[Congressional Record (Bound Edition), Volume 153 (2007), Part 8]
[House]
[Pages 11463-11470]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    HEALTH CARE IN THE UNITED STATES

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 18, 2007, the gentleman from Texas (Mr. Burgess) is recognized 
for 60 minutes.
  Mr. BURGESS. My colleagues filled the last hour with discussion of 
what is sublimely intuitive to the most casual of observers of the 
American scene, the IRS code.
  Now we are going to go to something a little more complex and that's 
health care in the United States.
  The question I get asked a lot of times, because I spent my 
precongressional career as a physician, how did we get into this 
situation? How did we get the health care system that we have today? 
More importantly, where are we going within our current system?
  We currently have a system that is based upon both the aspects of the 
public-provided system, the government- provided system and the private 
system. We have a system that does have a significant number of 
individuals who lack coverage. They may not always lack medical care, 
but they do lack coverage for that care. Some of the things we are 
going to be, of necessity, focusing on this in Congress is the 
reauthorization of the State Children's Health Insurance Program. We 
will also be talking about reauthorizing the Federally qualified 
Federal health center program.
  Health savings accounts have actually been around now for 10 years. 
It's appropriate to look back on where we have been with, first, 
medical savings accounts and then the expansion that occurred with the 
Medicare modernization act in 2003 with health savings accounts. 
Association health plans are not getting as much attention this year as 
they have in past years, but they are important, and we do need to 
think about those in the overall picture of where we are going with 
America's health care.
  Medical liability reform, probably one of the more contentious things 
that we have tackled in Congress since I came here in 2002 he 2003. We 
still, as far as a Nation, do not have an answer for that question, but 
several States have done things, including my home State of Texas, and 
also that is one of the things that I want to touch on tonight.
  One thing that does concern me greatly is the physician workforce 
today and the physician workforce of the future. I will be spending 
considerable time talking about things that we might do, the things 
that are within our grasp to do to help ensure that the doctors of 
today continue to deliver care for our patients, whether they be in the 
government sector, or the private sector, and ensure that we encourage 
the best and brightest among our young people to go into, to look at 
health care as a profession, whether it be as a physician, as a nurse, 
and one of the ancillary health services, but it is important that we 
attract our best and our brightest into those professions and perhaps a 
look at some of the things that are being tried in some of the States.
  The States, of course, are the great laboratories in our democracy. 
There are some interesting occurrences that are going on in some States 
that are trying to grapple with the problem of coverage for individuals 
who lack it; and then, finally, some ancillary issues. We recently 
passed a trauma bill on this House. Last weekend, the President signed 
that bill into law.

[[Page 11464]]

  Transparency, how do we make the expenditures in health care. How do 
we make information about cost, price and quality, how do we make that 
information available in an understandable format to the average 
consumer of health care in this country, whether they be in the private 
or the public sector.
  One of the things that we don't really talk about that often, but is 
going to be a significant issue, as more and more people my age get 
successively older and older, is how do we deal with the problem of 
long-term care facing this country? Well, let's go on a journey. Let's 
talk about the American health care system.
  For the purposes of this discussion, we don't have time to go all the 
way back to the beginning when our country was founded, though it is 
important to always note that while the forebearers of today's legal 
profession were drafting documents like the Declaration of Independence 
and the Constitution, the forebearers of my profession, Dr. Benjamin 
Rush, was treating people with leeches. We have come a great distance 
since that time.
  But if you look at just the modern era, the time since the end of the 
Second World War, when truly some of the big differences that developed 
between European countries and America, some of those differences, in 
fact, have their roots in the Second World War. In America, of course, 
in order to prevent problems with an inflationary spiral that 
threatened to go out of control, President Roosevelt put price controls 
on wages and said people could only earn so much.
  Well, employers wanted to keep employees working, they wanted to keep 
employees happy. They asked a question, could we provide benefits to 
our employees. Can we provide, perhaps, health insurance or health care 
benefits for our employees and not have that as part of the Federal 
