[Congressional Record (Bound Edition), Volume 151 (2005), Part 9]
[Senate]
[Pages 12306-12318]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. COLLINS (for herself and Ms. Landrieu):
  S. 1225. A bill to expand access to affordable health care and to 
strengthen the health care safety net and make health care services 
more available in rural and underserved areas; to the Committee on 
Finance.
  Ms. COLLINS. Mr. President, I am pleased to join with my colleague 
from Louisiana, Senator Landrieu, in introducing the Access to 
Affordable Health Care Act, a comprehensive, seven-point plan that 
builds on the strengths of our current public programs and private 
health care system to make quality, affordable health care available to 
millions more Americans.
  One of my top priorities in the Senate has been to expand access to 
affordable health care for all Americans. There are still far too many 
Americans without health insurance or with woefully inadequate 
coverage. As many as 45 million Americans--almost 16 percent of our 
population--are uninsured, and millions more are underinsured.
  Health care coverage matters. The simple fact is that people with 
health insurance are healthier than those who are uninsured. People 
without health insurance are less likely to seek care when they need 
it, and to forgo services such as periodic check ups and preventive 
services. As a consequence, they are more likely to be hospitalized or 
require costly medical attention for conditions that could have been 
prevented or treated at a curable stage. Not only does this put the 
health of these individuals at greater risk, but it also puts 
additional pressure on our hospitals and emergency rooms, many of them 
already financially challenged.
  Compared with people who have health coverage, uninsured adults are 
four times, and uninsured children five times, more likely to use the 
emergency rooms. The costs of care for these individuals are often 
absorbed by providers and passed on to the covered population through 
increased fees and insurance premiums.
  Maine is in the midst of a growing health insurance crisis, with 
insurance premiums rising at alarming rates. Whether I am talking to a 
self-employed fisherman, a displaced worker, the owner of a struggling 
small business, or the human resource manager of a large company, the 
soaring costs of health insurance is a common concern.
  Maine's employers are currently facing premium increases of as much 
as 20 percent a year. These premiums have been particularly burdensome 
for small businesses, the backbone of the Maine economy. Many small 
business owners are caught in a cost-squeeze: they know that if they 
pass on the premium increases to their employees, more of them will 
decline coverage. Yet these small businesses simply cannot afford to 
absorb double-digit increases in their health insurance premiums year 
after year.
  The problem of rising costs is even more acute for individuals and 
families who must purchase health insurance on their own. Monthly 
health insurance premiums in Maine often exceed a family's mortgage 
payment. It is no wonder that as many as 150,000 Mainers are uninsured. 
Clearly, we must do more to make our health care system more efficient 
and health insurance more available and affordable.
  The Access to Affordable Health Care Act, which we are introducing 
today, is a seven-point plan that combines a variety of public and 
private approaches to make quality health care coverage more affordable 
and available. The legislation's seven goals are:
  No. 1. To expand access to affordable health care for small 
businesses;
  No. 2. To make health insurance more affordable for individuals and 
families purchasing coverage on their own;
  No. 3. To strengthen the health care safety net for those without 
coverage;
  No. 4. To expand access to care in rural and under-served areas;
  No. 5. To increase access to affordable long-term care;
  No. 6. To promote healthier lifestyles;
  And No. 7, to provide more equitable Medicare payments to Maine 
providers to reduce the Medicare shortfall, which has forced hospitals, 
physicians and other providers to shift costs onto other payers in the 
form of higher charges, which, in turn drives up health care premiums.
  Let me discuss each of these seven points in more detail.
  First, our legislation will help small employers cope with rising 
health care costs.
  Since most Americans get their health insurance through the 
workplace, it is a common assumption that people without health 
insurance are unemployed. The fact is, however, that most uninsured 
Americans are members of families with at least one full-time worker. 
As many as 82 percent of Americans who do not have health insurance are 
in a family with a worker.
  Uninsured working Americans are most often employees of small 
businesses. In fact, some 60 percent of uninsured workers are employed 
by small

[[Page 12307]]

firms. Smaller firms generally face higher costs for health insurance 
than larger firms, which makes them less likely to offer coverage. 
Small businesses want to provide health insurance for their employees, 
but the cost of often just too high.
  The legislation we are introducing today will help small employers 
cope with rising costs by providing new tax credits for small 
businesses to help make health insurance more affordable. It will 
encourage those small businesses that do not currently offer health 
insurance to do so and will help employers that do offer insurance to 
continue coverage for their employees even in the face of rising costs.
  Our legislation will also help increase the clout of small businesses 
in negotiating with insurers. Premiums are generally higher for small 
businesses because they do not have as much purchasing power as large 
companies, which limits their ability to bargain for lower rates. They 
also have higher administrative costs because they have fewer employees 
among whom to spread the fixed cost of a health benefits plan. 
Moreover, they are not as able to spread the risks of medical claims 
over as many employees as large firms.
  Our legislation will help address these problems by authorizing 
Federal grants to provide start-up funding to States to assist them 
with the planning, development and operation of small employer 
purchasing cooperatives. These cooperatives will help to reduce health 
care costs for small employers by allowing them to band together to 
purchase health insurance jointly. Group purchasing cooperatives have a 
number of advantages for small employers. For example, the increased 
number of participants in the group help to lower the premium costs for 
all. Moreover, they decrease the risk of adverse selection and spread 
the cost of health care over a broader group.
  The legislation would also authorize a Small Business Administration 
grant program for States, local governments and non-profit 
organizations to provide information about the benefits of health 
insurance to small employers, including tax benefits, increased 
productivity of employees, and decreased turnover. These grants would 
also be used to make employers aware of their current rights under 
State and Federal laws. While costs are clearly a problem, many small 
employers are not fully aware of laws that have already been enacted by 
both States and Federal Government to make health insurance more 
affordable. For example, in one survey, 57 percent of small employers 
did not know that they could deduct 100 percent of their health 
insurance premiums as a business expense.
  The legislation would also create a new program to encourage 
innovation by awarding demonstration grants in up to 10 States 
conducting innovative coverage expansions, such as alternative group 
purchasing or pooling arrangements, individual or small group market 
reforms, or subsidies to employers or individuals purchasing coverage. 
The States have long been laboratories for reform, and they should be 
encouraged in the development of innovative programs that can serve as 
models for the Nation.
  The Access to Affordable Health Care Act will also expand access to 
affordable health care for individuals and families.
  One of the first bills I cosponsored as a Senator was legislation to 
establish the State Children's Health Insurance Program, S-CHIP, which 
provides insurance for the children of low-income parents who cannot 
afford health insurance, yet make too much money to qualify for 
Medicaid. This important program has provided affordable health 
insurance coverage to an estimated six million children nationwide, 
including almost 13,000 who are currently enrolled in the MaineCare 
program. Even so, nationwide, millions of qualified children have yet 
to be enrolled in this program, many because their parents simply don't 
know that they are eligible for the assistance.
  Our legislation builds on the success of this program and gives 
States a number of new tools to increase participation. The bill 
authorizes new grants for States and non-profit organizations to 
conduct innovative outreach and enrollment efforts to ensure that all 
eligible children are covered. States would also have the option of 
covering the parents of the children who are enrolled in programs like 
MaineCare. States could also use funds provided through this program to 
help eligible working families pay their share of an employer-based 
health insurance plan. In short, the legislation will help ensure that 
the entire family receives the health care they need.
  And finally, to help make health coverage more affordable for low- 
and middle-income individuals and families who do not have employer-
provided coverage and who are not eligible for the expanded public 
programs, our legislation would provide an advanceable, refundable tax 
credit of up to $1,000 for individuals earning up to $30,000 and up to 
$3,000 for families earning up to $60,000. This could provide coverage 
for up to 6 million Americans who would otherwise be uninsured for one 
or more months, and will help many more working lower-income families 
who currently purchase private health insurance with little or no 
government help.
  The Access to Affordable Health Insurance Act will also help to 
strengthen our Nation's health care safety net by doubling funding over 
5 years for the Consolidated Health Centers program, which includes 
community, migrant, public housing and homeless health centers. These 
centers, which operate in underserved urban and rural communities, 
provide critical primary care services to millions of Americans, 
regardless of their ability to pay. About 20 percent of the patients 
treated at Maine's community health centers have no insurance coverage 
and many more have inadequate coverage, so these centers are a critical 
part of our Nation's health care safety net.
  The problem of access to affordable health care services is not 
limited to the uninsured, but is also shared by many Americans living 
in rural and underserved areas where there is a serious shortage of 
health care providers. The Access to Affordable Health Care Act 
therefore calls for increased funding for the National Health Service 
Corps, which supports doctors, dentists, and other clinicians who serve 
in rural and inner city areas.
  The legislation will also give the program greater flexibility by 
allowing National Health Service Corps participants to fulfill their 
commitment on a part-time basis. Current law requires all National 
Health Service Corps participants to serve full-time. Many rural 
communities, however, simply do not have enough volume to support a 
full-time health care practitioner. Moreover, some sites may not need a 
particular type of provider--for example, a dentist--on a full-time 
basis. Some practitioners may also find part-time service more 
attractive, which, in turn, could improve recruitment and retention. 
Our bill therefore gives the program additional flexibility to meet 
community needs.
  Long-term care is the major catastrophic health care expense faced by 
older Americans today, and these costs will only increase with the 
aging of the baby boomers. Most Americans mistakenly believe that 
medicare or their private health insurance policies will cover the cost 
of long-term care should they develop a chronic illness or cognitive 
impairment like Alzheimer's Disease. Unfortunately, far too many do not 
discover that they do not have coverage until they are confronted with 
the difficult decision of placing a much-loved parent or spouse in 
long-term care and facing the shocking realization that they will have 
to cover the costs themselves.
  The Access to Affordable Health Care Act will provide a tax credit 
for long-term care expenses of up to $3,000 to provide some help to 
those families struggling to provide long-term care to a loved one. It 
will also encourage more Americans to plan for their future long-term 
care needs by providing a tax deduction to help them purchase long-term 
care insurance.
  Health insurance alone is not going to ensure good health. As noted 
author and physician Dr. Michael Crichton has observed, ``the future of 
medicine lies

