to allowing the importation of non-
     bioequivalent products, and safety issues related to 
     confusion in distribution and labeling of foreign products 
     and the domestic product that remain to be fully addressed in 
     the amendment.

  In other words, they don't think we can do this--importation, 
reimportation of drugs--without significant safety problems.
  There has been an explosion of illegal drug counterfeiting occurring 
around the world. Emergence of a multibillion-dollar international 
black market has

[[Page S12778]]

proven to this Senate, current and past HHS Secretaries, and the FDA 
that weakening our prescription drug regulatory framework would only 
increase the risk of life-threatening counterfeit, contaminated, or 
diluted prescription drugs entering our prescription drug supply that 
millions of Americans rely on and trust. Prescription drug 
counterfeiting has become a highly profitable criminal enterprise that 
has been taken up by international organized crime syndicates, rogue 
nations such as North Korea, Syria and Iran, and developing nations 
such as China and Pakistan that seek to exploit ineffective or weak 
counterfeit enforcement frameworks around the globe.
  Criminals have realized that the production of counterfeit drugs is 
twice as profitable as the trafficking of illegal narcotics and comes 
with significantly less criminal penalties compared to those handed out 
for illegal drugs.
  Due to these limited and minimal criminal penalties, global 
counterfeiting has grown into an epidemic that reaches every country 
around the world. The World Health Organization estimates that tens of 
thousands of people are dying due to counterfeit HIV, diabetes, and 
tropical disease medicines. Unfortunately, in most counterfeit cases, 
it is not what is included in these fake drugs, it is what has been 
excluded that proves to be most harmful and deadly to patients. By 
taking counterfeit, diluted, or completely ineffective drugs, many 
patients fail to receive the important lifesaving medicines they need. 
It is just as dangerous for a person with high cholesterol to use a 
counterfeit drug that lacks the prescribed medicine as it is for a 
person to ingest a contaminated or even a poisonous pill. Due to this 
global counterfeit epidemic, two Secretaries of HHS, under both the 
Clinton and Bush administrations, have been unable to certify that the 
importation of prescription drugs will not pose a substantial risk to 
the health and safety of citizens within the United States.
  Current Secretary Kathleen Sebelius, from Kansas, has committed to 
preventing a drug importation system in the United States until it can 
be proven that the safety standards of the imported drugs are ``at or 
above American standards.'' The FDA doesn't believe they can get that 
done at this time.
  Many have argued that parallel trade in Europe has proven drug 
importation across nations' borders has resulted in prescription cost 
savings and has not increased risks to consumers or general public 
health. However, these cost and safety assertions do not correctly 
reflect the European experience with drug importation through what is 
called parallel trading.
  A study by the London School of Economics on drug importation costs 
concluded that savings from parallel imports benefit middlemen and 
third-party vendors who buy and resell the imported drugs and do not 
get passed on to the patients in the form of lower prices. They say 
this:

       Although the overall number of parallel imports has 
     continued to increase, healthcare stakeholders are 
     realizing few of the expected savings . . . profits from 
     parallel imports accrue mostly to the benefit of the 
     third-party companies that buy and resell these medicines.

  Furthermore, a report by the University of London School of Pharmacy 
on the safety of the parallel prescription drug trade stated this:

       The United Kingdom is the most vulnerable in Europe to 
     counterfeiting owing to the high level of ``parallel 
     importing.''

  Due to parallel trade, the Medicines and Health Care Regulatory 
Agency in the UK has issued 10 different recalls of counterfeit drugs 
in the past 5 years. Drugs recalled include prescriptions to treat 
schizophrenia, blood pressure, and prostate cancer. The most disturbing 
fact of this counterfeit infiltration was that these drugs entered the 
United Kingdom through legitimate supply chains through parallel 
distribution trade, according to the MHRA, the regulator agency in the 
UK.
  In other studies, the European Commission found that the prescription 
drug supply chain in Europe, which includes the former Eastern bloc 
counties such as Latvia, Slovakia, and Bulgaria, is increasingly 
targeted by international criminal counterfeiters.
  The European Commission's Vice President, Gunter Verheugen, stated 
European parallel trade ``[B]rings a considerable risk for the safety 
of the patients'' and that the increase in counterfeit medicines ``is a 
very serious threat to public health and can cost lives.''
  We don't want that happening to the United States, particularly with 
what we have seen in recent products coming in from China, not 
regulated under our system: things such as toothpaste, pet food, and 
then the problems we have here. Do we want that to happen in the drug 
system? No, we don't. We can't certify that we can keep these products 
safe.
  As you can see, safety concerns and the lack of savings that may 
result from exposing this country to the potential risk created by the 
importation of drugs from outside our current safety system are real 
threats.
  It is kind of interesting. In October 2004, then-Governor Rod 
Blagojevich of Illinois launched the I-SaveRx Program to allow 
residents in Illinois, and later Missouri, Vermont, Wisconsin, and 
Kansas, to purchase low-cost drugs from Canada. However, by 2006, the 
Illinois State auditor found that the program cost nearly $1 million 
and was used by only about 3,700 people in Illinois and 267 residents 
of my State of Kansas.
  Health and Human Services has concerns regarding the safety of 
importation. The Food and Drug Administration has concerns regarding 
the safety of importation. Given the opportunity to purchase Canadian 
prescription drugs, only 267 Kansans took that chance. We should not 
throw out the safety of our drug supply chain without safety assurances 
from this country's regulatory bodies.
  I yield the floor.

                               Exhibit 1

         Department of Health and Human Services, Food and Drug 
           Administration,
                               Silver Spring, MD December 8, 2009.
     Hon. Tom Carper,
     U.S. Senate,
     Washington, DC.
       Dear Senator Carper: Thank you for your letter requesting 
     our views on the amendment filed by Senator Dorgan to allow 
     for the importation of prescription drugs. The Administration 
     supports a program to allow Americans to buy safe and 
     effective drugs from other countries and included $5 million 
     in our FY 2010 budget request for the Food and Drug 
     Administration (FDA or the Agency) to begin working with 
     various stakeholders to develop policy options related to 
     drug importation.
       Importing non-FDA approved prescription drugs presents four 
     potential risks to patients that must be addressed: (1) the 
     drug may not be safe and effective because it was not subject 
     to a rigorous regulatory review prior to approval; (2) the 
     drug may not be a consistently made, high quality product 
     because it was not manufactured in a facility that complies 
     with appropriate good manufacturing practices; (3) the drug 
     may not be substitutable with the FDA-approved product 
     because of differences in composition or manufacturing; and 
     (4) the drug may not be what it purports to be, because it 
     has been contaminated or is a counterfeit due to inadequate 
     safeguards in the supply chain.
       In establishing an infrastructure for the importation of 
     prescription drugs, there are two critical challenges in 
     addressing these risks. First, FDA does not have clear 
     authority over foreign supply chains. One reason the U.S. 
     drug supply is one of the safest in the world is because it 
     is a closed system under which all the participants are 
     subject to FDA oversight and to strong penalties for failure 
     to comply with U.S. law. Second, FDA review of both the drugs 
     and the facilities would be very costly. FDA would have to 
     review data to determine whether or not the non-FDA approved 
     drug is safe, effective, and substitutable with the FDA-
     approved version. In addition, the FDA would need to review 
     drug facilities to determine whether or not they manufacture 
     high quality products consistently.
       The Dorgan importation amendment seeks to address these 
     risks. It would establish an infrastructure governing the 
     importation of qualifying drugs that are different from U.S. 
     label drugs, by registered importers and by individuals for 
     their personal use. The amendment also sets out registration 
     conditions for importers and exporters as well as inspection 
     requirements and other regulatory compliance activities, 
     among other provisions.
       We commend the sponsors for their efforts to include 
     numerous protective measures in the bill that address the 
     inherent risks of importing foreign products and other safety 
     concerns relating to the distribution system for drugs within 
     the U.S. However, as currently written, the resulting 
     structure would be logistically challenging to implement and 
     resource intensive. In addition, there are significant safety 
     concerns related to allowing the importation of non-
     bioequivalent products, and safety issues related to 
     confusion in distribution and labeling of foreign products 
     and the domestic product that remain to be fully addressed in 
     the amendment.

[[Page S12779]]

       We appreciate your strong leadership on this important 
     issue and would look forward to working with you as we 
     continue to explore policy options to develop an avenue for 
     the importation of safe and effective prescription drugs from 
     other countries.
           Sincerely,
                                              Margaret A. Hamburg,
                                   Commissioner of Food and Drugs.