price controls that were in effect, or Federal wage controls that were 
in effect at that time?
  The Supreme Court looked at it and said, that's reasonable. You can 
do that. You can provide the health care benefit for your employee, and 
you will not be violating the provisions of the wage control provisions 
that were enacted in the Second World War.
  Well, the system was working, and the war ended, and the system 
continued. Because, in fact, it was working well, and people liked 
getting their insurance that way.
  It continued for a number of years. If you look at a country in the 
European theater, the Second World War, whether they were winners or 
losers at the end of the war, they faced a humanitarian crisis of 
almost unbelievable proportion. So it is no surprise that even a 
country that was victorious, like Great Britain, went down the road of 
national health insurance, because it needed to provide a great deal of 
care in a very short period of time, and they didn't have the bedrock 
of the employer-derived health insurance that was available in this 
country as a result of wage controls that were put on during the war.
  We are often compared with Europe and why our health care system 
looks different from theirs, when both, after all, are modern western 
nations. Part of the reason does go back to this discrepancy that 
occurred during the war, and then, of course, the situation, the 
economic situation, in some cases, a very dire economic situation that 
occurred on the ground in Europe as the war ended.
  It's not the purpose of this discussion tonight to actually provide a 
compare and contrast with the European system, though that might be 
interesting to do, but take where we were at the end of the Second 
World War, the beginning of the great economic expansion that 
characterized the post-war years in this country, insurance being 
provided by employers, employees very happy with that, employees having 
good coverage, doctors being happy with that, because that coverage 
meant that hospitals and doctors were reimbursed, and the situation was 
going along, some problems, of course, and some people in this body, 20 
years later, said, we need to do better than what we are doing, because 
after people are no longer employed, and they, perhaps, lose that 
health insurance, what are we going to do then?
  Twenty years after the end of the Second World War, in 1965, we had 
the rise of a new system, took probably 4 to 5 years for it to actually 
work its way through Congress. It was, just like today, a situation 
like this, was by no means easy. In 1965, President Lyndon Johnson 
signed into law the Medicare bill that primarily focused on hospital 
care for the elderly in addition to the hospital care. In addition to 
the part A of Medicare, there was also developed a part B of Medicare 
that was a reimbursement for physician-necessitated services. But we 
had the parts A and B of Medicare that came into being in the mid-
1960s, another 40 years before Congress made a significant change to 
the Medicare system by passing the Medicare prescription drug act.
  Now, my father was a physician back in 1965, and I used to tease him 
that in 1965, when the Medicare system was first enacted, there were, 
after all, only two medicines, penicillin and Cortizone, and they were 
used interchangeably. I know, he didn't think it was funny either, but 
the fact is, we didn't have nearly the tools at hand from a 
pharmaceutical perspective in 1965. Then fast forward to 2005, 2006 and 
2007, ones that are just part of our everyday parlance, our everyday 
armamentarium in medical practice.
  We saw this with the trustees' report that was just released last 
week or the week before, where it was described that 680,000 hospital 
beds in 2005 were not filled in Medicare, primarily because of the 
things we are doing better in Medicare, treating that cholesterol at an 
early stage with a statin and not treating it at the end stage when 
cardiac surgery or, in fact, sudden death may be the outcome of 
undiagnosed or untreated heart disease. So we are doing a better job of 
treating things early at the same time. It does cost more money in the 
provision of the Medicare prescription drug act.
  There was a great deal of discussion during the time that we passed 
that prescription plan, but it kind of sets the stage for the debate 
that we are going to now have, and going to continue today. Is it 
better to treat things in the preclinical stage, is it better to treat 
things in the nonacute stage, or is it better to wait and target your 
therapy toward the end process of a disease, which, characteristically, 
is how we handled things in Medicare previously.
  But the impetus is, of course, to be more preventive and proactive in 
taking care of patients. That is the direction in which medicine is 
going, that is the direction in which science is leading, and that is 
the direction in which Medicare itself should go.
  So I don't think there is any question about which is better, the, 
the acute-care model, or the long-term model. Furthermore, we will have 
additional discussion, should this expand the government share of the 
program, or is there perhaps some room for the private sector, and can 
they deliver value within the Medicare system as far as providing care 
for patients?