[[Page 12308]]

not in treating illness, but preventing it.'' Many of our most serious 
health problems are directly related to unhealthy behaviors--smoking, 
lack of regular exercise and poor diet. These three major risk factors 
alone have made Maine the state with the fourth highest death rate due 
to four largely preventable diseases: cardiovascular disease, cancer, 
chronic lung disease and diabetes. These four chronic diseases are 
responsible for 70 percent of the health care problems in Maine.
  Our bill therefore contains a number of provisions designed to 
promote healthy lifestyles. An ever-expanding body of evidence shows 
that these kinds of investments in health promotion and prevention 
offer returns not only in reduced health care bills, but in longer life 
and increased productivity. The legislation will provide grants to 
States to assist small businesses wishing to establish ``worksite 
wellness'' programs for their employees. It would also authorize a 
grant program to support new and existing ``community partnerships,'' 
such as the Healthy Community Coalition in Maine's Franklin County, to 
promote healthy lifestyles among hospitals, employers, schools and 
community organizations. And, it would provide funds for States to 
establish or expand comprehensive school health education, including, 
for example, physical education programs that promote lifelong physical 
activity, healthy food service selections, and programs that promote a 
healthy and safe school environment. 
  Finally, the Access to Affordable Health Care Act would promote 
greater equity in Medicare payments and help to ensure that the 
Medicare system rewards rather than punishes States like Maine that 
deliver high-quality, cost-effective Medicare services to our elderly 
and disabled citizens.
  According to a study in the Journal of the American Medical 
Association, Maine ranks third in the Nation when it comes to the 
quality of care delivered to our Medicare beneficiaries. Yet we are 
11th from the bottom when it comes to per-beneficiary Medicare 
spending.
  The fact is that Maine's Medicare dollars are being used to subsidize 
higher reimbursements in other parts of the country. This simply is not 
fair. Medicare's reimbursement systems have historically tended to 
favor urban areas and failed to take the special needs of rural States 
into account. Ironically, Maine's low payment rates are also the result 
of its long history of providing high-quality, cost-effective care. In 
the early 1980s, Maine's lower than average costs were used to justify 
lower payment rates. Since then, Medicare's payment policies have only 
served to perpetuate the gap.
  The Medicare Modernization Act of 2003 did take some significant 
steps toward promoting greater fairness by increasing Medicare payments 
to rural hospitals and by modifying geographic adjustment factors that 
discriminated against physicians and other providers in rural areas. 
The legislation we are introducing today will build on those 
improvements by establishing State pilot programs that reward providers 
of high-quality, cost efficient Medicare services. It will also 
establish a program to expand graduate medical education programs in 
rural and underserved areas of the nation.
  Mr. President, the Access to Affordable Health Care Act outlines a 
blueprint for reform based on principles upon which I believe a 
bipartisan majority in Congress could agree. The plan takes significant 
strides toward the goal of universal health care coverage by bringing 
millions more Americans into the insurance system, by strengthening the 
health care safety net, and by addressing inequities in the Medicare 
system.
                                 ______
                                 
      By Mr. AKAKA:
  S. 1226. A bill to provide jurisdiction over Federal contractors who 
engage in human trafficking offenses; to the Committee on the 
Judiciary.
  Mr. AKAKA. Mr. President, I rise today to introduce the Federal 
Contractor Extraterritorial Jurisdiction for Human Trafficking Offenses 
Act of 2005, which builds upon bipartisan efforts to combat the 
abhorrent practice of human trafficking.
  Human trafficking is unfortunately among the fastest growing 
international criminal activities. According to the U.S. State 
Department's 2005 Trafficking in Persons Report, 600,000 to 800,000 
victims are transported across international borders each year. These 
victims often come from the world's most vulnerable populations and 
regions affected by wars or humanitarian disasters.
  With the promise of well-paying jobs, victims are often enticed to 
foreign countries, where upon arrival, their passports or travel papers 
are confiscated, and they are forced, many times beaten, until they 
agree to work without pay or serve as prostitutes. The perpetrators of 
human trafficking are typically motivated by profits derived from the 
use of forced labor or commercial sex exploitation. Because one of the 
common motivations of trafficking is forced prostitution: 80 percent of 
the victims are women and 50 percent of the victims are children.
  In 2001, awareness of human trafficking grew in London during a 
murder investigation where the victim was a small African boy. While 
trying to determine the identity of the victim, investigators 
discovered that, in London alone, 300 African children between the ages 
of 4 and 7 could not be accounted for. That staggering statistic 
provides an insight into the pervasiveness of child trafficking and 
demonstrates that it can occur in all countries, including the most 
affluent.
  This issue has long been a concern of mine. Nearly 6 years ago, I 
learned of a human trafficking ring that enslaved foreign workers and 
smuggled them to the U.S. Commonwealth of the Northern Mariana Islands, 
CNMI. The workers were forced to work in factories or serve as 
prostitutes. Senators Frank Murkowski, Jeff Bingaman, and I introduced 
S. 1052 to tighten immigration law in the CNMI to prevent future human 
trafficking rings. Although our bill passed the Senate, it was not 
taken up in the House.
  Unfortunately, that was only one of numerous human trafficking 
conspiracies discovered within the United States. The State Department 
estimates that 14,500 to 17,500 human trafficking victims are brought 
into our country every year.
  We cannot address this issue without recognizing the efforts of my 
friend and departed colleague, Senator Paul Wellstone, who through his 
leadership, the Victims of Trafficking and Violence Protection Act of 
2000, P.L. 106-386, was enacted. This law first established our 
Nation's commitment to the prosecution of traffickers and the 
protection of victims of trafficking.
  Since 2000, and the passage of this Act, there has been a surge in 
government activity relating to the prevention and prosecution of human 
trafficking offenses. In 2003 alone, there were approximately 3,000 
convictions of human traffickers worldwide.
  We have learned a great deal more about the conditions under which 
members of a population are likely to become victims of trafficking. 
Those who are displaced from their homes or suffering from poverty are 
much more likely to become victims of trafficking. Unfortunately, 
military forces and organizations charged with protecting and providing 
for vulnerable populations have, at times, actually encouraged the 
trafficking of humans.
  There have been instances in the Congo and in Bosnia where increased 
demand for prostitution and forced labor caused by foreign peacekeeping 
troops and humanitarian aid workers accelerated the exploitation of 
already vulnerable populations.
  There have even been reports where contractors, working on behalf of 
the United States Government, have contributed to, and even 
participated in, the trafficking of humans abroad. Nothing is more 
contrary to the freedoms we cherish than the trafficking of humans, 
which is why I introduce today the Federal Contractor Extrater-
ritorial Jurisdiction for Human Trafficking Offenses Act.
  My bill closes a loophole in U.S. criminal law. Under current law, 
Federal contractors who engage in human trafficking offenses abroad are 
subject

[[Page 12309]]

to prosecution in the United States only if ``employed by or 
accompanying the Armed Forces.'' The bill closes this loophole by 
permitting the prosecution of Federal contractors of ``any executive 
agency.''
  I believe all U.S. contractors should be treated the same, and all 
should be held to the same standards. A paycheck from the United States 
should never be used to purchase a human life.
  I wish to point out that this legislation respects the sovereignty of 
foreign governments to prosecute these crimes locally. If a prosecution 
has occurred or is pending by the foreign government, U.S. authorities 
are precluded from prosecuting except upon approval of the U.S. 
Attorney General.
  Rather, my measure authorizes the prosecution of a U.S. contractor 
who engages in human trafficking abroad but flees the foreign country 
to avoid prosecution. This happened, according to at least one report, 
where an employee of a Federal contractor in Bosnia bought a woman to 
serve as a sex slave. This individual fled the country after local 
authorities discovered the crime, and he returned to the U.S. to avoid 
prosecution. My bill would empower U.S. prosecutors to bring such an 
individual to justice.
  Mr. President, I ask by unanimous consent that the text of my bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 1226

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Federal Contractor 
     Extraterritorial Jurisdiction for Human Trafficking Offenses 
     Act of 2005''.

     SEC. 2. FEDERAL CONTRACTOR EXTRA-TERRITORIAL JURISDICTION.

       Chapter 77 of title 18, United States Code, is amended by 
     adding at the end the following:

     ``Sec. 1596. Federal contractor extraterritorial jurisdiction

       ``(a) Whoever, while a Federal contractor, engages in 
     conduct outside the United States that would constitute a 
     violation of this chapter punishable by imprisonment for more 
     than 1 year if the conduct had been engaged in within the 
     special maritime and territorial jurisdiction of the United 
     States shall be punished as provided for that offense.
       ``(b) No prosecution may be commenced against a person 
     under this section if a foreign government, in accordance 
     with jurisdiction recognized by the United States, has 
     prosecuted or is prosecuting such person for the conduct 
     constituting such offense, except upon the approval of the 
     Attorney General or the Deputy Attorney General (or a person 
     acting in either such capacity), which function of approval 
     may not be delegated.
       ``(c) An individual who is a victim of a violation of this 
     chapter by a Federal contractor may bring a civil action 
     against the perpetrator under section 1595 if a civil action 
     would have been authorized under section 1595 had the conduct 
     been engaged in within the special maritime and territorial 
     jurisdiction of the United States.
       ``(d) As used in this section, the term `Federal 
     contractor' means a person who--
       ``(1) is employed as a contractor (including a 
     subcontractor at any tier), or as an employee of a contractor 
     (or subcontractor at any tier), of any executive agency, as 
     that term is defined in section 4(1) of the Office of Federal 
     Procurement Policy Act (41 U.S.C. 403(1));
       ``(2) is present or residing outside the United States in 
     connection with such employment; and
       ``(3) is not a national of or ordinarily resident in the 
     country where the violation occurred.''.
                                 ______
                                 
      By Ms. STABENOW (for herself and Ms. Snowe):
  S. 1227. A bill to improve quality in health care by providing 
incentives for adoption of modern information technology; to the 
Committee on Finance.
  Mrs. STABENOW. Mr. President, I am very pleased to introduce the 
``Health Information Technology Act of 2005'' with my friend and 
colleague from Maine, Senator Snowe. This legislation will reduce costs 
for our businesses, improve systems for our providers, and improve 
quality of care for patients.
  We know we need to reduce health care costs in this country. In 2004, 
United States national health expenditures, known as NHEs, amounted to 
$1.8 trillion, or about $6,300 per person, accounting for 15.8% of our 
GDP. This is almost twice the average among European Union countries.
  And costs are expected to continue to skyrocket. The Center for 
Medicare and Medicaid Services, CMS, estimates that by 2013, NHEs in 
the United States will reach $3.4 trillion and account for 18.8 percent 
of our GDP.
  It is without question that the increasing cost of employer-based 
health insurance hurts the global competitiveness of U.S. companies. 
General Motors now spends more than $1,500 per vehicle on health care 
costs, while their non-U.S. based competitors spend as much as $1,000 
less.
  Our large companies certainly aren't alone in struggling to meet the 
health care needs of their employees--the average member of the Small 
Business Association of Michigan, SBAM spends nearly $8,000 per 
employee per year on health insurance premiums. SBAM explains very 
clearly one of the reasons for these high costs: ``the way in which 
health care information is communicated is expensive, inefficient, and 
many times simply does not happen.''
  The members of the Health Information Technology Leadership Panel, 
convened pursuant to the National Coordinator for Health Information 
Technology's Framework for Strategic Action, recently agreed that 
``increasing health care costs pose a great and growing challenge to 
their industries and the broader U.S. economy.''
  But it's not just the level of health care spending--at the same time 
that we are spending twice as much as many other countries, 45 million 
of our citizens lack health insurance, and a recent national study by 
RAND suggests that U.S. adults receive only 55 percent of recommended 
care.
  The answer is not to cut payments or to ask patients to take less 
care, but to ensure the right information is where it needs to be at 
the time it needs to be there so that providers can give the best 
possible treatment and care. That will both reduce costs and improve 
quality of care.
  However, most of our Nation's health care providers don't have access 
to information technology and services because it's hard enough just to 
keep up with their daily costs, much less to invest in something new.
  And, there's another reason providers haven't been quick to adopt 
these systems. The nature of our health care system means that in large 
part the value of these technologies--through the lower costs they will 
achieve--accrue to the payers of health care, rather than to the 
providers.
  The costs of necessary information not being available are great. Too 
often, care is duplicated like an x-ray given twice, because an 
emergency room doctor didn't have the results of an earlier x-ray, or 
the best and most appropriate care isn't given. Our health care 
professionals can't possibly provide the best care if they don't have 
complete and accurate information about the patient sitting in front of 
them.
  Multiple studies have found that as much as $300 billion is spent 
each year on health care that does not improve patient outcomes on 
treatment that is unnecessary, inappropriate, inefficient, or 
ineffective.
  A March 2001 Institute of Medicine, IOM, study concluded that in 
order to improve quality, there must be a national commitment to 
building an information infrastructure. An October 2003 Government 
Accountability Office report found that the benefits of an electronic 
healthcare information system included improved quality of care, 
reduced costs associated with medication errors, more accurate and 
complete medical documentation, more accurate capture of codes and 
charges, and improved communication among providers enabling them to 
respond more quickly to patients' needs.
  By providing the most appropriate care at the most appropriate time, 
we can reap huge savings. A January 2005 Report by the Center for 
Information Technology Leadership, CITL, found that moving to 
standardized health information exchange and interoperability would 
save nearly $80 billion annually in the United States.
  The benefits of adoption and use of health care information 
technologies,

