[Congressional Record Volume 161, Number 91 (Tuesday, June 9, 2015)]
[Senate]
[Pages S3928-S3931]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CASSIDY (for himself, Mr. McConnell, Mr. Cornyn, Ms. 
        Collins, Mr. Inhofe, Mr. Coats, Mr. Rounds, Mr. Vitter, Mrs. 
        Capito, and Mr. Wicker):
  S. 1531. A bill to reform the provision of health insurance coverage 
by promoting health savings accounts, State-based alternatives to 
coverage under the Affordable Care Act, and price transparency, in 
order to promote a more market-based health care system, and for other 
purposes; to the Committee on Finance.
  Mr. CASSIDY. Mr. President, the Supreme Court is about to rule on 
King v. Burwell. This decision is a question of a plain reading of the 
law, which is that subsidies shall only be given to those who reside in 
States which have established State exchanges. That is the plain 
reading of the law. The administration maintains that, no, ``States'' 
doesn't mean ``States,'' but, rather, it can be an exchange set up 
either by the State or the Federal Government.
  Presuming the Supreme Court decides that a plain reading of the law 
is correct--that for a resident of a State to receive a subsidy, they 
have to reside in a State that has established an exchange--there are 
37 States in which those currently receiving subsidies will lose their 
subsidies. This is important because under ObamaCare we have seen a 
dramatic increase in the cost of health insurance premiums. So many 
people who formerly would have been able to afford an insurance premium 
no longer can without the subsidy. What this means for that person in a 
State such as Louisiana is there will be someone in the middle of 
chemotherapy who can no longer afford their insurance without a 
subsidy. The insurance has been made so high because of ObamaCare that 
that patient is no longer able to afford her insurance and she is at 
risk of losing her coverage because the administration illegally 
implemented the law.
  This is where we are going into the Supreme Court decision. Let me 
kind of now start on a different tack.
  The President's health care law, ObamaCare, the Affordable Care Act, 
has continued to be singularly unpopular. A recent ABC poll showed that 
only 39 percent of Americans approved of the law. That is an alltime 
low--10 percent lower than it has been.
  One can ask why it would be unpopular and why it would be 
particularly unpopular now. I think the reason it is unpopular in 
general is that ObamaCare is a coercive Federal Government program, 
that if you don't bend your will to the Federal Government, the Federal 
Government will penalize you. That is not how Americans view their 
relationship to the Federal Government. We don't expect the government 
to tell us what to do. There might be income taxes, which we pay, and 
there will be drafts in times of war, such as World War II, but in 
general, aside from those two things, the Federal Government should 
just stay out of our lives. In this case--ObamaCare--the Federal 
Government gets right in the middle of that which is most personal, and 
that is our health care.
  I think the reason ObamaCare is particularly unpopular now is because 
of the premium increases that have resulted because of ObamaCare. Here 
are

[[Page S3929]]

some headlines: CNN, ``Obamacare sticker shock: Big rate hikes proposed 
for 2016''; AP, ``Many health insurers go big with initial 2016 rate 
requests''; AP again, ``8 Minnesota Health Plans Propose Big Premium 
Hikes for 2016''; the New York Times, ``In Vermont, Frustrations Mount 
Over Affordable Care Act''; and the Washington Post, ``Almost half of 
Obamacare exchanges face financial struggles in the future.''
  In my own State, insurers are asking for 20 percent increases, and 
this is on top of premium increases that have resulted from the 
previous few years.
  Indeed, the President likes to speak about how health care costs 
under ObamaCare have mitigated--health care costs. Actually, that began 
in 2007 before ObamaCare passed. But since ObamaCare passed, it has 
been true. Health care costs have not risen as they did in the past. 
Health insurance costs have gone up dramatically. The remarkable story 
of ObamaCare is that there is now no relationship between health 
insurance cost and health care cost. The insurance companies, with the 
regulations imposed by ObamaCare, are charging far more for insurance 
than one would expect because of the health care costs. Of course, the 
President chooses to speak of the cost of care, not the cost of 
premiums, but for the average person, it is the cost of premiums which 
is making her so frustrated with this law.