                              {time}  2145

  When I talk about the public and private, let's break it down a 
little bit. Currently just in rough numbers the government pays about 
50 cents out of every health care dollar that is spent in this country. 
Our gross domestic product is approximately $11 trillion; we spend $1.4 
trillion on health care. The Health and Human Service budget alone for 
Medicare and Medicaid is over $600 billion. Add to that the money that 
is spent in the Federal prison systems, the VA health system, the 
Indian health system, all of the other areas where the Federal 
Government is involved in health care, and it is not difficult to see 
that you are very close to that number which encompasses 50 percent.
  The other 50 percent is certainly not all just simply commercial 
insurance, though commercial insurance makes up a large portion of 
that. There is certainly that portion which is self-funded by patients. 
Believe it or not, there are patients who just simply prefer to pay 
their bills in cash and continue to do so, and there is a significant 
number of dollars that are just contributed to the

[[Page 11465]]

system by doctors and hospitals and nurses and ancillary health care 
providers because the individuals whom they are taking care of have no 
health coverage.
  In the debate of how to best expand and give people more coverage, 
you certainly can make the argument for expanding the government 
system. My personal opinion is that might not be the best way to go 
about doing things. On the other hand, there are many people within 
this body who, Mr. Speaker, will be talking at great length, I suspect, 
over the 18 months leading up to the next election, a great many people 
in this body who will be talking about just that, expanding the 
government's role. Again, remember, we are already doing about 50 
percent, and they will be looking to expand that.
  One of the critical questions we have to ask ourselves in expanding 
that 50 percent is, are we doing a good job from the government's 
perspective with the 50 percent that we have now? Are we doing such a 
superlative job that in fact it is a good thing to push out or crowd 
out the private sector? Or, are there some areas where the government 
system perhaps could improve, and some areas that perhaps it is just 
innately difficult for a large governmental system to improve and where 
the private sector can in fact do a better job?
  One of the things that is frequently asked, and I know I got this the 
years I was in private practice was, why don't we just do what they did 
in Canada where they have a national health insurance in Canada and 
everybody is happy, the doctors are paid and the patients are taken 
care of? Well, it was probably 2004, 2005 that the Canadian Supreme 
Court came out with a ruling that access to a waiting list did not 
equal the same thing as access to care. And I know I will get some 
criticism about this, Mr. Speaker, but one of the secrets of the 
Canadian system is the fact that they have on their southern border the 
United States of America with a significant amount of excess capacity 
in our health care system; and patients in Canada who can afford to 
pay, who do not want to wait, simply offload their burden from the 
Canadian system and come south of the border to have their problems 
taken care of in a more timely fashion.
  In the British National Health Service, of course they have developed 
within their country a two-tiered system. Some of the most expensive 
medical care that you can buy today is in the country of Great Britain 
where they very famously have free care. The reason you can buy private 
care more expensively is because, again, people want to buy their way 
out of a waiting list or buy their way out of the public system so that 
they can get taken care of in a more timely fashion.
  One of the problems with a very long waiting list for things like an 
artificial hip or even coronary angiography for someone who is being 
worked up for chest pain is you reach a certain point in life, perhaps 
a person in their 70s or 80s where that 6-month wait, 12-month wait, 
14-month wait or longer becomes very detrimental to their overall 
health because they just simply do not have that many years left from 
an actuarial perspective.
  Well, what about the private sector, and what about Congress' 
interface with the private sector? Are we doing things that are 
generally helpful or hurtful to the private sector? And what can we do 
to promote policies that do keep the private sector engaged in 
providing health care in this country?
  I already alluded to medical savings accounts. Medical savings 
accounts started with the Kennedy/Castlebaum bill in 1996. The year 
1997 was the first year that a medical savings account was available in 
this country. I know that because I purchased one myself. I was 
concerned when I heard about the medical savings accounts becoming 
available because Congress had restricted medical savings accounts such 
that no more than 750,000 would be sold, no more than 750,000 would be 
available during those early years of medical savings accounts, and I 
was very concerned that I would be even able to get one. I thought that 
they would be so popular that that 750,000 limit would be very quickly 
subscribed and I might be left out of the process. It turns out I 
didn't need to worry, because there were so many restrictions placed on 
those old medical savings accounts that if you didn't have that M.D. 
degree, perhaps you weren't going to be capable of dealing with all of 
the things that you would have to deal with. In my home State of Texas, 
the restrictions were such that there were only two insurers that 
provided the medical savings account products. Still, I found it to be 
a very useful type insurance.
  First and foremost, it left me completely in charge of any medical 
decisions to be made for myself and my family. I didn't have to talk to 
an HMO director, I didn't have to dial 1-800-California and get 
permission for a particular treatment. I could spend my own money and 
reimburse myself out of that medical savings account.
  The downside was you couldn't put very much money away each year in 
the medical savings account and the deductibles were significant, and 
that was seen to be a significant barrier to a lot of people with 
getting a medical savings account.
  In 2003, the compromise that ended up being the Medicare 
Modernization Act did significantly expand what are now called health 
savings accounts. The amount of money that can be put away for a family 
greatly increased from, I believe, $3,200 to up to $5,000 for family 
coverage. The deductible itself was essentially maintained, though 
there were several tiered products made available so that that 
deductible didn't have to be as high as the highest number. You could 
in fact purchase an HSA product with a deductible that wasn't at the 
maximum.
  One of the most significant things, and the reason I know this is 
having tried to purchase a health care policy for an adult child back 
before even medical savings accounts came along in 1994 and 1995, there 
was almost no one out there willing to sell in the individual market an 
individual insurance policy. Whether it be a high deductible or a 
nominal deductible, it just wasn't available for any price.
  Fast forward to the time after the health savings account legislation 
passed in 2003. Come to 2004, 2005, 10 years later, and a young person 
who needs health insurance just out of college, say, wants to go into 
business for themselves, doesn't want to have to work for a big 
corporation to get that employer-sponsored health insurance but wants 
to carry their own insurance, they can go to Google or the search 
engine of their choice, type in ``health savings accounts,'' and with a 
few clicks and a quick search they can find high deductible PPO 
policies sold by reputable names that we would all recognize. And of 
course I won't mention any of those names, but they are sold by 
reputable companies that we would all recognize as longstanding 
established insurers in this country, and the premium would be in the 
range of $60 to $65 a month for a high deductible policy, imminently 
within reach of that 25-year-old nonsmoking male just out of college in 
my home State of Texas. Again, that type of policy was absolutely 
unavailable in 1994 for any price, and now it is available at a price 
that arguably would be affordable by a lot of people who are just 
getting out of college and have their earnings at the beginning of 
their earning cycle.
  And why is this important? Yes, it is a high deductible policy. That 
means, if you need a flu shot, you are probably not going to be able to 
show your insurance card and get a flu shot; you are going to go down 
to the place that gives flu shots and pay the $20 or $25, whatever is 
required to get the flu shot. If you have money accumulated in your 
health savings account, yes, you can make a draw on that money to 
reimburse yourself for that flu shot. But if you are even to the point 
where you haven't gotten enough of a savings into that account yet to 
go and tap into that money, you are going to have to pay that money out 
of pocket, the important thing is, is that after your flu shot you get 
on your motorcycle and ride home and have an accident and spend a day 
in the emergency room and 3 or 4 days in the intensive care unit and 
face a bill that may be as much as $10,000 or $15,000 or $20,000, you

[[Page 11466]]

