Mr. BAUCUS. Mr. President, for the benefit of all Senators, let me lay out today's program.
It has been nearly 3 weeks since the majority leader moved to proceed to the health care reform bill. This is the 10th day of debate on the bill. The Senate has considered 18 amendments or motions. We have conducted 14 rollcall votes.
Today the Senate will debate the amendment by the Senator from North Dakota, Mr. Dorgan, on prescription drug reimportation. At the same time, we will debate the motion by the Senator from Idaho, Mr. Crapo, on taxes.
Under the previous order, the time until 12:30 p.m. today will be for debate only, with the time equally divided and controlled between the two leaders or their designees. Following the remarks of the ranking member of the Finance Committee or his designee, the Republicans will control the first 30 minutes and the majority will control the second 30 minutes, with the remaining time equally divided and used in an alternating manner.
We are hopeful the Senate will be able to conduct votes on or in relation to a second-degree amendment to the Dorgan amendment, the Dorgan amendment itself, a side by side to the Crapo motion, and the Crapo motion itself. Thereafter, we expect to turn to another Democratic first-degree amendment and another Republican first-degree amendment. We are working on lining those up.
Over the course of the debate, there has been too much misinformation about what health care reform is and what it will do. I wish to set the record straight.
The goal of health care reform is to lower costs and provide quality, affordable coverage to American families, businesses, and workers. According to the nonpartisan Congressional Budget Office, our bill, the Patient Protection and Affordable Care Act, is a success.
According to the CBO, this bill provides health insurance coverage to 31 million more Americans. That is a big success. It lowers health insurance premiums. Despite what some have said, what some have claimed about premiums rising, that is not true. CBO says this legislation lowers health insurance premiums but for 7 percent, and that 7 percent gets much higher quality health care insurance than otherwise they would get. CBO also says this legislation reduces the Federal deficit by $130 billion
over the first 10 years--it reduces the Federal deficit by $130 billion over the first 10 years.
In addition, as the President promised, this bill does not raise taxes on the middle class. In fact, this bill is a net tax cut. Over the next 10 years, this bill will provide a total of $441 billion in tax credits to help American families buy quality, affordable health care coverage they can count on. That is a tax cut, a total of $441 billion in tax cuts. The chart behind me indicates [Page: S12746]
that. Over the next 10 years, this bill will provide a total of,
as I said, $441 billion in tax cuts.
The bill provides a net tax cut of $40 billion in the year 2017. You can see that basically on the chart: $40 billion of tax cuts in 2017. That is $440 for every taxpayer affected. These are individual tax cuts. Let me make that clear. American individuals will get tax cuts under this legislation in these amounts.
That same year--2017--low- and middle-income taxpayers who earn between $20,000 and $30,000 a year will see an average Federal tax decrease of nearly 37 percent. That is CBO. Do not take my word for it. That is CBO and the Joint Committee on Taxation--an independent organization. The average taxpayer making less than $75,000 a year will receive a tax credit of more than $1,300, and that tax credit grows to more than $1,500 in 2019. Those are tax cuts. It is very important we all remember this
bill is a net tax cut of this amount for American taxpayers. That is individual tax cuts.
I have heard arguments that the responsibility to have health insurance amounts to a tax on the middle class. This is simply not true. In fact, this policy works to repeal the hidden tax of more than $1,000 in extra insurance premiums that American families with health insurance pay each year in order to cover the cost of caring for those without health insurance. It is a tax for uncompensated care. That is $1,000 per American family, on average, that they have to pay under the current system.
This bill would virtually eliminate that.
Additionally, this bill provides Americans with the tools they need to meet that responsibility by ensuring that all Americans have access to quality, affordable health insurance.
The bill eliminates barriers that prevent Americans from getting insurance coverage, such as discrimination based on preexisting conditions. This bill eliminates that. We--all of us--either directly or through a family member or through a friend, have heard these horror stories of insurance companies denying coverage because of a preexisting condition. This legislation stops this. And this legislation makes quality insurance affordable to every American through tax cuts and help with copays and
other out-of-pocket costs.
If for some reason an individual still cannot afford to buy the health insurance coverage available to them, they are exempt from paying the penalty. Clearly, this penalty is not a tax. So if you cannot afford it, you do not have to pay--no penalty.
I have also heard arguments that the excise tax on private insurance companies offering costly and excessive insurance plans will raise taxes on individuals. This claim is equally untrue. The Congressional Budget Office reaches the conclusion that is not true. In fact, the Congressional Budget Office reaches the conclusion it will lower premiums. I think the amount is 7 to 12 percent, if I remember correctly--the amount stated in their letter to us in the Congress.
This policy, therefore, is not a tax on individuals. Rather, it is a tax on private insurance companies, and not passed on in the nature of higher premiums, according to CBO--in fact, lower premiums according to CBO.
This legislation is designed to encourage private insurance companies to offer, and employers to choose, health insurance plans with lower premiums that are below the taxable threshold. The Congressional Budget Office noted how effective this policy is in a report when it said:
..... most people would avoid the cost of the excise tax by enrolling in plans that had lower premiums.
As a result, CBO says premiums will decrease and wages will increase as employers offer more money in workers' pockets instead of inflated health benefits. In fact, the bulk of the revenue raised by this provision--more than 83 percent--comes not from the tax itself but from increased wages, increased wages on account of this provision. MIT economist Jonathan Gruber estimates this provision will cause workers' wages to rise by $55 in 2019. That is $700 in additional income for every household
with health insurance.
The truth is, this bill is fully paid for--fully paid for; CBO says so--and it is paid for in a fiscally responsible way. It reduces the Federal deficit. It lowers the growth of health care costs. It provides quality, affordable health insurance to millions more Americans. And it is a net tax cut--net tax cut--for American families, businesses, and workers, which in these tough economic times means more than ever.
Mr. COBURN. Mr. President, I stand confused from the statement of the chairman of the Finance Committee because we have all the reports that the bill he is talking about is not the bill we are going to be voting on because we are totally changing what we are doing. What is out there now is that we are going to expand Medicare to those down to 55 years of age, and we are going to expand Medicaid up to those of 150 percent of poverty. We are going to add billions of dollars of mandates, even at
90 percent copaid by the Federal Government, to the States over the next 10 years. We have a Medicare Program that you have taken $465 billion out of, and you are going to add 34 million new people to under the new plan--the new plan we are talking about. You are talking about the plan we used to have.
It is interesting, though, as you make those points, when you say it is net tax cut. Three-quarters of the net tax cut goes to people in this country who pay no taxes in the first place. The chairman cannot deny that. The fact is, according to the Joint Tax Committee--the chairman conveniently does not look at the other body that gives us information on taxes. According to the Joint Tax Committee, $288 billion of the $394 billion will be refundable. That is a refundable tax credit to people who
are paying no taxes now.
Mr. BAUCUS. Mr. President, might I ask the Senator, it is a tax cut, whether or not it is refundable. And even if it is refundable, it is extra dollars in people's pockets.
Mr. COBURN. The fact is, it is taxes to the average American family--40 million of them. According to the Joint Tax Committee, taxes will rise on those who are making under $200,000 a year. The Joint Tax Committee said that.
The point is, what you are talking about does not have any application because we do not have ``the bill,'' again, because we have a new ``the bill'' on the floor, which is going to take a bankrupt program that our children today are responsible for--if you are born today, based on the unfunded liabilities of Medicare, you are responsible for $350,000, if you are a new child born today, for what we have not paid for in Medicare. And now we have the new plan that is going to come out. We have
cut $465 billion out of Medicare, or moved it out of Medicare, to create a new program. And we are going to add 34 million new Americans to it, in a plan that has already mortgaged the future of our children.
The other thing the chairman said is that costs in health care will go down and that premiums will go down. Well, there are 11 out of 12 people who have studied ``the plan'' who say premiums will rise. What CBO says is, if you are in the individual market, your premiums are going to go up anywhere from 10 to 13 percent. In fact, they are not sure whether premiums will decline. They say on the other groups it is from a 1-percent increase to a 2-percent decrease over what they would have already
So our problem with health care is costs. That is the thing that stops access to health care in this country. And the plan--whether it is the new plan, which nobody has gotten to see the details of, or the plan we have seen the details of, the 2,074 pages we have seen the details of--raises the cost of health care in this country.
But none of that is important because the most important thing is, it puts government in control of your health care through the task force on preventive health services, through the Medicare Advisory Commission, and through the cost comparative effectiveness panel.
So with a wink and a nod we are going to put government in control of your health care; we are going to put 70 new bureaucracies between you and your doctor; we are going to put 20,000 new Federal employees between you and your doctor; and we are not going to lower the costs. The average American is not going to get a tax cut; they are going to see an [Page: S12747]
increase out of this bill. The average middle-income American is going to see a tax increase out of
So, consequently, what we have heard sounds good on the surface. But the most important thing to remember is you are no longer going to be in control of your health care because once the government puts its nose under the tent, just as it did on breast cancer screening--and we have the gall to say we are going to recognize every time the agency does something that is harmful to a patient in their relationship with their doctor, that we are going to come to the Senate floor and correct it. The
fact is, that isn't going to happen.
So, ultimately, your health care is going to cost more and your premiums are going to rise. Eleven out of the twelve studies say premiums are going to rise under the bill that is before us, and the people who get the tax cuts are the people who aren't paying any taxes now. To pay for those tax cuts, taxes are going to rise on 40 million American families who earn under $200,000 a year.
Mr. President, I yield the floor.
Mr. CRAPO. Thank you very much, Mr. President. I appreciate the opportunity to discuss the issue of taxes and jobs today as we focus on the critical legislation in front of us.
I have proposed an amendment, actually a motion, to commit this bill back to the Finance Committee to help us honor the President's pledge on taxes. As we have discussed now for more than a week, notwithstanding all of the claims that are being made about this legislation, one of the irrefutable facts is that it grows the government dramatically. If you take the first full 10 years of spending, not counting the first 4 years that are not included in the spending--in other words, they are delayed
in order to make the numbers look better--if you count the first full 10 years of implementation of this bill, it will result in $2.5 trillion of new Federal spending. It will grow the Federal Government by that much.
Repeatedly, President Obama has told the American people he will not allow them to be taxed--those whom he describes as the middle class--in order to pay for this huge new increase in Federal spending.
To use President Obama's own words:
I can make a firm pledge ..... no family making less than $250,000 will see their taxes increase ..... not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes ..... you will not see any of your taxes increase one single dime.
Yet what does this bill do? It includes $493 billion of new taxes in just the first 10 years. If you use that full 10-year timeframe--that timeframe that starts after the 4 years of spending that have been suppressed in order to change the numbers and the calculations on the bill--the total number in that 10-year window is $1.2 trillion of new taxes.
The question is, Do these taxes fall only on the wealthy or do they fall squarely on those in the middle class? The answer is the large majority of them fall on the middle class. In fact, the Joint Tax Committee has indicated that by 2019, individuals earning between $50,000 and $200,000 would, on average, see a tax increase of $595,000. Families earning between $75,000 and $200,000 would, on average, see a tax increase of $670,000.
My colleague from Montana, the chairman of the Finance Committee, has argued that there is actually a net tax cut in the bill. How do we get to those numbers? Based on a Joint Committee on Taxation report, of the $394 billion that the government will spend on what are called tax credits--that is the tax cut that my colleague is talking about--$288 billion of those $394 billion in credits will go to people who pay no taxes today.
If you think about it, how can it be a tax cut if the money is spent from the Federal Treasury and sent to--or to somebody on behalf of--a person who is not paying taxes in the first place? You can call it a subsidy. You can call it a credit if you would like. I know the words used in the bill are a ``refundable tax credit,'' but the reality is it is nothing other than pure Federal spending. In fact, the Congressional Budget Office classifies this kind of benefit as government spending.
Mr. CRAPO. Reclaiming my time, although people do pay a lot of sales taxes--not Federal sales taxes, by the way--and although people do pay a lot of other types of taxes, they will pay penalties and fees--in fact, under this bill they will be paying a lot more taxes. The reality is I don't think that is what President Obama was talking about. When he made his pledge, I think his words were: ``You will not see any of your taxes go up.'' The bottom line is you can't say, well, if you offset this
tax and you don't count the sales tax or if you add in the sales tax to counteract it--that is not what the President was talking about.
Once again, as Joint Tax has said, by 2019 individuals making between $50,000 and $200,000 on average would see a tax increase of $590,000, and families making between $75,000 and $200,000 would see a net increase on average of $670,000.
Let's go to the next chart.
I note my colleague from Tennessee is here. If he would like to step in at any time, please feel free. I just have two other charts to show, and then I will toss the floor to the Senator. I see he has, I think, a question brewing.
In the analysis that was done by the Joint Tax Committee, by 2019, these people whose taxes I have just described who are squarely in the middle class, there will be at least 73 million American households--that is not individuals, that is households--73 million American households earning below the $200,000 that will face a tax increase. Sometimes the proponents of this bill say, well, that doesn't net out the subsidies we are providing to some of them. If you net out the subsidies--and I don't
think that is necessarily an argument, but if you do net out the subsidies--it is still at least 42 million American households that will see their taxes increase under this legislation.
How can that comply with the President's promise? All the motion I have brought does is say to commit this bill to the Finance Committee and make the bill fit the President's pledge. The President pledged that people in the middle class, which he defined as families making less than $250,000 or individuals making less than $200,000, would not see their taxes go up.
With that, again, I see my colleague from Tennessee is ready to join in with me, and I would ask if he has any comments or questions to raise.
Mr. ALEXANDER. I thank the Senator from Idaho. The point you are making is, if you are going to add $ 1/2 trillion--this bill as proposed is paid for by about half through Medicare cuts and about half through tax increases, and it is paid for some by sending huge new bills to State governments. But I guess the point the Senator is making basically is that we are going to add $ 1/2 trillion in taxes over 10 years or much more than that when the bill is fully implemented. Who is going to end
up paying those taxes? It is not going to be insurance companies. It is not going to be medical device [Page: S12748]
companies. It is going to be the people who--it is going to be us. Isn't that true? Don't you expect that most of the companies upon which the new taxes are imposed will pass those taxes along to the American people?
Mr. CRAPO. Yes. As a matter of fact, in my own mind,
I distinguish between taxes on the American people and fees that will be charged to companies and businesses in the private sector that are also being passed on to the American people. All of those will occur.
One interesting clarification or explanation with regard to this refundable tax credit that is talked about so often: it isn't actually refunded to the taxpayer, as I understand it, or to the individual who doesn't pay taxes but is receiving the credit. It is paid directly to the insurance company, as I understand it. So even though some people could be claimed to be paying less taxes by this argument, because some of those who receive the subsidy will get a greater subsidy than they will a tax
increase, the fact is even they still get a tax increase and even they still pay their taxes at the higher level. It is just that some of them will get a subsidy that will help to offset that.
Mr. ALEXANDER. I wonder if I may take a minute to talk about another form of taxes, which would be State taxes. Now, people might be thinking: Well, you are talking about a Federal health care bill. How do you get State taxes in there? Well, let me try to explain that just a little bit.
I remember as Governor of Tennessee some years ago, nothing used to make me madder than Washington politicians who would come up with a big idea, take credit for it, hold a press conference and announce it; call it, for example, historic, and then send the bill to me, the Governor, to pay it. Then usually those same politicians would come back to Tennessee and they would make a big speech about local control at the Jefferson Day dinner or the Jackson Day dinner. In fact, sometimes Republicans
were just as bad as Democrats in doing it.
I also remember that in 1994 there was a political revolution in the country. This body switched dramatically to the Republican side, and one of the main arguments was no more unfunded mandates. In other words, don't be coming up with big ideas in Washington and sending the bill to the Governor or to the State legislature or to the mayor or to the county commission and expect them to raise property taxes or cut services or raise college tuitions to make it up.
So what I wish to say today is this: This legislation already includes a huge new bill for the State governments. As it is now written, Medicaid for low-income Americans is expanded, and there is a big bill to the States. Our Governor, who is a Democrat, by the way, has been very effective in pointing this out; that Senator Reid's bill will add $700 million over 5 years to our State. There is no way our State can pay this bill without a tax increase of significant size or seriously damaging
higher education or seeing college tuition begin to go through the roof, just as we saw it do in California the other day when it went up 32 percent. Why did it go up? Because the State has had to spend so much of its money on health care bills, many of which are required by the Federal regulations of Medicaid.
There is a rumor going around that there was a big deal cut last night that would pave the way for passage of this bill that says that instead of a new government-run program, we will simply expand two of the government-run programs we already have--Medicare for seniors and Medicaid for low-income Americans.
I would ask these questions: First, with Medicare, how in the world can we take $1 trillion out of Medicare when the program is fully implemented and give 34 million or 35 million more Americans a chance to opt in it at a time when the trustees of Medicare have said it is going broke in 5 years. Insofar as Medicaid goes, if it is true that the idea is to expand Medicaid to 150 percent of the poverty level--and, of course, we are not invited to any of the meetings; they were all written in the
back room so we don't know the details--but if it is true we are going to expand Medicaid even more, our Governor has said in our State that doubles the cost of this legislation to our State.
So down the road, in a few years, what we are going to see in Tennessee is a new State income tax, seriously damaging higher education, and I think it is--
Mr. BAUCUS. I will quote from a letter basically to refute the allegations that this is a big obligation on the States. That is totally not true. The question is, Is it not true that on page 7 of the letter from the CBO, dated November 18, to Senator Reid, CBO says:
The CBO estimates that State spending on Medicaid would increase $25 billion over 10 years as a result of this legislation.
That is $2.5 billion a year, on average, for all States.
Another figure I know is that the State increase will not be huge but about a 1 percent increase over the State obligation. Why? Because, as the Senator also noted, an expansion of the population in Medicaid--the Feds are paying virtually all of it. But on a net basis, it is a 1-percent only increase in State obligation over 10 years. Does the Senator know that to be true?
Mr. ALEXANDER. My understanding of the proposal by the Finance Committee bill and by the Reid bill is that the Federal Government expands Medicaid and pays for 100 percent of it for a few years, but after that, the State has a significant portion of the bill. Am I not correct in that?
Mr. ALEXANDER. Mr. President, I will retain the floor, and then the Senator can make his statement later.
The fact is, after 3, the Federal Government sends a big bill to the States. The fact is, the Governor of Tennessee, who is a Democrat and who has worked with other Governors and is actually leading the National Governors Association's effort to see the impact of this kind of legislation, says it will cost our State $700 billion over 5 years and $1.4 billion if we expand Medicaid up to 150 percent of federal poverty level. The State pays part of that bill. That means a big State tax increase.
It means big higher education increases.
As a former Governor, I guarantee that if this happens, a few years from now when the federal government shifts costs onto the states, there will be a revolt in the States and people will be asking who did this. I would seriously say that any Senator who votes to expand Medicaid and sends a significant part of the bill to the States ought to be sentenced to go home and be Governor and try to govern the State under those conditions.
I think this kind of legislation, and especially the rumor I have heard regarding a dramatic increase in the expansion of Medicaid, will be a damaging blow to the American public's higher education from which it will never recover, tuition will go to a level where only the rich can afford to go to school, and the idea of public higher education will be left aside, all because Washington politicians ran up the bill, took the credit, made an announcement, and sent a huge bill to State governments
that are struggling with their worst fiscal condition since the Great Depression.
Mr. CRAPO. I thank my colleague. We will see State taxes as well as Federal taxes going up.
Senator Johanns has joined us as well. Before I ask him to join in with questions and comments, I want to make one other clarification.
Again, we have the President's pledge up here on the chart. The motion I have offered simply says: Make the bill comply with the President's pledge. If there are no new taxes, the bill doesn't have to be changed if we pass this motion. If there are, it does.
Remember, I don't think that when the President made this pledge, he was saying he will not increase taxes on a net basis. In other words, I didn't hear the President say: I won't raise your taxes higher than I would cut them in some other areas. He specifically didn't say he would count subsidies being paid out to those who do not pay income taxes as an offset to any tax increases he wanted to raise somewhere else. The [Page: S12749]
President didn't get into all
these nuances. He said he was not going to raise taxes on the middle class. The fact is, the middle class will see huge tax increases under this bill.
Before I toss the floor to my colleague, I will say this: CBO estimates that only 7 percent of all Americans will receive any of these subsidies. Yet, specifically, out of the 282 million Americans with some type of health insurance, only 19 million of them will be eligible for the tax credit for their health insurance. The rest of the millions of Americans are going to be the ones paying those taxes. That is how it ends up. At minimum--and we are still going through the bill, and this number
is growing--at least 42 million people who make less than $200,000--and, frankly, far less--are going to be paying a lot more taxes. That is the reason for the motion.
I yield to my colleague, Senator Johanns.
Mr. JOHANNS. Mr. President, Senator Alexander really has this right. I had the honor of being the Governor of Nebraska for 6 years. The whole idea of balancing a budget is not theoretical to a Governor. You have to do it.
Let me tell you, if I might, about our State. Many years ago--decades and decades ago--when our founders wrote our State constitution, they were worried about the State getting itself embroiled in too much debt. So they said the politicians will be allowed to borrow some money. The limit they put in the State constitution was $50,000.
So you see, in Nebraska, when you are faced with an unfunded mandate, like what is happening in this health care bill, I say you get three choices: You can cut programs like K-12 education, higher education, and much-needed services. No. 2, you can raise taxes, sales and income taxes. That is about what you are down to because that is really where the revenue comes from for States. The third choice is you get to do both. I guarantee you that none of those approaches is very popular.
Just within the last few weeks, our Governor, dealing with the recession, like every Governor in the country, stepped in front of the unicameral, as I did as Governor, and he said: My friends, we have to cut the spending. It was just as clear as can be. He said: We have to cut the spending. People are hurting. They are laid off. If they are hurting, they are not spending as much; therefore, our revenues are down. We have to cut spending.
They worked over a couple-week period of time, and they came up with a plan--I think it was unanimously approved--to cut the spending.
Well, here we are in Washington, and when you pull the gimmicks out of this bill and score it realistically over 10 years, this is a multimillion-dollar hit to every State, including the State of Nebraska. So what are we handing off to the State? Guess what. We are saying: You get a chance to raise taxes--not because of any vote you took on the floor of the unicameral in Nebraska but because of what happened with Washington unfunded Federal mandates. That is what this bill is all about when you
look at the expansion of Medicaid. I read the reports about the possibility this might go to 150 percent. Keep doing the math, keep loading the unfunded mandates on our State Governors.
Do you know why we are doing this? We are doing it to try to convince the American people that this is a cheaper bill than it is. When they figure out that the Governor of their State has this problem to deal with and they come to figure out they are going to pay higher taxes or get fewer services and less education, it will become very real to them. I have said many times on this floor that with this bill, reality will set in. Here is another piece of reality.
Then you look at the overall bill. About $ 1/2 trillion--in addition to this Medicaid mess we are going to push onto the States, there will be about $ 1/2 trillion in new taxes.
Senator Crapo put up the promise the President has made. Well, gee, when he is done with that board, we can ceremoniously tear it up because, you know what, that promise isn't anywhere near being kept. When he said those things, quite honestly, there was no way he could deliver with this health care bill. Uninsured Americans get taxed. Insured Americans get taxed. Families with high-value plans get taxed. High-health-cost families get taxed. Flexible spending gets reduced. Small businesses
get taxed. We can go on and on and on, to the tune of $ 1/2 trillion. That is not even counting the unfunded mandate hammer we are sending to every Governor in this Nation.
Mr. CRAPO. Mr. President, I will add some statistics that I was reading while my colleagues were commenting. If you take out that CBO report, which is what actually analyzes this on a nonpartisan basis, the impact of these Medicaid expenditures, not including the proposed increase we heard about overnight, it clearly says:
CBO estimates that State spending on Medicaid would increase by about $25 billion over the 2010-2019 period as a result of the provisions affecting coverage in table 3. That estimate reflects States' flexibility to make programmatic and other budgetary changes to Medicaid and CHIP.
That is the statistic my colleague from Tennessee was looking for.
Mr. ALEXANDER. I thank the Senator. It is true that in the legislation the estimate is that the Federal Government would pay 100 percent of the increased expansion of Medicaid for 3 years and that it will cover about 90 percent of the cost after that, which sounds like a lot. But we throw so much money around up here, we have completely lost any appreciation of what that amount of money costs at the State level. In our State, our Governor has said that the 133-percent increase is about $700 million
over 5 years, and that is a big, new tax or a big increase in college tuition.
If I may, I ask unanimous consent to have printed in the Record an article from the Wall Street Journal of December 4 from the dean and CEO of Johns Hopkins Medicine.
There being no objection, the material was ordered to be printed in the Record, as follows:
Mr. ALEXANDER. The dean, who writes a very sympathetic column which I will not read but a sentence or two of, is describing the current health care bill. He says:
Even if only half those individuals seek Medicaid coverage, such a large expansion would likely have an excruciating impact on the State's budget. And Maryland is not alone. According to a Kaiser Foundation survey conducted earlier this year, three-quarters of the States have expressed concern that expanding Medicaid could add to their fiscal woes. Already, as Kaiser notes, 33 States cut or froze payment rates to those who deliver health care to Medicaid patients. .....
The proposal--and the Reid bill is maybe exacerbated by this deal we have been hearing about--is to shift millions more low-income Americans into a program called Medicaid, when only 50 percent of doctors will see new patients in that program, and then send a huge bill to the States, which will damage higher education.
I remember, after I was Governor, I heard on the radio that the State of Tennessee had done a wonderful thing. It would double the number of children covered by Medicaid at the same amount of cost. It went through my mind that it would never happen. That program became the TennCare Program, which has nearly bankrupted our State.
Mr. CRAPO. I will make a couple of other comments, and I will allow my colleagues to wrap up with their final comments. I want to raise an additional issue.
On this chart, we show what is going to happen with the IRS. Right now, the CBO estimate indicates that because the IRS is in charge of the implementation of so many of the mandates and other requirements in this bill and because of the new taxes that will be forced onto the American people, there will need to be an expansion of the IRS. The CBO says that could mean as high as an additional $10 billion at the IRS.
If there are no new taxes in this bill or no new mandates in the bill, if there is no increased role of the Federal Government in the management of the health care economy in this bill, why do we need to have the size of the IRS, which is a $12 billion institution today--why does it need to grow to almost double, up to $22 billion?
The point is, the motion I have made is very simple and straightforward. We can argue back and forth about what the President said or whether this bill has tax cuts or tax increases in it or whether, in the net result, it does one thing or another.
The bottom line is, with regard to about 157 million Americans who get their health insurance through their employer, by 2019, they are not going to be eligible for these tax credits people are talking about. They are going to be paying increased taxes.
All this motion does is protect those 42 million people we were talking about who are going to see their taxes go up; 42 million households will see their taxes go up.
If the other side is right and what we are talking about does not exist in the bill, then this motion should be harmless because all the motion says is commit the bill to the Finance Committee and tell the Finance Committee to take out the taxes that impact the middle class.
I ask if either of my colleagues from Nebraska or Tennessee would like to make any concluding remarks.
Mr. JOHANNS. Mr. President, let me offer a thought or two. Senator Crapo has hit the nail on the head. If this is not happening, if, in fact, the argument of the other side is accurate and this is not happening and this is some made-up sort of argument, then the Senator from Idaho is absolutely right, this motion will have no effect. So why would you not support the motion? Why wouldn't you want the health care bill to reflect the promise of the President of the United States? Why would
you not stand and say: Look, it is a hard time out there. Unemployment is 10 percent. People are hurting. Unemployment and underemployment are 17.5 percent. This has been as tough a recession as we have seen in a long time, and it has hurt real people. Why wouldn't you want to stand for them and say: Man, we understand. We have heard you at our townhall meetings. We have heard you back home. We have heard you, and we are going to make sure we are not going to add to your burden.
I appreciate Senator Alexander putting in that article. I thought that was a tremendous article. Medicaid is chewing up State budgets. I managed one of those budgets. Keep in mind, this is an entitlement program--no deductibles, no copays, no premiums. If you qualify, you get it. So there is no way you can manage this budget. It is exponentially growing. Forty percent of the docs do not take Medicaid patients. Why? Because they go broke on the reimbursement rate. Hospitals tell me all
across the State of Nebraska: We cannot keep our doors open on the Medicaid reimbursement rate.
So what are we doing? We are adding millions of people to that problem. They will have an access problem. State budgets will have a problem. They will be in crisis. Our hospitals are going to face the same crisis. It is the wrong policy. It is the wrong course of action. Let's start listening to the American people.
Mr. ALEXANDER. Mr. President, day in and day out Republicans have come to the floor and said: Instead of a comprehensive, 2,000-page approach to try to fix this massive health care system all at once in a way that raises taxes and premiums and makes Medicare cuts, why don't we, instead, identify the goal of reducing the cost of health care to individuals and to the government and take commonsense steps toward that goal.