  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, this is the 10th day in the debate on 
health care reform. I believe it is one of the most important issues we 
have ever debated, certainly in my time on the floor of the Senate. 
There have been a variety of amendments offered, and there has been a 
lot of work going on off the Senate floor. Before we could reach this 
point and start this debate, committees held hearings that went on for 
weeks and months. They started with the base bill and entertained 
hundreds of amendments. The HELP Committee, as well as the Finance 
Committee, devoted so much time to this.
  The first time I can recall the chairman of the Senate Finance 
Committee Max Baucus coming to see me personally on this was over a 
year ago. So over a year has gone into this effort to come to this 
moment. I might add, the negotiations and efforts to improve the bill 
have not stopped. As late as last night, a large group of members of 
the Democratic caucus in the Senate were meeting to work out pretty 
contentious issues relating to competition for private health insurance 
companies. They worked late into the night, night after night, and 
finally came up with a consensus where differing points of view had to 
make concessions and come up with the best way to move forward. That is 
what has gone into the base bill that is before us.
  This is it, 2,074 pages put together through all of the work I have 
just described. I understand the responsibility of the minority party 
in the Senate is to disagree. But we hope they will do it in a 
constructive fashion. In this situation, we have invited them in from 
the beginning. In fact, in each of the committees, Republican Senators 
have been active participants offering amendments, many of which were 
adopted.
  Beyond that, there were meetings off the Senate floor. The Senator 
from Wyoming was a party to meetings that went on for, I am told, more 
than 60 days in an effort to find a bipartisan middle ground. But the 
fact is, we come here today in the Senate debating this bill, and there 
are several realities. The first reality is, after the House of 
Representatives went through a similar exercise, only one Republican 
Representative, a Congressman from New Orleans, LA, voted for health 
care reform, only one. In the Senate to date, only one Republican 
Senator, Senator Snowe of Maine, has voted for health care reform in 
the Finance Committee. Not one single Republican Senator other than 
Senator Snowe has voted to move forward on health care reform.
  There is a second reality. There is no Republican health care reform 
bill. None. They have a variety of different ideas, but each one is 
discrete and specific. They are not comprehensive. They don't really 
address the issues this bill addresses. They have not presented a bill 
which makes health insurance premiums in America more affordable. This 
bill does.
  Don't take a politician's word for it. The CBO looked at this bill 
and said it will bring down premiums for the vast majority of Americans 
paying for health insurance today, something we definitely need because 
we are dealing with a situation where individuals, families, and 
businesses can no longer afford health insurance. There has not been a 
bill produced on the other side of the aisle which guarantees that 94 
percent of Americans will have health insurance. This bill does. They 
haven't produced that bill. When this bill is enacted into law, we will 
have a larger percentage of our American citizens covered with health 
insurance than ever in our history.
  They have not produced a bill which changes the way health insurance 
is managed and its relationship with its customers across America. This 
bill does. There is a bill of rights in here that says: American 
consumer, you have a right to have health insurance, even if you have a 
preexisting condition. You have a right to stand up to the health 
insurance companies when they deny you coverage, saying: We only cover 
you when you are well, not when you are sick. You have a right for your 
children to be covered under your family health insurance policy until 
they reach the age of 27. These are rights which we guarantee in the 
bill and have not been brought to the floor by the Republican side 
because they do not have a health care reform bill.
  Before us at this moment is a motion to commit by a friend of mine, 
Senator Crapo, who raises a question about will there be taxes. Will 
people have to pay for what we are doing here? Well, I can tell you, we 
think we have struck a good balance in terms of shared responsibility. 
First and foremost, understand this: If we dropped this debate, as most 
Republicans would have us do at this moment, and walked away and said: 
We are not going to do anything, each and every American will continue 
to pay over $1,000 a year in added premium costs to cover the cost of 
uncompensated care.
  In my hometown of Springfield, IL, we have some wonderful hospitals. 
When poor people with no insurance show up, they are treated, they are 
cared for. That hospital, then--whether it is St. John's or Memorial--
has to pass along the cost of that health care to the other people who 
are paying for their care, which means each of us is paying $1,000 more 
a year for our families in health insurance premiums to cover those 
uninsured. So that $1,000 tax is already there.
  Let me tell you what this bill does. This bill says, if you are 
making less than $80,000 a year, we will help you pay your health 
insurance premiums, give you tax breaks to pay those premiums. That 
means a lot of people who today cannot afford to pay for health 
insurance premiums will be able to. They will go to this exchange. They 
will be able to chose from health insurance options, and they will get 
a helping hand to pay for health insurance.
  We also have special provisions in here to take care of the smaller 
businesses. If you have fewer than 25 employees and have a small 
business--and that represents a lot of businesses, mom-and-pop 
businesses, for example--we are going to give you a helping hand so you 
can pay for the health insurance coverage for yourself, the owner of 
the business, and the people who work for you.
  What about those that are larger companies? Well, let's be honest 
about it. We expect them to step up and accept this shared 
responsibility. Most of these companies do not question whether they 
have to pay into unemployment insurance or workers' compensation. That 
is part of the cost of doing business. We are saying that in this era 
of health care reform, with shared responsibility, businesses should 
offer good health insurance for their employees. In most instances, 
they do, and they deserve our commendation for doing it.
  But we also understand there are some that may not cover their 
employees, may have waiting periods that are unreasonable. We start 
moving our policy against that so people do have the peace of mind of 
knowing, when they go to work, they have good health insurance that is 
going to be there when they need it. It is a new look at it.
  But we started with a real challenge. America is the only developed, 
industrialized country in the world where a person can die for lack of 
health insurance. We are the only one. There is not another country 
where that happens.
  We are also the only developed country in the world where a person 
can be driven into bankruptcy because of medical bills. We kind of 
accept it. Well, so and so had an accident, went to the hospital, was 
there for a month, and has a huge medical bill. They did not have any 
savings or insurance, and it wiped them out. It wiped them out.
  It does not happen in other countries. In developed countries, it 
does not happen because they take care of people, and they understand 
whether they are using private health insurance or public health 
insurance, there is a social obligation to make sure we all have the 
peace of mind of knowing that is not going to happen.
  So we address this, and we help people pay for their premiums as 
well. There is $441 billion in tax relief in this bill for families 
over the next 10 years to pay their health insurance premiums. That is 
a tax break that will lead to more insurance coverage and more peace of 
mind. That is a reality. For the smaller businesses, with 25 and

[[Page S12780]]

fewer employees, there is a helping hand for them to cover their 
employees as well.
  We also provide some competition that in many places does not exist 
today. We provide that there is going to be health insurance options 
for people. Too many small employers whom I have run into say: It is a 
take it or leave it deal with our health insurance company. We will 
renew last year's policy at a higher cost with less coverage, and you 
better take it because there is no place else to go. That is going to 
change here. That is part of the change.
  For all my Republican friends and colleagues who have come to the 
floor over the last 10 days critical of this health care reform bill, I 
understand, that is part of Senate debate, that is part of what we are 
here for. But make no mistake, these same Senate Republicans do not 
have a health care reform bill. Most of the amendments that have been 
offered have been to protect health insurance companies, companies that 
are wildly profitable, companies that, frankly, dictate in this system 
how much people are going to pay and whether they are going to have 
coverage.
  Dutifully, now, the Republican Senators have stepped up saying: We 
have to protect these health insurance companies and their profits. I 
do not think that is my responsibility. My responsibility is to almost 
13 million people in my State of Illinois and to the rest of the 
Nation, to make sure they have the same peace of mind we all want--to 
know they have quality, affordable health care, to extend the reach of 
health care and the peace of mind that comes with it to the largest 
percentage of Americans in history.
  The last point I wish to make is one about the deficit. We hear a lot 
about the deficit. This health care reform bill will cut more money 
from the deficit--$130 billion over the next 10 years--than any single 
bill ever considered on the floor of the Senate. Again, that is not my 
conclusion but the conclusion of the Congressional Budget Office, which 
analyzes these bills for Democrats and Republicans--a $130 billion 
reduction in the deficit over 10 years and, in the next 10 years, an 
additional $650 billion. Because as we start to bend the curve to bring 
down the increase in health care costs, it means we pay less for 
Medicare services, less for Medicaid services, less for many services 
that are offered through government programs.
  This bill is fiscally responsible. President Obama challenged us to 
make it such, and we did it. There has not been a bill offered by the 
Senate Republicans which reduces the deficit--not anywhere near this 
amount. No one has ever done it. It took a lot of hard work to reach 
this point.
  I would say the net result of the motion to commit by Senator Crapo 
is, unfortunately, to delay this debate even further, to stop the 
momentum toward health care reform. I do not think that is what America 
wants or needs. This is a once-in-a-political-lifetime opportunity to 
address an issue on the mind of every American and to do it in a fair 
and comprehensive way.
  Certainly, this bill is not perfect. As hard as we tried, it never 
will be. But to just continue to argue there are elements they want to 
question, without offering a comprehensive health care reform 
alternative, I do not believe is a fair debate. We have put the time 
into this. I stand by it. I will be proud to support it. There are 
things in it I do not agree with; most things I do. But the fact is, it 
is the right thing for us to do at this moment in history. We cannot 
miss this opportunity. I encourage my colleagues to oppose the Crapo 
motion to commit.

  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER (Mr. Sanders). Twenty-four minutes 40 seconds 
for the Democrats.
  Mr. DURBIN. Mr. President, how long have I spoken?
  The PRESIDING OFFICER. The Senator has spoken for 8 minutes.
  Mr. DURBIN. Mr. President, I stand in support of the amendment that 
is being offered by the Senator from North Dakota, Mr. Dorgan. Senator 
Dorgan has talked about drug reimportation, and he has raised an issue 
which troubles me. Why is it that pharmaceutical companies in America 
charge Americans more for their product than they charge customers in 
other countries buying exactly the same product? Senator Dorgan had a 
hearing once, and the response was obvious. The pharmaceutical 
companies say: We charge Americans more because we can.
  In all those other countries, such as Canada, when they try to sell 
drugs to Canadians, the Canadian Government steps in and says: You are 
entitled to a profit, but don't go overboard. We will allow you to 
increase your profits only so much each year.
  In the United States, there is no such mechanism and no such effort. 
So we continue as a nation to pay premium prices for drugs that are 
exactly the same drugs that are sold at a fraction of the cost around 
the world.
  The AARP, which is the largest organization of seniors in America, 
did a study of drug prices published in April. It showed that the price 
of the most commonly used drugs has risen faster than general inflation 
every year since 2004. This year, drug prices are going to go up 
another 9 percent, for example.
  So a lot of Americans are saying: If I can buy the same drug in 
Mexico or Canada at a lower price, why wouldn't I be allowed to do 
that? Why would you stop me under the law? Well, I do not think we 
should. I think we ought to give people that opportunity.
  What Senator Dorgan has done is to build in his amendment safety 
features so we know we are not dealing with counterfeit drugs and we 
know there is accountability as to the source and the purity and the 
effectiveness of the drugs that are bought.
  This amendment creates a role for the Federal Government in providing 
oversight, with the goal of ensuring that Americans have access to 
lower prices and the peace of mind of knowing their drugs are safe.
  The bill allows pharmacies and drug wholesalers licensed in the 
United States to import FDA-approved medications from Canada, Europe, 
Australia, New Zealand and Japan and pass along the savings to their 
American customers. What does it mean? A 35- to 55-percent lower cost 
for some of the most widely used drugs in America.
  This approach will reduce costs when people need it, particularly 
sick people who are dependent on drugs to stay healthy or to avoid even 
further illness.
  The CBO estimates that the new policy will result in Federal savings 
of $19.4 billion over 10 years. I will tell you why I think this is 
critically important. There are a lot of drugs and drug companies that 
are doing very well. They are very profitable, and they are based in 
the United States. I think it is unfair they are charging the people of 
their own country higher prices than they are charging people in other 
countries around the world.
  This reimportation is an effort to try to help bring down some of 
these drug prices. These companies, incidentally, say: Well, we need 
the money because we need to do research for new drugs. Well, certainly 
they need to do research for new drugs. But maybe they can stop and 
explain to me or to someone why they spend more money on advertising 
than they do on research. You have seen the ads on television, heard 
them on the radio, and seen them in magazines. They spend a fortune 
advertising, trying to lure people into using the highest priced drugs 
in America.
  These pharmaceutical companies are doing very well. Their profits are 
sky-high, sometimes the highest in America. I think it is fair in this 
bill, as we try to bring down the cost of health care, that we also 
bring down the cost of these drugs by allowing the importation, with 
strict safety standards, of these drug into the United States.
  I support the Dorgan amendment and look forward to making more 
affordable prescription drugs available across the United States.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAPO. Mr. President, I ask unanimous consent to speak for up to 
20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CRAPO. Thank you, Mr. President.
  Before I begin my remarks, I would like to yield a couple minutes to 
my friend and colleague from Oklahoma who would like to respond to the 
question that has been raised as to whether

[[Page S12781]]

the Republicans are presenting reliable, meaningful, and comprehensive 
alternatives.
  Mr. COBURN. I thank my colleague from Idaho.
  Mr. President, the majority whip realizes there is an alternative 
bill. As a matter of fact, there are four alternative bills out there. 
They were not given a hearing. They did not have the resources. They 
did not have the CBO that would score them.
  We have a bill that guarantees if you like what you have now, you can 
keep it; has absolutely zero tax increases on American families; no 
increases in taxes on American business; lowers the cost of everybody's 
health insurance premiums; covers preexisting conditions, period; 
protects seniors' high-quality care and choices; increases personal 
control over your own health care; no Medicaid expansion, but, in fact, 
puts Medicaid patients into true coverage without discrimination and 
allows all the doctors in this country to see them. It protects the 
physician-patient relationship and empowers patients, families, and 
physicians and providers. It does not empower the government. The 
majority whip knows that. Yet we have just heard on the floor we have 
not offered anything.
  We have offered a bill that outside evaluators say saves the States 
at least $1 trillion in the first 10 years, saves the Federal 
Government $70 billion, treats everybody the same, creates access to 
health care, and, more importantly, it incentivizes prevention and the 
management of chronic disease and, finally, it attacks some of the $100 
billion a year in fraud in Medicare and Medicaid, where this bill 
attacks less than $400 million a year in Medicare and Medicaid.