[[Page 12310]]

systems and services will be widespread: employers will realize cost 
savings, clinicians will gain new electronic support tools and patient 
information to help guide medical decisions, and patients will benefit 
from a more efficient health care system and from a safer health care 
system with fewer unnecessary treatments and more attention to 
preventive care. And, taxpayers and our federal programs will benefit. 
Researchers have suggested that up to 30 percent of annual Medicare 
health care spending could be saved by eliminating unnecessary and 
duplicative procedures, and improving quality by eliminating errors.
  The benefits of health information technologies and services become 
most compelling on an individual level. I met an extraordinary woman 
just a month ago. Renae Wallace, a small business owner in Kingsley, MI 
told me about her son Randall. Randall is just about to turn 8, but 
because he was born with complex heart and lung defects, he has seen 
the inside of a surgery room more times than most people see in a 
lifetime.
  Renae takes her son to providers in Traverse City, Grand Rapids, and 
Ann Arbor. But because there is no way for these providers to talk to 
each other, she has to carry around a file two inches thick of medical 
records--X-rays, MRI scans, surgical notes--on Randall. Otherwise, the 
health care professionals who are taking care of Randall wouldn't have 
the benefit of the results of the treatment that Randall has gotten 
previously. Because they wouldn't have all the information they need, 
Randall might not get the most appropriate care. Renae has made sure 
that all of the providers taking care of her son have as much of the 
information as possible--but it would make a lot more sense if the 
doctors and hospitals and nurses were able to have that information 
without Renae having to carry it around.
  We need to ensure that our health care professionals have all of the 
relevant clinical information available to them in whatever setting a 
patient needs care, at the time the patient needs the care so that they 
can provide the best and most appropriate treatment possible. We know 
that adoption of health information technology can play a critical role 
in improving patient outcomes and at the same time greatly reduce 
costs. But it can't happen without the federal government playing a 
role.
  The members of the Health Information Technology Leadership Panel 
concurred that without Federal leadership, neither their individual 
companies nor the industrial sector as a whole can achieve the breadth 
of HIT adoption that would be required to realize the needed 
transformation of health care.
  The bill that Senator Snowe and I are introducing recognizes that 
both Federal leadership and Federal investment are necessary and 
appropriate. The focus of the investment provided by the ``Health 
Information Technology Act of 2005'' is on improving health care for 
patients with heart disease, cancer, stroke, diabetes, chronic 
obstructive pulmonary disease, asthma, and other diseases and 
conditions by driving transformation of systems in physician offices 
and other health care settings. Our bill includes a number of funding 
incentive approaches intended to improve health care through adoption 
of information technology.
  First, we create a 5-year, $4 billion competitive grant program for 
hospitals, physicians, skilled nursing facilities, community health 
centers and community mental health centers to offset investments in 
new technologies and information services. Importantly, the grant 
program is funded by a mandatory appropriation from the Medicare trust 
funds. This is critical to ensuring that funds will actually be 
available for the grant program. It also makes sense as the trust funds 
will see savings through lower outlays due to less duplicative and 
unnecessary care.
  The grant program would authorize funding for the: purchase, lease, 
and installment of computer software and hardware and related services; 
upgrade of existing computer technology; purchase communications 
capabilities necessary for clinical data access, storage, and exchange; 
services associated with acquiring, implementing, operating, or 
optimizing the use of new or existing computer software and hardware 
and clinical health care informatics systems; provision of education 
and training for staff on information systems and technology designed 
to improve patient safety; and purchase, lease, subscription, 
integration service of clinical decision support tools that provide 
ongoing continuous quality improvement functions.
  Second, we allow accelerated depreciation of qualified health care 
information system expenditures in 2005-2010.
  Third, we adjust Medicare payments to providers who use HIT that 
improves the quality and accuracy of clinical decision-making. We begin 
by addressing payments for treatment of Medicare beneficiaries with 
heart disease, cancer, stroke, diabetes, and chronic obstructive 
pulmonary disease because we know these conditions consume a large 
portion of our Medicare resources.
  We know that the Medicare program will reap the benefit of providers 
using health information networks. The Office of the National 
Coordinator for Health Information Technology said on March 2 of this 
year that the annual savings attributable to widespread electronic 
health record adoption are likely to lie between 7.5 percent-30 percent 
of annual health care spending.
  It only makes sense to establish new payment codes to account for the 
costs of purchasing and using health information technology and 
services with patient-specific applications.
  Our legislation also will make it much easier for physicians and 
other health care professionals to treat patients by reducing the 
communication barriers that currently exist. The ``Health Information 
Technology Act'' provides that the Secretary shall adopt data standards 
for interoperability between providers and links funding to the 
adoption of those standards.
  We know that electronic health care information systems can reap huge 
benefits. The GAO found these systems improve quality of care, reduce 
costs and improve communication among providers.
  But we also know that we can't expect our health care providers to 
make this investment alone as they struggle to meet their daily needs. 
Our country must have a national commitment to building an information 
infrastructure, and the Federal Government needs to step up to the 
plate and provide much-needed funds to get the ball rolling.
  We could only have dreamed about clinical computerized information 
systems when the Medicare and Medicaid programs began. Today, we have 
them at our disposal. The sooner we get them into our hospitals, 
physician offices, nursing homes, community health centers and 
community mental health centers, the sooner our patients, providers, 
and pocketbooks will see the rewards.
  I am very pleased to announce the support of the following 
organizations: American College of Physicians, Federation of American 
Hospitals, National Council for Community Behavioral Healthcare, the 
National Association of Children's Hospitals, American Heart 
Association, National Rural Health Association, National Business 
Coalition on Health, American Academy of Family Physicians, National 
Association of Community Health Centers, American Health Care 
Association, IBM, Health Vision, Healthcare Information and Management 
Systems Society, eHealth Initiative, AdvaMed, American Health 
Information Management Association, Verizon, Altarum, Michigan Health 
and Hospital Association, Automation Alley, Small Business Association 
of Michigan, Detroit Chamber, Michigan State Medical Society, Detroit 
Medical Center, Marquette General Health System, Oakwood Healthcare 
System, Henry Ford Health System, MPRO, Michigan's Medicare Quality 
Improvement Organization; Microsoft Corporation, Axolotl Corp, Delmarva 
Foundation, Dell Inc, DiagnosisOne, Greenway Medical Technologies, 
HealthInsight, Healthgate, Inland Northwest Health Services, Kyrptiq, 
Lumetra, Medical Review of North Carolina, Misys Healthcare Systems, 
National Alliance for Primary

[[Page 12311]]

Care Informatics, Partners Healthcare System, Siemens Corporation, 
Philips Medical Systems, WebMD Corporation, and the Virgin Islands 
Medical Institute.
  I am also very pleased to have the support of the AFL-CIO, Trinity 
Health, NextGen, The Society of Thoracic Surgeons, American Association 
of Homes and Services for the Aging, St. John Health, Michigan Primary 
Care Association, the American Health Quality Association, and Comtek 
and look forward to receiving their forthcoming letters.
  I ask unanimous consent to have the text of the bill and additional 
material printed in the Record.
  There being no objection, the material was ordered to by printed in 
the Record, as follows:

                                                  American Academy


                                         of Family Physicians,

                                     Washington, DC, June 9, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: On behalf of It he 94,000 
     members of the American Academy of Family Physicians, 
     congratulations on the introduction of the Health Information 
     Technology Act. The AAFP strongly supports this legislation 
     and we would be pleased to help you in your efforts to have 
     Congress pass it.
       The legislation recognizes that the main obstacles to 
     widespread adoption of electronic health record systems are 
     the significant up-front costs and the lack of general 
     interoperability of many fragmented electronic systems. In 
     the first case. the estimated costs of about $25,000 per 
     physician to purchase an electronic health record system is a 
     serious problem for family physicians in small practices that 
     have very tight financial margins in which to operate. In the 
     second case, even if the financing is available, a family 
     physician will be reluctant to invest in health information 
     technology that cannot communicate with a nearby lab or the 
     specialist across town.
       By helping physicians with the financing of these systems 
     and by facilitating the development of interoperability 
     standards, your legislation would go a long way to improving 
     the quality and efficiency of health care delivery in this 
     county.
       Thank you for your leadership in this effort. We are 
     committed to working with you to secure passage of this 
     important legislation.
           Sincerely,
                                                  Michael Fleming,
     Board Chair.
                                  ____

                                           National Association of


                               Community Health Centers, Inc.,

                                      Bethesda, MD, June 13, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow, On behalf of health centers all 
     across the country and the 15 million Americans who rely on 
     them for health care, I want to express our strong support 
     for the ``Health Information Technology Act of 2005.'' The 
     legislation would help to ensure that health centers have the 
     additional resources they need to further harness the 
     potential of information technology to improve the overall 
     quality of health care delivered to patients in underserved 
     communities.
       Health centers recognize the value of healthcare 
     information technology in facilitating the delivery of cost-
     effective, quality health care services. Indeed, through 
     participation in the Health Resources and Services 
     Administration's Health Disparities Collaboratives, health 
     centers have demonstrated reductions in disparities and 
     improved access to services through the use of electronic 
     patient registries. However, the high cost of establishing 
     these IT. systems throughout the entire health center is a 
     significant barrier for centers with few financial resources.
       With that in mind, NACHC applauds you for including health 
     centers as eligible recipients of competitive grant funding 
     and tax incentives for the design and installation of new 
     healthcare IT systems, the upgrade of existing computer 
     hardware and software, and training and education of health 
     center staff. We also appreciate that your legislation would 
     require the establishment of national healthcare IT standards 
     that promote the interoperability of health care information 
     across all health care settings within 2 years.
       Thank you once again for introducing the ``Health 
     Information Technology Act of 2005.'' We stand ready to work 
     with you to advance this vital legislation in the 109th 
     Congress.
           Sincerely,
     Daniel R. Hawkins, Jr.,
       Vice-President for Federal, State, and Public Affairs.
                                  ____



                             American Health Care Association,

                                    Washington, DC, June 10, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow: On behalf of the American Health 
     Care Association (AHCA) and the National Center for Assisted 
     Living (NCAL), the nation's largest association representing 
     providers of quality long term care, I am writing to 
     acknowledge our support for the ``Health Information 
     Technology Act of 2005.''
       This legislation, which you will soon introduce, has the 
     potential to transform health and long term care by utilizing 
     information technology to allow for the seamless transfer of 
     health data while guaranteeing privacy and security. By 
     creating incentives for providers to acquire health 
     information technology and ensuring interoperability, you are 
     taking critically important steps to improve patient safety 
     and quality. With provisions such as allowing accelerated 
     depreciation of qualified health care information system 
     expenditures, you've clearly fast tracked the potential of 
     this legislation reaching its ultimate goals.''
       Senator Stabenow, AHCA and NCAL fully support and commend 
     you for the leadership you are providing with the 
     introduction of the ``Health Information Technology Act of 
     2005.''
           Sincerely,
                                                         Hal Daub,
     President & CEO.
                                  ____



                                                           IBM

                                   Washington, D.C., June 9, 2005.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, D.C.