We have suggested small business health care plans which have been offered, scored by the CBO to save money and expand coverage. We have offered proposals to limit the number of junk lawsuits against doctors. There may be an argument about how much that saves, but there is no argument that would not drive down the costs. We have suggested allowing purchasing of health insurance across State lines to increase competition, and creating health insurance exchanges. There are efforts in wellness and
prevention that we have made specific proposals concerning. In terms of corralling waste, fraud and abuse in Medicare and then spending the savings on Medicare, instead of a new program, that is the Republican agenda.
Pick a goal: reducing health care costs and move step by step toward that goal in a way that reearns the trust of the American people, instead of a comprehensive, 2,000-page bill filled with taxes, mandates, surprises, and a Washington takeover of health care.
There is a real choice. We regret the fact that we seem to be continuing to move on this track without the track we are offering. We want to defeat what is proposed, not in the debate. Change the debate toward reducing costs step by step.
I yield the floor.
Mr. BAUCUS. Mr. President, the Senator from Oklahoma and others on the other side of the aisle make the charge this bill increases government. That is not so. It does not increase government. This bill does not increase government. They made that allegation. It is a pure allegation. Anybody can allege anything, but let me get the facts. It is one thing to make an allegation; it is something else to get the facts.
The best fact I have come up with is a quote from the Congressional Budget Office letter to Senator Reid on that point. The Congressional Budget Office says--and I quote from page 16 of the letter. I do not have the date of the letter. There are several letters to several of us in the Senate. I will quote the letter. It says:
CBO expects that, during the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming from this legislation would roughly balance out, so that there would be no significant change in that commitment.
``Roughly balance out.'' ``No significant change in that commitment.'' That does not sound like an explosive growth in government to me. In fact, it sounds the opposite, listening to the Congressional Budget Office.
Also, add to that this bill, in the first 10 years, decreases the deficit by $130 billion. But CBO says: No, no, no significant change. Things will roughly balance out, according to the Congressional Budget Office.
Mr. BAUCUS. This controls the government's role in health care. It does not increase it.
I do not have any time, I say to the Senator from Idaho. We are an hour later--if we have another time agreement, we will take it out of the Senator's time. I will be willing to yield if the Senator from Idaho has a question.
Mr. BAUCUS. Fine. Some of my colleagues on the other side of the aisle try to paint health care reform as bad for the economy. Nothing could be further from the truth. Health care reform will be good for the economy. Health care reform is a net tax cut for working Americans--a net tax cut. Health care reform is essential for long-term growth.
Some say it is a tax increase. It is not. The Congressional Budget Office--I have a chart right in front of me--a net tax cut. If you take all the provisions of this bill that affect individuals, the Joint Committee on Tax concludes that the average tax break for affected filers with income under $75,000 is a cut every year. I will take one year, 2019: a $1,500 cut for those people in that category. Net tax break for affected overall is a $441 decrease. It is a long chart. I will not take the
time to read it all.
In summarizing the chart, affected taxpayers, as a percent of all taxpayers--it is over a majority--will see a net tax cut.
Some say for some it will be a tax increase. Let me indicate why that is somewhat true. They are getting more wages. Of course, their taxes go up if they get more wages. Why are they getting more wages? Because these tend to be
people affected by so-called Cadillac plans. The Joint Committee on Tax and the Congressional Budget Office say in that category, premiums go down and wages go up. Obviously, taxes are going to go up when wages go up. It is not fair to say that taxes are going up for those folks in that category unless you also say it is largely because their income is going up. I think that should be pointed out as well.
Our bill will provide a substantial tax cut. It will cut taxes by $40 billion in 2017 alone and cut taxes by $40 billion in 2019 alone and by substantial net tax cuts year after year. The average affected taxpayer with an income under $75,000 a year would get a tax cut of more than $1,500 in 2019. The bill would affect more than 92 million taxpayers a year by 2019. That is reductions. Our bill would affect most taxpayers by 2017, and the bill would give average taxpayers affected hundreds of
dollars of tax relief.
Not only would health care reform cut taxes for working Americans, it would also address the single largest challenge to our long-term fiscal future.
Reforming health care is the single most important thing we can do to address long-term budget deficits. The Congressional Budget Office says we will succeed in doing that. CBO says our bill would reduce the Federal budget deficit by $130 billion in the first 10 years. CBO says our bill would reduce the budget deficit by roughly $650 billion in the second 10 years. That is roughly $780 billion in net deficit reduction. That is $800 billion in net deficit reduction over 20 years. I think that
is progress. That is pretty good.
Some of my colleagues say: Gee, Medicaid is pretty expensive, so be careful, Congress, with what you do with respect to imposing obligations on States. I remind my colleagues there currently is a formula each State must subscribe to with respect to Medicaid. The Federal Government pays a certain portion and States pay the other. On average--I could be off--the Federal Government pays 50 to 60 percent and the States pay the rest.
Under this legislation, we are talking about the so-called transitional group, those where the poverty level is raised, in that category--I have forgotten the exact figure. But it is not the old formula, it is the new formula. Under the new formula, the Federal Government is paying virtually all of it--not quite all but virtually all of it. So the States will get a little bit of an increase in obligations. It is small. It is infinitesimal.
The underlying point is, we have to reform health care. Why do Medicaid costs go up? Because health care costs are going up around the country--health care costs for seniors, low-income people, health care costs for everybody.
There are so many parts of this bill which address that problem, which address health care costs, to get health care costs down. I would think all State Governors would want this bill to pass. Why? Because we are going to begin to go down the road of lowering health care costs. Then those Medicaid budgets will be more under control.
We have to lower health care costs, and this legislation does that. Health care reform would very much help the economy, not just in the near term but with substantial net tax cuts but also help the economy long term with substantial deficit reduction--but also all the provisions we are putting in to lower health care costs overall.
It is, clearly, the right thing to do. I, therefore, believe this legislation should definitely pass. To remind my colleagues who say: Gee, for folks making more than $250,000 a year, they will pay more taxes, let me make clear: Those folks are not seeing tax rate increases. Those folks are going to pay more taxes because they are going to get pay raises. That is why they are going to pay more taxes because, in effect, their incomes are going to go up. They are going to get pay increases.
I have more to say, but I see my colleague from Vermont on the floor. How much time is remaining on in this block?
Mr. SANDERS. Mr. President, I thank the chairman for yielding. Before I get into the subject I wish to talk about, which is prescription drug reimportation and the absolute necessity of lowering the cost of prescription drugs in this country, I wish to say a word in general.
I find it interesting that my Republican friends are spending a whole lot of time down here on the floor attacking the health care legislation. I suppose it is at least a positive thing that they are beginning to talk about health care. They ran the government from 2000 to 2006. They had the President, they had the House and the Senate. At that time, health care premiums soared. Millions of Americans lost their health insurance. Where were they?
Where were they in the beginning to come up with ideas to control health care costs and provide health care to more Americans? They weren't there.
Now, having said that, let me also say I have problems with the bill that is currently on the Senate floor. Clearly, it does a lot of things that are good, but there are weaknesses in this bill in terms of cost containment that we have to address.
When some of my friends talk about expanding Medicaid and the problems associated with that, they make a good point. We need to significantly expand our primary health care capabilities, which means more community health centers, which means more primary health care physicians. If we are not able to do that while we add 15 million more people to Medicaid, frankly, I am not sure how we are going to deal with the medical needs of those people.
So I think one of the imperatives that has to happen as we proceed on this bill is we have to support the language in the House, which substantially increases funding for community health centers and for the National Health Service Corps, so that we give a primary health care infrastructure--clinics and doctors--to begin to serve the millions more Americans who are going to be coming into the health care system.
That is one issue. The other issue I wanted to focus on today--and I am here because Senator Dorgan, who is the sponsor of this legislation, is unable to be on the floor of the Senate at this time--deals with prescription drug reimportation. This is an issue I have worked on for many years. When I was Vermont's Representative in the U.S. House, I believe I was the first Member of Congress to take American citizens over the Canadian border--in this case to Montreal--in order to purchase
affordable prescription drugs.
I will never forget--never forget--the bus trip we took over from St. Albans, VT, to Montreal, Canada. On that bus there were a number of lower income [Page: S12752]
women who were struggling with breast cancer. Many of them were using the widely used breast cancer drug called Tamoxifen. We got off the bus in Montreal, and we walked into the drugstore--and that had all been prearranged--and in there they purchased Tamoxifen. At that point in time--and I am thinking
it was about 10 years ago, a while back--they paid, in American dollars, one-tenth of the price for Tamoxifen in Montreal, Canada, that they were paying in the United States of America--one-tenth of the price for lower income women who were struggling for their lives.
So when you talk about morality, I want some of my friends to explain why it is that the American people are forced to pay by far the highest prices in the world for prescription drugs? Talk to physicians in Vermont. There is a doctor I know in northern Vermont, and when she writes a prescription, one-third of her patients cannot afford to fill the prescription. So what is the sense of an examination, a diagnosis, and writing a script when your patient can't even fill that script?
The high cost of prescription drugs in this country is one of the major health care crises we face. It is an issue we have to deal with, and we simply have to ask ourselves why it is that the same exact medicine in this country costs substantially more than it does in Canada, in Australia, or all over Europe.
There has been a lot of concern in this country about the lack of bipartisanship. Well, I have to say that on this issue there is bipartisanship. That was true when I was in the House, and that is true in the Senate.
Let me just read to you the cosponsors of this legislation--Democrats, Republicans, Independents. The bill is introduced by Senator Dorgan, and the cosponsors are Senator Begich, Senator Boxer, Senator Casey, Senator Conrad, Senator Feingold, Senator Inouye, Senator Klobuchar, Senator Leahy, Senator Lincoln, Senator McCaskill, Senator Sanders, Senator Snowe, Senator Stabenow,
Senator Thune, Senator Bingaman, Senator Brown, Senator Collins, Senator Durbin, Senator Grassley, Senator Johnson, Senator Kerry, Senator Kohl, Senator Levin, Senator McCain, Senator Nelson, Senator Shaheen, Senator Specter, Senator Tester.
So there is widespread bipartisan support for legislation which says: Let's end the absurdity of the American people having to pay substantially more for the same exact medicine that is sold in other countries around the world.
Let's take a look at some of these charts. To begin with, we all understand when you deal with the drug companies and the pharmaceutical industry you are dealing with some of the most powerful lobbyists and forces right here in Washington, DC. These people spend huge amounts of money on campaign contributions, huge amounts of money in lobbying. Just recently, in order to make sure they got in under the wire, in case there was some real reform passed in Washington, they substantially raised their
prices for particular drugs just in the year 2009, and here is the chart reflecting that: Enbrel, a 12-percent increase; Singulair, 12 percent; Plavix, 8 percent, Nexium, 7 percent; Lipitor, 5 percent; Boniva, 18 percent.
One of the reasons health care costs are soaring in America--and one of the reasons many seniors are having such a difficult time with health care costs--is precisely the rapid rise of prescription drugs.
What I want to talk about now, through this chart, is something that is inexplicable to the average American. This is Lipitor, which is a widely used drug, and here is the cost of Lipitor. The same amount in Canada costs $33; in France, $53; Germany, $48; the Netherlands, $63; in Spain, $32; the United Kingdom, $40; and in the USA, $125, or four times as much as it costs in Canada.
Now, you explain that to me. The same exact medicine made in the same exact factory, the same exact bottle. That is why, by the way, in the State of Vermont, and all across the northern tier, every day people are going over the Canadian border or using the Internet to buy those drugs. So what we are saying in this legislation is let's end this absurdity.
We are living in a global economy. I have a lot of problems with the global economy in many ways, but if, when we go Christmas shopping, the only products we can find are made in China--because we don't do too much manufacturing in America--and if when we eat lunch we get lettuce and tomatoes from all over the world, what people are asking is, why is it we can't bring into this country FDA-safety-approved medicine? We can bring lettuce in from the backwoods of Mexico, and that is OK. But somehow,
when we have a handful of major pharmaceutical companies, presumably it is just too difficult to be able to bring them safely into the United States. Nobody believes that for one moment.
Let's take a look at another chart. Plavix, same story: Canada, $85; France, $77; Germany, $85; the Netherlands, $77; Spain, $58; the U.K. $59; and in the USA, $133. Somebody explain this to me. I really would appreciate it.
Nexium: Canada, $65; Germany, $37; Spain, $36; the UK, $41; and the United States of America, $424. That is six times more than in the United Kingdom. People wonder why Americans are running over the Canadian border or they are on the Internet trying to get this medicine.
Why is it that the drug companies charge $424 here and $41 in the UK? Well, the reason they are charging more here is because they can charge more. If you walk into your drugstore tomorrow, you can find the prices that you will pay are double, triple because we are the only country in the world that does not have, in one way or another, some kind of regulation on prices. All these other countries have national health care programs. That is another reason their drug prices are lower. We don't,
But at the very least, what reimportation is all about is, we are saying, in a global economy, when all kinds of products are brought in from all over the world and we let the consumer buy them every day, why not let the pharmacist, let the prescription drug distributor be able to take advantage of the global economy?
I am not, I must confess, a great supporter of unfettered free trade. I think that has, in many ways, been a disaster for American workers. But to the degree that it is here, to the degree businesspeople can run to China and
pay workers there 50 cents an hour or so, that is the global economy. Well, here is the global economy: Canada, $65; the UK, $41; and the USA, $424. Why can't prescription drug distributors purchase their products in the UK, bring them back into America, so we can substantially lower the cost of health care and prescription drugs for all Americans?
Some of my friends in the pharmaceutical industry say: It is impossible to bring medicine in from abroad. It can't be done safely. Well, the Washington Post says:
40 percent of active ingredients in U.S. prescription drugs currently come from India and China.
I guess that is OK for the pharmaceutical industry, when it adds to their profits, but we can't do that to lower the cost to the consumer.
The Wall Street Journal, February 21, 2008, says:
More than half the world's Heparin, the main ingredient in the widely used anti-clotting medicine, gets its start in China's poorly regulated supply chain.
Well, I guess that is OK too.
So here is where we are. One of the many health care crises we face in this country is the high cost of prescription drugs. I think there is a lot that we have to do. Whether the Congress is capable of standing up to the drug companies and all their money and all of their lobbyists remains to be seen. But this is, quite frankly, a no-brainer.
For all my colleagues here who believe in unfettered free trade, please do not be total hypocrites. If you believe in unfettered free trade--which I happen not to--if you believe it is OK for American companies to shut down and run to China, if you think it is OK for people to buy any product anywhere in the world, tell me why we can do that for everything except for prescription drugs? There is no rational explanation.
This is legislation which has been around for years. The drug companies have fought it successfully for years. We now have widespread tripartisan [Page: S12753]
support in the Senate and a lot of support, I know, in the House. Let's finally stand up for the average American. Let's substantially lower the cost of prescription drugs. Let's pass prescription drug reimportation.
With that, Mr. President, I yield the floor, and I suggest the absence of a quorum.
Mr. McCAIN. Mr. President, I rise on behalf of the amendment which, according to the Congressional Budget Office, would provide an estimated $100 billion or more in consumer savings over 10 years. That is unique to this bill. It is unique to this legislation. It actually saves the taxpayers money.
I think it is important for us to go back and see how we got here--again, with the administration and the President reversing his previous position in favor of drug reimportation, the President's Chief of Staff, Mr. Rahm Emanuel, reversing his position on drug reimportation.
Again, a lot of it has to do with the deals that have been made. I refer, to start with, to the August 6, 2009, New York Times article.
Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.
Then it goes on to say:
``We were assured: We need somebody to come in first. If you come in first, you will have a rock-solid deal,' Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. ``Who is ever going to go into a deal with the White House again if they don't keep their word? You are just going to duke it out instead.''
The pressure from Mr. Tauzin to affirm the deal offers a window on the secretive and potentially risky game the Obama administration has played as it tries to line up support from industry groups typically hostile to government health care initiatives, even as their lobbyists pushed to influence the health measure for their benefit.
Here is the important part of the article--and I ask unanimous consent the entire article from the New York Times be printed in the Record.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
[From the News York Times, Aug. 6, 2009]
White House Affirms Deal on Drug Cost
(By David D. Kirkpatrick)
WASHINGTON.--Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.
Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow the government to negotiate drug prices and demand additional rebates from drug manufacturers.
In response, the industry successfully demanded that the White House explicitly acknowledge for the first time that it had committed to protect drug makers from bearing further costs in the overhaul. The Obama administration had never spelled out the details of the agreement.
``We were assured: `We need somebody to come in first. If you come in first, you will have a rock-solid deal,' '' Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. ``Who is ever going to go into a deal with the White House again if they don't keep their word? You are just going to duke it out instead.''
A deputy White House chief of staff, Jim Messina, confirmed Mr. Tauzin's account of the deal in an e-mail message on Wednesday night.
``The president encouraged this approach,'' Mr. Messina wrote. ``He wanted to bring all the parties to the table to discuss health insurance reform.''
The new attention to the agreement could prove embarrassing to the White House, which has sought to keep lobbyists at a distance, including by refusing to hire them to work in the administration.
The White House commitment to the deal with the drug industry may also irk some of the administration's Congressional allies who have an eye on drug companies' profits as they search for ways to pay for the $1 trillion cost of the health legislation.
But failing to publicly confirm Mr. Tauzin's descriptions of the deal risked alienating a powerful industry ally currently helping to bankroll millions in television commercials in favor of Mr. Obama's reforms.
The pressure from Mr. Tauzin to affirm the deal offers a window on the secretive and potentially risky game the Obama administration has played as it tries to line up support from industry groups typically hostile to government health care initiatives, even as their lobbyists pushed to influence the health measure for their benefit.
In an interview on Wednesday, Representative Raul M. Grijalva, the Arizona Democrat who is co-chairman of the House progressive caucus, called Mr. Tauzin's comments ``disturbing.''
``We have all been focused on the debate in Congress, but perhaps the deal has already been cut,'' Mr. Grijalva said. ``That would put us in the untenable position of trying to scuttle it.''
He added: ``It is a pivotal issue not just about health care. Are industry groups going to be the ones at the table who get the first big piece of the pie and we just fight over the crust?''
The Obama administration has hailed its agreements with health care groups as evidence of broad support for the overhaul among industry ``stakeholders,'' including doctors, hospitals and insurers as well as drug companies.
But as the debate has heated up over the last two weeks, Mr. Obama and Congressional Democrats have signaled that they value some of its industry enemies-turned-friends more than others. Drug makers have been elevated to a seat of honor at the negotiating table, while insurers have been pushed away.
``To their credit, the pharmaceutical companies have already agreed to put up $80 billion'' in pledged cost reductions, Mr. Obama reminded his listeners at a recent town-hall-style meeting in Bristol, Va. But the health insurance companies ``need to be held accountable,'' he said.
``We have a system that works well for the insurance industry, but it doesn't always work for its customers,'' he added, repeating a new refrain.
Administration officials and Democratic lawmakers say the growing divergence in tone toward the two groups reflects a combination of policy priorities and political calculus.
With polls showing that public doubts about the overhaul are mounting, Democrats are pointedly reminding voters what they may not like about their existing health coverage to help convince skeptics that they have something to gain.
``You don't need a poll to tell you that people are paying more and more out of pocket and, if they have some serious illness, more than they can afford,'' said David Axelrod, Mr. Obama's senior adviser.
The insurers, however, have also stopped short of the drug makers in their willingness to cut a firm deal. The health insurers shook hands with Mr. Obama at the White House in March over their own package of concessions, including ending the exclusion of coverage for pre-existing ailments.
But unlike the drug companies, the insurers have not pledged specific cost cuts. And insurers have also steadfastly vowed to block Mr. Obama's proposed government-sponsored insurance plan--the biggest sticking point in the Congressional negotiations.
The drug industry trade group, the Pharmaceutical Research and Manufacturers of America, also opposes a public insurance plan. But its lobbyists acknowledge privately that they have no intention of fighting it, in part because their agreement with the White House provides them other safeguards.
Mr. Tauzin said the administration had approached him to negotiate. ``They wanted a big player to come in and set the bar for everybody else,'' he said. He said the White House had directed him to negotiate with Senator Max Baucus, the business-friendly Montana Democrat who leads the Senate Finance Committee.
Mr. Tauzin said the White House had tracked the negotiations throughout, assenting to decisions to move away from ideas like the government negotiation of prices or the importation of cheaper drugs from Canada. The $80 billion in savings would be over a 10-year period. ``80 billion is the max, no more or less,'' he said. ``Adding other stuff changes the deal.''
After reaching an agreement with Mr. Baucus, Mr. Tauzin said, he met twice at the White House with Rahm Emanuel, the White House chief of staff; Mr. Messina, his deputy; and Nancy-Ann DeParle, the aide overseeing the health care overhaul, to confirm the administration's support for the terms.
``They blessed the deal,'' Mr. Tauzin said. Speaker Nancy Pelosi said the House was not bound by any industry deals with the Senate or the White House.
But, Mr. Tauzin said, ``as far we are concerned, that is a done deal.'' He said, ``It's up to the White House and Senator Baucus to follow through.''
As for the administration's recent break with the insurance industry, Mr. Tauzin said, ``The insurers never made any deal.''
Mr. McCAIN. The important quote is:
Mr. Tauzin said the administration had approached him to negotiate. ``They wanted a big player to come in and set the bar for everybody else,'' he said. He said the White [Page: S12754]
House had directed him to negotiate with Senator Max Baucus, the business-friendly Montana Democrat who leads the Senate Finance Committee.
Mr. Tauzin said the White House had tracked the negotiations throughout, assenting to decisions to move away from ideas like the government negotiation of prices or the importation of cheaper drugs from Canada.
``They blessed the deal,'' Mr. Tauzin said.
That is how we got here, with the administration coming over with a letter last night basically saying they would oppose or certainly impede the ability of Americans to import drugs from Canada. What have we seen happen in the interim? Here again is a New York Times article entitled ``Drug Makers Raise Prices in Face of Health Care Reform.''
Here is a graphic demonstration of it. This little line right here, I would say to my colleagues, is inflation in this country. If you look at it for the year 2009, inflation is actually minus 1.3 percent.
Now look at the wholesale drug prices. The annual change is 8.7 percent. While inflation has gone down 1.3 percent, actual costs of drugs have gone up 8.7 percent.
The article from the New York Times says:
Even as drug makers promise to support Washington's health care overhaul by shaving $8 billion a year off the nation's drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years. In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation's drug bill. .....
Let's get the math right. The drug companies have offered to save the American consumer $8 billion a year, and guess what. They have increased their prices, where it will add more than $10 billion to the drug bill of America's citizens, including our seniors.
The math is, they agreed to an $8 billion reduction. They actually already this year have seen an increase of more than $10 billion. So they are on track to make a $2 billion profit off their deal. No wonder they made a deal.
That will add more than $10 billion to the nation's drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992. .....
This is the consumer price index right here, which has fallen by 1.3 percent.
Drug makers say they have valid business reasons for the price increases. Critics say the industry is trying to establish a higher price base before Congress passes legislation that tries to curb drug spending incoming years.
That is what this is all about. They increase the prices so it reaches a certain level, and that is what they will negotiate on. They already are in line to experience $2 billion more in profits than the $8 billion they say they intend to cut. What a Ponzi scheme this is.
``When we have major legislation anticipated, we see a run-up in price increases,'' says Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota. He has analyzed drug pricing for AARP, the advocacy group for seniors that supports the House health care legislation that the drug industry opposes.
A Harvard health economist, Joseph P. Newhouse, said he found a similar pattern of unusual price increases after Congress added drug benefits to Medicare a few years ago, giving tens of millions of older Americans federally subsidized drug insurance. Just as the program was taking effect in 2006, the drug industry raised prices by the widest margin in a half-dozen years.
We have seen this scam before. What is the administration going to do? The administration sends a letter, I believe last night--not to the sponsor of this legislation, Senator Dorgan, but to another Member basically saying they would have to examine the health and safety.
Since when is a prescription drug imported from Canada a threat to Americans' health, since they obviously have the same standards that we do? The letter is to Senator Carper. It is signed by Margaret Hamburg, Commissioner of Food and Drugs. It is--I am not making this up. I am not making this up. ``The Dorgan importation amendment seeks to address these risks.'' It talks about our amendment.
We commend the sponsors for their efforts to include numerous protective measures in the bill that address the inherent risks of importing foreign products and other safety concerns relating to the distribution system for drugs within the U.S. However, as currently written, the resulting structure would be logistically challenging to implement and resource intensive.
Let's get this straight. According to the CBO, if we pass this, we would save consumers $10 billion--excuse me--$100 billion. According to CBO, we would provide an estimated $100 billion in consumer savings over 10 years. That is what the CBO says.
But what this obviously heavily overburdened Margaret Hamburg, the Commissioner of Food and Drug, says is:
However, as currently written, the resulting structure would be logistically challenging to implement and resource intensive.
Oh my God. I am going to have to include, for the Record, the number of employees over at the Food and Drug Administration. I am sure they are full up with their responsibilities at present.
In addition, there are significant safety concerns related to allowing the importation of non-bioequivalent products, and safety issues relating to confusion in distribution and labeling of foreign products--
When we see something come in from foreign countries, it is so confusing when you look at the labeling of it. It is remarkably challenging for the American consumer----
relating to the distribution and labeling of foreign products and the domestic product that remain to be fully addressed in the amendment.
``But''--she goes on to say, to Senator Carper, who is a fine and great Member of this body but not the sponsor of the amendment----
Mr. McCAIN. ``We appreciate your fine leadership on this important issue and would look forward to working with you as we continue to explore policy options to develop an avenue for the importation of safe and effective prescription drugs from other countries.''
Translated: The fix is in. We will be back on the floor on this. I strongly urge the adoption of the amendment.
I yield the floor.
Mr. NELSON of Florida. Mr. President, I am back on the floor on this, as I have been over the course of the last decade, because we have been like a yo-yo in my State of Florida on the importation of drugs, since we have quite a few senior citizens in our State. They have been accustomed to either going to Canada and bringing back prescriptions at half the price or phoning Canada to pharmacies and having those drugs shipped in the Postal Service or e-mailing to Canadian pharmacies. What happened
over the course of the last 8 or 9 years is that the previous administration cracked down on the reimportation of these drugs. Of course, that was at a great expense to our senior citizens who can buy these drugs at roughly 1/2 of what they pay by going into the pharmacies in the United States.
Then an interesting thing happened along about 2006. This Senator started getting multiples of calls--I think up to something like 100 complaints in that 1 year from senior citizens who had purchased the drugs, either by e-mail, telephone, or by going personally there and having them shipped. And lo and behold, under the previous administration, they gave the order to the Postal Service to confiscate these drugs. This happened, for example, to a couple from Mt. Dora, FL, Mr. and Mrs. Lee Eads.
They had their drugs confiscated. We went after the Postal Service. We went after the Customs Bureau. We found, in fact, that a lot of these complaints we had received, those drugs had been confiscated when, in fact, the policy was supposed to be if it was pharmaceuticals for personal use--and they defined that as less than a 90-day supply--the government, the U.S. Government, was going to let these senior citizens take advantage of getting that cost break of a 50-percent reduction.
It took us till late 2006--getting into this with Mr. and Mrs. Eads as the poster couple who had been getting their prescription drugs and then, all of [Page: S12755]
a sudden, they were confiscated--to get the Postal Service and Customs to reverse. This has supposedly been the policy, but we can't get it etched into law because people keep bringing up this Trojan horse that it is not safe. The very manufacturers we are buying our prescriptions from here in American
pharmacies are the same manufacturers in identical locations with identical labeling of the drugs that are going to Canadian pharmacies. Why can't we give our senior citizens a break?
Of course, what this Senator would like to do is to give them a bigger break. This Senator has an amendment, which is continuously being stated that I may not get to offer, that would cause the pharmaceutical industry to give discounts on the drugs sold under Medicare that are being sold to 6 million people who are eligible because of their low income for Medicaid but get their drugs through Medicare. Those 6 million people, Medicaid, poor people who are eligible to get government assistance,
used to have a discount, a substantial discount. Therefore, the U.S. Government was paying less for the drugs it bought for those people. But 6 years ago, when the prescription drug benefit was passed, those 6 million people were suddenly made ineligible to get the drug discount because they were now getting their drugs under Medicare. That is absolutely ridiculous, that the U.S. Government is going to pay full price for the drugs now that they used to pay only a fraction.
How much is that worth? According to CBO and the amendment I offered in the Finance Committee that was defeated 10 to 13, that is worth $106 billion over 10 years that would be savings to the American taxpayer that we would be paying for those dual eligibles, Medicaid recipients who get their drugs in Medicare, $106 billion of savings that the U.S. Government would not have to pay for those drugs, if we followed the same policy we did back there before this prescription drug benefit for Medicare.