  I yield back to the Senator.
  Mr. CRAPO. I thank my friend from Oklahoma because it is frustrating 
sometimes to have it continuously said that there are no alternatives 
being put forward when we have for years promoted major and 
comprehensive alternatives to the kinds of issues Americans are asking 
us to address today.
  What is it that Americans are asking? I have said this many times on 
the floor. Americans are asking us to find a pathway to lower health 
care premiums and costs and to increase access to better quality health 
care. Yet what is it that we are being faced with in this legislation? 
This bill drives up the cost of health care, not down, contrary to 
claims that have been made on the floor repeatedly; raises taxes by 
hundreds of billions of dollars; cuts Medicare by hundreds of billions 
of dollars; grows the government by $2.5 trillion; forces the needy 
uninsured--it doesn't give them a pathway toward subsidized insurance 
or any access to insurance but instead forces them into a failing 
Medicaid Program; imposes damaging unfunded mandates on the struggling 
States; leaves millions of Americans still uninsured; and establishes 
massive government controls over our health care economy. And we wonder 
why we cannot get engaged in a meaningful bipartisan solution here with 
this kind of heavy-handed approach being insisted upon.
  When I talk about the fact that it raises the costs or the size of 
government, often the response is: No, this bill doesn't raise the size 
of government, it doesn't increase the size of government, it is 
balanced. Actually, CBO has issued a report that says it reduces the 
deficit. Well, the fact is it grows the size of government over a true 
10-year period by $2.5 trillion. It does provide some increased taxes--
a lot--and it does cut Medicare. By doing so, it does reach an 
equilibrium, according to CBO, with regard to its impact on the 
deficit. But let's not mistake this deficit with the size of the 
government. This bill will grow the size of the government and the 
reach of the government by $2.5 trillion.
  With regard to the question as to whether it truly impacts the 
deficit, I think most Americans have already heard that there are some 
budget gimmicks here. You could not ever claim this bill doesn't 
increase the deficit unless you had all the taxes I am going to talk 
about in a minute and unless you had all of the Medicare cuts we have 
been talking about for the last week, and unless you had the budget 
gimmicks that are in the bill. The budget gimmicks are clearly depicted 
right here.
  Look at the first 4 years of this bill on the spending side: very 
little, if any, spending. The actual implementation of the spending 
part of the bill doesn't happen until 2014, but all the taxes start in 
the first year, and all the Medicare cuts come into place in the first 
year, and we start seeing the offset side of the bill run for a full 10 
years. It is going to be easy to say you have balanced out spending and 
taxing if you don't count the spending for the first 4 years. But if 
you look at that first true 10-year period of time, it is a growth of 
the government by $2.5 trillion.
  What I am here today to talk about is my motion that is on the floor 
to do one very simple thing: to commit this bill back to the Finance 
Committee and have the Finance Committee make the bill comply with the 
President's pledge to the American people about taxes. And what was his 
pledge, repeated many times across this country? In the President's own 
words:

       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 will not see any of your 
     taxes increase one single dime.

  That was the rhetoric. That was the pledge. What is the reality of 
the bill? In its first 10 years, the bill raises taxes by $495 billion. 
If you take that 10-year window that starts in 2014 where you are 
comparing spending and taxing at the same time, the total of taxes in 
that 10-year window is $1.2 trillion of new taxes, a huge proportion of 
which falls squarely on the backs of the middle class whom President 
Obama has defined here to be those earning less than $250,000, and that 
is per family. He said under $200,000 per individual.
  What are some of these taxes we are talking about? First, there is 
the excise tax on high-cost premium plans. One might say, wait a 
minute, that is a tax on companies, employers who provide very high 
quality insurance to their employees. It is an ingenious way--it is 
technically written that way--but it is an ingenious way to actually 
increase the cost, the tax base, of the workers and not the employer. 
Let's see the first chart. The way this works is the government will 
now say to an employer: You cannot provide health insurance to your 
employees that is worth more than a certain amount. Most employees who 
get health insurance--and that is most employees in the country who get 
health insurance from their employer--get wages and health care as a 
part of their total employment package.
  I picked an example of a woman who receives $50,000 in wages and 
let's assume a $10,000 employer-provided health care benefit. The 
government is now going to say wait a minute, to her employer; we are 
going to tax you if you provide that health care benefit on such a 
robust level. CBO and Joint Tax have told us that the reaction of the 
vast majority of all employers is going to be to reduce the health care 
benefit down below the level that gets taxed. They are not going to 
reduce the employee's overall benefit, however, their overall 
employment package. So let's pick a number. Let's say they reduce this 
$10,000 down to $7,000. They will increase the wages by $3,000 and the 
employee's total compensation package stays the same: $60,000, with one 
difference. Now that extra $3,000 is wages instead of health care, and 
it gets taxed. And that way the individuals in this country see their 
health care values go down. Their total compensation package stays the 
same, but then gets also reduced as it is taxed, and our Joint Tax 
Committee and CBO have told us that 84 percent of this $149 billion new 
tax is going to be borne by those with incomes under $200,000.
  That is one way this bill ingeniously gets at the pocketbook of those 
making less money than the $200,000 or $250,000 as a family that the 
President talks about.
  What is the next way? Medical deductions. I think everybody in 
America who itemizes deductions knows about the first line that says 
you can itemize your medical expenses, and to the extent they exceed 
7.5 percent, you can deduct those medical expenses. So people who have 
a large proportion of their income represented by medical costs get a 
break in the Tax Code for that deduction. Well, that break is now going 
to be smaller under this bill because the level of where you are able 
to

[[Page S12782]]

get it is no longer going to be 7.5 percent, it will be 10 percent. And 
as I indicated, that 84 percent of the excise tax is going to fall on 
people making less than $200,000 a year. Ninety-nine percent of the 
medical deduction restriction will fall on people making less than 
$200,000 a year; as a matter of fact, making a lot less than $200,000 
per year.
  Then what about the next one? The next major tax in the bill is the 
Medicare payroll tax. This one has been presented to the American 
public as a tax on rich people. It starts out primarily impacting 
people at the higher levels, but at the outset, it will already hit 
345,000 Americans, and it is not adjusted--I think most people 
understand how the alternative minimum tax works today. It is not 
adjusted for inflation properly. So over time, the payroll tax itself 
is going to increasingly hit more and more people in that income 
category under $200,000.
  There has been some analysis on these three provisions in the bill. 
Joint Tax has indicated that by the year 2019, at least--and I say at 
least because we are only talking about three provisions in this bill 
right now, and there are more--73 million American households--not 
individuals, households--73 million American households earning below 
$200,000 that are going to face a tax increase.
  Some have responded to this by saying, Wait a minute. Our bill 
actually cuts taxes and you are not characterizing this fairly. The tax 
cuts they are talking about are primarily a $394 billion government 
subsidy for purchase of health insurance, a subsidy that will be 
administered through the Tax Code. What they don't tell you is that 
$288,000 of this so-called tax cut is nothing other than a direct 
government payment to those who don't pay any taxes today anyway. It is 
not reducing their tax liability; they have no tax liability. It is a 
direct government subsidy, and CBO says so. It is scored by CBO not as 
tax relief; it is scored by CBO as direct government spending. To 
characterize that as tax relief I believe is inaccurate.

  Moreover, even if it were true tax relief, is that what the President 
was saying, that I won't raise your taxes more than I will lower 
someone else's or was he saying to the American people that he would 
not raise taxes on people who are making less than $200,000 a year, or 
$250,000 as a family? I believe it is inherently obvious what the 
President was saying. And to say now that we are cutting somebody 
else's taxes so we can raise yours does not comply with the President's 
pledge.
  To give another couple of perspectives on this in terms of numbers, 
when all is said and done, 7 percent of Americans will get this so-
called tax relief that is, in reality, direct Federal spending, and the 
rest of Americans--specifically, those who don't fall in that 
category--will get the tax increases. Out of 282 million Americans with 
some kind of health insurance today, only 19 million of them will be 
helped by this subsidy. The rest are going to fall into that category 
of those who get to share in the burden by seeing their taxes increase.
  But let's say we give credit for all of these arguments and say, All 
right, we will let you claim that all of this spending is tax relief. 
What is the true story then? Even if you give that argument, which is 
not valid, by 2019, there will still be at least 42 million American 
households earning below $200,000 that will face a tax increase. This 
is information from the Joint Committee on Taxation.
  In fact, the data there is rather interesting. Joint Tax data 
indicates that by 2019, individuals earning between $50,000 and 
$200,000 on average will see an increase in their taxes of $593. 
Families earning between $75,000 and $200,000 will see on average a net 
tax increase of $670.
  So what does my amendment do? My amendment says very simply that the 
bill will be committed back to the Finance Committee and that the 
provisions in the bill that violate the President's pledge should be 
removed. Simply make the bill comply with the President's pledge. The 
President, frankly, shouldn't sign this bill unless this amendment is 
passed and implemented, because that is the direction we need to go.
  Once again, the President's pledge is that no family making less than 
$250,000 is going to see their taxes increased.
  There is further information available about this, though. I recently 
sent a letter to the Joint Tax Committee. I recently sent a letter to 
the Joint Tax Committee asking them about whether there were other 
provisions in the bill other than these three--the reason I talked 
about these three taxes is because those three taxes have been analyzed 
by Joint Tax and it is Joint Tax that is telling us what they are going 
to do.
  In response to my letter saying are there more taxes in the bill than 
those you have analyzed, the answer has come back, yes, and below, they 
say, is a list of the provisions that they have not previously 
distributed and that have statutory incidence on individuals with those 
who fall below the income threshold which has been defined already. 
What are these taxes? There is a confirmed definition of medical 
expenses for health savings accounts. In other words, the reduction of 
benefits in health savings accounts will have an impact, and I believe 
that impact is about $1.5 billion.
  The increased penalty for nonqualified health savings account 
distributions and limitations on flexible spending arrangements will 
raise almost $15 billion. Most of this--although we don't have the data 
yet from Joint Tax--most of this comes from families below the income 
tax threshold, as well as the 5 percent excise tax on cosmetic surgery 
and similar procedures and the individual mandate in the bill that will 
force all Americans to purchase insurance or the IRS will come and 
collect a fee from them.
  I don't have the chart here that shows what will happen with the IRS, 
but think for a minute. The current size of the IRS is about $12 
billion in terms of the appropriations we give them to perform their 
functions. CBO says that if this bill passes, there will be so much 
additional business for the IRS in monitoring health care and the new 
plans and programs in the bill, there will have to be at least another 
$5 billion and maybe a $10 billion increase in the size of the IRS just 
so it can implement its enforcement responsibilities under this bill.
  The bottom line is that the President of the United States, Barack 
Obama, has made a pledge. It was that pledge, among a number of 
others--such as ``if you like what you have, you can keep it''--that 
caused us to see a strong low-confidence level by the American people, 
and maybe it is time for Congress to truly dig in and build a strong 
health care reform package. That pledge is being squarely broken by 
this bill.
  Again, all we are asking in this amendment is to send the bill back 
to the Finance Committee and have the Finance Committee make the bill 
conform to the President's pledge. What that will mean to the American 
people is that in the first 10 years of the bill, just under $500 
billion of new taxes will not be imposed, and over the true first 10-
year period, when the spending starts kicking in, $1.2 trillion worth 
of taxes will not be imposed.
  There are many other issues with this bill that we have seen 
discussed. There is the question of whether it truly increases the cost 
of premiums in health care. Virtually 10 out of 11 studies say that it 
does. The CBO report says that, clearly, for 30 percent of Americans, 
it does it in major ways, and for the other 60 percent, the impact is 
marginal, or the status quo.
  As we move forward, some of these big problems with the bill need to 
be fixed. My motion focuses on taxes. We have debated Medicare for some 
time now. We need to talk about the unfunded mandates on the States. We 
need to talk about the impact on premiums in health care because we 
don't want to be passing legislation that drives up the cost of health 
care at a time when that is the primary purpose for people calling for 
health care reform.
  I urge my colleagues to let us step down for a moment from the 
intensity of the debate, commit this bill to the Finance Committee, and 
let's, on a bipartisan basis, work out some of the solutions to these 
problems and do so in a way that does not result in such a massive 
growth of our Federal Government, such a massive increase in taxes, 
such a massive unfunded deficit on the