     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, D.C.
       Dear Senators Snowe and Stabenow: On behalf of IBM, I would 
     like to congratulate you on the introduction of the ``Health 
     Information Technology Act of 2005, and we support its 
     passage.
       The Act includes number of funding incentive approaches 
     intended to stimulate healthcare improvements enabled by 
     information technology. Most important, the Act would adjust 
     Medicare payments to providers who participate in a health 
     information network that improves the quality and accuracy of 
     clinical decision-making. With so many Americans in this one 
     program, creating rewards for quality in Medicare will have a 
     lifesaving impact for patients throughout the country.
       The Act also authorizes grants for information technology 
     software, hardware, and services to improve quality in health 
     care and patient safety. Eligible grantees would include 
     hospitals, skilled nursing facilities, federally qualified 
     health centers, physicians, and physician group practices. 
     Funding would be authorized for the years 2006 to 2010 as 
     part of the Medicare program as permitted within the Budget 
     Reserve Fund enacted in the 2006 Budget Resolution.
       The legislation would also reduce the communication 
     barriers that make it difficult for physicians to treat 
     patients. The Act provides that the Secretary shall adopt 
     data standards for interoperability between providers and 
     links funding to the adoption of those standards. At the same 
     time, the Act would implement procedures for the Secretary to 
     accept the optional submission of data derived from health 
     care reporting requirements. The funding will allow providers 
     to adopt technology with standards that promote the efficient 
     exchange of data.
       Finally, the Act would amend the Internal Revenue Code to 
     permit the expensing of health care informatics systems that 
     meet standards adopted by the Secretary of HHS.
       We thank you for advancing these important Medicare-related 
     provisions and look forward to supporting the Act's passage 
     this Congress.
           Sincerely,

                                            Christopher Caine,

                                                   Vice President,
     Government Programs.
                                  ____

     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: Healthvision, Inc. is 
     dedicated to providing and supporting connected healthcare 
     communities where information can be securely shared among, 
     physicians, patients, consumers, hospitals and other 
     interested constituents in the healthcare landscape. We 
     congratulate you both for introducing The Health Information 
     Technology Act. This legislation would provide grants to 
     physicians, hospitals and skilled nursing facilities for 
     purposes of improving patient safety and reducing medical 
     errors.
       We understand the positive role that health information 
     technology (HIT) can play in promoting safety and the quality 
     of

[[Page 12312]]

     care. We also are cognizant that financial barriers prevent 
     physicians and patients from receiving and utilizing health 
     information technology that is important to reducing medical 
     errors and creating efficiencies in the healthcare system. 
     The Health Information Technology Act (HIT Act) provides a 
     solution to overcoming the barriers that prevent the use and 
     utilization of HIT to improve healthcare. By providing 
     incentives for providers to adopt HIT, promoting the adoption 
     of national data and health communication standards to 
     facilitate interoperability, leveraging federal investments 
     in Medicare and Medicaid and creating special set asides for 
     certain groups including rural providers and health 
     professional shortage areas, the HIT Act provides 
     considerable leverage to help build momentum in improving 
     healthcare as we know it today.
       Quality and safety challenges, according to the Institute 
     of Medicine, cause an estimated 44,000 to 98,000 deaths 
     yearly due to medical errors. Legislation to adopt HIT is 
     essential to improving healthcare by replacing antiquated 
     paper records with electronic patient records that can be 
     shared across healthcare communities and among the necessary 
     stakeholders in such communities.
       The Healthcare Information Act of 2005 would be an 
     important step toward addressing some of the quality and 
     safety challenges identified by the Institute of Medicine. It 
     is our belief that upfront investment in HIT will improve the 
     quality of care, while returning savings through reductions 
     in clinical and administrative costs over time.
       We applaud your leadership and look forward to working with 
     you to provide incentives for adoption of modern health 
     information technology to improve the quality of healthcare.
           Very truly yours,
     Scott Decker,
       President and Chief Executive Officer.
     Jonathan Teich,
       Sr. Vice President and Chief Medical Officer.
                                  ____



                                           eHealth Initiative,

                                     Washington, DC, June 9, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: The eHealth Initiative 
     and the eHealth Initiative Foundation, a multi-stakeholder 
     consortium dedicated to driving improvement in the quality, 
     safety, and efficiency of healtcare through information and 
     information technology, congratulate you for introducing The 
     Health Information Technology Act of 2005. This legislation 
     would provide grants to physicians, hospitals and skilled 
     nursing facilities for purposes of improving patient safety 
     and reducing medical errors.
       The Health Information Technology Act of 2005 recognizes 
     the key role played by health information technology (HIT) to 
     improve healthcare by providing incentives for providers to 
     adopt HIT, promoting the adoption of national data and health 
     communication standards to facilitate interoperability, 
     leveraging federal investments in Medicare and Medicaid and 
     creating special set asides for certain groups including 
     rural providers and health professional shortage areas.
       Legislation to encourage the adoption of health information 
     technology to improve healthcare quality is essential, given 
     that 90 percent of the 30 billion U.S. health transactions 
     each year are conducted by phone, fax or mail and only 15 
     percent of US physicians use electronic health records. These 
     quality and safety Challenges according to the Institute of 
     Medicine, cause an estimated 44,000 to 98,000 deaths yearly 
     due to medical errors.
       Various studies have shown the potential of health 
     information technology to make improvements in healthcare 
     quality. For example, a rural community hospital prevented 
     administration of over 1,200 wrong drugs or dosages using 
     automatic identification technology and wireless scanners to 
     verify both the identities of patients and their correct 
     medications (GAO-04-224).
       The Health Information Technology Act of 2005 would be an 
     important step toward addressing some of the quality and 
     safety challenges identified by the Institute of Medicare. It 
     is our belief that upfront investment in HIT will improve the 
     quality of care, while returning savings through reductions 
     in clinical and administrative cots over time.
       On behalf of the undersigned and other members of the 
     eHealth Initiative, we salute your leadership and look 
     forward to working with you to provide incentives for 
     adoption of modern health information technology to improve 
     the quality of healthcare.
       Sincerely,
     AdvaMed.
     American College of Physicians.
     American Health Information Management Association.
     Altarum Institute.
     Axolotl Corp.
     Delmarva Foundation.
     Dell Inc.
     DiagnosisOne.
     Federation of American Hospitals.
     Healthcare Information and Management Systems Society.
     Greenway Medical Technologies.
     HealthInsight.
     Healthgate.
     Healthvision.
     IBM.
     Inland Northwest IHealth Services.
     Kryptiq.
     Lumetra.
     Medical Review of North Carolina.
     Microsoft Corporation.
     Misys Healthcare Systems.
     National Alliance for Primary Care Informatics.
     National Business Coalition on Health.
     Partners Healthcare System.
     Siemens Corporation.
     Philips Medical Systems.
     WebMD Corporation.
                                  ____



                                             HIMSS'

                                        Chicago, IL, June 9, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
     Hon. Olympia Snowe,
     U.S. Senate,
     Washington, DC.
       Dear Senators Stabenow and Snowe: On behalf of the 
     Healthcare Information and Management Systems Society and our 
     15,000 individual and over 260 corporate members and 45 
     chapters nationwide, we are pleased to support the Health 
     Information Technology Act of 2005. HIMSS members are very 
     aware of the need for catalyst legislation to improve patient 
     safety and cost effective healthcare in the U.S. Legislation 
     like the Health Information Technology Act of 2005 provides 
     the type of congressional leadership that will improve 
     healthcare delivery for the nation.
       HIMSS supports the concepts of this legislation because it 
     represents a positive step forward in the national agenda to 
     provide a catalyst to encourage substantial investments into 
     information technology and management systems to improve the 
     quality, safety, and efficiency of patient care. Through our 
     members and the Society's advocacy outreach, we will continue 
     to support and work for the bill's passage.
       We are particularly encouraged by the provisions in the 
     legislation to create a grant program to infuse almost $4 
     billion in federal funding into the provider community to 
     encourage adoption of information systems and services, as 
     well as the emphasis on interoperability that address the 
     needs of providers in diverse geographic settings, including 
     setting aside at least 20 percent for rural communities.
       The HIMSS Board of Directors applauds your efforts in 
     realizing and acting on the need for infuse federal funding 
     into the provider community to adopt much needed information 
     technology.
       We look forward to working with you to gain additional 
     healthcare industry support for the legislation. If we can be 
     of any further assistance, please contact Mr. Dave Roberts, 
     HIMSS Director of Public Policy.
           Sincerely,
     H. Stephen Lieber,
       President & CEO.
     Pamela R. Wirth,
       Chairperson of the Board, HIMSS, Vice President, Soarian 
     Medical Solutions, Siemens Medical Systems.
                                  ____



                                                      Verizon,

                                    Washington, DC, June 13, 2005.
     Senator Olympia J. Snowe,
     Senator Debbie A. Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senators Snowe and Stabenow: On behalf of Verizon, I 
     applaud your introduction of the Health Information 
     Technology Act of 2005. This legislation recognizes the vital 
     role of information technology im making a difference in 
     improving quality and reducing the cost of health care, both 
     of which are important to Verizon, as well as the Nation. 
     Verizon has a vital stake in seeing improvements in the 
     health care system, as we provide health care coverage for 
     over 800,000 employees, retirees and their dependents. We 
     hope the health care system can benefit from the technologies 
     that have worked so well in transforming our industry.
       In particular, we appreciate your recognition of 
     telecommunications technology and its significance in 
     improving quality and patient safety. Verizon believes that 
     broad-
     band, wireless and other telecommunications services can also 
     make a real difference in reducing barriers and improving 
     access to quality health care. We look forward to working 
     with you in passing this important piece of legislation to 
     improve the health care system.

                                          Andrew M. Mekelburg,

                                                   Vice President,
                                     Federal Government Relations.

[[Page 12313]]

     
                                  ____
                                                      Altarum,

                                      Ann Arbor, MI, June 5, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow: I am writing to convey to you 
     Altarum Institute's strong support for the Health Information 
     Technology Act, which you are about to introduce into the 
     United States Senate.
       As you well know, Altarum is now helping the state of 
     Michigan to define, develop and deploy the Michigan Health 
     Information Network--the underlying technical, standards and 
     governance foundation that will ensure that promising health 
     information technology efforts across the state are both 
     interoperable and sustainable.
       While with the MHIN we help to prepare the ``foundation'' 
     upon which these health IT applications will rest, your bill 
     takes a tremendous stride forward in helping healthcare 
     providers actually make these health IT tools a part of how 
     they do their business. We sincerely hope and trust that 
     providers who, due to the grant programs envisioned in your 
     bill, can begin to see their way clear to adopting health IT 
     tools in their practices will be ready to work as part of a 
     broader community to ensure interoperability, common 
     standards and a governing model such as the MHIN will 
     provide.
       Your leadership in this critically important area is both 
     timely and appreciated. We look forward to consideration and 
     passage of the Health Information Technology Act.
           Sincerely,
                                                 Kenneth R. Baker,
     President.
                                  ____

                                                   Michigan Health


                                       & Hospital Association,

                                        Lansing, MI, June 8, 2005.
     Hon. Debbie Stabenow,
     U.S. Senate,
     Washington, DC.
       Dear Senator Stabenow, The Michigan Health & Hospital 
     Association welcomes your efforts to assist with the capital 
     investment requirements hospitals face for health information 
     technology. The MHA supports your pending legislation, The 
     Health Information Technology Act of 2005, which would 
     provide needed funding for new health IT design, purchase and 
     collaboration, as well as recognition of these costs within 
     the Medicare reimbursement system. This issue will continue 
     to develop in importance for Michigan hospitals and we look 
     forward to working with you to identify how best to provide 
     federal assistance for technology infrastructure, while 
     keeping patient-focused safety and quality improvement as the 
     primary goal for all concerned.
       Thank you for your continued support. I may be reached at 
     517/703-86009 if you would like to discuss this matter in 
     further detail.
           Sincerely,
                                                     Brian Peters,
                                  Senior Vice President, Advocacy.