do have coverage for those catastrophic amounts. And, let's face it, 
for young people today, trauma or accidents are going to be one of the 
principle causes of hospitalization.
  Association health plans, again, a concept that we have dealt with in 
this Congress the last two Congresses. It has not come up this year and 
the reality is it may not. But this gives small businesses the ability 
to band together to get that purchasing power of a large corporation. 
One of the hard things is you go out to buy group coverage for your 
small business, and they say, you know what, you have got so few 
employees that it is really not worth our time and the cost for that 
coverage is, consequently, going to be astronomical. But if you are 
able to combine with, say, your chamber of commerce and you can combine 
with a chamber of commerce across in the next county, you can combine 
with a couple more chambers of commerce in other cities and perhaps 
even across State lines, suddenly you are accumulating enough covered 
lives to really get that insurance company's attention and perhaps 
drive a better bargain, perhaps get a better deal.
  Right now, we won't let that happen. But the fact is that Congress 
should get out of the way and allow those things to occur, because it 
is not so much that association health plans are going to bring down 
the number of the uninsured, but it sure will help the rate of rise of 
the uninsured we see in this country, because that rate of rise is in a 
large part fueled by the cost of purchasing health care by that small 
business person; and anything we can do to keep that cost of coverage 
down is going to ultimately increase the amount of coverage that is 
available.
  Transparency, I mentioned before, is critically important if we are 
going to have so-called consumer directed health care in this country. 
We have got to put that information in the consumer's hands so that 
they can make decisions about cost price and quality in the health care 
system. And I understand that there is an inherent danger in 
transparency. Opacity is there for a reason, and that reason is 
generally it is financially rewarding for whoever is providing the 
opacity. They don't want everybody to know what goes on behind the 
curtain.
  Again, I will reference my home State of Texas. The very beginning of 
a transparency project has now gone up on line. Mr. Speaker, if anyone 
at home were interested, it is tx.pricepoint.org, and someone can go to 
that, Mr. Speaker, on their Web site and look at that and get 
information about hospital charges in their area and how they compare 
with the rest of the State. Granted, there is going to need to be more 
information available, but it is a good start, and I certainly support 
the folks at the State level who provided that degree of price 
transparency for the citizens of Texas.
  In talking about the uninsured, one of the things that will come up, 
and I think we heard the President mention it here in this House during 
the State of the Union address, is what about the concept of that 
private ownership of insurance that is paid for with after-tax dollars? 
The President talked about giving people a tax deduction if they 
purchased their own insurance, not through their employer, but just 
went out and purchased it themselves. Certainly a valid argument that 
can be made about that is, well, there are a lot of people out there 
who don't pay income tax. So what about the concept of providing a tax 
credit? Some people would call it a voucher; I prefer the term premium 
support. If someone is working and their employer is providing the 
option for having the insurance but they say, you know with what, I 
still can't afford the $200, $300, or $400 a month I would have to pay 
individually in order to get that insurance; what if we provided them 
some help with that premium? And might that not be a better way to 
approach or to tackle some of the problems of the uninsured rather than 
just simply ever expanding the Medicaid system or some of the other 
systems that are out there to cover the uninsured? If someone is 
earning a living but does not have health insurance available at their 
place of employment, even providing them that premium support so that 
they can go out and purchase insurance in the private market. If we 
would help create and sustain that market, I believe that the private 
insurers would look at 42 million, 45 million people as a segment of 
market share that they would compete for, and we ought to give them the 
tools to do that.
  Now, currently the United States Census Bureau says there are 46.6 
million uninsured.

                              {time}  2200

  I think it's important to stress, once again, that uninsured does not 
always mean no access to health care. It may mean that the access to 
health care does not occur at the point where the health care can be 
rendered for a lower total dollar figure, or you may not receive the 
best health care outcome because care has been delayed. But having 
access to coverage will increase access to care.
  One of the things that this Congress did 10 years ago, long before I 
got here, was a program called the State Children's Health Insurance 
Program. It's 10 years old. It's going to be required to be 
reauthorized this year. But this did provide States some flexibility 
and some options for providing coverage for uninsured children that 
resided within their State.
  This was primarily to be directed to children who were not eligible 
for Medicaid, whose parents earned a little bit too much money to have 
them covered under the Medicaid system and therefore couldn't, but 
they, themselves, did not earn enough money to truly afford health 
insurance. So this was a good thing.
  Coverage of children is relatively cheap coverage. You pay $0.60 for 
what would be $1 of health care for an adult. You can pay $0.60, buy 
$0.60 worth of health insurance for a child and get the equivalent of 
$1 worth of insurance for an adult because children, as a general rule, 
are young and healthy. They tend to recover from their illnesses 
quicker than do adults, and money invested in the children's program 
is, indeed, money well spent and money wisely invested.
  Some of the things that I think we ought to keep in mind as we 
reauthorize this bill this year, and we will be doing that through my 
committee, Health Subcommittee on Energy and Commerce, but some of the 
things I think we ought to keep in mind is that it is primarily a 
children's health insurance program.
  The decision was made to cover pregnant adults, and I think that that 
was a good thing, and that should be continued. But covering non 
pregnant adults in the Children's Health Insurance Program is perhaps 
not the best use of those dollars.
  If there needs to be a program for providing additional coverage to 
those adults, then let's look at doing so, but let's not divert those 
dollars that should be going into coverage for health care for 
children; let's not divert those to some other purpose. And 
unfortunately, we have the situation in this country today where four 
States actually cover more adults than they do children.
  Again, we need to get back to the original principle that this 
program was enacted, and make sure, once we're covering all the 
children, once we're covering all the uninsured children in this 
country, then perhaps we can talk about expanding it to include adults. 
But until that time, we do need to focus and make certain that we are 
covering the uninsured children.
  You know, a letter to the editor back home in Dallas this weekend I 
was reading made the comment that, of course, SCHIP, and they were 
talking about it primarily at the State level. And the State, my State 
Legislature is in session right now, and they are grappling with the 
questions of funding for SCHIP.
  But the comment was made in the letter that the SCHIP program was 
there for some parents who cannot afford insurance; and sure enough, 
that's what it's there for.
  And the second line went on to say that also there are some parents 
who are working and covered under their