That kind of makes common sense, doesn't it, that we would want to save the American taxpayer $106 billion? But we were defeated by a vote of 13 opposed to the amendment and 10 in favor in the Finance Committee.
I know it is a tall order to bring this amendment out here on the floor and have to meet a 60-vote threshold, because 41 Senators can deny the American taxpayer from getting $106 billion of savings. One of the good things about our bill that has come to the floor is, we are going to reduce the deficit by $130 billion. That is over a 10-year period. That is a good thing. But if we would accept my amendment, we could reduce the deficit by $236 billion or we could use part of it--say, half--to fill
the rest of the doughnut hole that the AARP would like and so would this Senator. The AARP strongly supports my amendment. They have made it clear to the leadership of this Senate that they want to see that doughnut hole closed. But there is nothing coming out here on the floor that is going to do that.
The amendment Senator Dorgan has offered, which in and of itself is good policy, reimporting drugs at half the cost from Canada, is a step in the right direction, but that doesn't close the doughnut hole.
So here we are at a decision point. Who are we going to serve? Let me say at the outset I understand the political dynamics. I want to give credit where credit is due. The pharmaceutical industry is, in fact, supporting the leadership in trying to pass this bill. That is a good thing. We appreciate that very much. We need their support because we have all these other interest groups that are flaking off. At the end of the day, we have to get 60 votes in order to pass health care reform. That
includes health insurance reform. We have the insurance industry totally, flat out trying to kill this legislation. I am grateful to the pharmaceutical industry for trying to help us. Therefore, my plea is, there has to be a balance. There has to be a compromise in the
works. There has to be a way of the pharmaceutical industry stepping to the plate to help us totally fill the doughnut hole, that gaping $3,000 hole seniors have to pay for all of the drugs they need when they reach that level. There has to be a sweet spot, a compromise.
I certainly support the Dorgan amendment. I hope the Senate will favorably consider my amendment later on.
I yield the floor.
The PRESIDING OFFICER (Mr. Burris.) The Senator from Texas.
Mrs. HUTCHISON. I thank the Chair.
Mr. President, we have been talking about the Crapo motion and the new taxes that are in this bill. There are so many new taxes that it is going to increase the cost of health care to every individual who has health insurance. It will also tax the people who don't have health insurance. It will tax the people who have too much health insurance. The taxes in this bill are almost mind-boggling.
Yesterday we talked about the cuts in Medicare. But we are also talking now about the $ 1/2 trillion in tax increases, $500 billion of tax increases. What Senator Crapo's motion will do is to say that we want to go back to the promise made by the President that no one who makes under $200,000 or a couple who makes under $250,000 would have any tax increases. It recommits the bill and takes out everything that would tax individuals at that level because the promise was made to the American
Senator Crapo's motion would certainly benefit those who have high-benefit plans which are going to have a 40-percent excise tax in this bill. If your plan is considered high benefit and you make under $200,000 a year or you are a couple making under $250,000 a year, you should not have to pay, because your benefits are better than the government has said they should be.
We would help the union member, for instance, because the unions do have high-benefit plans. We would help those union members who are making under $200,000 a year, if they are single, to make sure that they are not going to pay a tax for having too much coverage. Then there are the individuals who have no coverage or too little coverage who are going to have to pay an individual tax in this bill of $750. Surely if someone can't afford to have health insurance, we should not be taxing them. The
Crapo motion will assure that when this goes back to the committee, someone would not be subject to the individual mandated tax, if they make under $200,000 a year, which they surely probably do, or if they have a high-benefit plan and they make under that amount. It is trying to say that promise that the President made would be kept.
I also wish to talk about another issue in this bill. One would think that the bill takes effect in 2014, so the taxes would take effect in 2014 as well, that everything will come together and start in 2014. That is what one would think, but they would be wrong. That is not the case. In fact, the biggest part of the taxes in this bill will take effect next month, less than 1 month from now. The taxes that are going to increase the cost of health care premiums, prescription drugs, equipment that
you would use for medical care--the taxes start next month. The bill imposes taxes for 4 years before any person would be able to sign up for any of the plans that are going to be available, presumably, under this bill.
Let's walk through this: $22 billion in taxes on prescription drug manufacturers would start next month; $19 billion in taxes on medical device manufacturers, next month; $60 billion in taxes on insurance companies across the board, next month. What is going to happen? Of course, the cost of all of those items will go up. Americans will start next month paying more in insurance premiums. Americans will pay more for their prescription drugs and more for their medical devices because those taxes
start next month for supposed programs that are going to start in 2014.
Well, maybe you would think the benefits would start coming in 2011, 2012, 2013. Not at all. Nothing starts in benefits or programs until 2014.
But there are more taxes that come before 2014. In 2013, taxes on high-benefit plans take effect: $149 billion. This will affect union members, surely people making under $200,000. They will be affected starting in 2013, but any benefits from this bill would take effect a whole year later. [Page: S12756]
The limit on itemized deductions for medical expenses is also changed. Under this bill, you would have to spend 10 percent of your income on medical expenses before you could take a deduction. This is for people who have a terrible accident or a debilitating high-cost disease, such as a cancer treatment, maybe a clinical trial. So present law is 7.5 percent of your income, and you can start deducting these expenses. But with the new bill, starting in 2013, you have to go to the 10-percent threshold
before you can have those deductions. So that would be another $15 billion in taxes to individuals.
Finally, in 2014, after 4 years of taxes and increases in premiums and medical devices and prescription drugs, then you would start seeing the rest of the bill take effect. In 2014, you still have more taxes. Mr. President, $28 billion in employer taxes will start in 2014. These are for employers who cannot afford to meet the threshold of what they will have to cover for their employees. Or individuals who cannot afford health care will have $8 billion in taxes. That starts in 2014.
I am working with Senator Thune. There will be a Hutchison-Thune motion to commit this bill that will say the taxes start when the implementation of the bill starts. I think that is a matter of fairness. We want to commit the bill and say: Everything should start at once. How can we tax people for 4 years, raise their prices on insurance premiums, raise their prices on drugs, raise their prices on medical devices when they get none of the opportunities that would be in this bill until
I am going to be working with Senator Thune, Senator Grassley, and Senator Hatch to try to make the corrections in this bill that will present transparency and fairness to the public about what these taxes are and when they start, then, when the implementation of the program starts.
It is so important we have the ability to say to the American people, if this bill passes: You are not going to be taxed, your prices are not going to go up, your premiums are not going to go up--any more than they already have, caused by the increased taxes in this bill--at least until the bill is implemented. We are going to try to do that in the bill for the American people very soon. I am very much looking forward to talking about this issue.
I talked to someone last night who heard us starting to talk about the taxes in this bill, and they were astounded.
Mrs. HUTCHISON. They were astounded.
We are going to try to give relief to the American people and have a bill that will truly not have the taxes and mandates that are there now that start 4 years before the bill is implemented.
Mr. President, I yield the floor.
Ms. STABENOW. Mr. President, I thank the Presiding Officer and the chairman of the committee.
Mr. President, I rise today to speak concerning an amendment on which I am proud to join the Senator from North Dakota, Mr. BYRON DORGAN, and other colleagues in an effort to lower the cost of prescription drugs. But I do want to make one comment on Medicare before I do that.
We know our plan, overall, is about saving lives, saving money, and saving Medicare. That is what this is about overall. That is what we are doing in our health care reform proposal for American families. But I do want to mention and stress again this is about saving Medicare. It is about strengthening Medicare and our commitment.
I do have to say, we have been hearing from colleagues, and the distinguished Republican leader has said over and over again that, in fact, cutting Medicare is not what Americans want. Then last night he said here on the floor that expanding Medicare was a plan for financial ruin. So they do not want to cut, they do not want to expand. I am not sure where our colleagues on the other side are in terms of Medicare. But I know where we are. I know we are the party that created Medicare, with President
Johnson at the time. We are the party that has continued to promote and to expand and to strengthen Medicare. We are the party that intends to make sure we save Medicare for the future, expanding prescription drug coverage, to be able to close the doughnut hole, to be able to expand the ability of seniors to have preventive care, and to extend the life of the Medicare trust fund, which is critically important.
And to that, I want to speak now to the other two provisions we have as our priorities: saving lives and saving money. The Dorgan-and-others amendment, which I am proud to join Senator Dorgan on, does exactly that. It will save lives and save money. As a Senator from Michigan, I know that very well. We can look across the Detroit River into Windsor and know that the people of Michigan, by going across the bridge, would be able to drop their costs 30, 40, 50 percent.
There is something wrong with the system where Americans are paying so much more than those in other countries for the same drug. The safety provisions are the same. The difference is there have been protections put up at the American border to stop Americans from getting the benefit of having our hospitals, our pharmacies, our schools of medicine, and others who use prescription drugs to be able to bring that back, to do business across the border.
Everybody is always talking about open borders, open trade. Well, this is a trade issue about bringing back FDA-approved prescription drugs across the border to the American side, so Americans have access to lower priced medicines.
It has been about 10 years now since I did my first bus trip to Canada with seniors. I have been doing that for a long time. I have been focused on this issue both in my days in the House of Representatives, where I took the lead
on this issue, as well as now working with colleagues in the Senate. It is time to get this right in the context of health care reform because this is about saving lives and saving money.
I want to share one story. I have heard so many over the years from people in Michigan. But here is one recent story of someone who has written to me.
Joe is a 40-year-old father with heart disease. His family says despite his heart condition, he is doing well. He loves to work. His medicines cost over $4,800 a month. Can you imagine that? But his insurance has a family cap of $10,000 a year. In other words, after basically 2 months, he hits the cap, and he has to pay for everything out of pocket.
By going over the bridge to Canada--and we have three bridges: up in the Upper Peninsula, we have a bridge; in Port Huron we have a bridge; and in Detroit we have a bridge, the largest cross-border bridge in terms of volume of goods and services on the northern border--but by simply going across the bridge, Joe would be able to save $2,000 a month.
We should be able to do better for Joe and his family. He could save $2,000--almost half of his cost--by simply buying the same drug, FDA approved, from one side of the bridge instead of the other.
We also know that the cholesterol-lowering drug Lipitor is about 40 percent less, also the ulcer medication Prevacid is about 50 percent less, according to a search on Pharmacy Checker. I have to say that again. This is a trade issue and whether we are going to continue to have trade barriers. Because, for instance, Lipitor is made in Ireland and Pfizer is able to bring that back to America, they can bring it back. But if someone wants to go to Windsor, Canada, right across the bridge, and purchase
a lower priced version of the very same drug, Lipitor, and bring it back as an individual or a business or a pharmacy or a hospital, it is illegal. It is illegal. That makes absolutely no sense.
This amendment is about opening the border, allowing our pharmacies, allowing our wholesalers, allowing hospitals--I have gotten calls from medical schools at universities wanting to do business, to lower their cost, with wholesalers in other countries where it is FDA approved, safe to do that. That is what this bill is about.
Right now, we are in a situation where if we do not pass the Pharmaceutical Market Access and Drug Safety Act, which we have introduced on a [Page: S12757]
bipartisan basis, we are going to continue to have a situation where people such as Joe, a 40-year-old father with heart disease, is going to be paying $4,800 a month out of his own pocket, when we could cut that down. It still would be tremendous, but we could cut that by $2,000 for him, by passing this legislation.
The drug importation bill is supported conceptually. We have been working over time with many different groups such as AARP, the Alliance for Retired Americans, Families USA, and Cato Institute--very different groups philosophically, but they all agree we need more competition, we need to open the border to safe--and I emphasize and underline ``safe''--FDA-approved prescription drugs so we are focused not on what is best for the pharmaceutical industry, the brand-name companies, but what is
best for American citizens who are struggling, who see their prices go up 8 percent, 9 percent, 10 percent, 15 percent every year. Families cannot sustain that.
How many of us have stood on this floor and talked about the fact that people are choosing between food and medicine? That is not just rhetoric. It is not rhetoric. It is real. It is real for people right now today. It is getting cold. It is getting very cold. People are deciding: Am I going to keep the heat on or am I going to be able to get my medicine? Am I going to be able to get my food? Am I able to get my medicine? Am I able to pay the rent, the mortgage, or get the medicine I need for
my life or for my child's life or for my husband's or wife's ability to continue to live a healthy, successful life?
That is what this is about. We have an easy, straightforward way to increase competition, to bring down prices, with safe, strong safety standards. This is something that makes sense. It will help seniors. It will help people with disabilities who are in the doughnut hole before we get that all closed under Medicare. It will help every family and every individual right now who needs medicine and is paying more and more, higher and higher prices every single year.
I hope we will have a very strong bipartisan vote. This is a very important addition to what we are doing here. This truly will save lives and save money; and that is what we are all about: creating competition to bring prices down so the American people have access to the medicine and to the health care they need and deserve.
Thank you, Mr. President.
Mr. CORNYN. Mr. President, I want to speak briefly about keeping President Obama's promise to the American people when it comes to tax increases in this health care bill.
You will recall on September 12, 2008, he said:
I can make a firm pledge: Under my plan, no family making less than $250,000 will see their taxes increase ..... not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.
The problem we see, though, is this bill, as proposed, increases taxes for 25 percent of taxpayers earning less than $200,000 a year. That is 42 million individuals and families who will be taxed in a way that violates President Obama's pledge.
According to the Congressional Budget Office, the Internal Revenue Service will need many more agents and workers in order to enforce the Reid bill. It will essentially need to double in size the Internal Revenue Service just to be able to raise those taxes called for in this big job-killing bill.
The possibility of higher taxes is one reason job creators are currently standing on the sidelines. The President had a job summit. Yesterday he spoke at Brookings Institute and talked about initiatives he was going to undertake in order to help create jobs in this country. But the fact is, government doesn't create jobs except to the extent we grow the size of government. What we need to do in this country is to get out of the way, reduce the burden, and limit the uncertainty for the private
sector--small business that is the primary job-creating engine in this country.
But the fact is, job creators are nervous--I would strike that; they are not nervous, they are scared--about one job-killing proposal after another coming out of Washington. Not just the spending, not just the debt, but they see things such as this big health care bill and the increase in taxes that go along with it. Then they see the President going to Copenhagen and perhaps trying to obligate our country to some additional financial burdens that are going to make it harder for these job-creators,
The debt, for example, is one looming disaster. The total public debt now stands at $12 trillion. Before the end of the month, the majority leader is going to come to the Senate floor, presumably on a Defense appropriations bill or some other vehicle, and ask us to lift the debt limit because Congress has maxed out the American people's credit card, and we can't keep running the government unless we increase the debt limit.
Well, a number of us are not going to vote for that increase in debt limit until we receive firm assurances that the administration and the majority are going to get real about this increasing debt and unfunded Federal liabilities in Medicare, in Medicaid, and other entitlement programs.
We are accumulating debt even faster during this fiscal year. For example, in just 2 months--2 months of this year--the Congressional Budget Office says an additional $292 billion in deficits were accumulated. Our deficits will average nearly $1 trillion for every year during the next decade, according to the Obama administration itself. Of course, I mentioned the other unfunded liabilities out there--things such as Medicare.
I understand the majority has somehow cut a tentative deal to try to grow Medicare. Well, if you grow Medicare and grow Medicaid, what does that do to the already $38 trillion in unfunded liabilities? This $38 trillion is three times our national debt. It means, in essence, a debt burden of $32,000 for every U.S. family. Yet my colleagues don't seem desirous of fixing this problem. They seem determined to make it worse.
Yesterday the Washington Post reported on our Nation's deteriorating fiscal situation. They said:
The problem is that, if investors think the United States isn't fiscally responsible--
I wonder why they would conclude that? But they go on to say--
they could start demanding much higher interest rates when they bid on Treasury securities.
That is, when they start buying our debt, as a result of all of this spending and the money we have to borrow from China and other countries that buy our debt, those countries could begin to demand higher interest rates.
The Washington Post goes on to say:
The feedback loop could get ugly. The Nation could have to borrow hundreds of billions of dollars just to pay interest on what it owes. This has been touted as a classic path to irreversible national decline.
The Post cited Leonard Burman, an economist at Syracuse University, who said:
Right now, this year, we have $1.6 trillion in debt coming due--
And that is before we pass this ill-conceived health care bill.
That's roughly twice individual income tax revenue. Our only plausible strategy for paying that back is to borrow more money.
The Post also cited David M. Walker, a former Comptroller of the United States, who recently testified:
Our total Federal financial hole is about $10 trillion more than the current estimated net worth of all Americans and the gap has been growing.
Then, adding insult to injury, yesterday Moody's Investors Service said its debt ratings on U.S. Treasury securities ``may test the Triple-A boundaries'' because the government's fiscal status is worsening.
Well, the fact is, this Reid health care bill makes this much worse. My colleagues say the CBO--the Congressional Budget Office--has scored the bill as deficit-neutral. Well, any bill can be called deficit-neutral if you are willing to raise taxes enough and cut programs such as Medicare, both of which this bill does.
The Congressional Budget Office said in their score of the Reid bill:
The long-term budgetary impact could be quite different if key provisions of the bill were ultimately changed or not fully implemented.
Well, what could they mean by that? What they mean is some of the assumptions about the cuts and other things that range over a 10-year budget window, if they don't come true, then all bets are off. [Page: S12758]
We know the Reid bill relies on budget gimmicks to hide the true cost of this Washington takeover. One gimmick is, for example, not including the Medicare provider fix, the so-called doc fix, which costs $210 billion over 10 years. In other words, this bill leaves that out entirely. I know--I am confident because Congress has only failed to act to
reverse those cuts on one occasion--that if we let this cut in provider payments to physicians be fully implemented--a 23-percent cut come January--then many Medicare beneficiaries, including the vastly expanded rolls that would be included under this deal we have read about in the paper, patients will not be able to find a doctor to see them because doctors will not be able to continue seeing patients with a 23-percent cut in the payments they are entitled to under Medicare.
The other issue is the time shift. This is really sort of the classic shell game. The Reid bill starts the tax increases and the Medicare cuts in 2010, but as we know, the expanded coverage doesn't start until 2014. Someone said that is like buying a house, closing on the sale of a house, and being told: Well, you can't move in for 4 years. You have to start paying the bill today, but you don't get the benefits for 4 years.
The Congressional Budget Office score focuses on the budgetary impact to the government, not on the total cost to the American people. The CBO said the Reid bill increases the Federal budgetary commitments to health care. In other words, rather than trying to bend the cost curve as we have heard should be the goal, this makes it worse. We end up bending the cost curve in the wrong direction. The Reid bill will increase premiums for American families purchasing insurance in the individual market.
The Congressional Budget Office hasn't yet been given time to estimate the total cost on the economy as a whole.
David Broder, one of the deans of the Washington Press Corps, did a nice roundup of nonpartisan experts last week. He cited Robert Bixby of the Concord Coalition, Maya MacGuineas of the Committee for a Responsible Federal Budget, and he concluded this:
Every expert I have talked to says that these bills as they stand are budget-busters.
Ms. KLOBUCHAR. Mr. President, I wish to speak in support of the Dorgan-Snowe importation amendment No. 2793, which provides some much-needed relief to Americans who are being crushed by ever-higher prescription drug costs. I wish to first note I am eagerly awaiting the details of some of the proposals that were put out there last night. I appreciate the work of my colleagues, but I do want to hear the response from the Congressional Budget Office. As I have said on this floor many times, I am
concerned about expanding Medicare unless we do something about the geographic disparities that are already present in our system. When we look at some of the numbers, the average patient got $6,600 in Minnesota in 2006, and Texas is something like $9,300. What we want to try to do with this bill, and
what I like about this bill, is all of the cost reform measures that are going to push us toward rewarding States that are participating in systems that provide more efficient care. If we don't do something about these geographic disparities, we are going to further exacerbate this by expanding Medicare.
So I have some concerns about this, and I look forward to hearing from my colleagues as well as, of course, the solvency of the Medicare Program, which is scheduled to go in the red by 2017 under existing circumstances.
Back to the Dorgan-Snowe amendment. This amendment not only would allow American pharmacies and drug wholesalers to import FDA-approved medications from Canada and several other countries and pass the savings on to consumers, it would also import some much-needed competition into the American pharmaceutical market. It is estimated that the amendment, which enjoys both Democratic and Republican sponsors, would result in Federal savings of $19.4 billion over 10 years, just at a time when we are
looking for these kinds of savings.
Millions of Americans depend on prescription drugs to help them manage chronic disease or other illnesses, but drug prices continue to skyrocket with annual increases well above the general inflation rate. From 1997 to 2007, retail drug prices increased an average of 6.9 percent per year, more than 2 1/2 times the general rate of inflation, which was 2.6 percent per year over the same period.
Look at that difference: 6.9 percent per year compared to 2.6 percent per year. As a result of these rising prices, many patients are forced to split pills, skip doses, or not fill their prescriptions at all. Yet right across the northern border of Minnesota and Canada, many of these same brand-name prescription drugs are available at a much lower cost.
For example, according to one recent comparison, a 90-day supply of Lipitor costs $256 in the United States. In Canada, it is available for $188. In other words, Canadians pay 26 percent less than Americans for the very same drug.
Here is another example: A 90-day supply of Nitroderm patches cost $303 in the United States but $125 in Canada. The Canadian price is 59 percent cheaper. We can go right down the line of major brand-name drugs and see these dramatic price disparities. In fact, every year, Canada's pharmaceutical pricing board compares Canadian prices for patented drug products with prices in a number of other countries. Consistently, prices in the United States are higher by double-digit percentages. In 2008
U.S. prices were, on the average, 63 percent higher than Canadian prices.
Now, current Federal law says no one except the manufacturer can import a drug into the United States. Wholesale and retail pharmacies aren't allowed to. State and local governments aren't allowed to. Individual Americans aren't allowed to, even for personal use. But, of course, they do, and they have been doing it for a number of years.
My State, as I noted, happens to be on the border of Canada. Every day Canadians cross over to Minnesota to work and make purchases and fish and do all kinds of things. Likewise, Minnesotans cross over to Canada every day to work and make purchases and fish. It is no big deal. We are not afraid of Canadians. Minnesotans know that Canadians pay less--much less--for many of their prescription drugs.
Beginning in the 1990s, the Minnesota Senior Federation started organizing bus trips for seniors to go up and cross the border into Canada so they could get affordable prices for the drugs they depend on.
The Senior Federation also introduced a prescription drug importation program and used its buying power to negotiate directly with Canadian mail order pharmacies to provide lower cost prescription drugs to Minnesota seniors. But drug prices in the United States just continue to go higher and higher and higher so the pressure to find some relief kept growing.
Finally, some State governments decided to take their own initiative to help their residents purchase lower cost drugs from Canada. Minnesota was one of the very first. There was broad bipartisan support for this with a Republican Governor and Democrats and Republicans in the legislature.
In February 2004, the State of Minnesota established RX-Connect, the first State-run Web site to provide citizens with information on how to safely purchase drugs from Canada. The Web site lists prices for hundreds of brand-name and generic medications as well as voicemail and e-mail contact information.
The American pharmaceutical industry likes to use scare tactics to keep people from buying their medications in Canada. Look at what is happening. You don't see a lot of problems there with their drugs.
The Dorgan-Snowe amendment takes on renewed importance and urgency because the American pharmaceutical industry has been imposing suspicious drug price increases this year. Last month, the New York Times reported that drugmakers have been busy raising prices for the most common prescribed medicines in anticipation of [Page: S12759]
possible health care reform. The newspaper quoted industry analysts as saying that in the 12 months ending September 30, drugmakers have
raised the wholesale prices of brand-name prescription drugs by about 9 percent. Overall, that means an additional $10 billion in health care spending. That is the largest increase since 1992, and it happened even as the consumer price index declined during
the same 12-month period. Some analysts suggest that these prices are being inflated artificially in expectation of new reform that could otherwise reduce prescription drug prices. A similar trend was observed just before Medicare Part D took effect.
Just last week, an economist at the University of Minnesota said:
Curiously, prescription drug prices appear to rise more rapidly in periods just prior to major policy changes. Brand-name and specialty drug prices accelerated before the Medicare Part D program was enacted and implemented.
That is what we are talking about here.
This amendment would allow U.S. licensed pharmacies and drug wholesalers to import FDA-approved medications from Canada, Europe, Australia, New Zealand, and Japan and then pass on the savings to consumers.
Real health care reform requires real changes from business as usual. This amendment would start to bring some real changes--opening up new choices to American consumers and injecting new competition into the pharmaceutical marketplace.
I yield the floor.
Mr. VITTER. Mr. President, I rise in strong support of the Dorgan reimportation amendment of which I am a cosponsor. I am very glad to support this important amendment. It is a bipartisan effort.
Unfortunately, most of this debate and effort about the underlying bill is anything but bipartisan. This is a welcome contrast to that, a bipartisan effort around a very important reform proposal--reimportation of prescription drugs.
We face an interesting situation. The United States is, by far, the biggest market for prescription drugs in the world. Yet with all that buying power and all that activity, we pay, by far, the highest prices in the world.
It is for a simple reason: We don't have a true worldwide free market in prescription drugs. We need to do that, in part, through reimportation.
Americans need lower prices. They need the sorts of prices being offered elsewhere. We need to break down this system by which the big drug companies can and do offer the same drugs at very different prices in different countries, and, of course, they offer them at the highest prices in the world in the United States. Americans should not have to choose between their lifesaving medicines and other basic needs, such as food and utility bills.
By voting for the Dorgan amendment and enacting comprehensive reimportation, we can directly address access to health care and truly lower health care costs, which I believe should be our top goal in this entire debate. That is what this amendment does. It gives Americans immediate relief from outrageously high prescription drug prices.
Our amendment allows individuals the freedom to buy their prescription drugs at affordable prices, while providing oversight to ensure that only FDA-approved and safe drugs are permitted.
Our amendment closes loopholes that big pharma has been using to fight reimportation, such as shutting down drugs to wholesalers who participate in reimportation.
Our amendment would close the poison-pill loophole requiring HHS certification, which has left it up to administrations to deny reimportation by making that comprehensive reimportation discretionary. It would shut down that poison-pill loophole.
We would make it mandatory that Americans have affordable choices for prescription drugs.
Many of us, Democrats and Republicans, and certainly including and starting with Senators Dorgan and Snowe, have long fought for this comprehensive solution. We have made important steps forward. The Senate has adopted amendments to allow personal reimportation. Just last year, we voted overwhelmingly, 73 to 23, that we need to enact this sort of comprehensive reimportation reform, and we have taken concrete steps, such as the personal reimportation provisions, some of which
I have authored and passed through the Senate. But we need to go further, and we need this comprehensive approach.
Obviously, the big stumbling block in the way is the powerful pharmaceutical lobby, big pharma, which has spent millions in lobbying to stop this comprehensive approach. Just this past summer, Senator McCain read an e-mail on the Senate floor from a big pharma lobbyist outlining their strategy to derail those efforts in the Senate. More recently, there are reports that they may have struck a deal with the White House to derail these sorts of efforts and offered to spend tens of millions
in support of so-called health care reform, perhaps with a deal to derail these efforts.
That is why I am so glad Democrats and Republicans are coming together around this amendment to say that enough is enough. We need to fight all of these backroom deals. We need to fight this pervasive influence by pharma and finally stand with average Americans and pass real, comprehensive reimportation reform that will bring down prices, bring down health care costs, which should be the top priority of all of us.
We all say we want to lower health care costs. That has been a big issue in this overall debate. Well, this amendment will absolutely do that. The Congressional Budget Office says that and independent analyses say that. Let's take an important step and do what we all say should be a top priority--actually lowering, in real terms, health care costs.
Again, I urge all of my colleagues, Democrats and Republicans, to come together in a bipartisan way. I wish more of this debate and this effort was designed from the beginning to be truly bipartisan. But this amendment and this effort is. This amendment and this effort have been discussed for years. Let's finally get it done with a bipartisan vote to pass comprehensive reimportation.
With that, I yield the floor and suggest the absence of a quorum.
Mr. BAUCUS. Mr. President, I ask unanimous consent that we extend the period for debate until 4 p.m. with the time equally divided, with Senators permitted to speak up to 10 minutes each, with no amendments in order during this period of time.
Mr. BAUCUS. Mr. President, the Senator from Texas and others talked about premiums. I wish to discuss the effect on premiums of health care reform.
Affordability is at the crux of this debate. In fact, reducing costs and making health care premiums more affordable and predictable, while improving quality, is the impetus for this bill. This bill cuts cost and improves quality.
Two analyses have been released that show Americans will pay less and have more choices under this bill. The first is by the CBO. It found that the legislation will lower premiums for millions of Americans. According to the CBO--and there are a lot of claims around here to the contrary, but they are just claims, and it is not documented--according to the CBO, in the individual market health insurance premiums under the Senate plan would fall by 14 to 20 percent compared with the same plan under
current law. If you compare apples with apples, premiums under the Senate plan will fall in the individual market by 14 to 20 percent. These savings come from lower administrative costs, from increased competition, and better pooling of risk to include healthier people. Again, in the individual market, premiums will fall 14 to 20 percent.