[[Page S12783]]

States, and all for no control of cost or health care premiums.
  With that, I yield back the remainder of the time I requested.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, here we go again. We keep hearing it, and 
the other side keeps using scare tactics. All those Democrats say is 
tax, tax, tax. Scare tactics. They think they can scare people into 
believing something that is not true. The fact is, not only does this 
bill not raise taxes on the middle class, this bill is a tax cut for 
Americans.
  Look at the chart behind me, which shows that. This is individual 
taxes. We are talking about taxes on individuals in America. This chart 
shows that in the year 2015, there will be a net tax cut for Americans 
of $26.8 billion--a tax cut. The other side says some of those folks 
are not paying taxes. That is true. It is a refundable tax credit of 
about $27 billion. In 2017, it is a net tax cut of $40 billion. In 
2019, it is a net tax cut of almost $41 billion.
  Nobody can read the small print on the chart, so I will read it:

       Combined effects of the high-premium excise tax, health 
     care affordability tax credits, increase in HI tax, increase 
     in HI floor for medical expense deductions.

  It is the basic provisions.
  It is very important to point out that this is a net tax cut for most 
Americans. For some, there is a tax increase. But guess what. According 
to CBO, that is because those folks will make more money. Their wages 
and salaries will go up.
  I don't see a chart-meister behind me to change the charts, but the 
chart shows almost for every year about a 10-percent increase in taxes 
for upper income areas and about an 80-percent increase in wages or 
income. That is basically because, according to the CBO, the high-
premium excise tax will result. People will be paying lower premiums, 7 
to 12 percent lower premiums as a consequence of the Cadillac tax 
provision. CBO says that; it is not my prediction. That will be passed 
on in the form of higher wages and higher income to people. People will 
be paying higher taxes, but they will be making more money.
  Let's make it clear. This bill lowers taxes. At least that is what 
CBO says. It is one thing to make an allegation that it increases 
taxes, but CBO says there is a net tax cut, which I mentioned.
  Turning to another subject--small business--one of the goals of 
health care reform, clearly, is to ensure employees and small 
businesses have access to quality, affordable health care options. 
Small businesses have a tough time providing health insurance, that is 
true. Last year, only 62 percent of small businesses offered health 
insurance to their employees. Compare that with about 99 percent of 
companies with 200 or more employees. Big businesses offer health 
insurance, but small businesses just can't do it. They have a hard 
time. Among the very small businesses, fewer than half offered their 
employees health insurance.
  Small businesses say the main reason they cannot provide health 
insurance is because premiums are so high. That is probably true; it is 
expensive. I have talked to many small businesspeople, and I am quite 
certain the Senator from Vermont, who is in the chair, has run across 
the same comments from businesses. It is just too expensive.
  In the past 10 years, premiums have risen 82 percent for single 
workers and 93 percent for families employed by small businesses. As 
health care costs rise, small businesses are forced to make workers pay 
a greater portion of these expensive premiums. Last year, employees in 
small businesses that provided health insurance paid more than twice 
what they paid in 1999. So in a period of 8 years, the amount employees 
paid more than doubled.
  The low rate offering and higher cost-sharing responsibilities for 
employees and small businesses often limit the ability of small 
businesses to attract and retain good employees.
  That is why the health care bill before us today includes provisions 
to make quality coverage more affordable for small businesses and their 
employees. The bill includes $24 billion in tax credits to help small 
businesses and charitable organizations purchase health insurance for 
their employees--$24 billion.
  Starting in a couple of years, eligible small businesses would 
receive tax credits worth up to 35 percent of the employer's 
contribution to employee health insurance plans. Then in 2014, eligible 
small businesses will receive tax credits worth up to 50 percent of the 
employer's contribution to employee health insurance plans purchased in 
health insurance exchanges. That is half of the cost to the employer. 
An employer could take half of that cost as a tax credit against that 
company's income.
  To qualify for the tax credits, businesses would have to cover at 
least half of their employee premium costs. The value of the tax credit 
is based on the size of the business and the average wage of its 
employees.
  The small business tax credit will help make health insurance more 
affordable for many small businesses. That is clear. In 2011, 4.2 
million Americans will be covered by quality, affordable health 
insurance because of this credit. On average, small businesses across 
the country will receive a new tax credit of around $5,000 to help them 
purchase insurance. The CBO has estimated that the small business 
credit will help lower insurance costs by 8 to 11 percent for employees 
at small businesses who receive that credit. CBO says, again, that 
small business credit will help lower insurance costs by 8 to 11 
percent for employees of small businesses who receive the credit.
  One of the reasons many small businesses are currently unable to 
afford health insurance is because they lack the buying power larger 
companies have to negotiate group rates. Our bill creates small 
business insurance exchanges, known as shop exchanges, where small 
businesses can join together and pool their risks. That will enhance 
their choice and buying power. These State-based exchanges will be a 
critical tool to help small businesses with fewer than 100 employees 
shop for health insurance plans and determine their eligibility for tax 
credits to buy health insurance. Small businesses that prosper and grow 
beyond 100 employees will be allowed to continue shopping in the 
exchanges.
  The insurance plans sold in these exchanges will be subject to the 
same transparency requirements and consumer protections, so small 
businesses can feel confident they are purchasing high-quality plans 
that will provide quality, affordable coverage for their workers.
  One more point. We all talk to small businesspeople. Time and time 
again, they say they like to provide health insurance. But what 
happens? The insurance company comes along and says: Next year, we are 
going to raise your premiums 20, 30, 40 percent. Why? The answer is 
that we found out one of your employees has a preexisting condition, so 
we are going to raise your premiums by that much. It puts small 
businessmen in a terrible dilemma: they either have to fire that 
employee to get the lower increase in premiums or eat that big increase 
and keep that employee.
  I remember a businessman in Billings, a small contractor, whose heart 
sank when he got that notice from the insurance company. He decided to 
keep the valuable employee, who had worked for him for a good period of 
time. He will not fire that employee. He shopped around and finally 
found another insurance company, and the increase was not 30 percent, 
it was more in the nature of 20 percent.
  Small businesspeople face this great variety of premiums. They go up 
this much and that much. It is because of the terrible situation we 
have where companies can deny coverage based on preexisting conditions, 
health care status, and so forth. Different States have different 
rating rules and so on. This will help small businesses get more 
stability and quality.
  The insurance plans sold will be subject to the same transparency 
requirements and consumer protection that other individuals will also 
find available.
  The health care reform bill before us also institutes reforms of the 
insurance market that will protect individuals and small businesses 
purchasing plans. I already mentioned that. These reforms will stop 
insurance companies from denying coverage based on preexisting 
conditions.
  Passing health care reform is critical to small businesses. Without 
reform, many small businesses will be forced to drop their health care 
insurance coverage because they will no longer be

[[Page S12784]]

able to afford the increasing premiums. That would leave employees to 
fend for themselves in the individual market.
  The CBO tells us these reforms will make coverage more affordable for 
millions of small business employees. The small business tax credit 
will help reduce health care costs for small businesses and their 
employees. As a result of the larger health reform proposals in this 
bill, there will be an increase in the percentage of small firms that 
offer health insurance coverage.
  I ask unanimous consent to extend the period for debate only until 
4:30, with the time equally divided, with Senators permitted to speak 
therein for up to 10 minutes each, with no amendments in order during 
that time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maine is recognized.
  Ms. SNOWE. Mr. President, I ask unanimous consent to speak for up to 
20 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. SNOWE. Mr. President, today the Senate is addressing the future 
of health care in our Nation--both Americans' access to care and its 
cost. As we confront projections of escalating health spending--
exceeding $33 trillion in the coming decade--the imperative is clear 
that we must address rising costs, or affordable access to coverage 
simply cannot be achieved and sustained.
  That is why I am joining Senator Dorgan, who has been a relentless 
champion on the issue of drug reimportation, in proposing the amendment 
to this legislation, so that Americans can safely and affordably access 
the medications which they rely upon to improve their health and which 
the industry has reminded us time and again are critical to reducing 
severe illness and hospitalization and, of course, extending life.
  Senator Dorgan has long been the Senate's tireless leader. In fact, 
it has been more than a decade, as I recall, that he began to pursue 
this endeavor and this journey in seeking to end the inequity which 
resulted when Americans were barred from importing less expensive 
medications. He has reminded us regularly of the trade inequity which 
has been imposed on consumers. He also has reminded his colleagues that 
drug importation, conducted with proper safety measures, provides a 
route to improving access to lifesaving medications.
  I am pleased to have joined him in this effort, once again, along 
with Senator McCain, who has been a stalwart on this issue from the 
very outset and a tremendous advocate and a driving force. Of course, 
the Presiding Officer, the Senator from Vermont, Mr. Sanders, 
throughout his career has been pursuing and advocating this inequity to 
be remedied once and for all.
  We introduced this legislation back in 2003 for the very first time. 
We worked on a comprehensive approach required to address the safe, 
economical importation of medications. I well recall the efforts--the 
yeoman efforts--of the late Senator Kennedy who worked relentlessly to 
remedy this flaw in our policy, along with Senator Grassley, Senator 
Stabenow, and Senator Vitter, whose bipartisanship on this vital 
question has also been instrumental as we advanced this cause for the 
better part of a decade. It has been a greater undertaking than I think 
many would have surmised or anticipated, frankly.
  There can be little doubt that the effort to reduce health costs 
poses one of the greatest challenges in health care reform. That is why 
the Senate Finance Committee, under the leadership of Chairman Baucus, 
has worked mightily to incorporate provisions in the pending 
legislation to ``bend the cost curve.'' Let there be no mistake, the 
resistance to reforming spending has been immense. That is in part 
because, as so often has been said: ``One man's waste is another man's 
profit.'' So while other nations pay 35 to 55 percent less for their 
prescription drugs than the United States, we have continued to pay the 
world's highest prices for brand drugs for the past decade, despite 
nearly 10 years of effort to provide for the safe importation of 
prescription drugs.
  Fortunately, that has not deterred a broad bipartisan call to arms on 
this issue, despite the industry's actions that have blocked attempt 
after attempt to provide Americans both access and assurances that 
imported drugs would be safe. Indeed, this issue of both safety and 
affordability has drawn a bipartisan coalition which has been a model 
for how we can work together to address this health care problem.
  We created legislation which the Congressional Budget Office 
previously estimated would save our Nation approximately $50 billion 
over 10 years. The CBO has not yet estimated the total savings to 
consumers but has projected a savings to the Federal Government alone 
of $19.4 billion. Since Federal savings was about 20 percent of total 
savings in the past, one can hypothesize dramatically increased 
consumer savings likely approaching $80 billion. These are exactly, 
precisely the kinds of savings we must advance today.
  One can easily see that the failure to act on this legislation since 
its introduction in April 2004 has needlessly carried a high cost for 
the American people, made all the more egregious and unacceptable given 
these difficult economic times, as more Americans are reducing or 
skipping doses or forgoing medication altogether. And this problem is 
not going to get better. It is regrettably only going to get worse.
  The trend is undeniable and unabated. We are all painfully aware of 
the price increases in brand-name prescription drugs this year that 
bear absolutely no relationship whatsoever to our overall economy. 
Manufacturers have increased prices of brand drugs by an average of 9 
percent, just as inflation measured by the CPI actually fell by nearly 
1 percent.
  We can look at this chart and demonstrate the contrast in increases. 
Brand drugs increasing 9 percent, and here are generics and here is the 
CPI. It truly is emblematic and reflective on this chart how actually 
prices have been decreased by the same amount that brand drug prices 
have escalated.
  In other words, just as we are working to expand coverage to tens of 
millions of more Americans, we have the industry establishing a new 
pricing baseline that is entirely off kilter with the rest of the 
economy, in comparison between the CPI and the cost of brand-name 
drugs. It is widely unaffordable for the American people and clearly 
unsustainable for the future. How can we possibly not act on this 
amendment?
  This is an industry that has offered $80 billion in concessions 
toward health care reform--approximately $8 billion over the next 10 
years. When one considers that our annual spending, while this single 
price increase of 9 percent imposed over $290 billion in drug spending, 
with over two-thirds of that amount representing brand drugs, it is 
clear that this single price increase alone at this 9 percent will 
yield at least twice as much as the industry has pledged to reform in 
the pending health care reform legislation.
  Frankly, that is cost shifting of the worst kind because it occurs on 
the back of the American taxpayer, most especially on those in greatest 
need who are also the least able to afford these exorbitant prices. 
There should be no mistake, these most recent increases are following 
the patterns we have witnessed year after year.
  How do we know? Following passage of the Medicare Modernization Act, 
Senator Wyden and I requested that the GAO track drug price trends, 
including looking back to before the bill was enacted.
  What did we find? First, that the price of brand drugs has escalated 
two to three times the rate of inflation. That means $100 in drug costs 
in 2004 has grown to more than $140 today.
  Tell me whose income has increased by that amount in the last 5 years 
alone. These unabated, escalating costs for drugs are only widening the 
already yawning gulf of unaffordability for the American people.
  But that is not all. When Senator Wyden and I examined the GAO data, 
we also discovered that as we neared the achievement of a prescription 
drug benefit under Medicare, the rate of price increases actually rose 
faster. History also appears to be repeating itself once again to the 
everlasting detriment of all those whose health security depends on 
medications.
  One year ago, the Associated Press reported a startling find that for 
the