[[Page 11467]]

parents' insurance, but they can't afford that additional premium for 
the dependent coverage on their insurance.
  This is some of the cheapest coverage out there that we should take 
advantage of. And certainly, it is available within the SCHIP program 
currently for some degree of premium support. But I certainly think we 
need to expand that, certainly, make states aware that this is 
available for them to use, that they can leverage those children's 
health insurance dollars to buy more health insurance.
  And the other thing that we do that's extremely important, if the 
Federal Government simply takes over the function of providing all of 
the insurance for all of the children, the private sector is completely 
crowded out. And is that fundamentally a good thing or a bad thing?
  I would argue that it is not in the best interest of our country to 
let that happen, that the private sector does belong in the children's 
health insurance market. And we should, while we may not be required to 
do anything to particularly subsidize that, we certainly should not do 
anything that makes that an untenable business model because, 
ultimately, I think we are going to be less satisfied with the result.
  Federally qualified health centers. We are going to have to, we 
didn't finish the work on reauthorization of the federally qualified 
health center statute last session of Congress. It is going to be 
important to try to do that again. Once again, that's an issue that 
will come through my committee on Energy and Commerce. We had some very 
good hearings on that last year, leading up to the introduction of the 
bill by Mr. Bilirakis, who is no longer with us. And that bill will 
come up again this year.
  I think that when you look at the federally qualified health center, 
one of the things that is really encouraging to me is that a Congress, 
and I grant you it was 35 or 40 years ago, sat down and agreed amongst 
themselves, the Members on both sides of the aisle, agreed what 
procedures, what items would be covered under that federally qualified 
health center statute.
  And to me, that's a beacon of hope, that perhaps we can work, this 
body can work together and decide on what are the things that should be 
covered; if we wanted to have an insurance policy, for example, that 
was generally available for individuals who were currently uninsured.
  What are the parameters that should be covered? What should we 
encourage?
  If we are going to go talk to the private sector about insurance 
policies that may be affordable by the Nation's working poor, what 
should those things cover, and can we ever come to an agreement that 
will allow those types of policies to be sold in one State or another, 
and what could we do about getting those policies up and on the 
Internet to take advantage of the competitive influences that are 
present on the Internet?
  You know, one of the things, again, I reference Texas a lot because I 
spend a lot of time there. But one of the Nation's largest automobile 
insurers has really made a big push in the Texas market. They're famous 
because they have a little green lizard who's kind of their spokesman, 
the little green lizard with an English accent, in fact, who's kind of 
their spokesman.
  But the message is that if you can go online and spend 15 minutes 
with them, they can save you some money. Wouldn't it be great to 
provide that same tool, that same device in the health insurance market 
as well and get the advantage of that, that very strong competitive 
market out there that has been provided by the new technology of the 
information superhighway?
  It's certainly had a very significant beneficial effect on bringing 
down the costs of term life insurance. And we saw this back in the late 
1990s, the early part of this century. Why not take that same 
competitive power and unleash it for health insurance and allow more 
people to be covered?
  I referenced health savings accounts before. Again, you can go on the 
Internet and buy a health savings account now that's available because 
some of the state-by-state restrictions do not apply because of the way 
that legislation was written. And this is an extremely powerful tool to 
put into people's hands.
  One of the disadvantages, one of the ways we disadvantage our 
citizens when it comes to purchasing a policy like a health savings 
account is that it is paid for with after tax dollars. You don't get 
that pre-tax expenditure.
  We could, in fact, further leverage the health insurance, how far a 
health insurance dollar could go in a family's budget by tapping into 
that concept of a pre-tax expense.
  But some of the things we have done with health savings accounts, and 
again, I would stress that since we passed the Medicare Modernization 
Act a scant 4 years ago, between 4 and 7 million people have now 
purchased health savings accounts.
  I referenced early on that first off, back in the early 1990s or, I'm 
sorry, the middle 1990s, it was going to be capped at 750,000 total 
policies. That cap was removed with the Medicare Modernization Act, and 
as a consequence now, at least 4 million people have purchased health 
savings accounts. Forty percent of those people were previously 
uninsured. That means that number of the uninsured would be higher by a 
factor of a million or a million and a half had we not passed that 
legislation that expanded health savings accounts.
  Making those premiums tax deductible, that is something that, an idea 
whose time has come, has long since come. We weren't able to do it 
during the last Congress. I know there are a number of competing 
influences out there, and we heard references to things like PAYGO 
before, so it is going to be a tough battle. But I do believe that we 
need to do that.
  The low income tax credit, or the premium support for an HSA like 
product for someone whose low income, again, an idea, certainly whose 
time has come.
  Maybe we should allow employers to make larger contributions to an 
HSA for a chronically ill employee, an employee who has diabetes or 
rheumatoid arthritis or any of other of a number of chronic diseases 
where, yeah, their health expenditures are going to be higher because 
they were unlucky enough to have this chronic disease, so their health 
insurance may cost a little bit more. But let's allow the employer the 
flexibility of perhaps contributing a little bit more to that plan.
  What about allowing the flexibility for health savings accounts to 
coordinate with other type of things that employers do to make the 
health care insurance burden for their employees easier to bear?