Let me be clear. CBO does say that those buying health care in the individual market will pay 14 to 20 percent [Page: S12760]
less under this bill than they would for the same plan under current law. If you currently have coverage you like, you can keep it. You will pay 14 to 20 percent less for that coverage than you would pay under current law. If, on the other hand, people in the individual market are unhappy with their coverage, what can they do? They can choose
to purchase the more comprehensive coverage available in the exchange. You can keep what you have, but if you don't like it, you can choose to buy something else in the exchange.
Unlike most of the coverage available in the individual market today, the coverage in the exchange will ensure access to preventive benefits. This is a very important point. Unlike most of the insurance available today in the individual market, that is, people buying just for themselves, the quality of insurance they will get, because of very dramatic insurance market reforms, will be much greater than what they have today. The quality will be much better.
What are some of those quality improvements? First of all, the bill will ensure that insurance companies cannot deny coverage based on preexisting conditions. Moreover, people will have access to preventive benefits. The plan--the bill we are debating--will guarantee that every policy has an out-of-pocket limit. That is not true today. Most plans don't have limits on that. This legislation says you have a limit on out-of-pocket coverage. Insurance companies have to provide the insurance. They
cannot provide a policy that says: We can only pay so much.
The legislation will eliminate discrimination by insurance companies against those who have been sick in the past or have a preexisting condition. They cannot deny coverage based on health status. They cannot do that anymore. They do that today.
This health legislation will preclude insurance companies from rescinding your policy if you get sick.
How many times have we heard that happen under current law, insurance companies rescinding a policy when you get sick because they find a little something that has nothing to do with your illness that you perhaps did not report, a preexisting condition someplace else.
For small businesses, the Congressional Budget Office estimates that premiums in the small group market could be 2 percent lower than under current law. For workers in small firms that are eligible for the small business tax credits, premiums would be 8 to 11 percent lower than under current law. Those savings alone make this legislation worthwhile for small business.
Another enormous benefit for small businesses under this bill is predictable premiums. Under current law, if you are a small employer and one of your employees gets sick, your premiums could double, triple next year. I have experienced that many times. I am sure most Senators have. They talk to small businessmen at home and a businessman says: My gosh, my insurance premiums have doubled, tripled, quadrupled over the past year. Why? Because one of my employees has a preexisting condition, and
I am placed in this terrible dilemma. This is a key employee. I cannot fire that person to get lower premiums. I cannot pay the increase in premiums. What do I do?
There is one contractor at home in Montana I talked to about this. He felt so bad, he could not let somebody go, one of his best employees. He kept that employee. He kept shopping around, shopping around, and found a carrier that did increase his premiums because this employee had a preexisting condition but not as much as his regular carrier. It was a 20-percent increase rather than a 30-percent increase. That happens today, and it is wrong, wrong, wrong, wrong.
So if you are a small businessperson, under this bill, you are going to find your premiums are going to be much more stable, and there is going to be a greater pool of people so your premiums, the Congressional Budget Office said, will be less--not by a lot but a little less. You don't have to worry about the insurance company coming to you next year and saying: We are going to charge you much more.
Under this legislation, insurance companies can no longer discriminate against small employers that have an employee who gets sick. I mention all the time I hear from small businesses that say they want to buy health insurance for their employees, but it is too expensive and the cost is too unpredictable. They cannot do it. They want to. They cannot afford it. This legislation helps solve that problem. This bill creates a requirement that allows small businesses to provide health coverage to
their workers. There is a little reduction in premiums, according to CBO, and also much more predictability and higher quality of insurance all at the same time.
In the large group market--that is companies with more than 50 employees--what does CBO say about their premiums? I have heard all these allegations about people who work for larger companies are going to find their premiums will increase. That is the assertion. That is flatly not true, at least not true according to the Congressional Budget Office. The Congressional Budget Office estimates that premiums could be up to 3 percent lower than under current law. Again, that is not a big reduction,
but it is a reduction, nonetheless. CBO says employees who work for larger companies will find their premiums will go down by a little bit. The assertion is, premiums will go up. CBO says they will go down, to be honest, not by a huge amount but down a little bit. That is better, lower premiums. That 3 percent could make the difference whether an employer decides to keep employees. A 3-percent reduction in premiums will keep that employee, or a bunch of employees, working for him.
According to the Congressional Budget Office, five out of six Americans get their coverage through employers of this size. Five out of six Americans work for larger companies. This means 83 percent of Americans will see no change or perhaps a slight decrease in their premiums. That is the Congressional Budget Office. That is what they say. It is in black-and-white print. It is right there. The remaining individuals--that is 17 percent--purchase their coverage on their own in the individual market.
Of those, many will choose to retain the coverage they have and will see a reduction of 14 to 20 percent in their premiums. Those who choose to purchase more comprehensive coverage in the individual market, the vast majority--nearly 60 percent--will see a reduction in premiums. Guess what. That is a big reduction in premiums. They will see a decrease of 56 to 59 percent due to the tax credits provided in this bill.
Let me restate that point. For the majority of those who choose to buy insurance in the exchange, in the individual market, a majority will see a reduction in premiums, according to the Congressional Budget Office, a whopping reduction of between 56 and 59 percent due to the tax credits provided in this bill. That is pretty important. The remaining few individuals may see an increase of up to 13 percent. But those who experience an increase in premiums, let's remember, will do so because they
have much better insurance. The increased quality of the insurance they are going to get, in my judgment, is going to outweigh the increase in premiums they have to pay because they are going to get a lot more for the buck, a lot better insurance than they otherwise would get today.
If you buy a new car rather than a used car, most people think maybe they will pay more for a new car as opposed to a used car because it is newer and better. That is what is happening today. You might pay more, but you are getting a lot better insurance.
The Congressional Budget Office analysis, therefore, is good news for health care reform. The analysis does not take into account some of the Senate bill's other policies, such as a catastrophic option available to young adults, otherwise known as ``young invincibles.'' They think: I am not going to get sick, so I will get a catastrophic plan and pay very low premiums. That is available in this legislation.
The Congressional Budget Office analysis does not incorporate the potential effect of the proposal on the level or growth rate of spending for health care. In other words, CBO's analysis does not fully capture the effects of the excise tax on high-cost plans, which will also help.
Mr. ENSIGN. Mr. President, I rise to speak about Senator Crapo's motion to commit the bill to the Committee on Finance in order that this bill does not increase taxes for individuals with incomes of less than $200,000 or families with incomes of less than $250,000. [Page: S12761]
Let's start by looking at three basic promises President Obama campaigned on to get elected--promises that almost no one on the other side of the aisle talks about anymore. Here are those promises. These are his quotes.
But let me [be] perfectly clear ..... if your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not a single dime.
Promise No. 2:
..... nothing in this plan will require you or your employer to change the coverage or the doctor you have. Let me repeat this: nothing in our plan requires you to change what you have.
His third promise:
Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year.
I think these are three promises that should be the test when we are judging this health care bill. I certainly agree with President Obama on all three of these points. The nonpartisan Joint Committee on Taxation has recently confirmed that this bill, in no uncertain terms, is a middle-class tax nightmare. Even after you account for taxpayers who receive the tax credit, 24 percent of tax filers--so that is a quarter of all tax filers--who make under $200,000 will, on average, see their taxes
go up. Only 8 percent of all taxpayers receive the premium tax credit, which, by the way, is a new entitlement program, not a tax cut, as Democrats claim.
This news should not be a surprise to anyone. We have known for a long time that the largest tax in the bill, the so-called Cadillac insurance plan tax, falls heavily on the middle class. Eighty-four percent--let me repeat this--84 percent of the people who pay the tax have incomes of less than $200,000 per year.
What is wrong with this bill? This bill contains nine--that is right, nine--new taxes that will affect every American. I wish to walk you through those brandnew taxes.
First, we have the 40-percent insurance plan tax. This is the biggest tax, and it is designed to make insurance companies and employers drop their premium insurance plans and leave people to buy cheaper plans. As a result, this tax violates promise No. 2 and promise No. 3 that the President made that I showed in my first chart. It also violates the first promise because 84 percent of the people paying this tax are in the middle class, according to the nonpartisan Joint Committee on Taxation.
The insurance tax, tax No. 2, is another tax that will raise the cost of everyone's insurance plans. According to the analysis from the nonpartisan Congressional Budget Office, which I will quote, these taxes ``would increase costs for the affected firms, which would be passed on to purchasers''--in other words, the employees--``and would ultimately raise insurance premiums by a corresponding amount.''
In addition to violating the first promise not to raise taxes on middle-class Americans, it also raises insurance premiums and violates the third promise. This is not a good start for the American people.
Tax No. 3, the employer tax. For businesses that are struggling to stay afloat and to not lay off employees, especially during these tough economic times, this tax will make it much harder and may result in further layoffs in our weakened economy.
I thought our goal was to create jobs and to strengthen our economy.
The drug tax--this is tax No. 4. This tax will increase pharmaceutical prices. In fact, my colleagues should not be surprised that drug companies are already increasing their prices ahead of this bill because they know they are going to be taxed.
Tax No. 5, the lab tax. If you need clinical laboratory tests, then here is another way the government is going to pick your pocket.
Tax No. 6, the medical device tax. If you need surgery, there is a new tax on medical devices, such as pacemakers and other lifesaving devices.
Tax No. 7, failure to buy insurance tax. If you do not buy insurance, as this bill mandates, then you must pay a penalty tax. Do not be fooled by the new bill as it changes the name from ``tax'' to ``penalty.'' It is still money out of your pocket. By the way, 75 percent of that tax is on people who make less than $200,000 a year--once again violating President Obama's first promise.
I also wish to note that unlike the protection we included in the committee's bill to waive interest on criminal and civil penalties on people who do not pay this tax, the current bill on the floor only stops criminal penalties and certain enforcement mechanisms. This bill still allows the IRS to go after people who do not buy insurance.
What is the maximum penalty allowed? For a civil penalty in this bill, $25,000 for not paying this tax. That is what Americans can be penalized if they just fundamentally do not agree with this tax. Some people, such as myself, do not believe it is constitutional that the Federal Government can require us to buy health insurance. If you believe strongly in the Constitution and you do not believe this is a constitutional provision, the IRS can come after you and require up to a $25,000 fine.
The next tax to talk about is the cosmetic surgery tax. Ironically, Democrats want to tax the most market-oriented aspect of medicine that has resulted in lower prices, safer procedures, and more consumer satisfaction by taxing cosmetic surgery procedures.
Tax No. 9, increased employee Medicare tax. Lastly, for the first time, some Americans will pay higher Medicare taxes and that money will finance an entirely new entitlement program.
According to the nonpartisan Joint Committee on Taxation, as I mentioned before, 84 percent of the people who pay the so-called Cadillac insurance plan tax are in the middle class.
Let's consider the whole taxpaying population of the United States. According, once again, to the nonpartisan Joint Committee on Taxation, 8 percent of the population, or slightly more than 13 million, will get benefits that the Democrats tout under this bill. That is about 8 percent of our population.
The other side is wrong to say that this bill delivers a broad tax cut to all Americans. It does this for only 8 percent, and only after shifting $ 1/2 billion worth of new taxes around to the rest of Americans. And what about the rest of Americans? They are either clear losers under this bill or come out roughly even by getting a tax credit to balance their tax hike. Even after you account for taxpayers who receive the tax credit, about one-quarter of all tax filers under $200,000 will, on
average, see their taxes go up, not down.
About 157 million Americans who get health insurance from their employers will not be eligible for the tax credit. This does not take into account the higher premiums, medical devices, drugs, lab tests that the nonpartisan Joint Committee on Taxation says will be shifted to consumers. They did not break those tax impacts down by income level, so we can't tell you exactly where they fall. But since most Americans make less than $200,000 a year, common sense tells you that most of those taxes will
be borne by Americans making under $200,000 a year.
Most of the nine brand new taxes in this legislation violate the President's promise that middle-class families will not have to pay more taxes. The purpose of the Crapo amendment is to inject honesty into the health care debate and to hold Congress to the promises that were made to the American people.
Before we vote on this, I want to remind my colleagues of a very similar vote we had last year. I had an amendment to the Budget Act that was passed 98 to 0 by this body. My amendment last year said: It shall not be in order in the Senate to consider any bill, resolution, amendment between Houses, motion----
Mr. ENSIGN. It shall not be in order in the Senate to consider any bill, resolution, amendment between Houses, motion or conference report that includes a Federal tax increase which would have widespread applicability on middle-income taxpayers. That passed 98 to zero. That provision was adopted. Unfortunately, it was stripped later when the budget resolution went to conference. [Page: S12762]
Let me say in conclusion, despite the actions my colleagues on the other side of the aisle made toward following that policy of not raising taxes on middle-income families, we continue to see legislative proposals--and the bill before us is exactly one of those legislative proposals--that do just that. So I support Senator Crapo's motion to commit this bill in order to remove these onerous tax burdens on the American people.
My argument is simple: Let's do what we said we would do and protect middle-income families from these taxes.
Madam President, I yield the floor.
Mr. CASEY. Madam President, I rise this morning--or this afternoon, I guess it is--to speak about health care, but in a very particular context--an area of our health care debate which we, unfortunately, haven't spent enough time on.
The purpose of my remarks today will focus on an amendment that I will be filing today that is entitled ``Support for Pregnant and Parenting Teens and Women.'' It is a challenge within our health care system which I think has gone largely unaddressed, or at least for a segment or a category of pregnant women in our society. We know many teens and women who face an unplanned pregnancy do so with little or no support. This amendment--the Pregnant and Parenting Teens and Women amendment--offers
teens and young women the support they need to finish their education and provide for their children. This is especially important to those teenagers or women who are victims of domestic violence or other kinds of violence, and also women on college campuses.
Just a quick overview of the amendment, and then I will walk through some of the main reasons why I think it is important we make this a priority.
First of all, the amendment will provide assistance and support for pregnant and parenting college students. Secondly, the amendment will provide assistance and support for pregnant and parenting teens. Third, it will improve services for pregnant women who are, as I mentioned before, victims of domestic violence, sexual violence, and stalking. Fourth and finally, it will increase public awareness of the resources available to pregnant and parenting teens and women.
I will go through some of the background in the time I have, but the way I look at this--and I think the way a lot of families look at this challenge in America--is that often after a woman becomes pregnant, she has a decision to make. Under our law, she can carry the child to term or not. We want to make sure if she decides to carry that child to term she has all of the help she needs. And not just a little help--not just a program or two here and there--but the full range of help that we can
provide, in addition to what so many people and so many organizations do so well.
There are many individuals and organizations in the nonprofit sector, and there are great programs out there right now that help women with their pregnancies, but I look upon this challenge as one that is faced by pregnant women of all incomes, of all backgrounds, and of all circumstances. Even a woman who has the resources and the means often feels that she has to walk that path alone. Sometimes her family abandons her or doesn't provide her the help she needs. But it is especially urgent and
especially difficult when a woman is both pregnant and without means or is pregnant and poor, pregnant and vulnerable to all of the challenges she will face.
If a woman makes the decision to bring a child to term and to raise the child, she often does that all alone. What I believe we have to do here--not just as Democrats and Republicans, because that doesn't matter, candidly, on this--we have to do as Americans, if we mean what we all say, that we want to help people who are vulnerable, and we want to help people with their health care, and many of us say that over and over--people in both parties say that--then we have to help women during what
can be a very difficult time in their lives.
I realize for some people this is not an issue. Pregnancy is a time of joy and a time when they have no challenges and they bring a child into the world with a lot of support and all the help they need. But there are plenty of women out there who have to walk this road all alone--all alone. And so if we mean what we say about helping, as Americans--forget parties here--we should do everything possible to walk that road with her, if she wants the help and if she can benefit from the services we
are talking about.
Why should a woman on a college campus who makes a decision to have a baby be left alone? Why shouldn't we be giving her help? We don't do it now. I know some do it, and I will hear from others that this group does this and this group does that, but unfortunately it is not nearly enough, especially for someone who happens to be a teenager, a woman who is pregnant, or a young woman who is pregnant as a teenager or before the age of 18. Are we doing enough to help that woman who happens to be pregnant
get through the challenge of a pregnancy?
Finally, and most horrifically, if a woman is both pregnant and the victim of domestic violence, sexual violence, or stalking, what are we doing to help her? Unfortunately, the answer to that is very little--very little. I think this is a criticism I am making of both political parties. We could have a debate about who is doing more, and that might be instructive, but neither party is doing enough for at least those three categories of pregnant women--teens, women on college campuses, and women
who are victims of violence.
I believe we are going to have an awful lot of support for this amendment. I think it is an essential part of this health care debate, and I believe it is an opportunity to bring people together to agree on something around here when we have a lot of disagreement. But also I think it is vitally important to our society in general. It is not just a good thing to do, it is not just the right thing to do or the compassionate thing to do, it is, I believe, a very important part of how we deliver
health care and how we help people through what is often a crisis.
Think of the kind of life that mother will have during her pregnancy and after her pregnancy. Think of the life that child will have, while the child is in the womb and then after the child is born. If the pregnancy goes well, the child will learn more. If the pregnancy goes well, the child will grow and develop appropriately so that he or she can be healthy. If a pregnancy goes well, the child will contribute a lot more to society. The real challenge, the urgent question for us is: What are
we doing to help pregnant women, especially in these particular categories?
I have been so fortunate, and I am grateful to have worked with Senator Klobuchar on this amendment. We will be talking about it more, but I wanted to provide a summary of it now.
Madam President, I yield the floor.
Mr. JOHANNS. Madam President, over the weeks and months we have been here, we have talked a lot about the economy and the challenges we face in the economy. We have spent time trying to figure out the best approach when it comes to job creation. We went through a debate earlier this year regarding a stimulus package that, when you add on interest, was eye popping--$1 trillion. We were promised by the President that if you pass this gargantuan stimulus package, the unemployment rate won't go over
8 percent. Well, we stand here today with unemployment at 10 percent.
We look at that and we recognize that the 10-percent number doesn't tell the true story of the suffering that is going on out there. When you read much farther in the analysis, you begin to realize it is not 10 percent. When you add in those who have flat given up, those who are underemployed, and those who may be piecing one or two or three jobs together to try to pay the bills, we are closer to the 17.5 percent range. And in spite of that, over the last days, we have been talking about a piece
of legislation that, because of mandates and tax increases and burdens placed upon the middle class and our job creators--our small businesses--we can see very clearly we are going to end up with adding to the misery of the American people.
Let me, if I might, start out by focusing on a specific piece of this to get started; that is, the employer mandate. [Page: S12763]
The bill here and the bill in the House have a common element--certainly different mandates, certainly different amounts of the mandate, but the common element is that under both pieces of legislation there is a ``Washington way or the highway'' sort of approach. It basically says to employers: Thou shalt do it our way or there is the highway. It basically says to our job creators out there that our medium-size, even some of our small job creators are going to be pulled into this. It says: Look,
you either do it the Washington way or we are going to penalize you. We are going to use the Internal Revenue Code, the full force and effect of this mammoth government bureaucracy called the Internal Revenue Service, to get you, to get that money out of your business because you have not complied with the Washington way of this legislation. We are going to put a tax on job creators, a penalty
on job creators who are already facing the dilemma of how do they keep their employment steady at a time when unemployment is 10 percent and real unemployment is actually in the vicinity of 17.5 percent. The result is obvious. You don't have to study this very long to figure out that if this bill is passed, you are hammering the very people who are supposed to be creating the jobs.
According to our Congressional Research Service:
Economic theory suggests the penalty [and by that they mean the employer mandate] should ultimately be passed through to lower wages ..... if firms cannot pass on the costs in lower wages, the higher cost of workers may lead firms to reduce output and the number of workers.
Let me kind of pierce through that fancy language, if I might. It kind of sounds like Washington-speak to me. What the Congressional Research Service is saying is this: If you are a worker out there in the United States, you are literally going to be faced with lower wages. If that doesn't work, then it may be your job that is at stake.
Like every Senator in this body, I get across my State. I try to listen to people. I have townhall meetings. We try to keep an open-door policy so if somebody wants to talk to me, they can. The human misery of losing a job is just unbelievable. It does something to a person. It makes them look at themselves very differently. It makes them wonder, is there hope out there?
This administration ran on this notion of hope and promise. According to our Congressional Research Service, when you pierce through that Washington-speak language, what it really says is that this bill by this administration is going to create more human misery because it will impact jobs. Nonpartisan analysis says employer mandates will either decrease wages or lead to layoffs.
This is my first year in the Senate. What a legacy for your first year, that you get to go home at some point and you say: You know, I voted for a bill that, according to the Congressional Research Service, will either cause more layoffs in my State or reduce wages.
Employers will look at their balance sheet--they have to. They don't have the ridiculous opportunity we have here of just spending crazily and running up the Federal deficit. They have to make it work or they go out of business. For them, it has to be a cost-benefit analysis. How many have looked at this bill and said: I think I have figured something out here. I don't like the mandate, they tell me. But then they say: But we have studied this, and if there has to be that result, it is cheaper
for us to try to figure out a way to drop our health coverage and pay the penalty. The average employer that provides a health care plan pays about $4,000 per employee for health coverage. If the mandate were something like $750--do the math--a cost-benefit analysis is going to lead to one conclusion: Drop the health plan. We
know employers are already considering it. My office recently met with a human resources manager from one of Nebraska's largest cities. She noted how much cheaper it would be if they could just do that. Many employees will lose their coverage. If that happens, then all of a sudden the doctor-patient relationship is impacted.
Remember all those promises: Your taxes are not going to go up; you get to keep the doctor you like; if you like your plan, you are not going to lose it. We have ripped those promises up with this legislation. You would think at some point somebody in the administration would stand up and say: Hold everything here, we are making shambles out of what we thought we could do.
True health care reform should lower costs for businesses so they have more capital to work with, so they can hire workers, not dismiss them. I suggest this bill just completely misses the mark.
I also suggest that this is a step in the wrong direction in terms of health care. Making matters worse, the people this bill supposedly helps will be disproportionately impacted. A professor studying employer mandates recently said this:
Workers who would lose their jobs are disproportionately likely to be high school dropouts, minorities and females. Among the uninsured, those with the least education face the highest risk of losing their jobs under employer mandates.
Is it a surprise that business groups are opposing this legislation? The U.S. Chamber, Wholesale Distributors, General Contractors, Independent Electrical Contractors--all sent a letter recently, and they said this:
Perhaps no sector has been more passionate, more active than the small business community in working to advance reforms that lower health coverage costs.
Mr. JOHANNS. The Senate health care bill `` ..... will lead to higher costs and increased burdens on small businesses. The bill will cause greater damage to our economy and health care system.''
We all agree on some basic premises. One is that about 60 to 70 percent of our jobs in this country are dependent upon small businesses. Isn't this a time for us to take a step back and ask what are we doing to our economy here, what are we doing to these job creators, and work together to get a truly bipartisan bill that builds our economy and protects our jobs?
I yield the floor.
Mr. BAUCUS. It is alleged here on the floor that the underlying bill raises taxes. The legislation does not increase taxes--essentially. There was a slight modification to that, but I will explain that later. In fact, the bill represents a tax cut. The bill does two things: It provides tax credits to low- and middle-income individuals and families to help purchase health insurance and it results in increased wages for those receiving employer-sponsored insurance.
Let me first speak about how the bill provides a tax cut. The chart behind me basically shows that for a family of four with an income of $66,000, the light blue indicates that the cost of that health insurance is going to be about $14,100. That is basically what health insurance costs today for a family of four. That is what people pay today. After this legislation, look at the bar there on the right. Again, a family of four, income $66,000. Those persons will receive an $8,000 tax cut, in terms
of credits that family will get, with a net result of a health insurance policy that costs $6,100. Health insurance is going to cost less for a family of four with an income of $66,000. That is fairly representative, a family of four with $66,000.
Just to repeat, on the left, the health insurance policy for a family of four with that income level is about $14,000. After the tax credit kicks in, once this legislation kicks in, the same family, same four people, will find they are paying only $6,100 net for their health insurance. Why? Because they get a tax cut of $8,000.
I might add--look at the next chart, ``Who Gets A
Tax Cut? An individual with an income of $32,000.'' Earlier, it was a family of four with $66,000. This is an individual with an income of $32,400. Currently, today, before health care reform is passed, that individual will pay roughly $5,000 in health insurance. But after this bill is passed, that same individual with an income of $32,400 will find that health insurance will not cost $5,000 but much less--$3,000. Why? Because that person gets a tax cut in terms of a credit of $2,200. I think
that is a very important point to make. [Page: S12764]
While we are at it, we might as well get the next chart.
There are some who are saying this legislation will result in increased taxes for higher income people; that is, people whose income is, say, around $200,000. There is something to that argument, but that is not the whole story. Let's look at the whole story.
This legislation as portrayed by this chart shows:
High-cost insurance excise tax leads to increased wages.
Why increased wages? Because the Congressional Budget Office or maybe it is the Joint Committee on Taxation--the Joint Committee on Taxation concludes that because of that provision of the bill; that is, the excise tax on companies that provide more expensive policies, in effect those policies will be modified or changed, and in effect the premiums for those policies, the so-called Cadillac plans, will actually go down, according to the Congressional Budget Office, between 7 and 12 percent. But
that is premiums. The discussion right now is on taxes. Those folks will be paying a little more taxes. That is true under this legislation. But, again, what is the whole story? Why are they going to be paying more taxes? They are going to be paying more taxes because they will get more income. Their wages and salaries will increase tremendously.
Look at the bar on the left. In the year 2013, the percent of the total tax revenue due to increased wages will be about 90 percent, but that person will also pay a 10-percent increase in taxes. The wage increase, salary increase is far greater than the tax increase. That is true for every year--2013, 2014, 2015, all the way up to 2019. It is proportionately basically the same--roughly around an 80-percent increase in wages and roughly maybe about less than a 20-percent increase in taxes. So
on a net basis, those persons are going to be doing pretty well.
Consider the example of Joe who works for ACME Company. He is married and has two children. Together, he and his spouse earn $100,000 a year in taxable wages.
In 2012, ACME Company provides family health coverage to Joe at a cost of $25,000. Because of the high cost insurance excise tax, ACME Company finds different coverage that costs only $21,000 in 2013. Thus, ACME Company can afford to pay Joe an extra $4,000 each year.
Now, even though Joe has to pay income and payroll taxes, he will still have an extra $2,076 in his pocket. That is $4,000 -$1,000 in Federal tax -$612 FICA tax -$312 in State tax.
I don't believe Joe would refuse a pay increase just because he has to pay taxes on that raise.
Or consider Sally, a single mother of two working for XYZ Company. She makes $50,000 in 2013 and receives family health insurance coverage costing $27,000.
When XYZ Company restructures their plan to $22,000 as a result of the high-cost insurance tax, Sally will get an extra $5,000 in wages. That is $3,095 in take-home pay after taxes. That is $5,000 -$750 in Federal income tax -$765 FICA tax -$390 State tax.
I have no doubt that Sally will be able to put that extra money to good use.
Also, I would like to remind everyone about this legislation on premiums. Earlier, I discussed what the Congressional Budget Office said about premiums under our bill. Let me repeat, this is what the Congressional Budget Office says: In summary, the Congressional Budget Office concludes that 93 percent of Americans receive decreases in premiums. About 93 percent of Americans net will see a decrease in premiums.
That is not from these charts; that is from the CBO letter. Of that 93 percent, 10 percent will see decreases of 56 percent to 59 percent because of new tax credits. We are talking about on the individual market. About 60 percent of those who are getting insurance in the individual market on the exchange will get tax credits which will result in roughly a 60-percent reduction in premiums. It is between 56 and 59, which is pretty close to 60 percent. The remaining 7 percent will pay slightly higher--100
less 93. Seven percent will pay slightly higher, but they also get much better insurance for that same dollar. When you have a choice between buying a used car or a new car, you probably expect to pay a little bit more when you buy the new car. Hopefully, it is a little better, higher quality, drives faster, safer, all those things. You expect to pay a little more for
a new car, but you get more. The same thing here. You are going to pay a little more. But only 7 percent will see their premiums go up according to the CBO. Those 7 percent are people who do not get tax credits because their incomes are a little higher, but they will get much better insurance, higher quality insurance. CBO says that, much higher quality insurance.
So, in effect, they will probably get at least the same, maybe no increase at all, maybe a reduction in premium, if we calculate in the higher quality insurance they will have.
In addition to CBO, MIT's Jon Gruber has also done a study on premiums. And what does he conclude? He concludes, using Congressional Budget Office data, the Senate bill could mean people purchasing individual insurance would save every year $200 for single coverage and $500 for family coverage in 2009 dollars. Most people think he is one of the best outside experts. He has big computer models. He takes the CBO data and, in some respects, he has helped CBO by giving some information to CBO that
it otherwise does not have.