[[Page S12785]]

first time in a decade, prescription drug use was down. Given the 
rising costs imposed on struggling American families, that should come 
as no surprise.
  It also should serve as a wake-up call, an alarm bell. We are long 
past the point where we should heed Einstein's timeless truism that one 
should not keep doing the same thing over and over and expect a new 
result. The fact is, we simply cannot assume pledges of savings in the 
form of the industry's monetary concessions to health reform actually 
amount to real, fundamental reforms or that drug assistance programs 
are a substitute for a market which brings consumers better value. They 
are not.
  It is clear that the time for enactment of this legislation is long 
overdue and, frankly, more urgent than ever, as illustrated by this 
second chart of unfilled prescription drugs. Just looking at it, you 
can see how the unmet need for medications has actually increased since 
2003. Among working age adults, only those with Medicare coverage 
experienced any improvement in their ability to fill their 
prescriptions. All others saw a rise in their inability to obtain the 
necessary medications.
  Among the uninsured, more than one in three individuals went without 
a required prescription. And in those with chronic diseases, that 
number doubles. This is a travesty. Indisputably, despite manufacturer 
assistance programs, despite the increased use of generics, the high 
and escalating cost of brand-name drugs is directly and negatively 
affecting the health of millions.

  That is why our voices today echo those of an overwhelming 7 out of 
10 Americans who have called for lifting the ban on prescription drug 
importation. Let there be no doubt, this is a mandate for action. The 
President has added his voice to ours, calling for safe drug 
importation as one means to address health care costs which threaten 
the health of Americans in perilous economic times.
  The bottom line is, when nations institute safe, regulated trade in 
pharmaceuticals, they achieve results, as Sweden did when it entered 
the European system of trade and saw a reduction of 12 to 19 percent in 
the price of traded drugs.
  Opponents claim importation will cause American consumers harm. For 
those who did express concern about safety, no one shares that 
sentiment more than I do. So let me be unequivocal in stating that 
safety is the foundation of this legislation.
  Our constituents have taken action repeatedly to purchase drugs which 
they could afford mostly in Canada. That is certainly true in my State 
of Maine. It is true in the State of Vermont, the Presiding Officer's 
State. It has been demonstrated time and again that importation is 
safe. We can ensure Americans safe access to imports. In Europe, over 
30 years of parallel trading of pharmaceuticals has demonstrated 
indisputable safety. In fact, a former Pfizer executive, Dr. Peter 
Rost, has stated from his firsthand experience in Europe:

       I think it is outright derogatory to claim that Americans 
     would not be able to handle reimportation of drugs, when the 
     rest of the world can do this.

  Yet some will point to a recent FDA letter cautioning that drugs must 
be demonstrated to be safe and effective, that they must be 
manufactured under the highest standards, that an imported drug must be 
demonstrated equivalent to existing products used domestically, and 
that we must guard against contaminated and counterfeit drugs. This 
amendment does each of these things and much more to ensure that 
Americans can safely have access to safe imports.
  Under this legislation, we see with this next chart, we would import 
drugs from 31 countries which meet high regulatory standards. Those are 
shown in blue on this chart. There are nations which meet our high 
standards. In most cases, individuals will purchase an imported 
prescription drug from their local pharmacists. Pharmacies will receive 
these drugs from U.S. wholesalers which import them. These wholesalers 
will be registered, inspected, monitored by the FDA. This higher level 
of safety is a first step in establishing a higher standard in the 
handling of prescription drugs in the United States.
  Our legislation also allows individuals to directly order medications 
from outside the United States when using an FDA-registered and 
approved Canadian pharmacy. Again, just as with wholesalers handling 
prescription drugs, the FDA will examine, register, and inspect these 
facilities on a frequent basis. FDA will assure the highest standard 
for such essential functions as recording medical history, verifying 
prescriptions, and tracking shipments. Regardless of whether the 
purchase is from the local pharmacist or a Canadian pharmacy, we assure 
that a legitimate prescription and a qualified pharmacist are required 
to help assure safety.
  For those who say that consumers could unwittingly purchase an 
unapproved or suspect drug, our legislation assures that drugs received 
will always be FDA approved. If any difference exists in a foreign 
drug--even the most trivial of distinctions--our legislation assures 
FDA will evaluate the product and determine its acceptability.
  For those who say counterfeiting is a threat, our legislation 
requires the use of anticounterfeiting technologies to protect drugs. 
Today we can thwart counterfeiting by employing technologies like the 
one now used on $20 bills. Our bill not only requires the use of such 
counterfeit-resistant technologies but also a standardized numerical 
identifier unique to each package of a drug. Moreover, this bill 
supports the development of future anticounterfeiting and track-and-
trace technologies which we hope will be used to protect all drugs.
  For those who say the consumers won't know who has handled an 
imported prescription drug, our bill requires a chain of custody--
otherwise known as a pedigree--be maintained and inspected to help 
ensure the integrity of imported drugs. A pedigree for medications was 
mandated by law in 1988 and has still not been implemented. This bill 
will change that.
  For the first time, in fact, this legislation will include resources 
to inspect all facilities handling medications. So we are not just 
making imported drugs safer but also domestic drugs.
  Some attempt to alarm Americans about the countries from which we 
would import drugs, citing nations such as Latvia, Estonia, Slovakia. 
The last time I checked, these are members of the European Union. The 
same is true for Ireland, for example, where Lipitor is made.
  So let me get this straight: It is fine for those countries to 
manufacture drugs in their plants for domestic U.S. companies and ship 
those drugs here where we then have the privilege of paying higher 
prices than anywhere else in the world, but we somehow cannot safely 
import drugs made in those same countries. Exactly what kind of sense 
does that make?
  In fact, going back to this chart where the European Union and other 
countries from which we would import appear in blue. So all those 
countries that are in blue are areas in which this amendment would 
allow the importation of drugs, which we see infrequent FDA inspections 
are in these red countries. All of these countries that are designated 
in red are the ones in which we have manufacturers importing 
ingredients for the final product. Yet there are infrequent FDA 
inspections. There are plants right now--today--shown on the chart in 
red that are making drugs that are sold and consumed in the United 
States, plants where there are few FDA inspections. In fact, it has 
been estimated that approximately 40 percent of the active ingredients 
in prescription drugs consumed in the United States are actually made 
in India and China, and we know oversight there is lacking. In fact, 
such plants may be inspected as infrequently as every 12 years.

  Currently, there are more than 3,200 foreign manufacturing plants 
that make medications for the United States market according to GAO. 
The GAO also found that FDA, in the words of an Associated Press 
article on the matter, ``isn't even sure how many foreign facilities 
are producing for the American market. One government database suggests 
it's 6,760. Another says about 3,000.''
  With the explosion of drugs coming in from nations such as India and 
China, as reported in the Washington Post, the FDA's ``budget for 
foreign inspections has not kept pace,'' and as a