  Ms. SNOWE. Mr. President, today I join my colleague, Senator Stabenow 
of Michigan, in introducing the ``Health Information Technology Act of 
2005'', which will serve to improve the quality of health care through 
implementation of information technology; IT, in hospitals, health 
centers and physician practices throughout the country. At a time when 
the Institute of Medicine (IOM) has reported that up to 98,000 
Americans die each year due to medical errors, we cannot afford to 
wait. When we also consider the escalating cost of health care in this 
country, we must recognize that this level of growth in spending has 
created a crisis. Information technology is one solution, and this 
legislation will assert the federal government's role in providing 
leadership in this area and provide financial incentives to spur rapid 
adoption of information technology in medicine. Our legislation is 
necessary because as a nation we face two stark problems.
  The first of these is a serious patient safety problem. The good news 
is that solutions exist: We have the technological ability to 
dramatically reduce medical errors and thus save lives. Many have heard 
about how drug interactions can be avoided by software systems which 
check a patient's prescriptions for hazards. Yet there are so many 
other applications which can improve health. For example, by reviewing 
and analyzing information, a health provider can help a patient better 
manage chronic diseases such as diabetes and heart disease, and avoid 
adverse outcomes.
  Our second major problem is the escalating cost of health care. Costs 
are reduced when tests don't have to be repeated and data isn't 
delayed. In fact, a patient may obtain faster, higher quality care 
when, for example, multiple practitioners can review diagnostic test 
results right at their desktops. In an age where millions of Americans 
share family pictures over the internet in seconds, isn't it long past 
time that a physician should be able to retrieve an x-ray just as 
easily?
  The President certainly recognizes the disparity in technology in 
health versus other parts of our economy. He has declared a goal for 
every American to have an electronic medical record within 10 years. I 
concur--we need this and more. In fact, once that record is in place we 
can do so many things better. From preventing drug interactions, to 
managing chronic diseases, to simply helping providers operate more 
efficiently. Most of us have been told at one time or another, ``we're 
waiting to get the test results mailed'', or ``we're still waiting for 
your chart''. Health care is one of the last bastions of such 
inefficiency.
  The bad news is that high start-up costs and a lack of standards have 
prevented us from reaping the benefits of new technologies. I am 
certainly looking forward to the progress we will make with Dr. David 
Brailer heading the new Office of the National Coordinator for Health 
Information Technology at the Department of Health and Human Services. 
The President has made technology implementation a priority, and there 
is no doubt that a lack of standards has prevented IT adoption by many 
health care providers. One must know that a system purchased will be 
compatible with others, and that--no matter what may happen in the 
future to a vendor--the huge investment one makes in building an 
electronic medical record won't be lost. In other words, your system 
must be able to communicate with other systems, and your investment in 
building electronic medical records must be preserved. So when a 
patient moves, their electronic ``chart'' should be able to move right 
along with them, and their continuity of care shouldn't be interrupted.
  Yet standards alone aren't enough. Today many providers are 
struggling to make these investments, and for those which serve 
beneficiaries of Medicare, Medicaid and SCHIP, it can be exceedingly 
difficult.
  The legislation which we are introducing today will bring the 
solution within our reach. In the last Congress I worked with Senator 
Bob Graham to introduce legislation which provided a grants program to 
give assistance to hospitals and long term care facilities to enable 
investment in IT. As I join today with Senator Stabenow to introduce 
this legislation, we have made several crucial enhancements to the 
previous bill. The legislation now includes both federally-qualified 
health centers and community mental health centers as eligible to 
receive IT grants. In addition, physician practices can also 
participate. All three are key treatment environments where both costs 
and errors must be addressed.
  Our new legislation even provides an alternative to those for-profit 
providers who do not wish to apply for a grant. Under this bill, such 
providers will be able to expense the cost of a qualified system.
  The legislation supports expenditures for a variety of expenses 
required to implement health care information technology. These include 
such components as computer hardware and software, plus installation 
and training costs. In addition, when installed we require that every 
system must meet the HHS Secretary's interoperability standards.
  We know we will realize significant savings through information 
technology. On that there is bipartisan consensus. Yet as providers are 
facing even declining payment rates, they also are told they must 
institute changes in the way they practice, including implementing 
information technology. We know that much of the savings in health care 
IT will accrue to the patient and payer--in such aspects as fewer 
duplicate tests, greater efficiency, and better health management. Thus 
it is appropriate that the Federal Government would assist with the 
often prohibitive start-up costs--particularly for those who serve 
beneficiaries of Medicare, Medicaid and SCHIP.
  I again want to stress the first goal of this legislation: To help 
build a safer

[[Page 12314]]

medical-delivery system. The great successes of our health care system 
are largely due to our highly committed and talented health care 
professionals. The problem we are addressing today is not theirs, but 
is an endemic weakness of the system they depend upon. However, to 
utilize the solution, the Federal Government must step forward and 
provide the leadership necessary to make system changes a reality.
  When the Medicare and Medicaid programs began, we could only have 
dreamed about computerized clinical information systems. Now, today, we 
have this technology at our disposal, and I strongly believe that we 
cannot afford to delay implementation. I hope my colleagues will join 
us in support of this legislation so we may soon achieve the goals of 
improving patient safety and reducing our escalating health care costs.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1227

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Health Information 
     Technology Act of 2005''.

     SEC. 2. INFORMATICS SYSTEMS GRANT PROGRAM.

       (a) Grants.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') shall 
     establish a program to award grants to eligible entities that 
     have submitted applications in accordance with subsection (b) 
     for the purpose of assisting such entities in offsetting the 
     costs incurred after December 31, 2004, that are related to 
     clinical health care informatics systems and services 
     designed to improve quality in health care and patient 
     safety.
       (2) Duration.--The authority of the Secretary to make 
     grants under this section shall terminate on September 30, 
     2010.
       (3) Costs defined.--For purposes of this section, the term 
     ``costs'' shall include total expenditures incurred for--
       (A) purchasing, leasing, and installing computer software 
     and hardware, including handheld computer technologies, and 
     related services;
       (B) making improvements to existing computer software and 
     hardware;
       (C) purchasing or leasing communications capabilities 
     necessary for clinical data access, storage, and exchange;
       (D) services associated with acquiring, implementing, 
     operating, or optimizing the use of new or existing computer 
     software and hardware and clinical health care informatics 
     systems;
       (E) providing education and training to eligible entity 
     staff on information systems and technology designed to 
     improve patient safety and quality of care; and
       (F) purchasing, leasing, subscribing, integrating, or 
     servicing clinical decision support tools that--
       (i) integrate patient-specific clinical data with well-
     established national treatment guidelines; and
       (ii) provide ongoing continuous quality improvement 
     functions that allow providers to assess improvement rates 
     over time and against averages for similar providers.
       (4) Eligible entity defined.--For purposes of this section, 
     the term ``eligible entity'' means the following entities:
       (A) Hospital.--A hospital (as defined in section 1861(e) of 
     the Social Security Act (42 U.S.C. 1395x(e))).
       (B) Critical access hospital.--A critical access hospital 
     (as defined in section 1861(mm)(1) of such Act (42 U.S.C. 
     1395x(mm)(1))).
       (C) Skilled nursing facility.--A skilled nursing facility 
     (as defined in section 1819(a) of such Act (42 U.S.C. 1395i-
     3(a))).
       (D) Federally qualified health center.--A Federally 
     qualified health center (as defined in section 1861(aa)(4) of 
     such Act (42 U.S.C. 1395x(aa)(4))).
       (E) Physician.--A physician (as defined in section 1861(r) 
     of such Act (42 U.S.C. 1395x(r))).
       (F) Physician group practice.--A physician group practice.
       (G) Community mental health center.--A community mental 
     health center (as defined in section 1861(ff)(3)(B) of such 
     Act (42 U.S.C. 1395x(ff)(3)(B))).
       (b) Application.--
       (1) In general.--An eligible entity seeking a grant under 
     this section shall submit an application to the Secretary at 
     such time, in such form and manner, and containing the 
     information described in paragraph (2).
       (2) Information described.--The information described in 
     this paragraph is the following information:
       (A) A description of--
       (i) the clinical health care informatics system and 
     services that the eligible entity intends to implement with 
     the assistance received under this section; and
       (ii) how the system will improve quality in health care and 
     patient safety, including estimates of the impact on the 
     health of, and the health costs associated with the treatment 
     of, patients with heart disease, cancer, stroke, diabetes, 
     chronic obstructive pulmonary disease, asthma, or any other 
     disease or condition specified by the Secretary.
       (B) Any additional information that the Secretary may 
     specify.
       (c) Priority for Certain Eligible Entities.--In awarding 
     grants under this section, the Secretary shall give 
     priority--
       (1) first, to eligible entities--
       (A) that are exempt from tax under section 501(a) of the 
     Internal Revenue Code of 1986; and
       (B)(i) in which the total of individuals that are eligible 
     for benefits under the medicare program under title XVIII of 
     the Social Security Act, the medicaid program under title XIX 
     of such Act, or under the State children's health insurance 
     program under title XXI of such Act make up a high percentage 
     (as determined appropriate by the Secretary) of the total 
     patient population of the entity; or
       (ii) that provide services to a large number (as determined 
     appropriate by the Secretary) of such individuals;
       (2) then, to eligible entities that meet the requirement 
     under clause (i) or (ii) of paragraph (1)(B); and
       (3) then, to other eligible entities.
       (d) Reserve Funds for Entities in Health Professional 
     Shortage Areas or Rural Areas.--
       (1) In general.--Subject to paragraph (2), the Secretary 
     shall ensure that at least 20 percent of the funds available 
     for making grants under this section to--
       (A) hospitals and critical access hospitals are used for 
     making grants to such hospitals that are located exclusively 
     in an applicable area;
       (B) skilled nursing facilities are used for making grants 
     to such facilities that are located exclusively in an 
     applicable area;
       (C) Federally qualified health centers are used for making 
     grants to such centers that are located exclusively in an 
     applicable area;
       (D) physicians and physician group practices are used for 
     making grants to physicians and such practices that are 
     located exclusively in an applicable area; and
       (E) community mental health centers are used for making 
     grants to such centers that are located exclusively in an 
     applicable area.
       (2) Availability of reserve funds if limited number of 
     entities apply for reserved grants.--If the Secretary 
     estimates that the amount of funds reserved under 
     subparagraph (A), (B), (C), (D), or (E) of paragraph (1) for 
     the type of entity involved exceeds the maximum amount of 
     funds permitted for such entities under subsection (e), the 
     Secretary may reduce the amount reserved for such entities by 
     an amount equal to such excess and use such funds for 
     awarding grants to other eligible entities.
       (3) Applicable area defined.--For purposes of paragraph 
     (1), the term ``applicable area'' means--
       (A) an area that is designated as a health professional 
     shortage area under section 332(a)(1)(A) of the Public Health 
     Service Act;
       (B) a rural area (as such term is defined for purposes of 
     section 1886(d) of the Social Security Act (42 U.S.C. 
     1395ww(d))); or
       (C) a rural census tract of a metropolitan statistical area 
     (as determined under the most recent modification of the 
     Goldsmith Modification, originally published in the Federal 
     Register on February 27, 1992 (57 Fed. Reg. 6725)).
       (e) Amount of Grant.--
       (1) Amount.--
       (A) In general.--Subject to subparagraph (B) and paragraph 
     (2), the Secretary shall determine the amount of a grant 
     awarded under this section.
       (B) Consideration.--In determining the amount of a grant 
     under this section, the Secretary shall take into account the 
     ability to take an expense deduction for health care 
     informatics system expenses under section 179C of the 
     Internal Revenue Code of 1986, as added by section 5.
       (2) Limitation.--
       (A) In general.--A grant awarded under this section may not 
     exceed the lesser of--
       (i) an amount equal to the applicable percentage of the 
     costs incurred by the eligible entity for the project for 
     which the entity is seeking assistance under this section; or
       (ii) in the case of a grant made to--

       (I) a hospital or a critical access hospital, $1,000,000;
       (II) a skilled nursing facility, $200,000;
       (III) a Federally qualified health center, $150,000;
       (IV) a physician, $15,000;
       (V) a physician group practice, an amount equal to $15,000 
     multiplied by the number of physicians in the practice; or
       (VI) a community mental health center, $75,000.