Mr. Gruber also points out that people with low incomes would receive premium tax credits that will reduce the price they pay for health insurance by as much as $2,500 to $7,500.
We have also seen several studies funded by the insurance industry. I don't want to be disparaging but to some degree you have to consider the source. I have been citing CBO. I think most people think they are a highly professional outfit, no axe to grind. Sometimes they upset those against health insurance reform. Sometimes they upset those for health insurance reform. They are a very professional group of people. But I have also seen studies paid for by the private sector, by the insurance
industry. Those studies find that premiums will increase under the bill before us for all Americans. These studies are flawed and, frankly, some of them, the authors of these studies admitted they are flawed. They were just looking at selective parts of the legislation, not all parts,
and they were pushed by the industry to issue a report quickly. They have admitted that. Each of them failed to take into account all aspects of the proposal. They selectively chose the provisions that will increase premiums, and they ignored those provisions that will lower premiums.
Why do they do that? Basically, the insurance industry wants to kill this bill. I can understand it. If I were the insurance industry, I wouldn't want my apple cart upset either. They do just fine under the status quo, thank you very much. They don't want to see any changes. Some insurance companies want to continue their current practices of denying coverage if you have a preexisting condition. That is how they made their money in the past. They made most of their money by denying coverage,
by underwriting insurance rather than making money on conventional insurance. Anyway these companies want to continue their current practice of denying you coverage if you have a preexisting condition. Some want to continue charging unaffordable premiums if you have been sick in the past, and some want to be able to rescind your coverage once you get sick. That is their MO, and they have done pretty well under the status quo.
The Congressional Budget Office and Professor Gruber are both credible and unbiased sources that are not bought and sold by the insurance industry. The Congressional Budget Office and MIT's Gruber have confirmed what many of us have known: that the bill before us will lower premiums and provide a great many options for more comprehensive coverage. That is very important. With the exchange set up and with other provisions that will be in this bill, there are many more options for individuals to
buy insurance with. It creates a lot of competition. With health insurance market reform, insurance companies will be competing more on price than they are on quality of coverage.
This legislation provides much needed assistance as well to lower middle-income Americans struggling to pay their health insurance premiums.
The Senator from Nevada, Mr. Ensign, a few moments ago said people [Page: S12765]
would pay more because of industry fees in this bill. Let's address that point. The reductions in premiums determined by the CBO that I described earlier took into account any impact of the industry fees. The Congressional Budget Office took that into account. I note for the record, there is no lab fee. I know that was an honest mistake on his part, but I want to indicate there
is no lab fees in this bill. He was talking about lab fees.
The bottom line is that for the overwhelming majority of Americans, this bill means lower premiums. I don't have it with me, but also a section in one of the CBO letters basically says these fees will have a very negligible impact on consumers. Frankly, I was a bit surprised. I was concerned that some of these studies might, as determined by the CBO or other outside analysts, conclude that there would be a significant impact on consumers and on premiums, basically, what these companies would
otherwise charge. But the CBO says no; the fees on hospitals, the pharmaceutical industry, even the insurance industry will have a very negligible effect on increased costs for consumers. It is negligible according to the CBO. I thought, frankly, that would not be the case.
Here is the letter. It is on page 15. I don't have the date of this letter, but it is from the Congressional Budget Office. It is under the section ``New Fees Would Increase Premiums Slightly.'' The operable sentence is:
Because that fee would not impose an additional cost for drugs sold on the private market, CBO and [Joint Tax] estimate that it would not result in measurably higher premiums for private coverage.
To be fair, I don't know if they also address the effect of hospital fees or other provider fees. But I think it is noteworthy in that context for us to remember, it wasn't too long ago when the health insurance industry got together at the White House with the President and promised the President they could reduce their costs by $2 trillion over 10 years. If they believed they could reduce their reimbursement by $2 trillion over 10 years, you would think they would kind of know what they are
talking about. After all, they have to report to stockholders. They have certain obligations.
They said they could reduce their reimbursement by $2 trillion. This bill cuts down their reimbursement increases not by $2 trillion but by one-quarter of that. That is roughly 4,500 billion over that same 10-year period. They have agreed to that. I can understand why they would agree to that because that is about one-quarter of what they promised earlier.
If they have agreed to it, they are probably going to do OK under this legislation. It is not going to result in reduced quality of care to people because they have agreed to it essentially. As I pointed out, CBO says, at least with respect to the pharmaceutical industry, very little of that will be passed on to consumers. Why is that? The basic reason is, there is waste in our current health care system. These companies know where the waste is. They can find it. They know it is out there.
But, second, with increased coverage, many more Americans will have health insurance. Currently, 84 percent have health insurance. Under this legislation, 94, 95 percent of Americans will have health insurance. If many more Americans have health insurance, there are more patients for the hospitals, more patients for home health care, more medical equipment sold, more drugs provided by the pharmaceutical industry. That is the second main reason they know that with provisions in this bill, the
reduction in reimbursement to them is numbers they can live with.
I know the next two speakers, Senator Grassley and Senator Dorgan, both intend to speak for more than 10 minutes. I ask unanimous consent they be allowed to speak longer under the time under the control of the respective sides.
Mr. GRASSLEY. Madam President, I thank the Senator from Montana for arranging that for me. I hope this afternoon to speak on the issue of importation of drugs because I support the Dorgan amendment. Right now I wish to address the issue of the Crapo motion to commit.
This generally deals with all of the tax provisions in this 2,074-page bill. If Senator Crapo prevails--and he should--the unrelated House bill, along with the Reid amendment, would be sent to the Senate Finance Committee. The Finance Committee, under the motion, would be empowered to return the bill to the full Senate with an amendment that eliminates the heavy taxes that are in this bill. Senator Crapo has discussed the impact of the Reid amendment on middle-class families.
I will lay out all the taxes that are in this bill.
In farm country, many of us who work the land often observe big freight trains rumbling across the terrain. Sometimes they scare cattle, hogs, and other animals. Those freight trains are impressive in their power, in their speed, and now the length of the trains. It is very common to see a 100-car train, 150-car trains. The partisan force with which the majority is powering this bill through the Congress is equally as impressive as that of a freight train. The speed that is being displayed for
such complex legislation is something to behold. Most importantly, the sheer number and breadth of the new taxes in this bill reminds me of a very long train.
Almost $ 1/2 trillion in taxes, fees, and penalties, and I think they all have the same economic impact, whether it is a tax, a fee, or a penalty--a negative impact on the economy. These taxes, fees, and penalties are so imposing, I am calling this 2,074-page bill the tax increase express.
The locomotive driving this train is health care reform, driven by the Democratic leadership. So we have the locomotive that drives this tax increase. I don't think the American public knows the bill would impose that much, $ 1/2 trillion worth of new taxes, new fees, and new penalties on the American people.
The American public, who supported President Obama with a majority of votes 13 months ago, heard the President loudly and clearly, and that is why they gave him such an overwhelming majority.
They understood our President pledged he would not raise taxes on people making less than $250,000 a year. Unfortunately, the Democrats' leadership bill would violate that clear pledge.
What are the tax increases and the fees and penalties in Senator Reid's amendment? Let me take a moment to highlight them because every locomotive needs power to run. The first power source, the first car of the tax increase express, is the so-called fees on health insurance companies, medical device manufacturers, and drug manufacturers.
That might not sound like something the grassroots of America would worry about--taxes on insurance companies, medical device manufacturers, drug manufacturers--because maybe they think businesses pay taxes. But businesses and corporations do not pay taxes, only people pay taxes. So when people find out they are going to be paying these, it puts a whole new light on what is a fee and what is a tax.
There have been numerous studies that have shown that these fees on, for example, health insurers will increase health insurance premiums. Some say premiums would increase by $488 for a family, other studies say $500. Most Members on the other side of the aisle take issue with these studies. They argue these studies were performed at the request of insurance companies or conducted by independent experts with ties to that same industry.
Let me ask my Democratic friends this: Do you question the work of the Congressional Budget Office and the Joint Committee on Taxation? Well, you should not because they are like a god around here. When the CBO says something is going to cost something, that stands, unless there are 60 votes to override it in the Senate. So most everything the CBO says stands. They have respect because of the intellectual honesty of their research and the nonpartisanship they have. So these agencies--the Congressional
Budget Office and the Joint Committee on Taxation--have testified that these fees will actually be passed on to health care consumers. Check the record. No one can dispute it.
The Congressional Budget Office and the Joint Committee on Taxation have also testified that the fees will increase [Page: S12766]
health insurance premiums. Check the record. No one can dispute it.
My friends in the Democratic leadership may say, once their health reforms are in place, premiums will go down, net of the fees. They will hail a recent CBO report highlighting the winners but somehow ignoring the losers. They will say these fees will not affect premiums for the vast majority of Americans. But here is the flaw in that assertion. The Congressional Budget Office analyzed premium costs, what they are projected to be in 2016 under this legislation.
What about premium costs right now in the years before these programs take effect--2010 and 2013? Why is this question important? The answer is, these fees go into effect in the year 2010, not when most of the expenditures go into effect in 2014.
The majority of the Democratic reforms which are intended to lower costs do not go into effect until 2014--4 years from now. I ought to say that 10 times because that is very important to how this bill came out to be revenue neutral.
So we ought to look at what happens in the years 2010, 2011, 2012, and 2013. Premiums will go up. Why? Because, for one, the Democrats are adding costs to the health insurance you buy by imposing these fees on health insurers, and they are giving you no government assistance to help with these added costs.
I would ask my friends in the media, dig a little bit deeper on this point, and you ought to be reporting on it. Why? Because the American public does not understand that in the short term premiums will go up. Instead, the public is simply hearing some media reports on a portion of the premiums, in 2016 and beyond. Of course, that is a very long time from now. The American public does not want to wait for their premiums to go down, if they go down at all. It appears my friends in the Democratic
leadership want the tax increase express to barrel through Congress before the public realizes what health care reform actually means; that is, higher premiums as early as 2010.
Let me turn to the second car of the tax increase express. This car is the proposal to restrict the eligibility criteria for claiming the itemized deductions for medical expenses. This proposal says you can no longer deduct expenses that exceed 7.5 percent of your adjusted gross income. Instead, you can only deduct expenses that exceed 10 percent of your adjusted gross income.
In plain English, this proposal limits tax deductions you can take for medical expenses. In other words, you will lose a portion of your tax deductions. Even the New York Times calls proposals that would take away a portion of your tax deduction a tax increase.
Mr. President, I ask unanimous consent that article from the New York Times, dated February 26, 2009, be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
[From the New York Times, Feb. 26, 2009]
To Pay for Health Care, Obama Looks to Taxes on Affluent
(By Jackie Calmes and Robert Pear)
WASHINGTON.--President Obama will propose further tax increases on the affluent to help pay for his promise to make health care more accessible and affordable, calling for stricter limits on the benefits of itemized deductions taken by the wealthiest households, administration officials said Wednesday.
The tax proposal, coming after recent years in which wealth has become more concentrated at the top of the income scale, introduces a politically volatile edge to the Congressional debate over Mr. Obama's domestic priorities.
The president will also propose, in the 10-year budget he is to release Thursday, to use revenues from the centerpiece of his environmental policy--a plan under which companies must buy permits to exceed pollution emission caps--to pay for an extension of a two-year tax credit that benefits low-wage and middle-income people.
The combined effect of the two revenue-raising proposals, on top of Mr. Obama's existing plan to roll back the Bush-era income tax reductions on households with income exceeding $250,000 a year, would be a pronounced move to redistribute wealth by reimposing a larger share of the tax burden on corporations and the most affluent taxpayers.
Administration officials said Mr. Obama would propose to reduce the value of itemized tax deductions for everyone in the top income tax bracket, 35 percent, and many of those in the 33 percent bracket--roughly speaking, starting at $250,000 in annual income for a married couple.
Under existing law, the tax benefit of itemizing deductions rises with a taxpayer's marginal tax bracket (the bracket that applies to the last dollar of income). For example, $10,000 in itemized deductions reduces tax liability by $3,500 for someone in the 35 percent bracket.
Mr. Obama would allow a saving of only $2,800--as if the person were in the 28 percent bracket.
The White House says it is unfair for high-income people to get a bigger tax break than middle-income people for claiming the same deductions or making the same charitable contributions.
The officials said the resulting increase in revenues, estimated at $318 billion over 10 years, would account for about half of a $634 billion ``reserve fund'' that Mr. Obama will set aside in his budget to address changes in the health care system. The other half would come from proposed cost savings in Medicare, Medicaid and other health programs.
In a document summarizing its proposals, the White House said it would finance coverage for the uninsured in part by ``rebalancing the tax code so that the wealthiest pay more.''
Mr. Obama's blueprint, which will project spending and revenues for the next decade, will flesh out the president's thinking on his energy plans both to cap the emissions of gases, particularly carbon dioxide, that are blamed for climate change and to spur development of nonpolluting energy alternatives.
The budget will show the government beginning by 2012 to collect billions of dollars in revenues from selling permits to businesses that emit the polluting gases, assuming the president's energy initiative becomes law as soon as this year, officials said.
Because utilities and other businesses would presumably pass on their costs to customers, Mr. Obama will propose to use most of the government's revenues from the permits to finance an extension of the new ``Making Work Pay'' tax credit beyond the two years covered in the $787 billion economic recovery plan that was just enacted.
That tax relief, the administration will argue, will offset households' higher costs for utilities and other products and services from businesses' passing on their permit expenses.
That tax credit annually will provide $400 to low-wage and middle-income workers or $800 to couples; Mr. Obama would like to increase those figures to $500 and $1,000. The credit phases out for those with incomes above $75,000 a year and for couples with incomes of more than $150,000; no benefit would go to individuals with more than $100,000 income and couples with $200,000.
The tax credit will begin showing up in the form of lower withholding for eligible workers beginning April 1.
The remainder of the projected revenues from the permits will finance Mr. Obama's campaign promise for $15 billion a year over 10 years to subsidize research and development of alternative energy sources, officials said. The stimulus package included a multibillion-dollar down payment to develop a national electricity grid to harness and distribute energy from such sources, including wind farms.
Behind the numbers in Mr. Obama's first budget is one of the most far-reaching domestic agendas in years, and at a time when the president and Congress are already grappling with an economic crisis worse than any in decades. The environmental permits would not take effect until 2012, at which point the administration expects the economy to have recovered. Similarly, some of the tax increases would not take effect until 2011.
Democratic Congressional leaders promised to push the agenda, which parallels their own. ``By the end of this year, I want to do something significant dealing with health care,'' the Senate majority leader, Harry Reid of Nevada, told reporters.
The tax proposals, however, could galvanize Republican opposition and give conservatives a concrete target for taking on Mr. Obama, who despite his political strength could find some members of his own party reluctant to embrace tax increases.
Senator Max Baucus, Democrat of Montana and chairman of the Senate Finance Committee, who has been drafting a health plan, predicted in an interview that the Senate could pass legislation by its August recess.
Mr. Baucus acknowledged that ``there has to be revenue'' to offset the costs of expanded coverage initially, but he did not endorse the proposal for limiting wealthy taxpayers' deductions.
``There will be lots of options to pay it, not necessarily that one,'' Mr. Baucus said.
He would not say what revenue options he would support. But he said tax increases of some kind would not prevent some Senate Republicans from aligning with Democrats to pass a health plan.
In the House, the Republican leader, Representative John A. Boehner of Ohio, telegraphed his side's opposition to any tax increases.
``Everyone agrees that all Americans deserve access to affordable health care,'' Mr. Boehner said in a statement, ``but is increasing taxes during an economic recession, especially on small businesses, the right way to accomplish that goal?''
Mr. Boehner likewise criticized Mr. Obama's cap-and-trade emissions permits proposal, saying, ``Cap-and-trade is code for increasing taxes and killing American jobs, [Page: S12767]
and that's the last thing we need to do during these troubled economic times.''
To finance health care reform, administration officials suggested to senior aides in Congress on Wednesday that revenues could be raised by ending the policy of excluding the value of employer-provided health insurance from income taxes.
But the officials emphasized that the administration was not advocating that option, which not only is anathema to some in organized labor and business but also conflicts with Mr. Obama's position in last fall's presidential campaign.
The administration is proposing a number of other politically contentious ways of offsetting the costs of the health care initiative. Mr. Obama wants to require drug companies to give bigger discounts, or rebates, to Medicaid, the health program for low-income people.
Drug makers now must provide Medicaid with a discount equal to at least 15.1 percent of the average manufacturer price for a brand-name product. Mr. Obama wants to require discounts of at least 22.1 percent. Pharmaceutical companies have strenuously resisted such proposals in recent years.
Mr. Obama will also propose cutting Medicare payments to health insurance companies that provide comprehensive care to more than 10 million of the 44 million Medicare beneficiaries. He says he can save $175 billion over 10 years with a new competitive bidding system, under which payments to private Medicare Advantage plans would be based on an average of the bids they submit to Medicare.
Mr. GRASSLEY. In the top line, the article says: ``President Obama will propose further tax increases on the affluent to help pay for ..... health care reform.''
I am highlighting this article because the President is also proposing to take away a portion of a person's tax deduction. The President wants to limit the itemized deductions people making more than $250,000 a year can take. The only difference between the two proposals is the medical expense deduction limitation affects people who make less than $250,000 a year--the same class of people the President promised in the election he was not going to increase taxes on.
So, again, do not take my word for it. Data from the Joint Committee on Taxation tells us that in the year 2013, the largest concentration of taxpayers claiming the medical expense deduction will earn between $50,000 and $75,000--people who never thought they were going to have their taxes increased based upon what the President said during the campaign.
The analysis shows, a good number of taxpayers earning between $75,000 and $200,000 also claim the medical expense deduction.
My friends on the other side of the aisle will argue that their government-subsidized tax credit for health insurance will wipe clean any new taxes for those people below 400 percent of poverty. They will also argue that people purchasing insurance through the new exchange will be protected from catastrophic expenses as a result of annual out-of-pocket limits. For this reason, my friends on the other side argue those middle-class taxpayers will not need to rely on medical expense deductions.
I hate to break it to my colleagues, but the Congressional Budget Office--again, that god of Capitol Hill--estimates that in 2014 only 4 percent of Americans will be purchasing exchange insurance and only 3 percent of Americans will be receiving a tax credit. By 2019, when the Reid bill is in full effect, only 7 percent of Americans with exchange insurance will be receiving the tax credit. That leaves a heck of a lot of people below 400 percent of poverty with higher taxes.
What about those individuals and families above 400 percent of poverty? These people earn income below the President's magic $250,000 level, and somehow they do not qualify for this tax credit. What they do qualify for, though, is a tax increase. After all, there is reason why this proposal raises $15 billion over 10 years, and that is a heck of a lot of money.
Let me now turn to the third car of the tax increase express. This car is the high-cost plan tax. The Congressional Budget Office has consistently cited the two most powerful ways to bend the cost curve downward, meaning the cost curve of health care inflation: No. 1 is to cap the tax preference for employer-provided health coverage or the so-called exclusion; and, secondly, Medicare delivery system reforms.
A recent letter sent to the White House by respected economists also contends that placing a limit on high-cost employer plans would slow health care spending and reduce costs.
Well, some of my colleagues have come out squarely in support of a cap on the exclusion. That was an intellectually honest position. My friends, the chairman of the Budget Committee and the chairman of the Finance Committee, took the intellectually honest position. The Democratic leadership, however, has squarely opposed a cap on the exclusion. They argue that a cap on the exclusion would hurt middle-class workers.
But in a sleight of hand, this bill--this 2,074-page bill--and its authors, the Democratic leadership, came up with a proposal that would tax insurance companies for offering high-cost plans. It is a more complicated way of taxing the same workers. It is a sleight of hand because the Democratic leadership knows the tax will be passed through to the worker.
My friends simply did not want to say they were taxing the workers directly. So they have decided to tax those same workers very indirectly. In the end, the worker would be paying the tax, and these workers would be middle-income workers.
Again, do not take my word for it. The Joint Committee on Taxation testified before our very Senate Finance Committee that the high-cost plan tax would be passed on to whom--the workers.
Joint Committee on Taxation data also indicates that in 2019, 84 percent of the revenue generated from the high-cost plan tax comes from--guess who--individuals and families earning less than $200,000 a year, contrary to the President's promise in the last campaign that these folks would not pay any additional tax.
So whether you agree or disagree with the policy of limiting the tax benefit for employer-provided coverage, middle-class workers would see a tax increase.
Let's go to the fourth car of the tax increase express. This car is going to carry two new tax increases. The first tax increase is on workers who contribute to a flexible spending account, better known as an FSA.
Under the current tax laws, a worker may contribute to an FSA on a pretax basis and use those FSA contributions to pay for copays and deductibles tax free. Currently, there is no limit on how much a worker may contribute to an FSA. This 2,074-page bill, put together by Senator Reid, would limit the contribution amounts to $2,500. Statistics show, the average FSA contribution is $1,800 a year. So this $2,500 limit does not sound that bad, right? Well, I say wrong. A great number of workers
who have serious illnesses contribute significantly more than $1,800 and, let me say, more than $2,500.
On average--on average--these workers whom I am talking about with serious health problems earn about $55,000 a year. If I were to connect the dots, I would see a tax increase on workers with serious illnesses who earn $55,000 a year. Well, here is how. These workers would now have to pay taxes on their FSA contributions in excess of $2,500.
The Democratic leadership is taxing health benefits for the first time ever--at least this benefit for the first time ever.
The second tax increase in this fourth car is the elimination of the taxfree reimbursement for over-the-counter medicine. Under the current tax rules, payments for over-the-counter medicine may be reimbursed taxfree if a worker is covered under a flexible savings account or under a health savings account. This 2,074-page bill takes away that tax benefit.
The fifth car of the tax increase express is the new Medicare payroll taxes. Since the New Deal, the United States has put into place several social insurance programs. They are part of the social fabric of America. Included in those programs are Social Security, unemployment insurance, and Medicare. They are all founded on the social insurance concepts. As Senator Moynihan, when he represented New York, used to remind us, to ensure their constitutionality, these programs were designed to be
financed with payroll taxes instead of insurance premiums. But to maintain the closest appearance possible to social insurance, the payroll tax looks a lot like a premium for insurance.
This analogy is very intentional. It is not accidental. It is bedrock to the sustainability and universality of social [Page: S12768]
insurance programs that we all support: Social Security on the one hand, Medicare on the other.
The Reid amendment breaks that precedent, muddies the premium analogy, and could start us on a tax-hike-only journey to dealing with our unsustainable entitlement programs.
Let me explain that. The way the payroll tax works now is that every worker pays in based on his or her salary, wages, or small business income. That is a single, simple, and consistent tax base. Also, one tax rate applies to that payroll tax base. Now, for the first time--for the very first time--an additional second tax rate will apply to the payroll tax base. Also, for the first time in the almost 45-year history of this great social insurance program, we have before us a proposal that creates
a marriage penalty in the payroll tax. Now think of the negative comments you get from a marriage penalty from grassroots America. So here we have a proposal that creates such a marriage penalty in the payroll tax. In other words, some married couples will be paying higher payroll taxes due solely to the fact that they are married. A tax on marriage? This is a direct result of this addition to the second tax rate.
Here is another matter that boggles the mind. The second tax rate kicks in if your wages exceed $200,000 if you are single and $250,000 if you are married. These dollar thresholds are not indexed. They are not indexed, so what happens then when you have inflation?
Another tax where the tax base is not indexed is the AMT. That ought to bring back all the horror stories about not indexing something timely when you first pass it. I think every Member of Congress knows that is an annual problem for us. In the late 1990s, commentators called the AMT the tax system's ``ticking timebomb.'' Fortunately, my friend, the chairman, and I started to diffuse this bomb in the 2001 tax legislation. It appears that my friends on the other side of the aisle have created
another tax system ticking timebomb problem.
Finally, we have a caboose of this tax increase express. The caboose is the individual mandate penalty tax. It is a tax. It can be called a penalty, but it is a tax. All you have to do is have the IRS collecting it, as it does, and you know it is a tax. President Obama does not want to acknowledge that the penalty for failing to maintain a government-approved health insurance program is a tax, but it is right here in black and white. The Reid bill amends the Tax Code by adding a new excise tax.
It is payable by those Americans who do not purchase government-approved health insurance.
I ask unanimous consent to place section 1501 of the Reid amendment in the Record, which adds this new excise tax to our tax laws.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
Subtitle F--Shared Responsibility for Health Care
PART I--INDIVIDUAL RESPONSIBILITY
SEC. 1501. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.
(a) Findings.--Congress makes the following findings:
(1) IN GENERAL.--The individual responsibility requirement provided for in this section (in this subsection referred to as the ``requirement'') is commercial and economic in nature, and substantially affects interstate commerce, as a result of the effects described in paragraph (2).
(2) EFFECTS ON THE NATIONAL ECONOMY AND INTERSTATE COMMERCE.--The effects described in this paragraph are the following:
(A) The requirement regulates activity that is commercial and economic in nature: economic and financial decisions about how and when health care is paid for, and when health insurance is purchased.
(B) Health insurance and health care services are a significant part of the national economy. National health spending is projected to increase from $2,500,000,000,000, or 17.6 percent of the economy, in 2009 to $4,700,000,000,000 in 2019. Private health insurance spending is projected to be $854,000,000,000 in 2009, and pays for medical supplies, drugs, and equipment that are shipped in interstate commerce. Since most health insurance is sold by national or regional health insurance companies,
health insurance is sold in interstate commerce and claims payments flow through interstate commerce.
(C) The requirement, together with the other provisions of this Act, will add millions of new consumers to the health insurance market, increasing the supply of, and demand for, health care services. According to the Congressional Budget Office, the requirement will increase the number and share of Americans who are insured.
(D) The requirement achieves near-universal coverage by building upon and strengthening the private employer-based health insurance system, which covers 176,000,000 Americans nationwide. In Massachusetts, a similar requirement has strengthened private employer-based coverage: despite the economic downturn, the number of workers offered employer-based coverage has actually increased.
(E) Half of all personal bankruptcies are caused in part by medical expenses. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will improve financial security for families.
(F) Under the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.), the Public Health Service Act (42 U.S.C. 201 et seq.), and this Act, the Federal Government has a significant role in regulating health insurance which is in interstate commerce.
(G) Under sections 2704 and 2705 of the Public Health Service Act (as added by section 1201 of this Act), if there were no requirement, many individuals would wait to purchase health insurance until they needed care. By significantly increasing health insurance coverage, the requirement, together with the other provisions of this Act, will minimize this adverse selection and broaden the health insurance risk pool to include healthy individuals, which will lower health insurance premiums. The
requirement is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.
(H) Administrative costs for private health insurance, which were $90,000,000,000 in 2006, are 26 to 30 percent of premiums in the current individual and small group markets. By significantly increasing health insurance coverage and the size of purchasing pools, which will increase economies of scale, the requirement, together with the other provisions of this Act, will significantly reduce administrative costs and lower health insurance premiums. The requirement is essential to creating effective
health insurance markets that do not require underwriting and eliminate its associated administrative costs.
(3) SUPREME COURT RULING.--In United States v. South-Eastern Underwriters Association (322 U.S. 533 (1944)), the Supreme Court of the United States ruled that insurance is interstate commerce subject to Federal regulation.
(b) In General.--Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
``CHAPTER 48--MAINTENANCE OF MINIMUM ESSENTIAL COVERAGE
``Sec..5000A..Requirement to maintain minimum essential coverage.
``SEC. 5000A. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.
``(a) Requirement to Maintain Minimum Essential Coverage.--An applicable individual shall for each month beginning after 2013 ensure that the individual, and any dependent of the individual who is an applicable individual, is covered under minimum essential coverage for such month.
``(b) Shared Responsibility Payment.--
``(1) IN GENERAL.--If an applicable individual fails to meet the requirement of subsection (a) for 1 or more months during any calendar year beginning after 2013, then, except as provided in subsection (d), there is hereby imposed a penalty with respect to the individual in the amount determined under subsection (c).
``(2) INCLUSION WITH RETURN.--Any penalty imposed by this section with respect to any month shall be included with a taxpayer's return under chapter 1 for the taxable year which includes such month.
``(3) PAYMENT OF PENALTY.--If an individual with respect to whom a penalty is imposed by this section for any month--
``(A) is a dependent (as defined in section 152) of another taxpayer for the other taxpayer's taxable year including such month, such other taxpayer shall be liable for such penalty, or
``(B) files a joint return for the taxable year including such month, such individual and the spouse of such individual shall be jointly liable for such penalty.
``(c) Amount of Penalty.--
``(1) IN GENERAL.--The penalty determined under this subsection for any month with respect to any individual is an amount equal to \1/12\ of the applicable dollar amount for the calendar year.