[[Page S12786]]

result, as of 2007, ``foreign drug and drug ingredient makers are 
inspected on average once every eight to 12 years, while American-based 
manufacturers must be inspected at least once every two years.''
  The article also reported that China itself has more than 700 plants, 
but the FDA only has the resources to conduct about 20 inspections a 
year there.
  So let me just indicate, on this chart again, that we, under this 
amendment that is pending before the Senate, would allow drugs to be 
imported from those countries designated in blue. The countries that 
are designated and reflected in red are those countries where we 
currently manufacture the ingredients of the final product. We are not 
suggesting that drugs be imported from these nations. Yet our 
legislation will make it safer because of the resources that we have 
incorporated in this legislation before the Senate and all of the 
standards that will be required for FDA to inspect these facilities 
that are currently not inspected.
  We have seen the dangers in ignoring these problems, and that is why 
this legislation would fund enhanced FDA foreign inspections to 
fundamentally improve the safety of drugs consumed in the United 
States. But that is not all. While opponents will cite current law on 
drug importation, the fact is, in the Medicare Modernization Act--the 
current drug importation statute which has never been implemented--
there are just six safety provisions over as many pages--as detailed in 
this chart--versus the 31 major provisions in our amendment.
  So when we passed the Medicare Modernization Act back in 2003, we 
included safety features because we heard from many of our colleagues 
who simply did not want to have drug importation. They claimed we had 
to have a safety certification process, which we have had numerous 
times for the last decade, to which nothing has advanced with respect 
to importation. Obviously, a safety certification hasn't been made 
because we haven't given any resources. We haven't implemented that 
certification in good faith.
  Under the pending amendment, we incorporate 31 major provisions in 
our legislation to address each and every issue. We systematically 
analyze and identify every issue that has been raised by the opponents 
to the drug importation legislation--every safety-related issue, every 
standard-related issue, every failure that has occurred with respect to 
the FDA inspection system on where they are importing drugs currently 
and where they have not inspected those facilities. We have 31 
different provisions in order to address every facet of safety-related 
issues.
  So for those who say importation isn't safe, we show that it shall 
be. This legislation will set a model and a mandate for improving 
safety in the handling of not only imported prescription drugs but of 
all medications--even domestic ones.
  But if that is not enough, let me also suggest to the opponents of 
this legislation that they are failing to observe the greatest safety 
threat to Americans--that the inability to take a drug as it is 
prescribed undoubtedly exacts a toll on thousands of American lives 
every year.
  So beyond question, our measure addresses the crucial issue of 
safety. I think it is certainly indicative and reflective in this chart 
today, all the provisions that have been incorporated in the pending 
amendment before the Senate. This clearly will deliver the real savings 
as well as safety for consumers.
  Organizations across the board are supporting this legislation. They 
represent more than 50 million Americans who realize that extending 
this coverage is fundamentally critically important to the well-being 
of all Americans.
  The PRESIDING OFFICER (Ms. Stabenow). The Senator's time has expired.
  Ms. SNOWE. I thank the Chair.
  The PRESIDING OFFICER. The distinguished Senator from Montana.
  Mr. BAUCUS. Madam President, I believe we have to amend the previous 
order which restricted speakers to 10 minutes. So I ask unanimous 
consent that the previous order be changed so that Senators may speak 
for longer than 10 minutes, and I yield 15 minutes to the Senator from 
New Jersey.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from New Jersey is recognized.
  Mr. MENENDEZ. I thank the distinguished chairman of the Senate 
Finance Committee for yielding me the time.
  Madam President, I rise in strong opposition to the Dorgan amendment 
to allow the importation of drugs from 32 different countries in the 
world into the medicine cabinets of American families. I believe that 
is, at its core, a regressive amendment.
  This amendment, however well-intentioned, reminds me of a time when 
the lack of sufficient regulation allowed people to sell snake oil and 
magic elixirs. Let's not relive that history. Let's learn from it.
  I am sure many in this Chamber remember a time when the doctor would 
give us a prescription, we would take that to the local pharmacy, and 
the one thing we never did was question what was in the bottle. Now, 
with this amendment, we would not be so certain. We would not be sure 
that what is in the bottle is what we think it is. We would not be so 
certain from where it came. It could be directly from countries all 
over the world--Lithuania, Estonia, Latvia, the Czech Republic, or any 
1 of 28 other countries, and I will speak to that. Yes, I have heard 
they are part of the European Union, but I will talk about what the 
European Union just said about their challenges with counterfeit drugs. 
Or maybe they will come indirectly from any number of countries that 
have proven to make tainted medicine; those who are not part of the 
European Union but who are counterfeiting their drugs into the European 
Union, getting into their supply chain and ultimately getting to us, if 
we were to allow it to happen. We would not be absolutely sure of the 
conditions under which they were manufactured, whether they are safe to 
use, or where their ingredients originated.

  Health care reform and lowering costs does not mean we should roll 
the dice with the health and safety of the American people.
  I appreciate my colleagues' interest in bringing lower cost drugs to 
the market. In fact, I agree with them. But we cannot risk the health 
and safety of the American people in order to do it, and I am afraid 
this amendment would do just that.
  We have heard a lot about the FDA--the Food and Drug Administration. 
Yes, they are the ones who safeguard Americans from having the wrong 
type of drugs get into our marketplace or making sure the right type of 
drugs are approved and the wrong ones stay out. I have heard the 
stories of Americans searching for affordable prescription drugs and 
either going online to get them or traveling sometimes. But we have to 
ensure the drugs they buy are not counterfeit, not tainted, not 
substandard, and that they are what the doctor ordered and will work.
  This amendment would undo current safety protections that ensure that 
patients are getting prescription medications that are the same in 
substance, quality, and quantity their doctor has prescribed. So let's 
see what the FDA said.
  In a letter from the Food and Drug Administration issued the other 
day to one of our colleagues in the Senate, Commissioner Hamburg said 
there are four potential risks to patients, in her opinion, that have 
to be addressed.
  First, she is concerned that some imported drugs may not be safe and 
effective because they were not subject to a rigorous regulatory review 
prior to approval. Second, she says the drugs ``may not be a 
consistently made, high quality product because they were not 
manufactured in a facility that complied with appropriate good 
manufacturing procedures.''
  Third, the drugs ``may not be substitutable with the FDA approved 
products because of differences in composition or manufacturing.''
  And, fourth, the drugs simply ``may not be what they purport to be'' 
because inadequate safeguards in the supply chain may have allowed 
contamination or--worse--counterfeiting.
  In addition, the FDA's letter went on to cite significant ``safety 
concerns related to allowing the importation of nonbioequivalent 
products . . . and confusion in distribution and labeling between 
foreign products and the domestic product.''

[[Page S12787]]

  The FDA is also concerned it does not have clear authority over 
foreign supply chains. In other words, there is a very real risk that 
imported drugs either would not make us better or, yes, could very well 
make us worse.
  One reason we never question what is in the bottle when we go to the 
pharmacy to fill our prescription is because the U.S. drug supply 
system is a closed system. That is why it is one of the safest in the 
world. Everyone in the system is subject to the FDA's oversight--to 
these very standards--and to strong penalties for failure to comply 
with the law.
  The FDA would have to review data to determine whether the non-FDA-
approved drug is safe, effective, and substitutable with the FDA-
approved version. In addition, the FDA would need to review drug 
facilities all over the world to determine whether they manufacture 
high-quality products consistently.
  It is clear that keeping our drug supply safe--in a global economy in 
which we cannot affect the motives and willingness of others to game 
the system for greed and profit--is a monumental task. It is not simply 
allowing for the importation of lower cost medications, as the 
proponents of this amendment would have us believe. It will require a 
global reach, extraordinary vigilance, and a serious investment to 
enforce the highest standards in parts of the world that have minimal 
standards now, so we don't have to ask which drug is real and which is 
counterfeit; so we don't have to wonder, if the packaging looks the 
same: Is it approved Tamiflu or is it counterfeit Tamiflu? The 
packaging looks the same, but is the content the same? One is approved; 
one is counterfeit.
  When the swine flu was coming through and everybody started trying to 
get hold of Tamiflu, what did they do? They went online and got 
counterfeit Tamiflu which didn't do the job. In this photo, the answer 
is no. One is real, one is counterfeit. You can't tell the difference. 
Is this helping people save money, if they just paid for a counterfeit 
product? No. Is this an effective treatment for a contagious H1N1 flu, 
if you have just been fooled by a counterfeit bottle of Tamiflu because 
you thought it was cheaper? No. How is this in the best interest of the 
American people?
  Here is another example--Lipitor. Can you tell which is counterfeit 
or approved Lipitor? They look the same. Americans who purchase them 
are told they are the same, but how do you tell the difference? Most 
people can't. So they will go about their normal routine each morning 
taking the so-called Lipitor, thinking they are treating their high 
blood pressure, but really they are walking around with the same silent 
killer and not taking the appropriate medication for it.
  Another example, Aricept, a drug to slow the progression of 
Alzheimer's disease--something my mother was taking when she was alive. 
Can you tell the difference between the pills in this photo? No. And 
that is the problem.
  The global economy opens global possibilities to counterfeiting these 
drugs. It opens the potential for these drugs--or the ingredients used 
in these drugs--to find their way from nation to nation, from Southeast 
Asia where the problem is epidemic to one of the 32 nations listed in 
the amendment that supposedly are safer, and then ultimately into 
American homes. That is a gamble we cannot afford to take. We should 
not have to wonder what is in the bottle.
  Americans suffering from Alzheimer's should not have to wonder if the 
drug they are taking is real or counterfeit. By the time they figure 
that out, buying a drug either online or abroad that is counterfeit or 
not of the same substance or of a different dosage, it could be too 
late to help reverse the damage, as was promised.
  One final example, Celebrex, used to treat arthritis and chronic 
pain. Can you tell the difference between these pills? No, and neither 
would those who continue to suffer if they are scammed into buying the 
counterfeit version. One is approved, one is counterfeit.
  I fully appreciate my colleagues' desire to keep the cost of 
prescription drugs down, but our first task is to protect the safety of 
Americans and to prevent counterfeit drugs from infecting the American 
market.
  The real problem is bringing down the cost of prescription drugs as 
part of overall health care reform, and the real solution is expanding 
access to affordable drugs in the United States.
  I have heard several of my colleagues refer to 9 percent increases. 
What they fail to mention is the deep discounts the industry provides, 
particularly to the government and other entities, against that 
increase. They do not do that because, of course, it doesn't serve 
their purpose.
  In this fight to create affordable drugs in the United States, I take 
a back seat to no one. But at the same time, I strongly believe we 
cannot roll the dice with the health and safety of the American people. 
This amendment is that roll of the dice. We should never put Americans 
in the position of having to worry about whether their medicine will 
make them better or worse. We should never put Americans in a position 
of wondering is that a real pill or is that a poison pill?
  To see what happens if we allow importation we only need to look to 
the European Union. One of my colleagues earlier today used it as an 
example as to why we should pass this amendment. But I listened to the 
words of the European Union, and I hear quite the opposite.
  Earlier this week, the European Union Commissioner in charge of this 
issue said:

       The number of counterfeit medicines arriving in Europe . . 
     . is constantly growing. The European Commission is extremely 
     worried.

  To quote another section of the statement:

       In just 2 months, the European Union seized 34 million fake 
     tablets at custom points in all member countries. This 
     exceeded our worst fears.

  It went on to say:

       Every fake drug is a potential massacre. Even when a 
     medicine only contains an ineffective substance, this can 
     lead to people dying because they think they are fighting 
     their illness with a real drug.
       I expect the EU will agree in 2010 that a drug's journey 
     from manufacture to sale should be scrutinized carefully.

  He goes on to talk about other safeguards.
  So, in fact, the very essence of what some claim is the very reason 
we should allow importation, the European Union is saying, quite to the 
contrary, that they think this is a huge problem for them and, in fact, 
what seems to be an action that would not hurt someone can actually 
mean the difference between life and death.
  I don't want American families to see those fears come to life. Yes, 
counterfeit drugs may happen, but if we pass the amendment, we just 
open the floodgates. The European Union's experience only proves my 
concerns, not alleviates them like some others suggest. A $75 
counterfeit cancer drug that only contains half of the dosage that a 
person has been prescribed and needs does not save Americans money and 
certainly is not worth the price in terms of dollars or risk to life. 
Let's not now open national borders to insufficiently regulated drugs 
from around the world.
  Finally, in a different dimension, I think safety is utmost, but at a 
time of joblessness in this country, I don't want to offshore those 
jobs abroad to allow contaminated and counterfeit prescription drugs to 
come into this country. We are attacking the one last major research 
and manufacturing entity in the United States, one that has been at the 
forefront of the health care reform effort and put $80 billion of its 
own money in for reform. I want to see more partners like that in this 
process.
  Let's reject this amendment. Let's keep our drug supply one of the 
safest in the world.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Madam President, I ask unanimous consent we extend the 
period for debate only until 5 o'clock, with the time equally divided 
with Senators permitted to speak up to 10 minutes each; with no 
amendment in order during this time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. I suggest the absence of a quorum and ask the time be 
equally charged to both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DORGAN. I ask unanimous consent that the order for the quorum 
call be rescinded.