  That brings us back to King v. Burwell. At this point, I am offering 
today, along with several original cosponsors, what we call the Patient 
Freedom Act. We give patients the power which ObamaCare took from them, 
and we give them the power by lowering the cost. We lower the cost by 
eliminating the mandates that are part of ObamaCare. We return power 
over insurance to the States, with the rationale that she who governs 
best governs closest to those who are governed. The insurance 
commissioner in that State should be able to decide what the person in 
their State wishes to have for their policy, not a Washington 
bureaucrat. And we give patients knowledge. We give them price 
transparency. They should know the cost of something that is ordered 
for them before they have the procedure performed as opposed to 
learning afterward. We give them portability, and we give them 
protection against preexisting conditions.
  I and others--I think the Presiding Officer as well--have campaigned 
for several cycles that we were going to repeal and replace ObamaCare. 
In this situation, the Supreme Court will repeal a portion of 
ObamaCare--not all but a portion--in 37 States, and this is the plan 
that will replace that portion of ObamaCare which is repealed.
  We like to look at it this way. We begin to plant the seeds. Now, in 
those 37 States, those 8 million people affected by the Obama 
administration's illegal implementation of the subsidy law--we make it 
better for them. We plant the seeds so that over time other aspects and 
eventually the entirety of ObamaCare will be replaced with something 
which gives the patient the power as opposed to a Washington 
bureaucrat.
  Let me lay out what we do. King v. Burwell goes against the 
administration. The Supreme Court rules that the law has been 
implemented illegally. States will then have a choice: They can either 
establish a State exchange if they wish for the status quo of 
ObamaCare, the State can do nothing, which means in that State all of 
ObamaCare goes away for the private insurance market, or they can 
choose the Patient Freedom Act, which is the market-based reform that 
we think gives the patient the power and not the bureaucrat.
  Now let me compare the two. I mentioned how under the Patient Freedom 
Act costs are lowered by repealing mandates. For example, under 
ObamaCare there is an individual mandate with a coercive penalty. The 
Patient Freedom Act does not have one. There is an employer mandate 
penalty. Yes, under ObamaCare the employer is penalized; under the 
Patient Freedom Act, no. There is the Federal essential health benefits 
mandate. Under ObamaCare, a Washington bureaucrat tells somebody that 
which they must purchase. In the Patient Freedom Act, we return that to 
the State insurance commissioner. We do not have these mandates. I can 
go on down the list, but the reality is that ObamaCare, coercive 
mandates; the Patient Freedom Act, no.
  The money we make available to the States we take from the tax 
credits that ObamaCare would give to those in the State--those who are 
eligible and signed up--we take the Medicaid funding that would be 
available in the State for Medicaid expansion, and we combine those two 
for the total allocation that will go to that State.
  Now, some would say: Wait a second. The Federal Government should not 
be in the business of helping people with health insurance. I say the 
Federal Government is deeply in that business already. If you look 
under public insurance, there is Medicare, Medicaid, CHIP, VA, TRICARE, 
and on and on where the Federal Government is providing health care 
benefits for a substantial portion--over 25 percent--of Americans. 
These are those Americans who get their insurance through the employer-
sponsored insurance, where the employer and the employee can contribute 
to their insurance but they get a tax break on the purchase. That tax 
break averages about $1,700. We are speaking about that remaining group 
who purchases their insurance for themselves. We lower their cost by 
equalizing the tax treatment between the two. It is the same sort of 
tax break that those with the employer-sponsored insurance receive. We 
will now offer that same tax break to these folks and in so doing 
achieve that conservative goal of equalizing the tax treatment of those 
purchasing employer-sponsored insurance as opposed to purchasing on 
their own.
  The funding goes to the patient. I am a doctor. I have been working 
in a public hospital system for 25 years. I learned working as a 
physician in both the private setting but also principally in the 
public hospital setting that whoever controls the dollar has the 
power. That makes no sense whatsoever. It is one of the major flaws in 
ObamaCare. Since these subsidies are based upon estimated earnings that 
are later reconciled through tax returns, Americans are facing onerous 
tax liabilities and penalties as a consequence.