                              {time}  2210

  Things like flexible spending accounts. A flexible spending account 
where an employer contributes a certain amount of money each year so 
that their employee can go out and have some of the first dollar 
coverage that they otherwise might not have, because even if they don't 
have a health savings account, just the regular deductible on regular 
commercial insurance, anyone who works and has employer-derived 
insurance will tell you that number has increased over the past 5 or 10 
years. So flexible spending accounts are moneys that the employer puts 
away for the employee to help to use to offset some of these expenses 
that may be incurred.
  If we allowed someone with a health savings account to participate in 
a flexible spending account and even went further; for a flexible 
spending account, at the end of the calendar year, it is a use it or 
lose it phenomenon. If the employer has contributed that money or the 
employee has said, I want to put away a tax-deferred amount of money 
into this account so that I can spend it for health care needs and try 
to capture a little bit of that pretax leveragability there, they lose 
that money at the end of the year if they haven't spent it on their 
health care.
  Why don't we let that roll over into their health savings account and 
let that health care nest egg accumulate at a little bit faster rate so 
that those citizens who do wish to utilize the power of a health 
savings account can

[[Page 11468]]

perhaps make it work even more to their advantage?
  And what if someone wants to retire early and they have got that 
health care nest egg built up in their health savings account but now 
they are going into early retirement, and doggone it, that insurance 
premium is going to be an additional burden to bear? What about 
allowing them to draw on the health savings account to pay their 
premium to continue their health savings account in those years from 
their early retirement prior to the time that they are covered by 
Medicare? It is an interesting concept and one I think this Congress 
would do well to spend some time thinking about doing.
  I will come back again to the pretax treatment of health care 
expenditures incurred under an HSA. Again, we can leverage a citizen's 
dollars so much more by allowing that type of treatment of those 
dollars.
  Again, association health plans for employers who want to provide 
their employees insurance but find they are being increasingly priced 
out of the market. Give them the flexibility to go out there and group 
together and say, We are a group of realtors and we want to be able to 
go out and buy health insurance in the market like we had a whole bunch 
of employees rather than an office that employs five or six people 
because we are not getting a good deal when we just go out and try to 
buy insurance in the market to cover five or six employees at a time.
  All of these things are critical for us to think about. All of these 
things are ways that we can improve the system that we have before us 
today. But we do have to ask ourselves if we are perhaps putting the 
cart before the horse.
  Alan Greenspan, the gentleman's name who is not unknown in this town, 
the prior Chairman of the Federal Reserve Board, about 1\1/2\ years ago 
came and talked to a group of us one morning, talking about just things 
in general, and the question inevitably came up about Medicare: How in 
the world are we ever going to pay for Medicare? How in the world are 
we ever going to tackle this unfunded obligation that we have?
  And Chairman Greenspan felt confident that at some point some 
Congress would be able to deal with this problem in a satisfactory way. 
And he paused and he got quite reflective, and he said, You know, what 
concerns me more is, is there going to be anyone there to provide the 
services when you need them? Of course he was talking about our 
physicians. Of course he was talking about our nurses.
  Those are words that certainly I have taken to heart. And I think we 
do need to spend considerable effort on thinking about this problem and 
considerable effort towards rectifying some of the difficulties that 
are out there so that we do, indeed, preserve the health care workforce 
that is present today and the health care workforce that we are going 
to want for the future.
  Last year, in order to deal with this problem, I introduced a bill, 
H.R. 5866, the Medicare Physician Payment Reform and Quality 
Improvement Act of 2006. I introduced that bill in July. Of course, 
with the August recess and then the recess before the election, there 
wasn't a lot of time left in the year to work on it. The reason it was 
so important is because the system we have developed in our Medicare 
system, parts A, B, C, and D are not paid for equally. The fact is that 
part B, the part that is handled by physicians, is dealt with in a 
different fashion. Part A, the hospital; part C, the HMO; part D, the 
prescription drug benefit, all of those each year receive essentially a 
cost-of-living adjustment, an update, because the cost of inputs is 
going to go up.
  The physician payment, this is an important concept. I realize it may 
sound arcane, but the physician payment is handled differently. There 
Congress, in its wisdom many, many years ago, said if we can control 
the volume and intensity of these payments, we are going to be able to 
save money over the long term. So a system was put in place called the 
Sustainable Growth Rate formula. You will hear it referred to as the 
SGR. The problem with the SGR is that every year physicians, instead of 
getting a cost-of-living update based on the fact that their 
electricity costs more, it costs more to put gas in their car to drive 
to work, it costs more to pay their help, all of those things go up, 
but the physician reimbursements go down. An estimated 5 percent a 
year, and this is projected to go up for years in the future so that 
the accumulative effect will be a 30 to 35 percent reduction in 
physician reimbursement in the Medicare system. And anyone just looking 
at this understands that that is untenable. You can't keep doing that. 
Every year Congress has to come in at the last minute and do something 
to keep that from happening for that year. Sometimes we get it done; 
sometimes we don't. But the problem is every year that we put that fix 
in place, we increase the price tag for eventually getting out of that 
system.
  A case in point: I first came to Congress in 2003. In fact, the 
Congress before my first term here had not passed any appropriations 
bills. So the first thing we were faced with was a huge omnibus bill, 
spending hundreds of billions of dollars. That omnibus bill contained 
within it a fix for the doctors. And I remember the then chairman of 
the Ways and Means Committee coming to our conference and saying, I 
have put a fix in there so that the doctors won't see that pay cut that 
they got last year, and it is going to cost $52 billion to do that. At 
that time the cost of buying our way out of the SGR formula and 
switching over to a cost-of-living formula, a cost-of-living adjustment 
formula, known as the Medicare economic index, was pegged at about $118 
billion, a significant sum of money. But $52 billion as a down payment 
on a $118 billion problem, that seemed reasonable. It seemed like we 
were going in the right direction.
  But fast forward 4 years, and every year, of course, we have done 
something similar, never quite as much as the $52 billion that was 
passed that first month that I was in Congress, but every year that at 
the end of the year where we have had to add that money to keep 
physicians from seeing a pay reduction, we have increased the cost of 
eventually repealing the SGR so that it now totals $280 billion.
  But wait. There is more. If you do not protect seniors, because by 
law in part B of Medicare, seniors pay 25 percent of the cost of the 
part B program, which 75 percent is borne by the Federal Treasury; 25 
percent is recovered in premiums, and every time we increase that 
amount, the premiums necessarily increase. No one likes to do that 
because those premium increases by law hit in the month of October and 
that is very close to an every 2-year election that occurs in the month 
of November. So everyone wants to deal with that problem of the 
premiums going up every year. If you were to deal with the entire 
problem, the SGR and premium protection for senior citizens, the costs 
suddenly goes up to $340 billion. It is clear to see in a PAYGO 
environment that that is almost an impossible hill to climb.
  Last year in the Physician Payment Reform and Quality Improvement Act 
of 2006, in attempting to deal with that, I looked for help within the 
health care community, people to find places where there could be 
efficiencies to help offset that SGR price tag that at that time was 
$218 billion.