       (B) Applicable percentage.--For purposes of subparagraph 
     (A)(i), the term ``applicable percentage'' means, with 
     respect to an eligible entity for the period involved, the 
     percentage of total revenues (excluding grants and gifts from 
     Federal, State, local government, and private sources) for 
     such period that consists of total revenues from the medicare 
     program, the medicaid program, and the State children's 
     health insurance program under titles XVIII, XIX, and XXI, 
     respectively, of the Social Security Act.

[[Page 12315]]

       (f) Requirements.--
       (1) Compliant with standards.--A clinical health care 
     informatics system funded under this section and placed in 
     service on or after the date the standards are adopted under 
     section 4 shall be compliant with such standards.
       (2) Furnishing the secretary with information.--
       (A) In general.--An eligible entity receiving a grant under 
     this section shall furnish the Secretary with such 
     information as the Secretary may require to--
       (i) evaluate the project for which the grant is made; and
       (ii) ensure that assistance provided under the grant is 
     expended for the purposes for which it is made.
       (B) Coordination.--The Secretary shall ensure that the 
     requirements for furnishing information under subparagraph 
     (A) are coordinated with other requirements for furnishing 
     information to the Secretary that the eligible entity is 
     subject to.
       (g) Studies.--The Secretary shall conduct studies to--
       (1) evaluate the use of clinical health care informatics 
     systems and services implemented with assistance under this 
     section to measure and report quality data based on accepted 
     clinical performance measures; and
       (2) assess the impact of such systems and services on 
     improving patient care, reducing costs, and increasing 
     efficiencies.
       (h) Reports.--
       (1) Interim reports.--
       (A) In general.--The Secretary shall submit, at least 
     annually, a report to the appropriate committees of Congress 
     on the grant program established under this section.
       (B) Contents.--A report submitted pursuant to subparagraph 
     (A) shall include information on--
       (i) the number of grants made;
       (ii) the nature of the projects for which assistance is 
     provided under the grant program;
       (iii) the geographic distribution of grant recipients;
       (iv) the impact of the projects on the health of, and the 
     health costs associated with the treatment of, patients with 
     heart disease, cancer, stroke, diabetes, chronic obstructive 
     pulmonary disease, asthma, or any other disease or conditions 
     specified by the Secretary;
       (v) the results of the studies conducted under subsection 
     (g); and
       (vi) such other matters as the Secretary determines 
     appropriate.
       (2) Final report.--Not later than 180 days after the 
     completion of all of the projects for which assistance is 
     provided under this section, the Secretary shall submit a 
     final report to the appropriate committees of Congress on the 
     grant program established under this section, together with 
     such recommendations for legislation and administrative 
     action as the Secretary determines appropriate.
       (i) Funding.--
       (1) Hospitals.--There are appropriated from the Federal 
     Hospital Insurance Trust Fund under section 1817 of the 
     Social Security Act (42 U.S.C. 1395i) $250,000,000, for each 
     of the fiscal years 2006 through 2010, for the purpose of 
     making grants under this section to eligible entities that 
     are hospitals or critical access hospitals.
       (2) Skilled nursing facilities.--There are appropriated 
     from the Federal Hospital Insurance Trust Fund under section 
     1817 of the Social Security Act (42 U.S.C. 1395i) 
     $100,000,000, for each of the fiscal years 2006 through 2010, 
     for the purpose of making grants under this section to 
     eligible entities that are skilled nursing facilities.
       (3) Federally qualified health centers.--There are 
     appropriated from the Federal Supplementary Medical Insurance 
     Trust Fund under section 1841 of the Social Security Act (42 
     U.S.C. 1395t) $40,000,000, for each of the fiscal years 2006 
     through 2010, for the purpose of making grants under this 
     section to eligible entities that are Federally qualified 
     health centers.
       (4) Physicians.--There are appropriated from the Federal 
     Supplementary Medical Insurance Trust Fund under section 1841 
     of the Social Security Act (42 U.S.C. 1395t) $400,000,000, 
     for each of the fiscal years 2006 through 2010, for the 
     purpose of making grants under this section to eligible 
     entities that are physicians or physician group practices.
       (5) Community mental health centers.--There are 
     appropriated from the Federal Supplementary Medical Insurance 
     Trust Fund under section 1841 of the Social Security Act (42 
     U.S.C. 1395t) $20,000,000, for each of the fiscal years 2006 
     through 2010, for the purpose of making grants under this 
     section to eligible entities that are community mental health 
     centers.

     SEC. 3. ADJUSTMENTS TO MEDICARE PAYMENTS FOR HEALTH 
                   INFORMATION TECHNOLOGY ENABLED QUALITY 
                   SERVICES.

       (a) Adjustments.--The Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall establish a methodology for making adjustments in 
     payment amounts under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.) made to providers of services and 
     suppliers who--
       (1) furnish items or services for which payment is made 
     under such title; and
       (2) in the course of furnishing such items and services, 
     use health information technology and technology services 
     with patient-specific applications that the Secretary 
     determines improves the quality and accuracy of clinical 
     decision-making, compliance, health care delivery, and 
     efficiency, such as electronic medical records, electronic 
     prescribing, clinical decision support tools integrating 
     well-established national treatment guidelines with 
     continuous quality improvement functions, and computerized 
     physician order entry with clinical decision-support 
     capabilities.
       (b) Requirements.--The methodology established under 
     subsection (a) shall--
       (1) include the establishment of new codes, modification of 
     existing codes, and adjustment of evaluation and management 
     modifiers to such codes, that take into account the costs of 
     acquiring, using, and maintaining health information 
     technology and services with patient-specific applications;
       (2) first address adjustments for payments for items and 
     services related to the diagnosis or treatment of heart 
     disease, cancer, stroke, diabetes, chronic obstructive 
     pulmonary disease (COPD), and other diseases and conditions 
     that result in high expenditures under the medicare program 
     and for which effective health information technology exists; 
     and
       (3) take into account estimated aggregate annual savings in 
     overall payments under such title XVIII attributable to the 
     use of health information technology and services with 
     patient-specific applications.
       (c) Duration.--The Secretary may reduce or eliminate 
     adjustments made to payments pursuant to subsection (a) as 
     payment methodologies under title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.) are adjusted to reflect 
     provider quality and efficiency.
       (d) Rule of Construction.--In making national coverage 
     determinations under section 1862(a) of the Social Security 
     Act (42 U.S.C. 1395y(a)) with respect to maintaining health 
     information technology and services with patient-specific 
     applications, in determining whether the health information 
     technology and services are reasonable and necessary for the 
     diagnosis or treatment of illness or injury or to improve the 
     functioning of a malformed body member, the Secretary shall 
     consider whether the health information technology and 
     services improve the health of medicare beneficiaries, 
     including the improvement of clinical outcomes or cost-
     effectiveness of treatment.
       (e) Definitions.--In this section:
       (1) Provider of services.--The term ``provider of 
     services'' has the meaning given that term under section 
     1861(u) of the Social Security Act (42 U.S.C. 1395x(u)).
       (2) Supplier.--The term ``supplier'' has the meaning given 
     that term under section 1861(d) of such Act (42 U.S.C. 
     1395x(d)).

     SEC. 4. INTEROPERABILITY.

       (a) Development and Adoption of Standards.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall provide for the development and adoption under programs 
     administered by the Secretary of national data and 
     communication health information technology standards that 
     promote the efficient exchange of data between varieties of 
     provider health information technology systems. In carrying 
     out the preceding sentence, the Secretary may adopt existing 
     standards consistent with standards established under 
     subsections (b)(2)(B)(i) and (e)(4) of section 1860D-4 of the 
     Social Security Act (42 U.S.C. 1395w-104).
       (2) Requirements.--The standards developed and adopted 
     under paragraph (1) shall be designed to--
       (A) enable health information technology to be used for the 
     collection and use of clinically specific data;
       (B) promote the interoperability of health care information 
     across health care settings, including reporting to the 
     Secretary and other Federal agencies; and
       (C) facilitate clinical decision support through the use of 
     health information technology.
       (b) Implementation of Procedures for the Secretary to 
     Accept Data Using Standards.--
       (1) Data from new health care reporting requirements.--Not 
     later than January 1, 2008, the Secretary shall implement 
     procedures to enable the Department of Health and Human 
     Services to accept the optional submission of data derived 
     from health care reporting requirements established after the 
     date of enactment of this Act using data standards adopted 
     under this section.
       (2) Data from all requirements.--
       (A) In general.--Not later than January 1, 2010, the 
     Secretary shall implement procedures to enable the Department 
     of Health and Human Services to accept the optional 
     submission of data derived from all health care reporting 
     requirements using data standards adopted under this section.
       (B) Limitation.--
       (i) In general.--On and after January 1, 2010, if an entity 
     or individual elects to submit data to the Secretary using 
     data standards adopted under this section, the Secretary, 
     subject to clause (ii), may not require

[[Page 12316]]

     such entity or individual to also submit such data in an 
     additional format.
       (ii) Exception.--The Secretary may provide for an 
     exception, not to exceed 2 years, to the limitation under 
     clause (i) with respect to certain types of data if the 
     Secretary determines that such an exception is appropriate.

     SEC. 5. ELECTION TO EXPENSE HEALTH CARE INFORMATICS SYSTEMS.

       (a) In General.--Part VI of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to itemized 
     deductions for individuals and corporations) is amended by 
     inserting after section 179B the following new section:

     ``SEC. 179C. HEALTH CARE INFORMATICS SYSTEMS EXPENDITURES.