[[Page S12788]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Madam President, I have listened this afternoon to some 
of the opposition to the legislation, the amendment we have offered 
trying to deal with the increasing price of prescription drugs. Those 
who are opposed apparently are oblivious to the question of the 
dramatic runup in prices for prescription drugs. They talk about 
counterfeiting and their worry about that. I wish to talk about that. 
Because if you are worried about counterfeiting--and, by the way, there 
is a counterfeiting issue with respect to prescription drugs in this 
country and several of my colleagues have described that issue--if you 
are worried about that, then you have to support the amendment I and 
Senator McCain and others have offered that provides the only basis for 
getting to things such as pedigrees on prescription drugs, batch lots, 
and tracers. The only mechanism to do that is in this amendment, which 
will make the domestic drug supply safer, allow us to track back drugs 
to their origin, and will certainly allow us to import FDA-approved 
drugs when they are sold in other countries for a fraction of the 
price.
  Let me describe what brings us to the floor of the Senate. To those 
who are opposed to this amendment, if one wants to be oblivious, I 
guess, fine, but the consumers will certainly notice. You want to buy 
some Nexium, guess what. Nexium is going to cost you $424 in this 
country. But if you buy it in Great Britain, it is $41 dollars; Spain, 
$36; Canada, $65; Germany $37. Once again, the American consumer gets 
to pay $424 for an equivalent amount, 10 times the cost of what it 
costs in Great Britain. Is that fair? To me, it is not. It is not fair 
to me that the American consumer is charged the highest prices in the 
world.
  Plavix, you can see what is happening here, $133; $59 in Britain; $58 
in Spain. The American consumer gets to pay $133 for the equivalent 
amount. Lipitor, the popular cholesterol-lowering drug, for an 
equivalent amount of Lipitor, the American consumer pays $125. In Great 
Britain, they pay $40. In Spain, they pay $32. In Germany, they pay 
$48. Again, the American consumer is told: You get to pay $125. I have 
described, over and over again, the two bottles of Lipitor, empty 
bottles made in Ireland by an American corporation and distributed all 
across the world, the most popular cholesterol-lowering drug. Same pill 
put in the same bottle made by the same company, FDA approved. Only 
difference is this one has a blue label and this one has a red one. 
This one went to Canada and this one to the United States. The U.S. 
consumer got to pay nearly triple the price. Is that fair? Not where I 
come from.
  By the way, my colleague from Maine, who spoke moments ago, talked 
about a nearly 10-percent increase in the price for brand-name 
prescription drugs just this year. This chart shows what is happening. 
You take the arthritis drug Enbrel; you got a 12-percent increase this 
year. Singular, for asthma, this year you got a 12-percent increase. 
Boniva, for osteoporosis, an 18-percent increase this year in drug 
cost. The list goes on. Plavix, 8 percent up this year. In fact, I have 
a chart that shows what has happened year after year after year. The 
price of brand-name prescription drugs in the United States is way 
above the rate of inflation in every single year. In fact, during this 
year, the rate of inflation has dropped down here and the price of 
prescription drugs has gone up 9.3 percent.
  Several of my colleagues, at least a couple of my colleagues have 
talked about the issue of counterfeit drugs. I am concerned about 
counterfeit drugs as well. In fact, there were proposals in the 
Congress that would have done what we should have done long ago with 
respect to ensuring a safe drug supply: attaching pedigrees to drugs, 
batch lots so you can trace them all the way back to their origin and 
trace them all the way through the chain of custody. That has never 
been done, and it should be done. It is in our amendment. That is the 
only way we will have a totally safe drug supply.
  A couple of my colleagues have talked about circumstances where there 
have been counterfeit drugs in this country. That is true. Those were 
domestic drugs, drugs inside the country. By the way, how does some of 
that happen when you have not only counterfeit drugs but contaminated 
drugs? Forty percent of the active ingredients in prescription drugs 
for the United States comes from India and China. Think of that: 40 
percent of the active ingredients of all the prescription drugs 
consumed in our country comes from India or China. I described earlier 
today the Wall Street Journal investigative report which shows the 
circumstances with the active ingredient for Heparin, the production of 
Heparin in a building in China. This shows the development of pig 
intestines for the production of Heparin. You will see this in the Wall 
Street Journal articles and the expose. Here is a man in this building 
in China who is producing Heparin, stirring a rusty old pot with what 
appears to be a twig from a tree, clearly unsanitary conditions. That 
becomes ingredients for America's prescription drug supply; 40 percent 
of our active ingredients comes from circumstances in which there is 
virtually no inspection or very few inspections of those kind of places 
where those prescription drugs are developed.
  By the way, there was a drug called Epogen produced by a 
pharmaceutical company, a very reputable one. There is a wonderful book 
written called dangerous doses by Katherine Eban. She traced this drug 
to a 16-year-old boy named Timothy Fagan, whose health was dramatically 
affected by what has happened here. This drug found its way all the way 
through these places, including a strip joint in Miami, a cooler in the 
back of a strip joint in Miami, in the trunks of automobiles, 
distributed through all sorts of strange and unusual places, and gets 
to a 16-year-old boy with devastating results because this drug had 
one-twentieth the strength that was supposed to have been given to this 
young boy for his disease. Does anybody have the capability to 
understand where all this happened, how it got tracked? A journalist 
did the investigative work to find this out. Fortunately for us, we now 
have a track on this one drug that affected this young boy in a 
devastating way.
  That was not importation. That was the domestic drug supply. How can 
this happen? Because we don't have batch lots and pedigrees and tracers 
and the capability to find out where a drug is produced and where it 
goes from that production to the final user in every single 
circumstance. We have that in our amendment. It is the only way it will 
happen if we pass this amendment.
  It is interesting to me. There was a man named Dr. Peter Rost. He was 
the former vice president of marketing for Pfizer Corporation. By the 
way, Dr. Rost also worked in Europe in the parallel trade area for 20-
some years. They do this in Europe routinely. They actually have 
parallel trading where you can purchase drugs, one country to another, 
no problem. Here is what he says:

       The biggest argument against reimportation is safety. What 
     everyone has conveniently forgotten to tell you is that in 
     Europe reimportation has been in place for 20 years.

  They say this is going to be unsafe, you can't do it. Europe has been 
doing it for 20 years. Don't tell me we don't have the capability if 
Europe can do it. Why would we do it? Because it is unfair to the 
American people to be paying double, triple or quadruple or 10 times 
the cost of prescription drugs that are being paid for by people in the 
rest of the world. That is unfair. It doesn't make any sense to me.
  We offer an amendment. It is one of the few amendments in the Senate, 
in recent days and weeks, that is bipartisan. Most of the things 
offered are not bipartisan. This is an amendment, Dorgan-Snowe. We 
offer it with broad support. The late Ted Kennedy, bless his soul, sat 
right over there. He was a cosponsor of our amendment. John McCain is a 
cosponsor of our amendment. Senator Grassley and Senator Stabenow are 
cosponsors.
  The PRESIDING OFFICER. The Senator has spoken for 10 minutes.
  Mr. DORGAN. I ask unanimous consent for 5 additional minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. This is broadly bipartisan. It is one of the few 
bipartisan amendments. My expectation is, we will have a vote on the 
Crapo motion. He offered his last evening and I offered mine last 
evening. My expectation is

[[Page S12789]]

we will have a vote on the Crapo motion and then a vote on this 
amendment and move on. I would hope we will have the votes on this. It 
is the only thing in any health care proposal in the House or the 
Senate that starts to put the breaks on the escalating prices of 
prescription drugs. It is the only thing. Without this, we will pass 
health care reform, if, in fact, it passes and if someone says to you: 
What have you done to try to put the brakes on the fact that 
prescription drugs are increasing at 9 and 10 percent? What have you 
done about that? The answer is going to be, we didn't do anything. We 
just couldn't do that.

  The fact is, a whole lot of people in this country use prescription 
drugs regularly to control their cholesterol, their blood pressure, and 
otherwise manage diseases. It keeps them out of the hospital. The fact 
is, many of these prescription drugs are very important in the lives of 
people. The question for us is, if we are allowing these drugs to be 
priced out of the reach of people, what does that say about the value 
of the drugs? We need to have fair pricing for the American people. We 
must insist on fair pricing for prescription drugs for the American 
people. It is that simple. This notion of there being any kind of a 
safety issue is a total canard by those who ignore the very provisions 
of the bill that establish the most rigorous regime of safety ever 
established for the domestic drug supply and for the reimportation of 
prescription drugs. That is just a fact.
  My hope is, in very short order, we will have an opportunity to have 
the Members of the Senate cast their votes on this and, at long last, 
Senator Snowe and I, having been at this, I think, now for 8 or 10 
years, will have at the right time--and that is health care, when you 
are considering health care, when is a more important or more 
appropriate time to consider the questioning of prescription drugs--and 
in the right place, the ability to pass the legislation. We offer a 
bill as an amendment. Thirty Senators having cosponsored it, Republican 
and Democrats, conservatives and liberals and moderates having 
cosponsored it. It is my expectation, we will have this vote and at 
long last be successful in doing something for the American people.
  The question is, does the pharmaceutical industry have a lot of 
clout? The answer is, they sure do. As I said many times, I have no 
beef against that industry. I want them to succeed and earn profits. I 
think their pricing strategy is unfair to the American consumer. Do 
they have a lot of clout. Yes, they do. But it is my hope that when it 
comes time for a vote, the American people and the interests of the 
American consumers will have as much clout in this Chamber, based on 
the facts, facts that suggest the American people ought to be treated 
fairly.
  This amendment is all about freedom, giving the American people the 
freedom to do what everybody else can do and that is participate in the 
global marketplace. When the medicine they need that is FDA-approved is 
available somewhere else for half price or for an 80-percent reduction, 
why on Earth should they not be able to acquire that lower priced drug 
that is FDA-approved? The answer is, they should have the freedom to do 
that. The only way that freedom will exist is if we pass this 
amendment. That is just a fact.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Madam President, I yield the time remaining on our side 
to the Senator from Maryland.
  Might I ask, how much time is that?
  The PRESIDING OFFICER. There is 4 minutes 40 seconds.
  Mr. BAUCUS. Madam President, not withstanding the prior agreement, I 
ask unanimous consent that the Senator from Maryland be allowed to 
speak for 10 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. BAUCUS. Madam President, I might amend that by asking unanimous 
consent that the Senator from Kansas also be recognized for 15 minutes 
following the Senator from Maryland.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Maryland is recognized.
  Mr. CARDIN. Madam President, I ask unanimous consent that I be able 
to speak as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The remarks of Mr. CARDIN are printed in today's Record under 
``Morning Business.'')
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. ROBERTS. Madam President, I understand I am recognized for 15 
minutes; is that correct?
  The PRESIDING OFFICER. That is correct.
  Mr. ROBERTS. Madam President, I understand the distinguished Senator 
from Michigan wishes to attend the very important Democratic conference 
on a brand new health care bill. I understand that, and I shall try to 
expedite my remarks, only with the suggestion to the Presiding Officer 
that when you are late in the Senate, you are early, and they are not 
going to say anything important without you.
  I wish to yield at this time to the distinguished Senator from 
Georgia, who I understand has a statement to make.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. CHAMBLISS. Madam President, I thank my friend from Kansas.
  I rise to discuss the tax implications that this health care bill 
will have on Americans.
  Last year, President Obama made a promise to the American people. He 
assured us over and over that he would not raise ``a single dime'' of 
taxes on Americans earning less than $250,000 per year.
  But the health care bill presently before this body--the very bill 
that the President has demanded--will not only raise taxes, it will 
create new ones.
  And as of yet, we have no idea what the Congressional Budget Office 
will say about how much the deal my colleagues apparently struck last 
night will cost taxpayers.
  But we know that this $2.5 trillion proposal is going to hit three 
groups with new or higher taxes: families, businesses, and the health 
care industry itself. And we know that under the current bill taxes 
overall are estimated to go up by $867 billion.
  Tax hikes are detrimental at any time. But they are doubly hurtful in 
the bad economy we are in.
  Under the terms of this bill, in 2019, more than 42 million 
individuals and families--this is 25 percent of all tax returns under 
$200,000--will see their taxes increase.
  In addition, if we pass this bill, the Congressional Budget Office 
estimates that $36 billion in new taxes and fines will be forced upon 
individuals and businesses.
  Families without insurance would be fined up to $2,250. And according 
to the Joint Committee on Taxation, some of those are expected to have 
incomes below $200,000.
  Also, businesses with more than 50 workers that do not offer coverage 
will be forced to pay a penalty of $750 for every full-time worker if 
any of those workers get subsidized coverage through insurance 
exchanges.
  Many of these businesses will not be able to afford the cost of 
providing health insurance or the fine. According to the CBO, 5 million 
Americans will lose employer coverage. Others may find their pay 
reduced so employers can cover the cost of these new taxes and fines.
  This bill has been sold as an attempt to ``help businesses be more 
competitive in the marketplace.''
  But the National Federation of Independent Business--which actually 
represents small businesses--disagrees.
  In a letter to the majority leader, the NFIB was very clear--and this 
is a quote: ``The current bill does not do enough to reduce costs for 
small business owners and their employees.'' It also called this bill 
``the wrong bill at the wrong time.''