                              {time}  2220

  Suffice it to say that those cost savings were never identified. 
People were reluctant to come forth with areas in their particular part 
of Medicare where they might save money. And as a consequence, the pay-
fors did not materialize, and the bill was something we didn't take up.
  This year, it's not even just about fixing that part of the formula. 
It is important to do that because one of the pernicious effects of 
that formula is you have doctors who are looking toward their 
retirement and perhaps thinking about accelerating it for a few years. 
So we have physicians in the workforce who may be leaving early because 
they look down the road and say, 5 percent reduction in the rate of 
Medicare reimbursement every year for the next 10 years for a 
cumulative total of 30 or 35 percent, I don't think so.

[[Page 11469]]

Maybe I do need to get on with my retirement plans. And then on the 
other end of the spectrum you have the young physician who is just 
getting out of medical school, who is meeting the residency in those 
primary care high need specialties, they may need some additional help. 
And finally, the student who's finishing college and looking to go to 
medical school; how am I going to deal with those significant loans I'm 
going to face when I get out of school?
  All three areas are going to require this Congress to think very 
carefully and work very hard on trying to craft solutions. And I would 
just stress that it is important not to craft a solution that is only 
going to fix the short term. We've really had this kicking-the-can 
phenomenon or postponing-the-pain phenomenon has worked only up to a 
point. And you have to believe that this type of trajectory does have a 
shelf life, and ultimately we're going to reach a point where we are in 
fact no longer able to afford even those relatively modest, and I use 
the term modest advisedly because we are talking about a Washington 
expenditure here, will be unable to afford even those modest payments 
that are required to offset the reductions that happen year over year.
  And you might say, well, that's not so bad, it's just the Medicare 
system. That's just half of health care, how could that be that big a 
problem? The unstated aspect of this is that every private health 
insurance company out there who writes insurance policies, I shouldn't 
say every, but a lot, will peg their reimbursement rates to what 
Medicare pays. They pay 80 percent of Medicare, they pay 120 percent of 
Medicare, but they pay some percentage of what Medicare pays. And when 
we as a Congress say to the physicians of America, guess what? You get 
a 5.4 reduction this year. Those companies that peg their reimbursement 
rates to the Medicare 2007 reimbursement schedule are in fact also 
given a bit of a break. And they were never intended to be the 
recipients of the largess of the Federal Government, but that's what 
happens when you have Federal price controls on a system like health 
care.
  Well, improvements in the bill from last year I think are in 
progress. And the fact that the entire concept is split into three 
parts to deal with the overall affordability of educating and providing 
the incentives for people to go into medicine in the first place, 
providing the tools for their educational process, providing some 
flexibility with loan forgiveness, tax credits for the young physician, 
and then finally, providing some stability for the physician who is 
mature and in practice, that they are going to face a stable pricing 
environment going forward, not a continuously shrinking price 
environment going forward.
  It is going to be difficult. There again, I will reference the 
Medicare Trustees Report. Again, 680,000 hospital beds that were not 
filled in 2005 because of improvements in the practice of medicine. 
We've come a long way from the days of Benjamin Rush, when they used 
leeches to treat their patients. Those 680,000 hospital beds that 
weren't filled in the Medicare system, that is money that is saved in 
the part A part of Medicare, but the savings actually occur because of 
the work being done in the part B part of Medicare. And there has got 
to be somewhere, some way within the Federal statutes that the savings 
that occur in part A or part C or part D because of continued work and 
vigilance by the folks who are practicing in part B, there has got to 
be a way that those savings will accrue to part B, and use those 
savings as the offset for lowering that total price tag on the SGR 
formula.
  Further, there are some places, unfortunately, where people do 
attempt to abuse the system and take money that perhaps they are not 
entirely entitled to. The Inspector General's Office at HHS and the 
Department of Justice held a lengthy hearing with our Energy and 
Commerce Subcommittee a few weeks ago; it was a terribly enlightening 
process. But the money that's recovered in those audits is not money 
that should go to the Department of Justice, though don't tell them I 
said that, but it's money that should go back to the part B of Medicare 
to offset the eventual repeal and replacement of the SGR formula with 
the Medicare Economic Index. And I quite simply don't know any other 
way how to say that.
  If we are not able to get that done this year or next year or the 
year after, we do need to put some programs in place that will protect 
physicians from those cuts that are programmed to occur in 2008 and 
2009. And again, that is part of the legislation that I will be working 
on to not only capture those monies that rightfully belong to part B to 
offset the eventual cost of repealing the SGR, but additional things in 
place to protect the earnings of the physicians who care for our 
Medicare patients during those years before the SGR can be repealed.
  Well, I mentioned earlier that some of the States have done some 
things within their health plans that have been innovative and really 
quite exciting; Massachusetts is probably the leader in that regard. 
It's significant because the Governor of Massachusetts is offering 
himself as a Presidential candidate and is certainly one of the 
individuals who can say ``check the box, I've done that.'' And working 
with a legislature and a State senate who was of the opposite party and 
not always aligned with his vision of where things were and where they 
ought to be, was able to craft a plan. Just like so many things, we can 
always say it's God's plans, but the devil is in the details, and sure 
enough in this situation the devil is in the details. The months 
starting in July of this year will tell the tale as to whether or not 
that plan will actually work. But some very clever ideas were 
incorporated.
  Now I will be the first to admit that as a Texan there are a lot of 
things that you can apply to Massachusetts that you could never apply 
in Texas. But one of the concepts that I thought was, you have heard me 
reference several occasions that wouldn't it be great to get the 
leverage of getting a pretax expense for someone who wanted to buy 
their health insurance? Well, they found a way to do that in 
Massachusetts, it's called the Massachusetts Connecter. And indeed, 
even back in my home State of Texas I know they are looking at this 
concept. There is apparently a chapter in the IRS code, we heard the 
last speaker say how complicated the IRS code can be, but buried within 
the IRS code is section 125, which will allow for Federal tax 
deductibility of insurance premiums where the State acts not so much as 
the broker, but the middle man, if the State acts as the person who is 
going to bring the buyer and seller in the insurance market together, 
there is apparently a way in the IRS code where there is a tax 
deductible treatment then of that expenditure. And think about that for 
persons who are in the 20 or 25 percent tax bracket. If they can buy 
their health insurance premiums with 80 cent dollars, suddenly we've 
gone a long way towards allowing them some additional flexibility 
within the plan.
  The thing I like the best about the Massachusetts plan is it does 
stress the concept of personal responsibility. That is to say that if 
you are a resident in the State of Massachusetts and you can afford 
health insurance, then you've got no good reason not to have health 
insurance and we are going to require you to have it. Again, a concept 
that may not work in other States. And Governor Schwarzenegger is 
looking at doing something in California. I know in my home State of 
Texas, Governor Perry is looking at some options. Governor Jeb Bush in 
Florida and now Governor Crist, who replaced him, all have the ability 
to look at the State programs because of flexibility that was put in 
the system when the Deficit Reduction Act passed in December of 2005. 
Again, the much maligned Deficit Reduction Act gave the tools to these 
State leaders so that they can look at doing these innovative plans in 
their States to provide coverage for their populations who are 
uninsured. And after all, again, one of the great things about the 
United States is the States can serve as laboratories. We don't 
necessarily have to change everything for the whole country, we can see 
how it works in a given