       ``(a) Treatment of Expenditures.--
       ``(1) In general.--An eligible entity may elect to treat 
     any qualified health care informatics system expenditure 
     which is paid or incurred by the taxpayer as an expense which 
     is not chargeable to capital account. Any expenditure which 
     is so treated shall be allowed as a deduction.
       ``(2) Election.--An election under paragraph (1) shall be 
     made under rules similar to the rules of section 179(c).
       ``(b) Limitations.--
       ``(1) Dollar limitation.--With respect to any eligible 
     entity, the aggregate cost which may be taken into account 
     under subsection (a)(1) for any taxable year shall not 
     exceed, when added to any cost taken into account under this 
     section in any preceding taxable year, the dollar amount 
     specified under section 2(e)(2)(A)(ii) of the Health 
     Information Technology Act of 2005.
       ``(2) Applicable rules.--For purposes of this subsection, 
     rules similar to the rules of paragraphs (3) and (4) of 
     subsection (b) and paragraphs (6), (7), and (8) of subsection 
     (d) of section 179 shall apply.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified health care informatics system 
     expenditures.--
       ``(A) In general.--The term `qualified health care 
     informatics system expenditure' means, with respect to any 
     taxable year, any direct or indirect costs incurred and 
     properly taken into account with respect to the purchase or 
     installation of equipment and facilities relating to any 
     qualified health care informatics system. Such term shall 
     include so much of the purchase price paid by the lessor of 
     equipment and facilities subject to a lease described in 
     subparagraph (B)(ii) as is attributable to expenditures 
     incurred by the lessee which would otherwise be described in 
     the preceding sentence.
       ``(B) When expenditures taken into account.--
       ``(i) In general.--Qualified health care informatics system 
     expenditures shall be taken into account under this section 
     only with respect to equipment and facilities--

       ``(I) the original use of which commences with the 
     taxpayer, and
       ``(II) which are placed in service after December 31, 2004, 
     and before October 1, 2010.

       ``(ii) Sale-leasebacks.--For purposes of clause (i), if 
     property--

       ``(I) is originally placed in service after December 31, 
     2004, and before October 1, 2010, by any person, and
       ``(II) sold and leased back by such person within 3 months 
     after the date such property was originally placed in 
     service,

     such property shall be treated as originally placed in 
     service not earlier than the date on which such property is 
     used under the leaseback referred to in subclause (II).
       ``(C) Grants, etc. excluded.--The term `qualified health 
     care informatics system expenditure' shall not include any 
     amount to the extent such amount is funded by any grant, 
     contract, or otherwise by another person (or any governmental 
     entity).
       ``(2) Qualified health care informatics system.--The term 
     `qualified health care informatics system' means a system 
     which--
       ``(A) has been individually approved by the Secretary of 
     Health and Human Services for purposes of this section,
       ``(B) consists of electronic health record systems and 
     other health information technologies, and
       ``(C) meets the standards adopted by the Secretary of 
     Health and Human Services under section 4 of the Health 
     Information Technology Act of 2005 by not later than the date 
     which is 60 days after the date of the adoption of such 
     standards.
       ``(3) Eligible entity.--The term `eligible entity' has the 
     meaning given such term by section 2(a)(4) of the Health 
     Information Technology Act of 2005.
       ``(4) Property used outside the united states, etc., not 
     qualified.--No expenditures shall be taken into account under 
     subsection (a)(1) with respect to the portion of the cost of 
     any property referred to in section 50(b) or with respect to 
     the portion of the cost of any property specified in an 
     election under section 179.
       ``(5) Ordinary income recapture.--For purposes of section 
     1245, the amount of the deduction allowable under subsection 
     (a)(1) with respect to any property which is of a character 
     subject to the allowance for depreciation shall be treated as 
     a deduction allowed for depreciation under section 167.''.
       (b) Conforming Amendments.--
       (1) Section 263(a)(1) of the Internal Revenue Code of 1986 
     (relating to capital expenditures) is amended by striking 
     ``or'' at the end of subparagraph (H), by striking the period 
     at the end of subparagraph (I) and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(J) expenditures for which a deduction is allowed under 
     section 179C.''.
       (2) The table of sections for part VI of subchapter A of 
     chapter 1 of such Code is amended by inserting after the item 
     relating to section 190 the following new item:

``Sec. 179C. Health care informatics system expenditures.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2004.

     SEC. 6. SENSE OF THE SENATE.

       It is the sense of the Senate that the provisions of, and 
     amendments made by, this Act should achieve deficit 
     neutrality over the 5-year period beginning on October 1, 
     2005.
                                 ______
                                 
      By Mr. REID (for himself, Mrs. Feinstein, Ms. Cantwell, Ms. 
        Snowe, Mr. Jeffords, Mr. Lieberman, and Mr. Kerry):
  S. 1229. A bill to amend the Internal Revenue Code of 1986 to extend, 
modify, and expand the credit for electricity produced from renewable 
resources and waste products, and for other purposes; to the Committee 
on Finance.
  Mr. REID. Faced with uncertainties in electricity energy markets, 
turmoil in the Middle East, the need to cut back on the fossil fuel 
emissions linked to global warming, air pollution that contributes to 
high rates of asthma and fills even our national parks with smog, the 
United States must diversify its energy supply by promoting the growth 
of renewable energy.
  Since 1999, Las Vegas electricity rates have increased by 50 percent. 
In the same time period, natural gas prices across Nevada rose 45 
percent. We need to change the energy equation. We need to diversify 
the nation's energy supply to reduce volatility and ensure a stable 
supply of electricity. We must harness the brilliance of the sun, the 
strength of the wind, and the heat of the Earth to provide clean 
renewable energy for our Nation.
  Mr. President, I rise today to introduce a bill with Senators 
Feinstein, Cantwell, Snowe, Jeffords, Lieberman and Kerry that expands 
the existing Section 45 production tax credit for renewable energy 
resources to cover all renewable energy resources. Our legislation 
accomplishes this by ensuring that geothermal, incremental geothermal, 
solar, open-loop biomass, incremental hydropower, landfill gas, and 
animal waste to the list of renewable energy resources that would 
qualify for a production tax credit.
  Our legislation also makes the production tax credit permanent to 
signal America's longterm commitment to renewable energy resources. The 
existing production tax credit will expire at the end of the year. 
Since it inception in 1992, the production tax credit has expired and 
been renewed three times--in 1999, 2001, and 2004. Development of wind 
energy has closely mirrored these renewal cycles. Clearly, the private 
investment necessary to develop renewable energy resources requires the 
business certainty afforded by a long-term extension of the production 
tax credit. Our bill allows for co-production credits to encourage 
blending of renewable energy with traditional fuels and provides a 
credit for renewable facilities on Native American and Native Alaskan 
lands.
  In northern Nevada, the Pyramid Lake Paiute Tribe is working with 
Advanced Thermal Systems to develop geothermal resources on Indian 
lands that will spur economic development by creating business 
opportunities and jobs for tribal members.
  This legislation also provides production incentives to not-for-
profit public power utilities and rural electric cooperatives, which 
serve 25 percent of the Nation's power customers, by allowing them to 
transfer their credits to taxable entities. The good news is that the 
production tax credit for renewable energy resources really works to 
promote the growth of renewable energy.
  In 1990, the cost of wind energy was 22.5 cents per kilowatt hour 
and, today, with new technology and the help of a modest production tax 
credit, wind is a competitive energy source at approximately 5.5 cents 
per kilowatt hour. In the last 5 years, wind energy has experienced a 
30 percent growth rate. The

[[Page 12317]]

production tax credit provides 1.8 cents for every kilowatt-hour of 
electricity produced. Similar to wind energy, this credit will allow 
geothermal energy, incremental hydropower, and landfill gas to 
immediately compete with fossil fuels, while biomass will follow 
closely behind. The Department of Energy estimates that we could 
increase our geothermal energy production almost tenfold, supplying ten 
percent of the energy needs of the West. As fantastic as it sounds, 
enough sunlight falls on 100 square miles of southern Nevada that--if 
covered with solar panels--could power the entire Nation.
  Let's never lose sight of the fact that renewable energy resources 
are domestic sources of energy, and using them instead of foreign 
sources contributes to our energy security. Renewables provide fuel 
diversify and price stability. After all, the fuel--from the wind, the 
sun, and heat from the core of the earth--cost nothing. And they 
provide jobs, especially in rural areas that have been largely left out 
of America's recent economic growth. The production tax credit for 
renewable energy resources is a powerful, fast-acting stimulus to the 
economy. According to the Western Governors Association, the Department 
of Energy's Initiative to deploy 1,000 Megawatts of concentrated solar 
power in the Southwestern area of the United States by the year 2006 
would create approximately 10,000 jobs and estimated expenditures of 
more than $3.7 billion over 14 years.
  Nevada has already developed 200 megawatts of geothermal power, with 
a longer-term potential of more than 2,500 megawatts; this development 
will provide billions of dollars in private investment and create 
thousands of jobs. Our production tax credit means immediate economic 
development and jobs.
  In the U.S. today, we get 2 percent of our electricity from renewable 
energy sources like wind, solar, geothermal, and biomass. But the 
potential for much greater supply is here. For example, Nevada could 
use geothermal energy to meet one-third of its electricity needs, but 
today this source of energy only supplies 2 percent. I am proud to say 
that Nevada has adopted one of the most aggressive Renewable Portfolio 
Standards in the Nation, requiring 15 percent of the State's 
electricity needs be met by renewable energy resources in 2013.
  After pouring billions of dollars into oil and gas, we need to invest 
in a clean energy future. Fossil fuel plants pump over 11 million tons 
of pollutants into our air each year. Federal energy policy must 
promote reductions in greenhouse gas emissions. By including landfill 
gas in this legislation, we systematically reduce the largest single 
human source of methane emissions in the United States, effectively 
eliminating the greenhouse gas equivalent of 233 million tons of carbon 
dioxide.
  Medical studies have revealed an alarming link between soot particles 
from power plants and motor vehicles and lung cancer and heart disease. 
The adverse health effects of power plant and vehicle emissions cost 
Americans billions of dollars in medical care, and our cost in human 
suffering is immeasurable. Simply put, the human cost of dirty air is 
staggering. If we factor in environmental and health effects, the real 
cost of energy becomes apparent, and renewable energy becomes the fuel 
of choice.
  America's abundant and untapped renewable resources can fuel our 
journey into a more prosperous and safer tomorrow without compromising 
air and water quality. Renewable energy is a critical component of a 
successful, forward-looking, and secure energy policy for the 21st 
Century.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1229

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Renewable 
     Energy Incentives Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. EXTENSION, MODIFICATION, AND EXPANSION OF CREDIT FOR 
                   ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES 
                   AND WASTE PRODUCTS.