  Also hit hard would be the health care industry and medical-device 
manufacturers.
  Now, it may not be popular to worry about fees imposed on health 
insurers and the like, but the fact is, the $100 billion in taxes and 
fees this bill will impose on them will be passed on to Americans in 
the form of higher premiums. That is also according to the CBO.
  Our health care system needs to be reformed. We absolutely need to 
cover those with preexisting conditions, and

[[Page S12790]]

Americans in the medical fight of their lives should not be kicked off 
their insurance.
  But swapping out a system that needs fixing with just another broken 
system that also raises taxes on Americans who need every dime of their 
paychecks to get through the month is not the way to go.
  We need to move in the right direction. We need to emphasize wellness 
and prevention.
  We need to reduce frivolous medical malpractice lawsuits that add so 
much to the cost of practicing medicine. Senator Graham and I have 
introduced a ``loser pays'' bill that would do just that.
  We also need to allow health insurance purchases across state lines, 
and allow small businesses to pool resources to buy insurance for their 
employees.
  But do we need an insurance tax, an employer tax, a drug tax, a lab 
tax, a medical device tax, a failure-to-buy-insurance tax, a cosmetic 
surgery tax, and an increased employee Medicare tax?
  We don't need to impose eight new taxes on the American people.
  The absolute last thing we should be doing during the worst economy 
we have had in decades--with 10 percent, 26-year-high unemployment--is 
hiking taxes on the middle class and on small businesses, both of which 
are the backbone of America.
  The NFIB is right--this is the wrong bill at the wrong time.
  Madam President, I thank the Senator from Kansas.
  Mr. ROBERTS. Madam President, President Obama has repeatedly made two 
pledgees to the American people--and we have heard it and heard it 
before, and we will probably hear it again--about health care reform. 
The first is, if you like the health care you have, you can keep it.
  We know the bill before us breaks this pledge because all but two in 
the majority voted to preserve the nearly $500 billion in cuts to 
Medicare, which includes $120 billion in cuts to Medicare Advantage.
  The nonpartisan Congressional Budget Office, or CBO, has confirmed 
that these cuts to Medicare Advantage mean that ``approximately half'' 
of the Medicare Advantage benefits will be cut for the nearly 11 
million seniors who are enrolled in this program.
  This vote confirms whether Americans will be able to preserve and 
keep the health care benefits they have and like. That answer, 
unfortunately, is no.
  So now let's look at the President's second pledge: that he will not 
raise taxes on families earning under $250,000 or individuals earning 
under $200,000.
  A number of my colleagues have pointed to comments made last year in 
Dover, NH, by then-Candidate Obama, who said:

       I can make a firm pledge--

  And we have heard this before--

       . . . 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.

  I think he said ``by one dime'' at the end of that.
  Yet time and again in this bill, that pledge is also broken. This 
bill calls for nearly $500 billion in new taxes, penalties, and fees 
that hit virtually every American, including middle-class families 
making less than $250,000 and individuals earning less than $200,000.
  Even though the majority has tried to disguise these taxes as various 
``fees'' and presents them as being paid for by targeted health care 
industries, the reality is that this bill taxes the average American 
coming and going.
  It taxes you if you have health insurance. It taxes you if you do not 
have health insurance. It taxes you if you use medical devices, such as 
a hearing aid or a pacemaker. It taxes you if you save on your own to 
pay for your health care expenses. And it effectively increases taxes 
for individuals and families with catastrophic medical expenses.
  Americans should understand that the higher taxes called for in this 
bill will come straight out of their pockets, with the middle class 
bearing much of this tax burden.
  Let me give you a few examples of the new taxes proposed and who will 
pay for 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 and raises almost $150 billion and 
will be paid for primarily by individuals--not the health insurance 
provider, but by individuals--through increased income and payroll 
taxes.
  By the time this bill is fully implemented, 84 percent of this tax on 
``high-cost plans'' will be paid by Americans who earn less than 
$200,000--taxpayers the President promised would not pay additional 
taxes.
  Second, the bill imposes new taxes on health insurance providers and 
medical device manufacturers. Both the nonpartisan Congressional Budget 
Office and Joint Committee on Taxation have said these taxes will be 
passed on to consumers in the form of higher insurance premiums. The 
new $60 billion tax on health insurance providers alone could raise 
premiums by as much as 2 percent according to some analyses, and that 
increase could come as early as next year.
  Not only that, the $19.3 billion in new taxes on medical devices 
could increase costs for up to 80,000 medical products, such as heart 
stents, blood pressure monitors, eyeglasses, pacemakers, hearing aids, 
and advanced diagnostic equipment. Such a tax would stifle and will 
stifle innovation and reduce the ability for manufacturers to develop 
new lifesaving devices and technologies.
  So make no mistake, the cost of this tax will be passed on to and 
paid for by anyone who uses a medical device, including those middle-
class taxpayers the President has pledged will not experience any tax 
increase.
  If you need a pacemaker or a stent, you will pay more for it because 
of these new taxes. If you need a diagnostic procedure, you will pay 
more for it because of this new tax.
  Furthermore, under this bill, the floor for deducting medical 
expenses from income tax is raised from 7.5 percent to 10 percent of 
adjusted gross income. Those who will take this deduction are most 
often seniors and those with serious or catastrophic medical issues.
  For a family of four, earning $57,000 in 2013, limiting the deduction 
means they would lose a tax deduction of $1,425. A family of four 
earning $92,000 would lose a tax deduction of $2,300.
  It goes without saying, I think, that losing a portion of your tax 
deduction means you pay more in taxes. These are real dollars to hard-
working Americans. This provision alone raises $15 billion in new taxes 
on Americans who deduct medical expenses.
  Finally, this bill raises taxes for the more than 35 million 
Americans who participate in flexible spending accounts, or FSAs. For 
the first time, this benefit to middle-income workers is taxed to pay 
for new government spending and an expansion of entitlement programs.
  FSAs are a key benefit for many families for whom health insurance 
does not cover or does not cover sufficiently some of their highest 
cost health care expenses such as dental, vision, as well as 
prescription drug costs. They are also important for individuals who 
manage chronic diseases such as diabetes, heart disease, or cancer.
  Flexible savings accounts allow the participants to set aside money 
out of their own pocket to pay for these necessary expenses. However, 
under this bill, the government caps how much can be set aside in an 
FSA account at $2,500, effectively raising the tax burden on certain 
FSA participants and increasing their health care costs.
  The typical worker who contributes more that $2,500 to their FSA has 
a serious medical condition. This means that under this bill, workers 
with serious illnesses and earning an average of $55,000 will be paying 
more in taxes.
  I have highlighted a few of the many tax hikes in this bill and the 
fact that the middle-class taxpayers will bear the brunt of these 
higher taxes, but if there are any doubts remaining about what this 
bill means for Americans' pocketbooks, let's consider this. An analysis 
by the nonpartisan Joint Committee on Taxation looked at four tax 
provisions in the bill and how, when taken together, they will affect 
Americans. They looked at the tax credit for health insurance, the 
additional Medicare payroll tax, and several I have already mentioned, 
including the high-cost plan tax and the medical expense deduction 
limit. Their analysis shows that when this bill is in full effect, on 
average individuals making over $50,000

[[Page S12791]]

and families making over $75,000 would see their taxes go up under this 
bill. Even after taking into account the premium tax credit, the 
subsidy that the government will provide to help people offset the cost 
of health insurance, when this bill is fully in effect, more than 42 
million individuals and families or 25 percent--one-quarter of all tax 
returns under $200,000--will see on average their taxes go up as a 
result of this bill.
  In addition, based on the same information, the Joint Committee on 
Taxation identified two groups of taxpayers. The first are those 
individuals and families who are not eligible to receive the premium 
tax credit to purchase health care, and second are those individuals 
and families whose taxes will increase first before they then see some 
type of tax reduction as a result of their premium tax credit. Taking 
these two groups together, the number is even more disturbing: 73 
million individuals and families or 43 percent of all tax returns under 
$200,000 will on average see their taxes increase under this bill, says 
the Joint Committee on Taxation.
  To put it another way, under this bill, for every one individual or 
family that benefits from the tax credit to purchase insurance, this 
bill raises taxes on three middle-income individuals and families. 
These tax increases are on top of those I discussed earlier, such as 
the new taxes on FSAs, so the estimates I have already mentioned 
understate the tax impact, again, on middle-income taxpayers. The JCT 
the Joint Committee on Taxation--has confirmed that these additional 
taxes, such as the FSA tax, will likely further raise the taxes of 
middle-income Americans.
  All Americans, and middle-class taxpayers especially, need to take 
notice of what these higher taxes will mean for them and their 
families. They need to know these taxes will be used in part to pay for 
a vast expansion of the role of government in health care and more 
government intrusion into families health care choices.
  Paying for health care on the backs of the middle-class and working 
Americans is the wrong solution for health care, violates the 
President's pledge to these taxpayers, and is terribly 
counterproductive in regard to the No. 1 issue facing this country, and 
that is jobs and the economy.
  I urge my colleagues--I plead with my colleagues--to support the 
Crapo motion to prevent the enormous tax hike this bill inflicts on 
middle-class Americans.
  Mr. President, I appreciate your indulgence. I know you are ready to 
go to your conference.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Nelson of Florida.) The majority leader is 
recognized.

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