  Let me explain further how this wage-lock occurs, because 
increasingly Americans are going to be running into this problem. Let 
me give you an example. Last year, the least expensive premium for a 
silver plan to cover a 50-year-old individual in Aroostook County, ME, 
cost $6,300 through an Affordable Care Act exchange. But that, 
obviously, is not what most individuals pay. Instead, they receive a 
subsidy that phases out based on their estimated income. But again, the 
subsidy completely disappears at a sharp cliff at 400 percent of the 
Federal poverty level.
  An individual whose estimated income is just less than this cliff, 
say, one that is earning $46,500, will pay 9.5 percent of his or her 
income, or $4,370, for insurance and the rest is covered by the Federal 
tax credits. But if it turns out that this individual actually made a 
bit more than 400 percent of the Federal poverty level--let's say the 
individual made $47,000--then, he or she would be on the hook for the 
entire $6,300 premium. In other words, a 50-year-old who makes just 
$500 more than he or she estimated will have to pay $2,000 more at tax 
time for health insurance in the exchange.
  Think about what this means for a self-employed individual whose 
income fluctuates not only from year to year but from month to month. 
This is a financial nightmare to try to figure out.
  This cliff does not just affect individuals who get their coverage 
through the ACA. Cliffs appear over and over in the design of the 
subsidies under ObamaCare, and couples and families will face them at 
different levels of income as their household size changes. What will 
these bait-and-switch health insurance premiums do to incentives to 
work harder, to earn more, to accept promotions? If you accept a 
promotion at work and then your income goes over that magic 400 percent 
of poverty threshold, you are going to lose your entire subsidy. You 
might well decide to turn down that raise at work or that opportunity 
to be promoted to a better job. What kind of system has been designed 
to discourage people from moving ahead in the workplace?

[[Page S3930]]

  In the State of Maine, so far we have learned that at least 1,000 
Maine families have lost their subsidies completely because they were 
in that situation where their income went over that threshold. Another 
1,000 Mainers are finding out that they are losing part of their 
subsidy and are going to be on the hook for paying more money.
  I will say to my colleagues that you are going to start hearing this 
in your States, and it particularly is going to affect people who are 
self-employed and who have to estimate what their income is going to 
be. Through no fault of their own--unless they are going to turn down 
work--they may well go over the threshold amount and lose their subsidy 
altogether. Remember, it takes just $1 in additional earnings at the 
400 percent of poverty level to lose your subsidy altogether.
  Let me give you an example of a Maine couple who contacted my office. 
They discovered to their horror that when they filed their taxes, they 
had earned more than the threshold and they owed $13,000 to the IRS for 
the health insurance they received through the ObamaCare exchange, on 
top of the $4,000 that they had been told their exchange coverage would 
cost.
  Imagine finding out that because you worked a little harder, because 
you earned a bit more money, you now unexpectedly owe an extra $13,000 
to the IRS because you lost your subsidy. The Patient Freedom Act would 
put an end to the bait-and-switch premiums that are built into the 
ObamaCare exchanges.
  One of the reasons I opposed the Affordable Care Act was that there 
was nothing affordable about it. I predicted at the time that it would 
lead to fewer choices and higher insurance costs for many middle-income 
Americans and small businesses.
  A ruling in favor of the plaintiffs in King v. Burwell would prompt 
Congress to protect those who would lose their subsidies, but it would 
also provide the opportunity to give States the option to replace the 
Affordable Care Act's poorly crafted mandates with patient-directed 
reforms that contain costs, provide more choices, and still provide 
assistance to those who need it most.
  The Patient Freedom Act does exactly that. I urge my colleagues to 
support it.
  Now, if it is a bureaucrat who controls that dollar, then the 
bureaucrat will dictate the type of facility the patient is seen in. If 
the patient controls the dollar, the hospitals are going to compete for 
her business, and she dictates the type of facility in which she is 
seen. So in the Patient Freedom Act, the money goes directly to the 
patient. It can go through the State. The money can be granted to the 
State on a per-patient enrolled grant type; and in so doing, the State 
would then distribute--and there are advantages for the State to do the 
distribution--or, if the State does not want that responsibility, it 
can be a Federal tax credit that goes into a health savings account 
that the patient controls. But either way, the patient controls the 
dollar. The patient has the power, not a bureaucrat.