[[Page 11470]]

State, and to the extent that it is helpful, we can expand the program.

                              {time}  2230

  If we find it wasn't helpful, we won't expand the program. But it is 
one of those great things that our Founding Fathers envisioned, that 
the States would be great laboratories for needed social change to 
occur in this country.
  One of the other things that I didn't cover earlier because I wasn't 
sure if time would permit it, I do obviously need to say a word about 
the medical liability system in this country.
  My home State of Texas, again, did tackle this issue in 2003 and did 
pass a State law that capped non-economic damages, much along the lines 
of the Medical Injury Compensation Reform Act of 1975 that was passed 
in California. Our State of Texas picked up that concept, modernized it 
for the 21st century, and those caps on non-economic damages, instead 
of just being one realm of non-economic damages, the cap is 
trifurcated, $250,000 thousand cap on the doctor, $250,000 thousand cap 
on the hospital, $250,000 thousand cap on the on a nursing home or 
second hospital, if one is involved.
  The critical thing about this is it has brought insurance costs for 
medical liability insurance down by 20 percent in my home State of 
Texas, and, remember, medical liability costs were going up by 25 to 30 
percent a year prior to the passage of that law.
  So it has had an immediate and beneficial effect on physicians in 
Texas. And one of the unintended beneficiaries was the mid-sized, 
community-based, not-for-profit hospital who self-insured. Those 
hospitals have seen a significant reduction in the amount of moneys 
that they had to put toward medical liability, and, as a consequence, 
those are dollars that they are investing in capital improvements, 
nurses' salaries, the very things you would want your medium-sized, 
not-for-profit community hospital to do if they had the flexibility to 
do so.
  I have legislation that I have drafted that bases off the Texas plan. 
I think it is reasonable legislation. In our budget resolution that the 
Republicans had, the savings, and this was scored by CBO as a savings, 
at a time we are looking for ways to save money in the healthcare 
system to pay for other things, it is almost unconscionable to walk 
away from that $8 to $10 billion in savings that CBO scored this 
particular legislation.
  Mr. Speaker, I see that the hour, it goes so quickly when you get 
down here to talk about these things. I will wrap up.
  I do want to point out that Americans, for all of the criticism that 
we have, there was an article in The New York Times published October 
2006, Tyler Cowan, who writes, ``When it comes to medical innovation, 
the United States is the world leader. In the past 10 years, 12 Nobel 
Prizes in medicine have gone to American-born scientists working in the 
United States, three to foreign-born scientists working in the United 
States, and just seven have gone to researchers outside of the 
country.''
  That is what we need to preserve, protect and defend. That is why 
these issues are so important for us to face in this Congress.

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