``(2) DOLLAR LIMITATION.--The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to all individuals for whom the taxpayer is liable under subsection (b)(3) shall not exceed an amount equal to 300 percent the applicable dollar amount (determined without regard to paragraph (3)(C)) for the calendar year with or within which the taxable year ends.
``(3) APPLICABLE DOLLAR AMOUNT.--For purposes of paragraph (1)--
``(A) IN GENERAL.--Except as provided in subparagraphs (B) and (C), the applicable dollar amount is $750.
``(B) PHASE IN.--The applicable dollar amount is $95 for 2014 and $350 for 2015.
``(C) SPECIAL RULE FOR INDIVIDUALS UNDER AGE 18.--If an applicable individual has not attained the age of 18 as of the beginning of [Page: S12769]
a month, the applicable dollar amount with respect to such individual for the month shall be equal to one-half of the applicable dollar amount for the calendar year in which the month occurs.
``(D) INDEXING OF AMOUNT.--In the case of any calendar year beginning after 2016, the applicable dollar amount shall be equal to $750, increased by an amount equal to--
``(i) $750, multiplied by
``(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting `calendar year 2015' for `calendar year 1992' in subparagraph (B) thereof.
If the amount of any increase under clause (i) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.
``(4) TERMS RELATING TO INCOME AND FAMILIES.--For purposes of this section--
``(A) FAMILY SIZE.--The family size involved with respect to any taxpayer shall be equal to the number of individuals for whom the taxpayer is allowed a deduction under section 151 (relating to allowance of deduction for personal exemptions) for the taxable year.
``(B) HOUSEHOLD INCOME.--The term `household income' means, with respect to any taxpayer for any taxable year, an amount equal to the sum of--
``(i) the modified gross income of the taxpayer, plus
``(ii) the aggregate modified gross incomes of all other individuals who--
``(I) were taken into account in determining the taxpayer's family size under paragraph (1), and
``(II) were required to file a return of tax imposed by section 1 for the taxable year.
``(C) MODIFIED GROSS INCOME.--The term `modified gross income' means gross income--
``(i) decreased by the amount of any deduction allowable under paragraph (1), (3), (4), or (10) of section 62(a),
``(ii) increased by the amount of interest received or accrued during the taxable year which is exempt from tax imposed by this chapter, and
``(iii) determined without regard to sections 911, 931, and 933.
``(D) POVERTY LINE.--
``(i) IN GENERAL.--The term `poverty line' has the meaning given that term in section 2110(c)(5) of the Social Security Act (42 U.S.C. 1397jj(c)(5)).
``(ii) POVERTY LINE USED.--In the case of any taxable year ending with or within a calendar year, the poverty line used shall be the most recently published poverty line as of the 1st day of such calendar year.
``(d) Applicable Individual.--For purposes of this section--
``(1) IN GENERAL.--The term `applicable individual' means, with respect to any month, an individual other than an individual described in paragraph (2), (3), or (4).
``(2) RELIGIOUS EXEMPTIONS.--
``(A) RELIGIOUS CONSCIENCE EXEMPTION.--Such term shall not include any individual for any month if such individual has in effect an exemption under section 1311(d)(4)(H) of the Patient Protection and Affordable Care Act which certifies that such individual is a member of a recognized religious sect or division thereof described in section 1402(g)(1) and an adherent of established tenets or teachings of such sect or division as described in such section.
``(B) HEALTH CARE SHARING MINISTRY.--
``(i) IN GENERAL.--Such term shall not include any individual for any month if such individual is a member of a health care sharing ministry for the month.
``(ii) HEALTH CARE SHARING MINISTRY.--The term `health care sharing ministry' means an organization--
``(I) which is described in section 501(c)(3) and is exempt from taxation under section 501(a),
``(II) members of which share a common set of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs and without regard to the State in which a member resides or is employed,
``(III) members of which retain membership even after they develop a medical condition,
``(IV) which (or a predecessor of which) has been in existence at all times since December 31, 1999, and medical expenses of its members have been shared continuously and without interruption since at least December 31, 1999, and
``(V) which conducts an annual audit which is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and which is made available to the public upon request.
``(3) INDIVIDUALS NOT LAWFULLY PRESENT.--Such term shall not include an individual for any month if for the month the individual is not a citizen or national of the United States or an alien lawfully present in the United States.
``(4) INCARCERATED INDIVIDUALS.--Such term shall not include an individual for any month if for the month the individual is incarcerated, other than incarceration pending the disposition of charges.
``(e) Exemptions.--No penalty shall be imposed under subsection (a) with respect to--
``(1) INDIVIDUALS WHO CANNOT AFFORD COVERAGE.--
``(A) IN GENERAL.--Any applicable individual for any month if the applicable individual's required contribution (determined on an annual basis) for coverage for the month exceeds 8 percent of such individual's household income for the taxable year described in section 1412(b)(1)(B) of the Patient Protection and Affordable Care Act. For purposes of applying this subparagraph, the taxpayer's household income shall be increased by any exclusion from gross income for any portion of the required
contribution made through a salary reduction arrangement.
``(B) REQUIRED CONTRIBUTION.--For purposes of this paragraph, the term `required contribution' means--
``(i) in the case of an individual eligible to purchase minimum essential coverage consisting of coverage through an eligible-employer-sponsored plan, the portion of the annual premium which would be paid by the individual (without regard to whether paid through salary reduction or otherwise) for self-only coverage, or
``(ii) in the case of an individual eligible only to purchase minimum essential coverage described in subsection (f)(1)(C), the annual premium for the lowest cost bronze plan available in the individual market through the Exchange in the State in the rating area in which the individual resides (without regard to whether the individual purchased a qualified health plan through the Exchange), reduced by the amount of the credit allowable under section 36B for the taxable year (determined as if
the individual was covered by a qualified health plan offered through the Exchange for the entire taxable year).
``(C) SPECIAL RULES FOR INDIVIDUALS RELATED TO EMPLOYEES.--For purposes of subparagraph (B)(i), if an applicable individual is eligible for minimum essential coverage through an employer by reason of a relationship to an employee, the determination shall be made by reference to the affordability of the coverage to the employee.
``(D) INDEXING.--In the case of plan years beginning in any calendar year after 2014, subparagraph (A) shall be applied by substituting for `8 percent' the percentage the Secretary of Health and Human Services determines reflects the excess of the rate of premium growth between the preceding calendar year and 2013 over the rate of income growth for such period.
``(2) TAXPAYERS WITH INCOME UNDER 100 PERCENT OF POVERTY LINE.--Any applicable individual for any month during a calendar year if the individual's household income for the taxable year described in section 1412(b)(1)(B) of the Patient Protection and Affordable Care Act is less than 100 percent of the poverty line for the size of the family involved (determined in the same manner as under subsection (b)(4)).
``(3) MEMBERS OF INDIAN TRIBES.--Any applicable individual for any month during which the individual is a member of an Indian tribe (as defined in section 45A(c)(6)).
``(4) MONTHS DURING SHORT COVERAGE GAPS.--
``(A) IN GENERAL.--Any month the last day of which occurred during a period in which the applicable individual was not covered by minimum essential coverage for a continuous period of less than 3 months.
``(B) SPECIAL RULES.--For purposes of applying this paragraph--
``(i) the length of a continuous period shall be determined without regard to the calendar years in which months in such period occur,
``(ii) if a continuous period is greater than the period allowed under subparagraph (A), no exception shall be provided under this paragraph for any month in the period, and
``(iii) if there is more than 1 continuous period described in subparagraph (A) covering months in a calendar year, the exception provided by this paragraph shall only apply to months in the first of such periods.
The Secretary shall prescribe rules for the collection of the penalty imposed by this section in cases where continuous periods include months in more than 1 taxable year.
``(5) HARDSHIPS.--Any applicable individual who for any month is determined by the Secretary of Health and Human Services under section 1311(d)(4)(H) to have suffered a hardship with respect to the capability to obtain coverage under a qualified health plan.
``(f) Minimum Essential Coverage.--For purposes of this section--
``(1) IN GENERAL.--The term `minimum essential coverage' means any of the following:
``(A) GOVERNMENT SPONSORED PROGRAMS.--Coverage under--
``(i) the Medicare program under part A of title XVIII of the Social Security Act,
``(ii) the Medicaid program under title XIX of the Social Security Act,
``(iii) the CHIP program under title XXI of the Social Security Act,
``(iv) the TRICARE for Life program,
``(v) the veteran's health care program under chapter 17 of title 38, United States Code, or
``(vi) a health plan under section 2504(e) of title 22, United States Code (relating to Peace Corps volunteers).
``(B) EMPLOYER-SPONSORED PLAN.--Coverage under an eligible employer-sponsored plan.
``(C) PLANS IN THE INDIVIDUAL MARKET.--Coverage under a health plan offered in the individual market within a State.
``(D) GRANDFATHERED HEALTH PLAN.--Coverage under a grandfathered health plan.
``(E) OTHER COVERAGE.--Such other health benefits coverage, such as a State health benefits risk pool, as the Secretary of Health and Human Services, in coordination with [Page: S12770]
the Secretary, recognizes for purposes of this subsection.
``(2) ELIGIBLE EMPLOYER-SPONSORED PLAN.--The term `eligible employer-sponsored plan' means, with respect to any employee, a group health plan or group health insurance coverage offered by an employer to the employee which is--
``(A) a governmental plan (within the meaning of section 2791(d)(8) of the Public Health Service Act), or
``(B) any other plan or coverage offered in the small or large group market within a State.
Such term shall include a grandfathered health plan described in paragraph (1)(D) offered in a group market.
``(3) EXCEPTED BENEFITS NOT TREATED AS MINIMUM ESSENTIAL COVERAGE.--The term `minimum essential coverage' shall not include health insurance coverage which consists of coverage of excepted benefits--
``(A) described in paragraph (1) of subsection (c) of section 2791 of the Public Health Service Act; or
``(B) described in paragraph (2), (3), or (4) of such subsection if the benefits are provided under a separate policy, certificate, or contract of insurance.
``(4) INDIVIDUALS RESIDING OUTSIDE UNITED STATES OR RESIDENTS OF TERRITORIES.--Any applicable individual shall be treated as having minimum essential coverage for any month--
``(A) if such month occurs during any period described in subparagraph (A) or (B) of section 911(d)(1) which is applicable to the individual, or
``(B) if such individual is a bona fide resident of any possession of the United States (as determined under section 937(a)) for such month.
``(5) INSURANCE-RELATED TERMS.--Any term used in this section which is also used in title I of the Patient Protection and Affordable Care Act shall have the same meaning as when used in such title.
``(g) Administration and Procedure.--
``(1) IN GENERAL.--The penalty provided by this section shall be paid upon notice and demand by the Secretary, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
``(2) SPECIAL RULES.--Notwithstanding any other provision of law--
``(A) WAIVER OF CRIMINAL PENALTIES.--In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.
``(B) LIMITATIONS ON LIENS AND LEVIES.--The Secretary shall not--
``(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or
``(ii) levy on any such property with respect to such failure.''.
(c) Clerical Amendment.--The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 47 the following new item:
``Chapter 48--Maintenance of Minimum Essential Coverage.''.
(d) Effective Date.--The amendments made by this section shall apply to taxable years ending after December 31, 2013.
Mr. GRASSLEY. The kicker here is that CBO has told Congress that roughly one-half of those Americans who will pay this tax are individuals between 100 and 300 percent of poverty. These folks earn less than $250,000 a year. I see the light at the end of the tunnel that this tax increase express is going through. Unfortunately, that light at the end of the tunnel is the tax increase express.
We can derail the tax increase express if we want to.
That is why today I am supporting Senator Crapo's motion to commit the Reid amendment to the Senate Finance Committee. Senator Crapo's motion would require the Finance Committee report a bill back to the Senate that does not include tax increases, fees, and penalties included in the Reid bill.
Why should my Democratic friends vote in favor of the motion? Because they shouldn't want to bear the fallout of legislation that was rushed through Congress as the economic stimulus package was back in February. They shouldn't want to tell their constituents they voted in favor of a bill that increased their premiums. They shouldn't want to vote for a bill that raises taxes on many, only to provide benefit for a few. They shouldn't want to break President Obama's pledge not to tax people making
less than $250,000 a year.
What my friends should want is real health care reform, the kind of reform that has broad bipartisan support. I have consistently said that if Congress wants to restructure one-sixth of the economy, it ought to be done on a bipartisan basis, and that is not one or two Republicans voting with Democrats. That is not happening around here on a bipartisan basis. We are debating this 2,074-page bill, a partisan product, a bill that was cobbled together by the Democratic leadership, a bill that has
not received approval of the Senate Finance Committee.
I ask my Democratic friends to stop this process foul right now. Vote in favor of Senator Crapo's motion so we can do health care reform in the right way: on a bipartisan basis, in a transparent and open way, so that the American public can understand what we are doing; so the American public can be a part of the process; so that we can find a way to reform our health care system without burdening our constituents with these higher taxes, fees, and penalties.
Let's reduce the out-of-control spending in the Reid amendment and find savings within the health care system. Let's derail the tax increase express before it steamrolls over hard-working Americans and discourages employment, particularly employment in small business, where 70 percent of the new jobs are created. The taxes, fees, and penalties don't need to be the fuel of this locomotive fire.
I ask all of my colleagues to support Senator Crapo's motion to commit the Reid bill to the Finance Committee.
I yield the floor.
Mr. DORGAN. Madam President, the amendment we are now considering is an amendment I have offered that deals with drug importation; that is, the importation of prescription drugs from other countries. One might ask the question: Well, why would we want to import drugs from other countries? FDA-approved drugs are made all over the world and they are shipped all over the world; again, FDA-approved drugs, approved by our Food and Drug Administration, produced in plants that are inspected by our Food
and Drug Administration. The difference is--the only difference is--when they are shipped around the world, the American consumer is charged the highest prices in the world by far.
Here is an example of the drug Lipitor. There are plenty of examples and I will go through a number of them today, but this is an example of Lipitor. For an equivalent amount of Lipitor, 20 milligram tablets, the U.S. consumer pays $125, the British pay $40, the Spanish pay $32, the Canadians pay $33, the Germans pay $48. We are charged the highest prices in the world for Lipitor. Lipitor, by the way, is the most popular cholesterol-lowering drug. I have a couple of empty bottles in the desk
drawer here that demonstrates this drug was produced in Ireland. It was sent all around the world. The same pill put in the same bottle made by the same company, approved by our Food and Drug Administration, this was sent to Canada, this was sent to the United States.
The difference? Well, the American consumer was allowed to pay three times as much as the Canadian consumer. I shouldn't say ``allowed,'' I should say forced. But it is not just United States versus Canada. As we can see, it is United States versus every other country.
The question is, Should that be the case? Should the American consumer be charged the highest prices in the world? My answer to that is no. Why is it the case that we are charged the highest prices in the world? Because we are the only country in which there is a special little law that prevents our citizens from accessing that FDA-approved drug from wherever it is sold at the most advantageous price. We have a provision in law that says the American people don't have the freedom to import a
prescription drug, an FDA-approved drug that they find for half the price or 20 percent of the price in some other country. I say, give the American people the freedom. I hear so much discussion on the floor of the Senate about freedom. This is the ultimate freedom: the freedom of the American people to access those prescription drugs that are sold virtually everywhere else, brand-name prescription drugs at the fraction of the price.
I have examples of other prescription drugs as well to show you. It is not just Lipitor, although Lipitor is the most popular cholesterol-lowering drug.
This is Plavix. Plavix is an anticoagulant. You will see that we pay higher than all of these countries by [Page: S12771]
far; more than double what the British pay, more than double what the Spanish pay.
This is Nexium. If you are someone who has ulcers and you are taking Nexium, for an equivalent amount of the same drug, Nexium, you are charged $424 if you are an American citizen, $40 for the British, $36 for the Spanish, $37 for the Germans, $67 for the French. The American consumer, trying to control their condition of ulcers, pays $424--10 times the amount of money that others are paying for the identical drug--10 times.
This kind of what I believe is gouging--that is, a pricing strategy that gouges the American consumer--can largely be resolved by the amendment I have offered. It removes that little sweetheart impediment in law and says to the American people: You may import prescription drugs that are FDA-approved from registered enterprises in other countries. We specifically delineate which countries those are--there are a handful of them--that have a nearly identical drug approval process that we have in
our country. Identical. We also put in this amendment unbelievable safety provisions dealing with pedigree and batch lots and tracers that don't exist now in our domestic drug supply, let alone importation.
So if we were allowing the American people to do this, the Congressional Budget Office says my amendment will save $19 billion--$19 billion--for the Federal Government over the next 10 years,
but about somewhere around $80 billion for American consumers above that. That is a pretty big savings.
Here is another chart that shows what has happened in addition to the fact that we are charged the highest drug prices in the world. What has happened in recent months, in 2009, is that brand-name prescription drugs have increased in price over 9 percent, at a time when there is virtually no inflation. For Enbrel, for arthritis, you get to pay 12 percent more; for Singulair, 12 percent more; and for Boniva, for osteoporosis, by the way, you are paying 18 percent more just this year. That is what
is happening. There is nothing in any of the health care plans considered by the Senate or the House that addresses the escalating price of prescription drugs.
There are a whole lot of folks in this country who are not senior citizens and are taking drugs to manage their disease. They may take cholesterol-lowering medicine or medicine to lower their blood pressure. They manage their health issues, and they don't have to go to a hospital because they are doing the right things. They are doing it with pharmaceuticals. The problem is, pharmaceutical prices are going up, up, up, way up above what other people in the world are paying for the identical drugs.
I am saying it is just not fair. The issue is not that the pharmaceutical industry is a bad one or that they are infested with bad companies. I just think they have bad pricing policies. They are able to, and therefore they do, charge the American people, by far, the highest prices in the world.
I wish to talk about a couple of important issues with respect to this issue of giving the American people the freedom to access or purchase that FDA-approved drug in selected countries in which the drug safety regulatory system is identical to ours, which is in our bill. And our bill includes, as I said, the establishment of pedigrees for batch lots and tracers that don't exist today for our drug supply.
Some say and allege that you cannot do this safely, that it causes all kinds of problems with counterfeiting and so on. The fact is, the Europeans have been doing it safely for 20 years. For over two decades, in Europe, under what is called parallel trading, if you are a German and want to buy a prescription drug in Spain, you can do it through the parallel trading system. If you are in Italy and you want to buy a prescription drug from France, there is no problem, you can do it. They have done
that safely for a long time. To suggest that we don't have the skill and capability to do what the Europeans have been doing routinely for 20 years is, in my judgment, shortchanging our country and certainly our consumers. I think we will, however, have people allege again that this is risky, it is just risky.
I would like to make a point about risk because I want to demonstrate something that I think most people don't know. Forty percent of the active ingredients of our existing prescription drugs come from China and India. Again, 40 percent of those active ingredients come from China and India and in most instances from areas that have never been inspected. My amendment doesn't allow drugs to be imported into this country from China or India. I am talking about the ingredients the pharmaceutical
industry acquires with which to make their drugs. We don't allow drugs to be imported from China or India as a matter of this amendment; only FDA-approved drugs from FDA-inspected plants in Canada, the European countries, Japan, New Zealand, or Australia. That is all. Why? Because they have similar drug safety standards. That is the basis on which we determine how importation could work safely.
I wish to describe a recent scandal that illustrates the double standard some want to apply to this question. The scandal was about a drug called Heparin, a blood thinner that is commonly used by dialysis patients, which was linked to more than 62 deaths last year. Heparin was ultimately pulled from the market. According to Baxter, which markets Heparin in the United States, the allergic reactions to Heparin that caused the deaths appear to be caused by a contaminant added in place of the active
ingredient in Heparin somewhere during the manufacturing process, most likely in China.
The Wall Street Journal did a very important story on the Heparin contamination. They reported that more than half of the world's Heparin gets its start in China's poorly regulated supply chain. This is what the Wall Street Journal, after its investigation, concluded:
More than half of the world's Heparin, the main ingredient in this widely used anti-clotting medicine, gets its start in China's totally unregulated supply chain.
The Wall Street Journal published a series of pictures that I want to show--photographs of the intestine encasing factory which processes pig intestines used to make Heparin. I want to show some photographs that came from the Wall Street Journal. This is a photograph of a facility, and that is the outside. Here is a photograph of someone in the facility who is stirring a rusty vat full of Heparin ingredients with a tree branch. So this is the processing of Heparin from pig intestines in a facility
in China, in which a worker is stirring this rusty vat with a tree branch. Are the ingredients that are used to make medicine with respect to blood clotting an issue?
When the industry and others say we can't have drug importation safely from Canada or Ireland, the point is that they are getting a lot of their ingredients from China and India. All you have to do is simply look at this and ask yourself whether the domestic drug supply with respect to that ingredient and those inputs has sufficient safety.
While the record keeping at these Chinese facilities makes it almost impossible to trace the contaminant from this particular factory, these pictures by the Wall Street Journal show the unsanitary conditions in which pig intestines are processed for that particular medicine. Again, by contrast, the amendment we offer would allow the importation of FDA-approved medicines only, with a chain of custody to ensure the drugs are handled properly. It gives the FDA the authority to inspect all facilities
in the chain of custody.
The amendment mandates the use of anticounterfeiting technology to track and trace imported and domestic drugs to ensure product integrity. That doesn't exist today, but that is required in the amendment. The amendment also requires pharmacies and drug wholesalers to register with the FDA and to be subject to strict requirements to ensure the safety of imported medications, including frequent random inspections.
The amendment I am offering would ensure safety and, in fact, provide a much greater margin of safety than now exists with all of our drug supply. We need to have these improvements, in my judgment, because our own prescription drug distribution system is not as good as we think it is.
Here is an excellent example of something that took place in the United States. This is a picture of Mr. Tim [Page: S12772]
Fagan, a young 16-year-old boy from Long Island, NY. He received a liver transplant. He was prescribed a drug called Epogen to boost his red blood cells and fight the anemia after the operation. He received daily inspections, but his red blood cell count wasn't improving and the doctors could not figure out why, what was happening. After 2 months,
his mom went to the local CVS pharmacy, where she was told: By the way, the Epogen your son has been taking may have been counterfeit.
Here is an example of counterfeiting in the existing domestic drug supply--counterfeiting in which this container held the counterfeit medicine and this one held the real medicine. There were subtle differences but not many. It turned out that the vial Tim was injecting was one-twentieth the strength of what he was supposed to be taking and what was disclosed on the label.
How did that happen? The weaker drug sells for $22 a bottle, and the high-strength version goes for $445 a bottle. Investigators found that 110,000 of the bogus bottles of that medicine reached the market in this country, and it is estimated that the criminals involved with that counterfeiting in that particular case made $46 million.
The manufacturer of that drug, a company called Amgen, had distributed some of the product through a complicated network of secondary distributors. Although nobody knew it at the time, some of the Epogen that was eventually resold had most likely run through a cooler in the back of this strip club, a seedy Miami strip club called Playpen South.
Here is a chart that shows the distribution system this particular counterfeit drug went through. Again, this is not an import; this is a domestic drug. You can see this unbelievable and complicated distribution system. At the end of that, it traveled through strip clubs, through homes,
and through trunks of cars without proper cooling.
This story was told in great detail by some outstanding investigation by Katherine Eban in a book called ``Dangerous Doses.''
Mr. DORGAN. Mr. President, again talking about the issue I just described:
They traveled through strip clubs. They traveled through homes. They traveled through trunks of cars, without proper cooling.
I am talking about a domestic counterfeit drug supply.
The amendment we are offering would fix this supply chain problem. It will require a pedigree for all drugs, not just those imported. It should have been done long ago. Some of us have been trying for a long time. It will allow us to track every single drug from where it is made to the pharmacy in which it is sold.
My amendment will require a set of anti-counterfeiting measures that are not in place now. If you think of it, I have a twenty-dollar bill here, and most people who have looked at them understand there is sophisticated and substantial anti-counterfeiting technology in new twenty-dollar bills. That doesn't exist today, by the way. That sophistication, that relentless search for the ability to detect counterfeiting does not exist today, regrettably, in our drug supply. The pedigree that we require,
the tracing capability, the batch lots will make that a requirement on our entire drug supply.
This amendment will make our entire drug supply safer. It will allow Americans to benefit from lower prices--the prices at which these identical drugs are sold in other countries. In many cases they are half the price and in some cases much lower--10 percent of the price at which they are sold in this country.
I wish to talk for a moment about the issue of drug price inflation because the drug price--what is happening to us in this country is drug price inflation, the relentless increases year after year, which is the red line here on the chart. It is 9.3 percent this year. This yellow line is the rate of inflation. If we don't do anything to deal with the price of prescription drugs, we will have missed the opportunity to do something to help the American people.
Let me describe a few stories about the need for the amendment.
In my home State, in Aneta, ND, Maryanne wrote to me:
My husband has Parkinson's Disease, so he takes a drug called Mirapex. We have Medicare Part D, but in September, he ends up in the so-called donut hole. In 2008, when this happened, we paid $106 for his medication. It increased to $187 in October and November, $198 in December. Now, in September 2009, the price was $286--a $180 increase in one year.
Mr. McCAIN. The Senator, I know, is aware and has talked about this. How does the Senator account for the fact that there is a nearly 9-percent increase in the cost of pharmaceutical drugs, while the consumer price index this year has gone down 1.3 percent?
I understand this is the highest increase in the history, or in most recent years, in the cost of prescription drugs. What is the explanation between the divergence of those two lines?
Mr. DORGAN. The explanation, I suppose, is probably better addressed to the pharmaceutical industry of how and why do they increase these prices this way. My guess is they do it because they can.
The fact is, the cost-of-living index--the inflation rate is the yellow line. The price of prescription drugs is the red line.
Mr. DORGAN. I say to the Senator from Arizona, my expectation is the pharmaceutical industry has said this is the time to increase these prices. The most important element is there is no restraint. No one has any capability of restraining them. The only way you would provide restraint on this is if you said to the American consumer: You know what. You don't have to buy it from these people at these prices because it is sold in virtually every other country at half the price. If we say to the
American people, we will give them the freedom to access that drug elsewhere, I think quickly the pharmaceutical industry would not be able to impose those price increases because then you would have competition. Freedom equals competition, in my judgment, on this issue.
Mr. McCAIN. May I ask the Senator another question. We understand you can buy lettuce from overseas. You can buy many other products from overseas. You can buy dairy products. You can buy almost any item except perhaps prescription drugs. Yet the Canadians, in particular, as well as the countries that are included in the Senator's amendment, all adhere to the same standards or higher standards than the United States of America does.
Now I understand one of the Senators--not the Senator from North Dakota--has received a letter saying this is still a problem.
I don't get it. Maybe the Senator from North Dakota can explain it a little better.
Mr. DORGAN. I say to the Senator from Arizona, there is not a safety issue here. To the extent there is any safety issue, it is that we intend to increase the safety of both domestic supply of prescription drugs and the imported prescription drugs because the fact is, there is nothing at this point dealing with batch lots and pedigrees and tracing capability. That does not exist at this point. We will insist on it in this amendment.
For anybody to suggest that somehow we are going to end up with prescription drug products that are less safe, that is just not the fact. As I indicated before the Senator came to the floor, Europe has been doing this for 20 years in something called parallel trading. For 20 years, they have done it. If you are in Germany and want to buy a prescription drug that is approved, you can. If you are in Italy and want to buy [Page: S12773]
it from France, you can. They
do it successfully.
I do not believe anybody should tell us we are not capable of doing what the Europeans have done for 20 years, and that is giving people the freedom to access prescription drugs where they are sold at a better price.
Mr. McCAIN. May I ask the Senator another question. Isn't it true a letter was written to one of our colleagues from the Administrator of the FDA, the organization that would basically make sure any product that goes to American consumers along these lines, that go through that bureaucracy, said it would require a significant amount of assets and resources?
I have since been told there are 11,000 employees of that bureaucracy. I wonder what he thinks about that argument; and, again, was the Senator from North Dakota informed about this position, which, by the way, is the same position as the previous administration?
Mr. DORGAN. Madam President, the Senator from Arizona is correct. There was a letter from the Food and Drug Administration. The fact is, we have seen this over the years. They say: We don't have the resources or it will pose more risk.
The fact is, this amendment provides the resources for them because those who are going to register to ship FDA-approved drugs into this country at a better price are going to have to pay a fee. The people who are selling will pay a fee, and those pharmacies and others in our country that will be receiving them will also pay a fee.
Mr. DORGAN. No additional funding from the taxpayers at all. Those who decide they are going to offer these lower price prescription drugs would be paying a fee for the purpose of being able to do that. This is not a taxpayer-funded issue at all. It will provide the additional resources and pay for those resources without asking the taxpayers to come up with the money.
Mr. McCAIN. Do these countries that are included in the Senator's amendment--do we have absolute assurance, can we look at the American people and say: Those countries and the agreements we would have with them, you can have products that are safe, you can safely buy, and it would not pose any hazard to anyone's health?