  Here is a brief example of how it will work: Here is the health 
savings deposit that goes into a health savings account. There will be 
some reforms in the bill that allow the patient to either use it as her 
contribution--as the employee's contribution on a employer-sponsored 
plan. She can directly contract with a provider network. She can 
purchase commercial insurance or, if she does nothing, the State has 
the option of creating a system, where someone is enrolled unless they 
choose not to be.
  Again, I am going to call upon my experience as a physician. Think of 
a person who might be schizophrenic, homeless, living beneath a bridge. 
He is never going to do what ObamaCare mandates, which is to get on the 
Internet and fill out a 16-page form. It is just not going to happen. I 
have been there, I have done that. I have been in the ER in the middle 
of the night when a patient has come in with some acute medical or 
trauma condition. Under this system, though, the State could have this 
person enrolled unless they choose not to be.
  So with the health savings account, they would have first-dollar 
coverage for a visit should they decide to go into an outpatient clinic 
for a foot that was infected. If they have some major issue and they 
are brought to the hospital, the catastrophic policy would then give 
them the coverage for that hospitalization but also protect the 
hospital, the doctors, and other providers from taking a total loss--
which, by the way, society ends up paying for--because they have no 
coverage for that hospitalization. So with this system, we can achieve 
higher enrollments than are achieved under ObamaCare.
  Last, let me talk about one more way in which we think patients will 
have the power. One, they will have power portability. Every year, in 
an open enrollment season, if the patient wishes to change plans, she 
may, without penalty. Secondly, she will be protected against 
preexisting conditions. The only rating that will be required for 
premiums will be for geography and age. A 57-year-old will get a bigger 
credit than a 20-year-old. But aside from age and, again, geographic--
because it is more expensive to receive care in Manhattan, NY, than 
Manhattan, KS--that will be the only differences allowed. Lastly, there 
will be the power of price transparency.
  Currently, a woman goes in with her daughter, the doctor orders a CT 
scan, and the patient has no clue what the cost of that CT scan is. 
Now, it can be anywhere from $250 to $2,500 or more. I pick those 
numbers because the LA Times had an article a couple years ago, they 
found that the difference in cash price for CT scans was $250 to 
$2,500. The only way someone could know is if they were an 
investigative reporter and able to find out, not if you are a mom with 
a sick child who needed a CT scan. For me, it is going to be great when 
the mother can take her smart phone, scan a QR code, and pull up 
something which says: CT scan $250 here, $2,500 there. I am going to 
make my decision based on some combination of cost, quality, and 
convenience. I will pick based upon my values on where to go. It is not 
a Washington bureaucrat, it is a mother who is going to make that 
decision.
  Again, continuous coverage protects those with preexisting 
conditions, and we mentioned the price transparency. In this way, 
Republicans will give States the option to choose. Again, they can stay 
in ObamaCare if they want. They have that option now. They can do 
nothing, and it goes away if the Supreme Court rules that the subsidies 
have been implemented illegally or they can go with the Patient Freedom 
Act--the Patient Freedom Act--which gives patients the power by 
lowering costs, lowering the cost by eliminating mandates, returning 
power over insurance back to the commissioners who govern closest to 
those who actually will be using the insurance, and then giving the 
patient the power of portability, protection against preexisting 
conditions, and the power of price transparency.
  Ms. COLLINS. Mr. President, let me begin my remarks this evening by 
commending my friend and colleague the Senator from Louisiana for 
coming up with a creative and comprehensive health care bill that I am 
pleased to cosponsor.
  As a physician, Senator Cassidy knows far better than most of us in 
this body what it is like to deliver health care and has made a real 
effort to come up with a public policy response in anticipation of the 
Supreme Court's decision in King v. Burwell, which is expected to be 
handed down later this month. So I thank him for his work and his 
creativity in tackling a very complex issue.
  As I mentioned, later this month, the Court is expected to rule in 
King v. Burwell, a case challenging the availability of premium tax 
credits under the Affordable Care Act in the 37 States that have not 
established a State-run health insurance exchange.
  If the Supreme Court rules in favor of the plaintiffs, as many 
experts expect it will, 6.4 million Americans who are now receiving 
premium tax credits through the federally run exchanges will lose their 
subsidies, and, as a result, their health insurance may well become 
unaffordable. This includes almost 61,000 people in my State of Maine.