       (a) Permanent Extension.--
       (1) Paragraphs (1) and (2)(A)(i) of section 45(d) are each 
     amended by striking ``, and before January 1, 2006''.
       (2) Section 45(d)(2)(A)(ii) is amended by striking ``before 
     January 1, 2006, is originally placed in service and'' and 
     insert ``is''.
       (3) Section 45(d)(3)(A) is amended_
       (A) by striking ``owned by the taxpayer'',
       (B) by inserting ``owned by the taxpayer and'' in clause 
     (i)(I) after ``is''
       (C) by striking ``and before January 1, 2006'' in clause 
     (i)(I), and
       (D) by striking ``originally placed in service before 
     January 1, 2006'' in clause (ii) and inserting ``owned by the 
     taxpayer''.
       (4) Paragraphs (4), (5), (6), and (7) of section 45(d) 
     (relating to qualified facilities) are amended by striking 
     ``and before January 1, 2006'' each place it appears.
       (b) Credit Rate.--
       (1) Increase in credit rate.--
       (A) In general.--Section 45(a)(1) is amended by striking 
     ``1.5 cents'' and inserting ``1.9 cents''.
       (B) Conforming amendments.--
       (i) Section 45(b)(2) is amended by striking ``1.5 cent'' 
     and inserting ``1.9 cent''.
       (ii) Section 45(e)(2)(B) is amended by inserting 
     ``(calendar year 2004 in the case of the 1.9 cent amount in 
     subsection (a))'' after ``1992''.
       (2) Full credit rate for all facilities placed in service 
     after date of enactment.--Section 45(b)(4)(A) (relating to 
     credit rate) is amended by inserting ``and placed in service 
     before the date of the enactment of the Renewable Energy 
     Incentives Act'' after ``subsection (d)''.
       (c) Full Credit Period for All Facilities Placed in Service 
     After Date of Enactment.--Section 45(b)(4)(B)(i) (relating to 
     credit period) is amended by inserting ``and placed in 
     service before the date of the enactment of the Renewable 
     Energy Incentives Act'' after ``subsection (d)''
       (d) Expansion of Qualified Resources.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources) is amended by striking ``and'' at the end 
     of subparagraph (F), by striking the period at the end of 
     subparagraph (G) and inserting a comma, and by adding at the 
     end the following new subparagraphs:
       ``(H) incremental geothermal energy production, and
       ``(I) incremental hydropower production.''.
       (2) Definition of resources.--Section 45(c) (relating to 
     qualified energy resources and refined coal) is amended by 
     adding at the end the following new paragraphs:
       ``(8) Incremental geothermal production.--
       ``(A) In general.--The term `incremental geothermal 
     production' means for any taxable year the excess of--
       ``(i) the total kilowatt hours of electricity produced from 
     an incremental geothermal facility described in subsection 
     (d)(9), over
       ``(ii) the average annual kilowatt hours produced at such 
     facility for 5 of the previous 7 calendar years before the 
     date of the enactment of this paragraph after eliminating the 
     highest and the lowest kilowatt hour production years in such 
     7-year period.
       ``(B) Special rule.--A facility described in subsection 
     (d)(9) which was placed in service at least 7 years before 
     the date of the enactment of this paragraph shall commencing 
     with the year in which such date of enactment occurs, reduce 
     the amount calculated under subparagraph (A)(ii) each year, 
     on a cumulative basis, by the average percentage decrease in 
     the annual kilowatt hour production for the 7-year period 
     described in subparagraph (A)(ii) with such cumulative sum 
     not to exceed 30 percent.
       ``(9) Incremental hydropower production.--
       ``(A) In general.--The term `incremental hydropower 
     production' means for any taxable year an amount equal to the 
     percentage of total kilowatt hours of electricity produced 
     from an incremental hydropower facility described in 
     subsection (d)(10) attributable to efficiency improvements or 
     additions of capacity as determined under subparagraph (B).
       ``(B) Determination of incremental hydropower production.--
     For purposes of subparagraph (A), incremental hydropower 
     production for any incremental hydropower facility for any 
     taxable year shall be determined by establishing a percentage 
     of average annual hydropower production at the facility 
     attributable to the efficiency improvements or additions of 
     capacity using the same water flow information used to 
     determine an historic average annual hydropower production 
     baseline for such facility. Such percentage and baseline 
     shall be certified by the Federal Energy Regulatory 
     Commission. For purposes of the preceding sentence, the 
     determination of incremental hydropower production shall not 
     be based on any operational changes at such facility not 
     directly

[[Page 12318]]

     associated with the efficiency improvements or additions of 
     capacity.''.
       (3) Facilities.--Section 45(d) (relating to qualified 
     facilities) is amended by adding at the end the following new 
     paragraphs:
       ``(9) Incremental geothermal facility.--In the case of a 
     facility using incremental geothermal to produce electricity, 
     the term `qualified facility' means any facility owned by the 
     taxpayer which is originally placed in service before the 
     date of the enactment of this paragraph, but only to the 
     extent of its incremental geothermal production. In the case 
     of a qualified facility described in the preceding sentence, 
     the 10-year period referred to in subsection (a) shall be 
     treated as beginning not earlier than such date of enactment. 
     Such term shall not include any property described in section 
     48(a)(3) the basis of which is taken into account by the 
     taxpayer for purposes of determining the energy credit under 
     section 48.
       ``(10) Incremental hydropower facility.--In the case of a 
     facility using incremental hydropower to produce electricity, 
     the term `qualified facility' means any non-Federal 
     hydroelectric facility owned by the taxpayer which is 
     originally placed in service before the date of the enactment 
     of this paragraph, but only to the extent of its incremental 
     hydropower production. In the case of a qualified facility 
     described in the preceding sentence, the 10-year period 
     referred to in subsection (a) shall be treated as beginning 
     not earlier than such date of enactment.''.
       (e) Credit Eligibility for Lessees and Operators Extended 
     to All Facilities.--Paragraph (6) of section 45(d) is amended 
     to read as follows:
       ``(6) Credit eligibility for lessees and operators.--In the 
     case of any facility described in paragraph (1), (4), (5), 
     (6), (7), (9), or (10), if the owner of such facility is not 
     the producer of the electricity, the person eligible for the 
     credit allowable under subsection (a) shall be the lessee or 
     the operator of such facility.''.
       (f) Qualified Facilities With Co-production.--Section 45(b) 
     (relating to limitations and adjustments) is amended by 
     adding at the end the following:
       ``(5) Increased credit for co-production facilities.--
       ``(A) In general.--In the case of a qualified facility 
     described in any paragraph of subsection (d) (other than 
     paragraph (8)) which adds a co-production facility after the 
     date of the enactment of this paragraph, the amount in effect 
     under subsection (a)(1) for an eligible taxable year of a 
     taxpayer shall (after adjustment under paragraph (2) and 
     before adjustment under paragraphs (1) and (3)) be increased 
     by .25 cents.
       ``(B) Co-production facility.--For purposes of subparagraph 
     (A), the term `co-production facility' means a facility 
     which--
       ``(i) enables a qualified facility to produce heat, 
     mechanical power, chemicals, liquid fuels, or minerals from 
     qualified energy resources in addition to electricity, and
       ``(ii) produces such energy on a continuous basis.
       ``(C) Eligible taxable year.--For purposes of subparagraph 
     (A), the term `eligible taxable year' means any taxable year 
     in which the amount of gross receipts attributable to the co-
     production facility of a qualified facility are at least 10 
     percent of the amount of gross receipts attributable to 
     electricity produced by such facility.''.
       (g) Qualified Facilities Located Within Qualified Indian 
     Lands.--Section 45(b) (relating to limitations and 
     adjustments), as amended by subsection (f), is amended by 
     adding at the end the following:
       ``(6) Increased credit for qualified facility located 
     within qualified indian land.--In the case of a qualified 
     facility described in any paragraph of subsection (d) (other 
     than paragraphs (1), (2) and (8)) which--
       ``(A) is located within--
       ``(i) qualified Indian lands (as defined in section 
     7871(c)(3)), or
       ``(ii) lands which are held in trust by a Native 
     Corporation (as defined in section 3(m) of the Alaska Native 
     Claims Settlement Act (43 U.S.C. 1602(m)) for Alaska Natives, 
     and
       ``(B) is operated with the explicit written approval of the 
     Indian tribal government or Native Corporation (as so 
     defined) having jurisdiction over such lands, the amount in 
     effect under subsection (a)(1) for a taxable year shall 
     (after adjustment under paragraphs (2) and (5) and before 
     adjustment under paragraphs (1) and (3)) be increased by .25 
     cents.''.
       (h) Additional Modifications.--
       (1) Treatment of persons not able to use entire credit.--
     Section 45(e) (relating to additional definitions and special 
     rules), as amended by subsection (a)(2), is amended by adding 
     at the end the following new paragraph:
       ``(11) Treatment of persons not able to use entire 
     credit.--
       ``(A) Allowance of credit.--
       ``(i) In general.--Except as otherwise provided in this 
     subsection--

       ``(I) any credit allowable under subsection (a) with 
     respect to a qualified facility owned by a person described 
     in clause (ii) may be transferred or used as provided in this 
     paragraph, and
       ``(II) the determination as to whether the credit is 
     allowable shall be made without regard to the tax-exempt 
     status of the person.

       ``(ii) Persons described.--A person is described in this 
     clause if the person is--

       ``(I) an organization described in section 501(c)(12)(C) 
     and exempt from tax under section 501(a),
       ``(II) an organization described in section 1381(a)(2)(C),
       ``(III) a public utility (as defined in section 
     136(c)(2)(B)), which is exempt from income tax under this 
     subtitle,
       ``(IV) any State or political subdivision thereof, the 
     District of Columbia, any possession of the United States, or 
     any agency or instrumentality of any of the foregoing, or
       ``(V) any Indian tribal government (within the meaning of 
     section 7871) or any agency or instrumentality thereof.

       ``(B) Transfer of credit.--
       ``(i) In general.--A person described in subparagraph 
     (A)(ii) may transfer any credit to which subparagraph (A)(i) 
     applies through an assignment to any other person not 
     described in subparagraph (A)(ii). Such transfer may be 
     revoked only with the consent of the Secretary.
       ``(ii) Regulations.--The Secretary shall prescribe such 
     regulations as necessary to ensure that any credit described 
     in clause (i) is assigned once and not reassigned by such 
     other person.
       ``(iii) Transfer proceeds treated as arising from essential 
     government function.--Any proceeds derived by a person 
     described in subclause (III), (IV), or (V) of subparagraph 
     (A)(ii) from the transfer of any credit under clause (i) 
     shall be treated as arising from the exercise of an essential 
     government function.
       ``(C) Credit not income.--Any transfer under subparagraph 
     (B) of any credit to which subparagraph (A)(i) applies shall 
     not be treated as income for purposes of section 501(c)(12).
       ``(D) Treatment of unrelated persons.--For purposes of 
     subsection (a)(2)(B), sales among and between persons 
     described in subparagraph (A)(ii) shall be treated as sales 
     between unrelated parties.''.
       (2) Credits not reduced by tax-exempt bonds or certain 
     other subsidies.--Section 45(b)(3) (relating to credit 
     reduced for grants, tax-exempt bonds, subsidized energy 
     financing, and other credits) is amended--
       (A) by striking clause (ii),
       (B) by redesignating clauses (iii) and (iv) as clauses (ii) 
     and (iii),
       (C) by inserting ``(other than any loan, debt, or other 
     obligation incurred under subchapter I of chapter 31 of title 
     7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et 
     seq.), as in effect on the date of the enactment of the 
     Renewable Energy Incentives Act, or proceeds of an issue of 
     State or local government obligations the interest on which 
     is exempt from tax under section 103)'' after ``project'' in 
     clause (ii) (as so redesignated), and
       (D) by striking ``TAX-EXEMPT BONDS,'' in the heading and 
     inserting ``CERTAIN''.
       (3) Credit allowable against minimum tax without 
     limitation.--Clause (ii) of section 38(c)(4)(B) (defining 
     specified credits) is amended to read as follows:
       ``(ii) the credit determined under section 45 to the extent 
     that such credit is attributable to electricity or refined 
     coal produced at a facility which is originally placed in 
     service after October 22, 2004.''.
       (4) Treatment of qualified facilities not in compliance 
     with pollution laws.--Section 45(d) (relating to qualified 
     facilities), as amended by subsection (d)(3), is amended by 
     adding at the end the following:
       ``(11) Noncompliance with pollution laws.--For purposes of 
     this subsection, a facility which is not in compliance with 
     the applicable State and Federal pollution prevention, 
     control, and permit requirements for any period of time shall 
     not be considered to be a qualified facility during such 
     period.''.
       (i) Effective Date.--The amendments made by this section 
     shall apply to electricity and other energy produced and sold 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

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