Mr. DORGAN. The countries that are involved in this amendment--and they are limited--are countries that have nearly identical drug safety standards to our country. These are countries that are accessing the same drugs.
I just mentioned--let me do it again--two bottles of medicine. They are empty, obviously. Both of these bottles contain Lipitor. Most of my colleagues know what Lipitor is. This was made by an American company in Ireland and then shipped all over the world. This little bottle was shipped to the United States. This little bottle was shipped to Canada. Same bottle. One was blue, one has red in the label. Same bottle, same company, inspected by the FDA. What is the difference? The price.
The American consumer is told: Guess what you get to do. You get to pay almost triple. Why? And it is not just the American consumer, if I can hold up a chart that shows two drugs--one is Nexium. This is advertised substantially. Nexium is an example. I also have one on Lipitor. Here is the price for Nexium.
Do you think the pharmaceutical industry is selling Nexium at $37 for the equivalent quantity in Germany and losing money? I don't think they are losing money at that. Instead of $37, they charge the American consumer $424.
My point is my beef with the industry is their pricing policy.
Mr. McCAIN. Wouldn't the pharmaceutical companies say it costs $424 because we have to absorb the cost of all the research that went into developing Nexium?
Mr. DORGAN. I would say that is also always raised. They say: If you don't allow us to charge the American consumers the highest prices in the world, we don't get to do the research and development that produces the next new miracle drug.
Most of the recent studies have shown that the pharmaceutical industry spends more money on promotion, marketing, and advertising than they do on research. I want them to do research. But there is one other piece. The Congress gave, without my support, a proposal that said those American companies that have money overseas should bring it back and we will let them pay a lower tax rate. Guess which industry was one of the largest industries with repatriated profits from abroad? The pharmaceutical
industry. If they are making big profits abroad and charging lower prices to those consumers abroad, why can't the American people have access to those prices?
It is not because they are going to lose money because they made a lot of money abroad. That is why they repatriated at a lower rate.
Mr. McCAIN. Do the seniors from his State and other citizens from his State travel to Canada and buy these prescription drugs because they know and are confident that they are getting, at a much lower price, the same product? Unfortunately, citizens in my State have to go south, and it is unfortunate when they have to do that because we do have a much larger problem there, I am sorry to say.
Mr. DORGAN. Madam President, the citizens from North
Dakota often have to go to Canada to buy a prescription drug. I have told the story about the old codger who was sitting on a hay bale in a farmyard when I had a town meeting. He was nibbling on a piece of straw. He said to me: My wife--he was about 80 years old--my wife has been fighting breast cancer for 3 years. He said: The only way we could pay for our prescription drugs was to drive to Canada once every 3 months because when you buy tamoxifen in Canada, you pay like one-tenth the price
or one-fifth of the price you pay in the United States. He said: We did that every 3 months so my wife could keep fighting breast cancer.
Of course they do that. What is happening is consumers are allowed to bring back as an informal strategy about 90 days' worth of supply of prescription drugs for personal use only. Most American consumers cannot do that. They do not live anywhere close to a border.
The question is, Can the rest of the American people have access to the same prescription drugs sold at a fraction of the price?
Mr. McCAIN. May I ask the Senator, isn't it true the Congressional Budget Office has determined that this measure of the Senator from North Dakota, this modest measure of only countries that are of the highest level of quality of inspection, of all the standards that we have, would save the American consumer $100 billion; is that true?
Mr. DORGAN. Madam President, the Congressional Budget office says it will save the Federal Government about $19 billion, and then about another $80 billion will be saved by the consumers. That is about $100 billion, nearly $100 billion in savings in total, $19 billion of which will be saved by the Federal Government for its purchases, and the rest by the American consumers.
Mr. McCAIN. Finally, I wish to ask the Senator, what is the basis of the argument against the Senator's amendment? What possible reason, frankly, except for the influence of a special interest in this, our Nation's Capitol?
Mr. DORGAN. I am not a very good advocate for the other side. If one were to ask what is the best argument opposed to my amendment, I would say there are not any arguments that are the best. There is a range of poor arguments or arguments that do not hold much water.
I started by saying I do not have a beef against the pharmaceutical industry. I want them to do well. I want them to be successful. I want them to keep finding and searching for miracle drugs. By the way, much of the work they do comes from the National Institutes of Health and the massive investments we make in health. I want them all to be successful.
My beef with them is a pricing strategy that says to the American people: Here is what you pay, and you can do nothing about it because we decided that is what you pay, and we are going to offer everything around the world at lower prices. That is my beef. This is a pricing issue. They are wrong about it.
The way to correct it is to give the American people a little bit of freedom. We will save money for the government and save money for the American people. [Page: S12774]
I want to raise one additional point while the Senator is here. If the Senator from Arizona is like me, when I am brushing my teeth in the morning, I have a television blaring and I hear all these ads: Go ask the doctor if the purple pill is right for you. I haven't the foggiest idea what a purple pill will do for me. The ads are so compelling you almost feel: I have to get out of here. I have to stop brushing my teeth, go get a phone, and call my doctor to see if my life might be improved by
taking a purple pill.
I read a whole series of advertisements:
Does your restless mind keep you from sleeping? Do you lie awake exhausted? Maybe it's time to ask if Lunesta is right for you. Ask your doctor how to get 7 nights of Lunesta free .....
I read a bunch of these. I will not now. Bladder problems, Flomax, Ambien--you name it and they advertise it all day and every morning. I say knock off a little of that. Give us some better prices. God bless you for doing all you do, I would say to the industry, but give us fair prices. Give fair prices to the American consumer and knock off a little of the advertising. The advertising is only for a product that only a doctor can prescribe. You cannot get this product unless a doctor thinks you
need it. Stop asking me if the purple pill is right for me, asking me to ask a doctor if the purple pill is right for Senator McCain. Knock it off.
Mr. McCAIN. I thank the Senator from North Dakota who has been pursuing this issue for a number of years. I believe we are on the verge of success.
I appreciate his eloquence, I appreciate his passion, but most of all, on behalf of the citizens of my State who can't get up to Canada, who now are experiencing unprecedented economic difficulties, and who need these lifesaving prescription drugs--many of them senior citizens--I just wish to say thank you for your advocacy.
I think you have made an eloquent case, and I hope my colleagues have paid attention and will vote in the affirmative for the Senator's amendment today.
Mr. DORGAN. Mr. President, let me say that Senator McCain has been a part of this effort for a long time. It is interesting, with all the action on floor of the Senate in recent weeks, this is one of the few examples of a significant policy that is bipartisan. We have Republicans and Democrats--over 30 cosponsors--who have worked with us to make certain we can do this, do it safely, and give the American people the opportunity they deserve. This is very bipartisan. I appreciate that
I wish to say, the National Federation of Independent Businesses supports this; the AARP supports this. We have a long list of organizations that are strong supporters of this amendment, and so I hope, today, perhaps at last--at long last, after 8 or 10 years--we might finally achieve a breakthrough and get this through the Senate.
I have said previously that the pharmaceutical industry is a formidable opponent. I understand that. We have had difficulty getting this in a piece of legislation to get it signed and give the American people freedom and give them fair pricing. When we do this--Senator McCain, myself, and others--it is suggested that somehow we have no regard for this industry. That is not the case at all. It just is not. We have no regard for a pricing policy, however, that we believe is unfair to the
American people. It has been that way for too long--a long time too long. Perhaps today--with the vote on this amendment, which I expect later this afternoon--will be the first step in getting that changed.
I yield the floor.
Mr. KYL. Mr. President, I wish to speak to the Crapo motion--an amendment that, hopefully, we will be voting on a little later today--and I urge my colleagues to support the motion of the Senator from Idaho.
This is about jobs and it is about taxes. I think one thing Americans don't expect out of this legislation is that they are going to have a pay a lot of taxes and that jobs are going to be killed rather than created. The President is talking about creating more jobs. Everyone in America is focused on putting people back to work, ending this recession, and bringing unemployment down so we can get jobs and go back to work. One of the problems with this bill is it kills jobs. It kills job creation.
One of the ways it does that is through the many new taxes and mandates it imposes.
Naturally, we want to be sure that whatever we do, we don't harm our economy or job creation, but this $2.5 trillion legislation is filled with new taxes and mandates that will ultimately be borne by small businesses and the American workers. I will talk about just three.
First, a new employer mandate that says that employers have to provide insurance to their employees or face a penalty. This would hurt low-income workers especially, according to a Harvard economist, and I will be talking about that.
Second, there is a new Medicare payroll tax. Incidentally, the revenue raised doesn't go back to Medicare. It would be nice if we could help with the Medicare solvency, but this too threatens the creation of jobs, particularly in small businesses, because it is a direct tax on hiring more people.
Finally, new taxes on the health care industry could undermine its ongoing job creation gains. By the way, it is the only industry to have gained jobs since the start of the recession and this legislation will actually cause job losses.
I will describe all three of these. First, the employer mandate. The bill imposes a requirement--a costly new mandate--on employers that will have the perverse impact of actually hurting employees, especially low-cost employees. How so? Any employer with more than 50 employees who does not offer health care coverage would be required to pay an assessment for each employee who receives a tax credit for purchasing coverage through a newly created exchange. Those are folks in the lower income brackets
who qualify for tax credits. So this becomes a direct tax on hiring people.
According to the Center on Budget and Policy Priorities,
..... the particular employee provision in the Finance Committee bill would pose significant problems by imposing a tax on employers for hiring people from low- and moderate-income families who would qualify for subsidies in the new health insurance exchanges, it would discourage firms from hiring such individuals, and would favor the hiring--for the same jobs--of people who don't qualify for the subsidies (primarily people from families at higher income levels.)
It would [also] provide an incentive for employers to convert full-time workers (i.e., workers employed at least 30 hours per week) to part-time workers.
So here you have it--a mandate in the bill that would directly impact the hiring of low-income workers--precisely the opposite of what we want to be doing these days.
Harvard economist Kate Baicker examined the effect of an employer mandate similar to the one in the Reid bill. She estimated the cost of hiring a low-wage worker would rise by 33 percent--or $2 per hour on a worker earning $6 per hour. Think about that. She concluded that 224,000 workers would lose their jobs as a result of a mandate with these costs.
In addition to all the other problems we have with growing unemployment, here is another one-quarter million people who would lose their jobs because of this bill. It makes no sense.
There was a recent letter sent to the two Senate leaders from the National Federation of Independent Businesses which states:
Mandates destroy job creation opportunities for employees. The job loss, whether through lost hiring or greater reliance on part-time employees, harms low-wage or entry-level workers the most.
That is exactly what the other study said. By the way, the NFIB is a nonprofit, non-partisan organization, defining itself as the voice of small business. We are all familiar with the good work it does. I think it would know [Page: S12775]
what is best for American business and workers.
The second way this bill imposes taxes and hurts workers is it actually creates a payroll tax; in other words, a tax on hiring people or keeping them on your payroll. It raises the Medicare payroll tax by 0.5 percent on small businesses with taxable receipts of $200,000 a year or $250,000 or more, if the small business employer filer is married.
Because many small businesses pay taxes at the individual level, imposing higher individual income taxes hurts these engines of job creation. The Joint Committee on Taxation recently estimated that one-third of the income that would be taxed under a similar House proposal comes from small businesses. Let us remember, as President Obama reminded us earlier this week, small businesses generated 65 percent of the job growth between 1993 and 2008 and represent about half the private sector employment
of the United States.
So this huge potential engine for job creation is going to get whacked by the imposition of a new tax, which is a direct tax on the hiring or retaining of employees. The Joint Committee estimates that this increase in the Medicare tax would raise $54 billion over the next 10 years. That is $54 billion of resources that could have better been used in the private economy, in these small businesses, to expand job creation.
Each new tax dollar paid by these small businesses is one less dollar that could go toward the hiring of new employees or, for that matter, preventing layoffs or even giving raises to their existing employees.
A group of organizations recently told us in a letter--by the way, these are all organizations that represent small businesses in their communities--they oppose this bill because of what it would do to these small businesses. I wish to read the names of the groups that represent these folks: the Associated Builders and Contractors, the Associated General Contractors, the International Food Service Distributors Association, the National Association of Manufacturers, the National Association of
Wholesaler-Distributors, the National Retail Federation, the Small Business and Entrepreneurship Council, and the U.S. Chamber of Commerce.
Here is a telling quotation from their letter:
In order to finance part of its $2.5 trillion price tag, H.R. 3590 imposes new taxes, fees, and penalties totaling nearly half a trillion dollars. This financial burden falls disproportionately on the backs of small business. Small firms are in desperate need of this precious capital for job creation, investment, and business.
That is exactly what President Obama said yesterday. We have to get more capital into the hands of these small businesses so they can either continue their businesses with their employees or, potentially at least, soon begin hiring more. Yet as this letter points out, this bill imposes taxes with a burden that falls disproportionately on the very firms we are trying to help.
In a November 19 statement, the National Federation of Independent Businesses said of the bill's impact on small businesses:
We oppose [the Reid bill] due to the amount of new taxes, the creation of new mandates, and the establishment of new entitlement programs. There is no doubt all these burdens will be paid for on the backs of small business. It is clear to us that, at the end of the day, the costs to small business more than outweigh the benefits they may have realized.
They go on:
The impact from these new taxes, a rich benefit package that is more costly than what they can afford today, a new government entitlement program, and a hard employer mandate equals disaster for small business.
They know what they are talking about. These are the folks whom we are depending upon to create jobs and we are punching them right in the stomach, right where it hurts, with respect to their ability to create these new jobs with the new taxes and mandates imposed in this bill.
Let me share a brief letter from one of my constituents. He is a small business owner in Tempe, AZ. His name is Justin Page. He would like to be able to grow his business, but the burdensome new taxes in this bill would force him to lay off workers and cut hours from his payroll. Here is what he says:
Dear Senator Kyl, As a long time Tempe and Arizona resident, who has been operating a small business for the past 19 years, I urge you to not vote for the healthcare bill as it is currently proposed and as recently passed by the House of Representatives. My business has taken a severe financial hit in the past 18 months with several employee layoffs, reduced hours for current employees, heavier workloads, et cetera. My answer to increased health care costs and additional small business taxes
is to lay more people off ..... not good for [my employees], and not good for me! But survival is my primary goal right now! Reform is necessary, but please do it in a bipartisan manner and within a timetable that allows for constructive debate. This is too important.
So small businesses have some very real concerns about this legislation and good reason to worry that they will be victims of its destructive policies. Obviously, it is not the kind of legislation small business owners or the American worker wants and, of course, not particularly in times of double-digit unemployment. We need to listen to the people out there who are actually creating jobs, who have to meet a payroll, balance a budget, and know what is necessary to run a successful small business.
They are not happy with this legislation.
The third and final point is the new taxes on the health care industry, which of course get passed through to the people who ultimately have to buy insurance. Let me just discuss one--the medical device tax. This medical device tax is a tax on things that are used to treat us, to give us health care every day. The $110 billion in new taxes on industries such as this--the pharmaceutical, the insurance, and medical device industries--is a direct passthrough in terms of what we will end up having
to pay in insurance premiums.
For example, this medical device tax will be assessed against thousands of products, such as contact lenses, stethoscopes, hospital beds, artificial heart valves, and advanced diagnostic equipment. Why would you impose a tax on these things that help us? I could maybe see a tax against liquor or a tax against tobacco but a tax on things such as this--these advanced technologies that help us? Why do we want to make them more expensive? These have been invented so we can have an extension of our
lives; so our families can have better health care.
We all know when you tax something, you get less of it. In fact, a UBS Investment Research paper recently confirmed:
If the plan passes as proposed and our estimates are correct, the initial years would be a financial challenge for medical device manufacturers, as the full industry fee becomes due before newly covered patients impact volumes.
What they are saying here is, first, before they can even begin to pass these costs on, it could kill this particular industry.
These taxes will hit smaller firms particularly hard since some of the smaller companies don't start out with a lot of profits. They rely almost entirely for domestic sales on their revenues.
I note my colleagues on the other side of the aisle, Senators Klobuchar, Bayh, Franken, and in addition Senator Lugar from this side of the aisle, recently sent a letter in which they said:
Independent estimates indicate that this tax could translate into an annual income tax surcharge of between 10 and 30 percent on medical device manufacturers.
Think about that, a 10- to 30-percent tax on folks who are inventing these kinds of things to help us.
These Senators go on in their letter:
This provision would harm economic development and health care innovation nationwide.
This was a letter to the chairman of the Finance Committee.
I know there some who argue that lost jobs in the private health care sector will be made up with new jobs in the government with health care bureaucrats here in Washington. Wonderful, I say.
That is not a good thing. We need jobs in the private sector. That should be our primary goal and that certainly is what President Obama was talking about yesterday when he talked about creating more jobs in the private sector.
In conclusion, I have described three ways in which this legislation through its mandates and its new taxes will [Page: S12776]
cripple our ability to come back out of this recession. It will make it very difficult for us to retain, let alone hire, new employees.
All of us here in the Senate I know want to do what we can to bring down the current very high unemployment. It is obvious that this health care bill makes things worse, not better. At every turn its new taxes and mandates put us on the wrong course. I think it is very hard to justify support for this legislation that threatens job creation, especially job creation for low-income workers.
I urge my colleagues, when we vote on the Crapo motion here pretty soon, to consider its impact. It will enable at least people in the lower income levels to avoid the kind of taxes that are imposed here, one of which, for example, is the tax that IRS will enforce if you do not buy the insurance policy that the government, under this bill, will mandate that you buy. If you cannot afford the insurance the Government has, you have to buy it anyway. If you do not, we will impose a new tax on you,
enforced by the IRS. The Crapo motion would say no, not so fast, IRS, we are going to protect folks from that new tax. That is why it is important to support the Crapo motion.
I urge my colleagues, even though I know we have had a lot of votes here where very few Democrats have supported Republican amendments, this is one which I hope all of us could support.
Mr. FEINGOLD. Mr. President, I rise in strong support of the amendment offered by Senator DORGAN. Frankly, this amendment should be a no-brainer--it saves taxpayers and consumers money by bringing down prices for prescription drugs. I don't think American consumers should have to pay the highest prices in the world for prescription drugs, particularly when those prices keep going up.
The Congressional Budget Office has stated that brand-name drugs cost, on average, 35 to 55 percent less in other industrialized nations than they do in the United States. And the AARP released a study recently that found that the price of drugs most commonly used by seniors has risen faster than the general inflation rate every year since 2004. In 2007, the price spiked by 8.7 percent--three times the general inflation rate of 2.9 percent.
It is no wonder that Americans turn to Canada to buy more affordable, and entirely safe, prescription drugs. Americans are now importing more than $1 billion in prescription drugs from Canada alone. Consumers would not go to such lengths to buy their medicines this way if they were not saving money.
Now, the drug industry has said that drug importation can't be done safely. I give PhRMA credit. They have gone to great lengths to scare the public. The reality is drug importation has occurred within European Union countries--called parallel trade--for the last 25 years. The pharmaceutical industry should know drug importation is safe. The industry has imported drugs and sold them in the U.S. for decades. One-quarter of the drugs consumed by Americans today are made in foreign manufacturing
The Dorgan amendment includes a number of protections to ensure that imported drugs are safe--and certainly safer than the completely unregulated system we have today.
I don't need to remind my colleagues about the deficit hole we are in. Federal spending is one of the top concerns I hear about from my constituents--they want to know what we are doing to get our deficit under control. That is why I introduced legislation, the Control Spending Now Act, to propose concrete ways to bring down runaway government spending. And one of the proposals I included was Senator DORGAN's drug importation legislation, because it is such a commonsense and effective
way to save the government tens of billions of dollars. I am pleased that the health care reform bill we are debating already includes three other proposals in my control spending bill, championed by Senator BINGAMAN and others, that would slash Federal spending on prescription drugs by billions of dollars.
With passage of the Dorgan amendment we can make it four.
We do a lot of things in Congress that leave our constituents scratching their heads. Now we have a chance to show them we are listening to them, that we understand their concerns, and that we want to bring down Federal spending while ensuring the prescription drugs they need are more affordable. Again, that sounds like a no-brainer to me.
Mr. BAUCUS. Mr. President, I ask unanimous consent that we extend the period for debate until 4 p.m. with the time equally divided, with Senators permitted to speak up to 10 minutes each, with no amendments in order during this period of time.
Mr. ENZI. Mr. President, Americans across this country are facing the reality of an economy that is in trouble. The unemployment rate is now 10 percent. According to the Department of Labor's broadest measure, some 17.5 percent of Americans are without a job entirely or are underemployed.
We have shed 3 1/2 million jobs since January of this year and the average work week is now down to 33 hours for the American worker. Americans are struggling to find good jobs and, because of that, they are having trouble making their mortgage payments. Fourteen percent of all mortgage loans, meaning 7.4 million households, were delinquent or in foreclosure in the last quarter. That is the highest number since the mortgage bankers industry began this survey in 1972.
Many economic indicators point toward a slow, unsteady and jobless recovery, and the American people know it. In a recent survey, 82 percent of Americans said our Nation's economic conditions are poor. In recent weeks, President Obama has convened a summit at the White House to discuss jobs and economic issues. He has given speeches to discuss proposals for job creation and economic recovery. There has even been discussion about spending additional billions of dollars on another economic stimulus
Unfortunately, the President has not advocated for the single quickest and simplest way to promote economic growth. If the President wants to save jobs and grow the economy, all he needs to do is tell the majority leader and the Senate Democrats to scrap this $2.5 trillion Reid health care reform bill and work it over, step by step, to get it right and to save costs.
Senator Reid's prescription for our economic troubles is a $2.5 trillion bill full of tax increases, higher health care costs, and $500 billion in Medicare cuts. The Reid bill contains $500 billion in new taxes. Primarily that is how it is being paid for--steal money from Medicare and tax people additionally. There are new taxes on individuals, new taxes on small businesses, and new taxes on health care providers.
These new taxes will raise health care costs. They will be passed on to the individuals in the form of higher premiums. According to the Congressional Budget Office, the Reid bill will drive premiums up by 10 percent to 13 percent.
I know the other side likes to relate to those pieces of the bill that talk about--one section that brings it down by 7 percent and another one that brings it down by 7 percent, but they fail to notice that the bill actually raises it to 27 percent to begin with. When you subtract that out, it still winds up with a 10-percent to 13-percent increase.
Who gets taxed under the Reid bill? If you don't have a government-approved health insurance, you get taxed. Incidentally, we are going to tell you--Washington is going to tell you what the minimum requirement is. That will be higher than most people have for insurance at the present time. The government will tell you what you need and they will fine you if you do not agree.
The total amount of new taxes on uninsured Americans is $8 billion. According to the Congressional Budget Office, half of the new taxes on the uninsured will be paid by families earning less than $68,000 a year.
If you do not have insurance, you will get taxed. If you have insurance, you can get hit twice by new taxes in [Page: S12777]
the Reid bill. First, new taxes on health care providers will be passed on to consumers in the form of higher premiums. Second, if the government bureaucrats decide your employer-sponsored insurance is too generous, you will get taxed for that too.
The Reid bill contains $150 billion in new taxes on employer-sponsored health benefits. These new taxes on benefits fall disproportionately on middle-income Americans. According to the Joint Committee on Taxation, 73 percent of those hit with new taxes on benefits earn less than $200,000--73 percent. That is a whole bunch of people down there in that category.
The Reid bill also contains new taxes on businesses that cannot afford to provide health insurance. Most employers do provide health insurance to their employees, but there are some who simply cannot afford to and stay in business. Senator Reid's health care plan will mean they will have to pay $28 billion in new taxes. These are the same businesses that are barely making it. These are the same businesses that are having to lay off workers to keep the company afloat, the same businesses
that are cutting shifts to prevent further layoffs, and they are cutting wages to keep their employees on the payroll.
With our Nation's unemployment in double digits and millions more Americans worried about keeping their jobs and paying their bills, it is unthinkable to me that any Member of this body would support new taxes on businesses that are already struggling. These are the small businesses that absorb the extra employees that get laid off from the big businesses--and hopefully it is the small businesses that become the future big businesses.
In addition to the job-killing taxes, the Reid bill raises Medicare payroll taxes by $50 billion. These will fall disproportionately on small businesses. Approximately one-third of America's small businesses will be hit with this tax increase. These are the same small businesses that employ 30 million Americans.
I have to say, when you talk about taxing the rich, we are also talking about taxing the owners of small business corporations, because the money flows right through to them, even though they have to put most of it back into the business in order to keep the business going.
Not only will small businesses see their taxes go up under the Reid bill, they will see their health insurance premiums go up as a result of new taxes on health care providers. Beginning in 2010--that is 3 1/2 years before many of the health reforms go into effect--new fees will be imposed on health insurance companies. That is right now, 3 1/2 years before the reforms go into effect. The Congressional Budget Office and the Joint Committee on Taxation have characterized these as excise taxes.
They have also testified that these fees will be passed through to consumers in the form of higher premiums.
If you need prescription drugs, you get taxed. Beginning in 2010, new fees will be imposed on prescription drug manufacturers. Similar to the health insurer fee, CBO and Joint Tax say it will be more expensive to buy prescription drugs.
If you need a medical device, you get taxed. Medical device manufacturers will be subject to a 2 1/2 -percent excise tax on sales. Again, the Congressional Budget Office and Joint Tax have testified that this tax will increase the cost of medical devices. Just like prescription drug costs and health insurance, this new tax on devices will drive premiums up. If you have high out-of-pocket drug expenses, you will get taxed. A family will no longer be able to deduct medical expenses that exceed
7 1/2 percent of their gross income as they can now. Instead, they can only deduct expenses that exceed 10 percent. In plain English, this proposal limits the tax deductions a family can take for medical expenses. For example, a family of four earning $57,000 in 2013 would lose a tax deduction of $1,425.
A family of four earning $92,000 in 2013 would lose a tax deduction of $2,300.
Instead of working toward a bipartisan solution to our economic problems, Senator Reid has brought a bill before us that spends $2.5 trillion over 10 years, raises taxes on middle-class families and small businesses. I support health care form, and I will continue to work to enact real reforms that lower the cost of health care. I cannot, however, support higher taxes that further jeopardize our economic recovery by punishing small businesses and raising health care costs for working
I yield the floor.
Mr. BROWNBACK. Mr. President, the Senator from North Dakota is a strong, good, talented legislator. He has a good amendment, one I have looked at. It has been around for a long time. I have to rise in opposition to it.
I am ranking member on the Appropriations Subcommittee on Agriculture, Rural Development, and the Food and Drug Administration. The FDA is in the purview of our subcommittee, so I work on the issues of the FDA. If I may brag, the University of Kansas is one of the best pharmaceutical schools in the world and is often rated No. 1 as a pharmacy school. For anybody interested in that field of study or work, it is a good place to go. They are very concerned about what is in the Dorgan amendment.
The United States currently has one of the safest drug supply systems in the world that allows the Federal Food and Drug Administration to monitor and regulate the manufacture and distribution of approved medicines. The legal authority to import drugs already exists in this country. However, no HHS Secretary, Democrat or Republican, has been able to certify that the importation of prescription drugs from foreign nations is safe or will lead to cost savings. None have been able to.
The Dorgan amendment will allow for the importation of drugs from outside our current regulatory system, established and enforced by the FDA without certification from the Secretary of HHS or the Food and Drug Administration. Allowing drug importation from foreign nations could threaten public health and result in unsafe, unapproved, and counterfeit drugs being placed on pharmacy shelves in the United States.
I want to develop that thought. The FDA has been tasked with the responsibility of safeguarding this country's prescription drug supply and has executed that responsibility quite well. But as this country and the Food and Drug Administration struggle to prevent the growing threat posed by imported, foreign-produced goods, as evidenced by recent failures to detect polluted products such as infant formula, pet food, and toothpaste, permitting the importation of drugs from foreign nations without
the complete assurance from the FDA that it will not jeopardize public safety is irresponsible and threatens this Nation's safety and proven drug supply.
Toward that end, I ask unanimous consent that a letter that Senator Carper received from the Health and Human Services agency, the FDA Director, be printed in the Record at the conclusion of my comments.
Mr. DURBIN. Mr. President, this is the 10th day in the debate on health care reform. I believe it is one of the most important issues we have ever debated, certainly in my time on the floor of the Senate. There have been a variety of amendments offered, and there has been a lot of work going on off the Senate floor. Before we could reach this point and start this debate, committees held hearings that went on for weeks and months. They started with the base bill and entertained hundreds of amendments.
The HELP Committee, as well as the Finance Committee, devoted so much time to this.
The first time I can recall the chairman of the Senate Finance Committee MAX BAUCUS coming to see me personally on this was over a year ago. So over a year has gone into this effort to come to this moment. I might add, the negotiations and efforts to improve the bill have not stopped. As late as last night, a large group of members of the Democratic caucus in the Senate were meeting to work out pretty contentious issues relating to competition for private health insurance companies. They
worked late into the night, night after night, and finally came up with a consensus where differing points of view had to make concessions and come up with the best way to move forward. That is what has gone into the base bill that is before us.