  Such a decision will place responsibility on Congress and the 
President to work together to protect those individuals. Senator 
Cassidy and I believe we can do this by extending the current subsidies 
for a transition period, as contemplated by the sense-of-Congress

[[Page S3931]]

language included in the Patient Freedom Act that we are introducing 
today.
  But the Supreme Court's decision will also invite us to think anew 
about how to ensure that all Americans have access to affordable, high-
quality health care. We can advance this goal by revamping and 
reforming the Affordable Care Act to improve the quality and 
affordability of health care while retaining the insurance market 
reforms that are so important to consumers.
  Senator Cassidy's Patient Freedom Act is precisely the type of new 
thinking we need. As the title of this bill suggests, the Patient 
Freedom Act is built on the premise that freeing people to take charge 
of their health care is superior to the one-size-fits-all approach of 
ObamaCare. A decision for the plaintiffs in King v. Burwell would 
essentially leave States with two options, absent congressional action. 
They could either set up a State-run exchange to ensure that their 
residents have access to the Affordable Care Act subsidies or do 
nothing and allow their residents to lose these ObamaCare subsidies. 
Under Senator Cassidy's bill, however, States with federally run 
exchanges would have a third option. They would have the choice of 
participating in the new Patient Freedom Act.
  Participating in the Patient Freedom Act would allow States to 
structure their health insurance market without an individual mandate 
or an employer mandate or many of the other expensive mandates under 
ObamaCare. In return, States would have to offer their citizens a basic 
health insurance plan that would include first-dollar coverage through 
a health savings account, basic prescription drug coverage, a high-
deductible health plan to protect enrollees against medical bankruptcy, 
coverage for preexisting conditions--a good provision of the current 
law that we would retain--coverage through a parent's plan for children 
up to age 26--another good provision of the law that we would retain--
and there could be no annual or lifetime limits on insurance claims, 
again a good provision of the current law that we would retain.
  Here is how it would work: The Federal Government would provide 
funding directly into the health savings accounts of individuals 
insured through the Patient Freedom Act. These funds would be phased 
out for higher income individuals. The aggregate funding for these per-
patient, per-capita grants would be determined based on the total 
amount of funding that the Federal Government would have provided in 
the form of ObamaCare subsidies in each State, plus any funding each 
State would have received had they chosen to expand their Medicaid 
Program, even if, like the State of Maine, they had chosen not to do 
so.
  In addition to Federal funds, individuals and employers could make 
tax-advantaged contributions to these health savings accounts. The bill 
even provides for a partial tax credit for very low-income individuals 
who do receive employer-based coverage, but it would help these workers 
pay for their deductibles and copays.
  Individuals who are insured under the Patient Freedom Act would 
receive debit cards tied to their health savings accounts, which they 
could use to purchase a high-deductible health plan to pay directly for 
medical expenses or pay premiums for a more generous health insurance 
policy. In addition, health care providers receiving payment from the 
health savings accounts would be required to publish cash prices for 
their services, which would add transparency that we desperately need 
to move toward a more patient-directed health care future.
  The promise of patient-directed health care is one of the advantages 
of this approach, but it has other advantages as well. For example, 
residents of States that elect this option would no longer face the 
individual mandate penalty that can cost individuals 2.5 percent of 
their income and the typical American family of four an estimated 
$2,100 next year. It would also codify the elimination of the employer 
mandate in these States, freeing these employers to add jobs and let 
their full-time employees work 40 hours a week. ObamaCare has been 
causing some employers to reduce hours for their employees. The result 
has been smaller paychecks for those workers.
  Perhaps most important, however, the Patient Freedom Act would do 
away with what the superintendent of insurance in Maine refers to as 
``wage lock.'' That is caused by the fact that the subsidies in the 
ObamaCare exchanges phase out completely at 400 percent of the Federal 
poverty level. In other words, there is a cliff there. Now, 400 percent 
of the poverty level is about $47,000 for an individual and $64,000 for 
a couple. Taxpayers who earn just $1 more than the threshold lose their 
entire subsidy.
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