This is it, 2,074 pages put together through all of the work I have just described. I understand the responsibility of the minority party in the Senate is to disagree. But we hope they will do it in a constructive fashion. In this situation, we have invited them in from the beginning. In fact, in each of the committees, Republican Senators have been active participants offering amendments, many of which were adopted.
Beyond that, there were meetings off the Senate floor. The Senator from Wyoming was a party to meetings that went on for, I am told, more than 60 days in an effort to find a bipartisan middle ground. But the fact is, we come here today in the Senate debating this bill, and there are several realities. The first reality is, after the House of Representatives went through a similar exercise, only one Republican Representative, a Congressman from New Orleans, LA, voted for health care reform, only
one. In the Senate to date, only one Republican Senator, Senator Snowe of Maine, has voted for health care reform in the Finance Committee. Not one single Republican Senator other than Senator Snowe has voted to move forward on health care reform.
There is a second reality. There is no Republican health care reform bill. None. They have a variety of different ideas, but each one is discrete and specific. They are not comprehensive. They don't really address the issues this bill addresses. They have not presented a bill which makes health insurance premiums in America more affordable. This bill does.
Don't take a politician's word for it. The CBO looked at this bill and said it will bring down premiums for the vast majority of Americans paying for health insurance today, something we definitely need because we are dealing with a situation where individuals, families, and businesses can no longer afford health insurance. There has not been a bill produced on the other side of the aisle which guarantees that 94 percent of Americans will have health insurance. This bill does. They haven't produced
that bill. When this bill is enacted into law, we will have a larger percentage of our American citizens covered with health insurance than ever in our history.
They have not produced a bill which changes the way health insurance is managed and its relationship with its customers across America. This bill does. There is a bill of rights in here that says: American consumer, you have a right to have health insurance, even if you have a preexisting condition. You have a right to stand up to the health insurance companies when they deny you coverage, saying: We only cover you when you are well, not when you are sick. You have a right for your children to
be covered under your family health insurance policy until they reach the age of 27. These are rights which we guarantee in the bill and have not been brought to the floor by the Republican side because they do not have a health care reform bill.
Before us at this moment is a motion to commit by a friend of mine, Senator Crapo, who raises a question about will there be taxes. Will people have to pay for what we are doing here? Well, I can tell you, we think we have struck a good balance in terms of shared responsibility. First and foremost, understand this: If we dropped this debate, as most Republicans would have us do at this moment, and walked away and said: We are not going to do anything, each and every American will continue
to pay over $1,000 a year in added premium costs to cover the cost of uncompensated care.
In my hometown of Springfield, IL, we have some wonderful hospitals. When poor people with no insurance show up, they are treated, they are cared for. That hospital, then--whether it is St. John's or Memorial--has to pass along the cost of that health care to the other people who are paying for their care, which means each of us is paying $1,000 more a year for our families in health insurance premiums to cover those uninsured. So that $1,000 tax is already there.
Let me tell you what this bill does. This bill says, if you are making less than $80,000 a year, we will help you pay your health insurance premiums, give you tax breaks to pay those premiums. That means a lot of people who today cannot afford to pay for health insurance premiums will be able to. They will go to this exchange. They will be able to chose from health insurance options, and they will get a helping hand to pay for health insurance.
We also have special provisions in here to take care of the smaller businesses. If you have fewer than 25 employees and have a small business--and that represents a lot of businesses, mom-and-pop businesses, for example--we are going to give you a helping hand so you can pay for the health insurance coverage for yourself, the owner of the business, and the people who work for you.
What about those that are larger companies? Well, let's be honest about it. We expect them to step up and accept this shared responsibility. Most of these companies do not question whether they have to pay into unemployment insurance or workers' compensation. That is part of the cost of doing business. We are saying that in this era of health care reform, with shared responsibility, businesses should offer good health insurance for their employees. In most instances, they do, and they deserve
our commendation for doing it.
But we also understand there are some that may not cover their employees, may have waiting periods that are unreasonable. We start moving our policy against that so people do have the peace of mind of knowing, when they go to work, they have good health insurance that is going to be there when they need it. It is a new look at it.
But we started with a real challenge. America is the only developed, industrialized country in the world where a person can die for lack of health insurance. We are the only one. There is not another country where that happens.
We are also the only developed country in the world where a person can be driven into bankruptcy because of medical bills. We kind of accept it. Well, so and so had an accident, went to the hospital, was there for a month, and has a huge medical bill. They did not have any savings or insurance, and it wiped them out. It wiped them out.
It does not happen in other countries. In developed countries, it does not happen because they take care of people, and they understand whether they are using private health insurance or public health insurance, there is a social obligation to make sure we all have the peace of mind of knowing that is not going to happen.
So we address this, and we help people pay for their premiums as well. There is $441 billion in tax relief in this bill for families over the next 10 years to pay their health insurance premiums. That is a tax break that will lead to more insurance coverage and more peace of mind. That is a reality. For the smaller businesses, with 25 and [Page: S12780]
fewer employees, there is a helping hand for them to cover their employees as well.
We also provide some competition that in many places does not exist today. We provide that there is going to be health insurance options for people. Too many small employers whom I have run into say: It is a take it or leave it deal with our health insurance company. We will renew last year's policy at a higher cost with less coverage, and you better take it because there is no place else to go. That is going to change here. That is part of the change.
For all my Republican friends and colleagues who have come to the floor over the last 10 days critical of this health care reform bill, I understand, that is part of Senate debate, that is part of what we are here for. But make no mistake, these same Senate Republicans do not have a health care reform bill. Most of the amendments that have been offered have been to protect health insurance companies, companies that are wildly profitable, companies that, frankly, dictate in this system how much
people are going to pay and whether they are going to have coverage.
Dutifully, now, the Republican Senators have stepped up saying: We have to protect these health insurance companies and their profits. I do not think that is my responsibility. My responsibility is to almost 13 million people in my State of Illinois and to the rest of the Nation, to make sure they have the same peace of mind we all want--to know they have quality, affordable health care, to extend the reach of health care and the peace of mind that comes with it to the largest percentage of Americans
The last point I wish to make is one about the deficit. We hear a lot about the deficit. This health care reform bill will cut more money from the deficit--$130 billion over the next 10 years--than any single bill ever considered on the floor of the Senate. Again, that is not my conclusion but the conclusion of the Congressional Budget Office, which analyzes these bills for Democrats and Republicans--a $130 billion reduction in the deficit over 10 years and, in the next 10 years, an additional
$650 billion. Because as we start to bend the curve to bring down the increase in health care costs, it means we pay less for Medicare services, less for Medicaid services, less for many services that are offered through government programs.
This bill is fiscally responsible. President Obama challenged us to make it such, and we did it. There has not been a bill offered by the Senate Republicans which reduces the deficit--not anywhere near this amount. No one has ever done it. It took a lot of hard work to reach this point.
I would say the net result of the motion to commit by Senator Crapo is, unfortunately, to delay this debate even further, to stop the momentum toward health care reform. I do not think that is what America wants or needs. This is a once-in-a-political-lifetime opportunity to address an issue on the mind of every American and to do it in a fair and comprehensive way.
Certainly, this bill is not perfect. As hard as we tried, it never will be. But to just continue to argue there are elements they want to question, without offering a comprehensive health care reform alternative, I do not believe is a fair debate. We have put the time into this. I stand by it. I will be proud to support it. There are things in it I do not agree with; most things I do. But the
fact is, it is the right thing for us to do at this moment in history. We cannot miss this opportunity. I encourage my colleagues to oppose the Crapo motion to commit.
Mr. President, how much time do I have remaining?
Mr. DURBIN. Mr. President, I stand in support of the amendment that is being offered by the Senator from North Dakota, Mr. Dorgan. Senator Dorgan has talked about drug reimportation, and he has raised an issue which troubles me. Why is it that pharmaceutical companies in America charge Americans more for their product than they charge customers in other countries buying exactly the same product? Senator Dorgan had a hearing once, and the response was obvious. The pharmaceutical
companies say: We charge Americans more because we can.
In all those other countries, such as Canada, when they try to sell drugs to Canadians, the Canadian Government steps in and says: You are entitled to a profit, but don't go overboard. We will allow you to increase your profits only so much each year.
In the United States, there is no such mechanism and no such effort. So we continue as a nation to pay premium prices for drugs that are exactly the same drugs that are sold at a fraction of the cost around the world.
The AARP, which is the largest organization of seniors in America, did a study of drug prices published in April. It showed that the price of the most commonly used drugs has risen faster than general inflation every year since 2004. This year, drug prices are going to go up another 9 percent, for example.
So a lot of Americans are saying: If I can buy the same drug in Mexico or Canada at a lower price, why wouldn't I be allowed to do that? Why would you stop me under the law? Well, I do not think we should. I think we ought to give people that opportunity.
What Senator Dorgan has done is to build in his amendment safety features so we know we are not dealing with counterfeit drugs and we know there is accountability as to the source and the purity and the effectiveness of the drugs that are bought.
This amendment creates a role for the Federal Government in providing oversight, with the goal of ensuring that Americans have access to lower prices and the peace of mind of knowing their drugs are safe.
The bill allows pharmacies and drug wholesalers licensed in the United States to import FDA-approved medications from Canada, Europe, Australia, New Zealand and Japan and pass along the savings to their American customers. What does it mean? A 35- to 55-percent lower cost for some of the most widely used drugs in America.
This approach will reduce costs when people need it, particularly sick people who are dependent on drugs to stay healthy or to avoid even further illness.
The CBO estimates that the new policy will result in Federal savings of $19.4 billion over 10 years. I will tell you why I think this is critically important. There are a lot of drugs and drug companies that are doing very well. They are very profitable, and they are based in the United States. I think it is unfair they are charging the people of their own country higher prices than they are charging people in other countries around the world.
This reimportation is an effort to try to help bring down some of these drug prices. These companies, incidentally, say: Well, we need the money because we need to do research for new drugs. Well, certainly they need to do research for new drugs. But maybe they can stop and explain to me or to someone why they spend more money on advertising than they do on research. You have seen the ads on television, heard them on the radio, and seen them in magazines. They spend a fortune advertising, trying
to lure people into using the highest priced drugs in America.
These pharmaceutical companies are doing very well. Their profits are sky-high, sometimes the highest in America. I think it is fair in this bill, as we try to bring down the cost of health care, that we also bring down the cost of these drugs by allowing the importation, with strict safety standards, of these drug into the United States.
I support the Dorgan amendment and look forward to making more affordable prescription drugs available across the United States.
I yield the floor.
Mr. CRAPO. Thank you, Mr. President.
Before I begin my remarks, I would like to yield a couple minutes to my friend and colleague from Oklahoma who would like to respond to the question that has been raised as to whether [Page: S12781]
the Republicans are presenting reliable, meaningful, and comprehensive alternatives.
Mr. COBURN. I thank my colleague from Idaho.
Mr. President, the majority whip realizes there is an alternative bill. As a matter of fact, there are four alternative bills out there. They were not given a hearing. They did not have the resources. They did not have the CBO that would score them.
We have a bill that guarantees if you like what you have now, you can keep it; has absolutely zero tax increases on American families; no increases in taxes on American business; lowers the cost of everybody's health insurance premiums; covers preexisting conditions, period; protects seniors' high-quality care and choices; increases personal control over your own health care; no Medicaid expansion, but, in fact, puts Medicaid patients into true coverage without discrimination and allows all the
doctors in this country to see them. It protects the physician-patient relationship and empowers patients, families, and physicians and providers. It does not empower the government. The majority whip knows that. Yet we have just heard on the floor we have not offered anything.
We have offered a bill that outside evaluators say saves the States at least $1 trillion in the first 10 years, saves the Federal Government $70 billion, treats everybody the same, creates access to health care, and, more importantly, it incentivizes prevention and the management of chronic disease and, finally, it attacks some of the $100 billion a year in fraud in Medicare and Medicaid,
where this bill attacks less than $400 million a year in Medicare and Medicaid.
I yield back to the Senator.
Mr. CRAPO. I thank my friend from Oklahoma because it is frustrating sometimes to have it continuously said that there are no alternatives being put forward when we have for years promoted major and comprehensive alternatives to the kinds of issues Americans are asking us to address today.
What is it that Americans are asking? I have said this many times on the floor. Americans are asking us to find a pathway to lower health care premiums and costs and to increase access to better quality health care. Yet what is it that we are being faced with in this legislation? This bill drives up the cost of health care, not down, contrary to claims that have been made on the floor repeatedly; raises taxes by hundreds of billions of dollars; cuts Medicare by hundreds of billions of dollars;
grows the government by $2.5 trillion; forces the needy uninsured--it doesn't give them a pathway toward subsidized insurance or any access to insurance but instead forces them into a failing Medicaid Program; imposes damaging unfunded mandates on the struggling States;
leaves millions of Americans still uninsured; and establishes massive government controls over our health care economy. And we wonder why we cannot get engaged in a meaningful bipartisan solution here with this kind of heavy-handed approach being insisted upon.
When I talk about the fact that it raises the costs or the size of government, often the response is: No, this bill doesn't raise the size of government, it doesn't increase the size of government, it is balanced. Actually, CBO has issued a report that says it reduces the deficit. Well, the fact is it grows the size of government over a true 10-year period by $2.5 trillion. It does provide some increased taxes--a lot--and it does cut Medicare. By doing so, it does reach an equilibrium, according
to CBO, with regard to its impact on the deficit. But let's not mistake this deficit with the size of the government. This bill will grow the size of the government and the reach of the government by $2.5 trillion.
With regard to the question as to whether it truly impacts the deficit, I think most Americans have already heard that there are some budget gimmicks here. You could not ever claim this bill doesn't increase the deficit unless you had all the taxes I am going to talk about in a minute and unless you had all of the Medicare cuts we have been talking about for the last week, and unless you had the budget gimmicks that are in the bill. The budget gimmicks are clearly depicted right here.
Look at the first 4 years of this bill on the spending side: very little, if any, spending. The actual implementation of the spending part of the bill doesn't happen until 2014, but all the taxes start in the first year, and all the Medicare cuts come into place in the first year, and we start seeing the offset side of the bill run for a full 10 years. It is going to be easy to say you have balanced out spending and taxing if you don't count the spending for the first 4 years. But if you look
at that first true 10-year period of time, it is a growth of the government by $2.5 trillion.
What I am here today to talk about is my motion that is on the floor to do one very simple thing: to commit this bill back to the Finance Committee and have the Finance Committee make the bill comply with the President's pledge to the American people about taxes. And what was his pledge, repeated many times across this country? In the President's own words:
I can make a firm pledge ..... no family making less than $250,000 will see their taxes increase ..... not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes ..... you will not see any of your taxes increase one single dime.
That was the rhetoric. That was the pledge. What is the reality of the bill? In its first 10 years, the bill raises taxes by $495 billion. If you take that 10-year window that starts in 2014 where you are comparing spending and taxing at the same time, the total of taxes in that 10-year window is $1.2 trillion of new taxes, a huge proportion of which falls squarely on the backs of the middle class whom President Obama has defined here to be those earning less than $250,000, and that is per family.
He said under $200,000 per individual.
What are some of these taxes we are talking about? First, there is the excise tax on high-cost premium plans. One might say, wait a minute, that is a tax on companies, employers who provide very high quality insurance to their employees. It is an ingenious way--it is technically written that way--but it is an ingenious way to actually increase the cost, the tax base, of the workers and not the employer. Let's see the first chart. The way this works is the government will now say to an employer:
You cannot provide health insurance to your employees that is worth more than a certain amount. Most employees who get health insurance--and that is most employees in the country who get health insurance from their employer--get wages and health care as a part of their total employment package.
I picked an example of a woman who receives $50,000 in wages and let's assume a $10,000 employer-provided health care benefit. The government is now going to say wait a minute, to her employer; we are going to tax you if you provide that health care benefit on such a robust level. CBO and Joint Tax have told us that the reaction of the vast majority of all employers is going to be to reduce the health care benefit down below the level that gets taxed. They are not going to reduce the employee's
overall benefit, however, their overall employment package. So let's pick a number. Let's say they reduce this $10,000 down to $7,000. They will increase the wages by $3,000 and the employee's total compensation package stays the same: $60,000, with one difference. Now that extra $3,000 is wages instead of health care, and it gets
taxed. And that way the individuals in this country see their health care values go down. Their total compensation package stays the same, but then gets also reduced as it is taxed, and our Joint Tax Committee and CBO have told us that 84 percent of this $149 billion new tax is going to be borne by those with incomes under $200,000.
That is one way this bill ingeniously gets at the pocketbook of those making less money than the $200,000 or $250,000 as a family that the President talks about.
What is the next way? Medical deductions. I think everybody in America who itemizes deductions knows about the first line that says you can itemize your medical expenses, and to the extent they exceed 7.5 percent, you can deduct those medical expenses. So people who have a large proportion of their income represented by medical costs get a break in the Tax Code for that deduction. Well, that break is now going to be smaller under this bill because the level of where you are able to [Page:
get it is no longer going to be 7.5 percent, it will be 10 percent. And as I indicated, that 84 percent of the excise tax is going to fall on people making less than $200,000 a year. Ninety-nine percent of the medical deduction restriction will fall on people making less than $200,000 a year; as a matter of fact, making a lot less than $200,000 per year.
Then what about the next one? The next major tax in the bill is the Medicare payroll tax. This one has been presented to the American public as a tax on rich people. It starts out primarily impacting people at the higher levels, but at the outset, it will already hit 345,000 Americans, and it is not adjusted--I think most people understand how the alternative minimum tax works today. It is not adjusted for inflation properly. So over time, the payroll tax itself is going to increasingly hit more
and more people in that income category under $200,000.
There has been some analysis on these three provisions in the bill. Joint Tax has indicated that by the year 2019, at least--and I say at least because we are only talking about three provisions in this bill right now, and there are more--73 million American households--not individuals, households--73 million American households earning below $200,000 that are going to face a tax increase.
Some have responded to this by saying, Wait a minute. Our bill actually cuts taxes and you are not characterizing this fairly. The tax cuts they are talking about are primarily a $394 billion government subsidy for purchase of health insurance, a subsidy that will be administered through the Tax Code. What they don't tell you is that $288,000 of this so-called tax cut is nothing other than a
direct government payment to those who don't pay any taxes today anyway. It is not reducing their tax liability; they have no tax liability. It is a direct government subsidy, and CBO says so. It is scored by CBO not as tax relief; it is scored by CBO as direct government spending. To characterize that as tax relief I believe is inaccurate.
Moreover, even if it were true tax relief, is that what the President was saying, that I won't raise your taxes more than I will lower someone else's or was he saying to the American people that he would not raise taxes on people who are making less than $200,000 a year, or $250,000 as a family? I believe it is inherently obvious what the President was saying. And to say now that we are cutting somebody else's taxes so we can raise yours does not comply with the President's pledge.
To give another couple of perspectives on this in terms of numbers, when all is said and done, 7 percent of Americans will get this so-called tax relief that is, in reality, direct Federal spending, and the rest of Americans--specifically, those who don't fall in that category--will get the tax increases. Out of 282 million Americans with some kind of health insurance today, only 19 million of them will be helped by this subsidy. The rest are going to fall into that category of those who get
to share in the burden by seeing their taxes increase.
But let's say we give credit for all of these arguments and say, All right, we will let you claim that all of this spending is tax relief. What is the true story then? Even if you give that argument, which is not valid, by 2019, there will still be at least 42 million American households earning below $200,000 that will face a tax increase. This is information from the Joint Committee on Taxation.
In fact, the data there is rather interesting. Joint Tax data indicates that by 2019, individuals earning between $50,000 and $200,000 on average will see an increase in their taxes of $593. Families earning between $75,000 and $200,000 will see on average a net tax increase of $670.
So what does my amendment do? My amendment says very simply that the bill will be committed back to the Finance Committee and that the provisions in the bill that violate the President's pledge should be removed. Simply make the bill comply with the President's pledge. The President, frankly, shouldn't sign this bill unless this amendment is passed and implemented, because that is the direction we need to go.
Once again, the President's pledge is that no family making less than $250,000 is going to see their taxes increased.
There is further information available about this, though. I recently sent a letter to the Joint Tax Committee. I recently sent a letter to the Joint Tax Committee asking them about whether there were other provisions in the bill other than these three--the reason I talked about these three taxes is because those three taxes have been analyzed by Joint Tax and it is Joint Tax that is telling us what they are going to do.
In response to my letter saying are there more taxes in the bill than those you have analyzed, the answer has come back, yes, and below, they say, is a list of the provisions that they have not previously distributed and that have statutory incidence on individuals with those who fall below the income threshold which has been defined already. What are these taxes? There is a confirmed definition of medical expenses for health savings accounts. In other words, the reduction of benefits in health
savings accounts will have an impact, and I believe that impact is about $1.5 billion.
The increased penalty for nonqualified health savings account distributions and limitations on flexible spending arrangements will raise almost $15 billion. Most of this--although we don't have the data yet from Joint Tax--most of this comes from families below the income tax threshold, as well as the 5 percent excise tax on cosmetic surgery and similar procedures and the individual mandate in the bill that will force all Americans to purchase insurance or the IRS will come and collect a fee
I don't have the chart here that shows what will happen with the IRS, but think for a minute. The current size of the IRS is about $12 billion in terms of the appropriations we give them to perform their functions. CBO says that if this bill passes, there will be so much additional business for the IRS in monitoring health care and the new plans and programs in the bill, there will have to be at least another $5 billion and maybe a $10 billion increase in the size of the IRS just so it can implement
its enforcement responsibilities under this bill.
The bottom line is that the President of the United States, Barack Obama, has made a pledge. It was that pledge, among a number of others--such as ``if you like what you have, you can keep it''--that caused us to see a strong low-confidence level by the American people, and maybe it is time for Congress to truly dig in and build a strong health care reform package. That pledge is being squarely broken by this bill.
Again, all we are asking in this amendment is to send the bill back to the Finance Committee and have the Finance Committee make the bill conform to the President's pledge. What that will mean to the American people is that in the first 10 years of the bill, just under $500 billion of new taxes will not be imposed, and over the true first 10-year period, when the spending starts kicking in, $1.2 trillion worth of taxes will not be imposed.
There are many other issues with this bill that we have seen discussed. There is the question of whether it truly increases the cost of premiums in health care. Virtually 10 out of 11 studies say that it does. The CBO report says that, clearly, for 30 percent of Americans, it does it in major ways, and for the other 60 percent, the impact is marginal, or the status quo.
As we move forward, some of these big problems with the bill need to be fixed. My motion focuses on taxes. We have debated Medicare for some time now. We need to talk about the unfunded mandates on the States. We need to talk about the impact on premiums in health care because we don't want to be passing legislation that drives up the cost of health care at a time when that is the primary purpose for people calling for health care reform.
I urge my colleagues to let us step down for a moment from the intensity of the debate, commit this bill to the Finance Committee, and let's, on a bipartisan basis, work out some of the solutions to these problems and do so in a way that does not result in such a massive growth of our Federal Government, such a massive increase in taxes, such a massive unfunded deficit on the [Page: S12783]
States, and all for no control of cost or health care premiums.
With that, I yield back the remainder of the time I requested.
Mr. BAUCUS. Mr. President, here we go again. We keep hearing it, and the other side keeps using scare tactics. All those Democrats say is tax, tax, tax. Scare tactics. They think they can scare people into believing something that is not true. The fact is, not only does this bill not raise taxes on the middle class, this bill is a tax cut for Americans.
Look at the chart behind me, which shows that. This is individual taxes. We are talking about taxes on individuals in America. This chart shows that in the year 2015, there will be a net tax cut for Americans of $26.8 billion--a tax cut. The other side says some of those folks are not paying taxes. That is true. It is a refundable tax credit of about $27 billion. In 2017, it is a net tax cut of $40 billion. In 2019, it is a net tax cut of almost $41 billion.
Nobody can read the small print on the chart, so I will read it:
Combined effects of the high-premium excise tax, health care affordability tax credits, increase in HI tax, increase in HI floor for medical expense deductions.
It is the basic provisions.
It is very important to point out that this is a net tax cut for most Americans. For some, there is a tax increase. But guess what. According to CBO, that is because those folks will make more money. Their wages and salaries will go up.
I don't see a chart-meister behind me to change the charts, but the chart shows almost for every year about a 10-percent increase in taxes for upper income areas and about an 80-percent increase in wages or income. That is basically because, according to the CBO, the high-premium excise tax will result. People will be paying lower premiums, 7 to 12 percent lower premiums as a consequence of the Cadillac tax provision. CBO says that; it is not my prediction. That will be passed on in the form
of higher wages and higher income to people. People will be paying higher taxes, but they will be making more money.
Let's make it clear. This bill lowers taxes. At least that is what CBO says. It is one thing to make an allegation that it increases taxes, but CBO says there is a net tax cut, which I mentioned.
Turning to another subject--small business--one of the goals of health care reform, clearly, is to ensure employees and small businesses have access to quality, affordable health care options. Small businesses have a tough time providing health insurance, that is true. Last year, only 62 percent of small businesses offered health insurance to their employees. Compare that with about 99 percent of companies with 200 or more employees. Big businesses offer health insurance, but small businesses
just can't do it. They have a hard time. Among the very small businesses, fewer than half offered their employees health insurance.
Small businesses say the main reason they cannot provide health insurance is because premiums are so high. That is probably true; it is expensive. I have talked to many small businesspeople, and I am quite certain the Senator from Vermont, who is in the chair, has run across the same comments from businesses. It is just too expensive.
In the past 10 years, premiums have risen 82 percent for single workers and 93 percent for families employed by small businesses. As health care costs rise, small businesses are forced to make workers pay a greater portion of these expensive premiums. Last year, employees in small businesses that provided health insurance paid more than twice what they paid in 1999. So in a period of 8 years, the amount employees paid more than doubled.
The low rate offering and higher cost-sharing responsibilities for employees and small businesses often limit the ability of small businesses to attract and retain good employees.
That is why the health care bill before us today includes provisions to make quality coverage more affordable for small businesses and their employees. The bill includes $24 billion in tax credits to help small businesses and charitable organizations purchase health insurance for their employees--$24 billion.
Starting in a couple of years, eligible small businesses would receive tax credits worth up to 35 percent of the employer's contribution to employee health insurance plans. Then in 2014, eligible small businesses will receive tax credits worth up to 50 percent of the employer's contribution to employee health insurance plans purchased in health insurance exchanges. That is half of the cost to the employer. An employer could take half of that cost as a tax credit against that company's income.
To qualify for the tax credits, businesses would have to cover at least half of their employee premium costs. The value of the tax credit is based on the size of the business and the average wage of its employees.
The small business tax credit will help make health insurance more affordable for many small businesses. That is clear. In 2011, 4.2 million Americans will be covered by quality, affordable health insurance because of this credit. On average, small businesses across the country will receive a new tax credit of around $5,000 to help them purchase insurance. The CBO has estimated that the small business credit will help lower insurance costs by 8 to 11 percent for employees at small businesses
who receive that credit. CBO says, again, that small business credit will help lower insurance costs by 8 to 11 percent for employees of small businesses who receive the credit.
One of the reasons many small businesses are currently unable to afford health insurance is because they lack the buying power larger companies have to negotiate group rates. Our bill creates small business insurance exchanges, known as shop exchanges, where small businesses can join together and pool their risks. That will enhance their choice and buying power. These State-based exchanges will be a critical tool to help small businesses with fewer than 100 employees shop for health insurance
plans and determine their eligibility for tax credits to buy health insurance. Small businesses that prosper and grow beyond 100 employees will be allowed to continue shopping in the exchanges.
The insurance plans sold in these exchanges will be subject to the same transparency requirements and consumer protections, so small businesses can feel confident they are purchasing high-quality plans that will provide quality, affordable coverage for their workers.
One more point. We all talk to small businesspeople. Time and time again, they say they like to provide health insurance. But what happens? The insurance company comes along and says: Next year, we are going to raise your premiums 20, 30, 40 percent. Why? The answer is that we found out one of your employees has a preexisting condition, so we are going to raise your premiums by that much. It puts small businessmen in a terrible dilemma: they either have to fire that employee to get the lower
increase in premiums or eat that big increase and keep that employee.
I remember a businessman in Billings, a small contractor, whose heart sank when he got that notice from the insurance company. He decided to keep the valuable employee, who had worked for him for a good period of time. He will not fire that employee. He shopped around and finally found another insurance company, and the increase was not 30 percent, it was more in the nature of 20 percent.
Small businesspeople face this great variety of premiums. They go up this much and that much. It is because of the terrible situation we have where companies can deny coverage based on preexisting conditions, health care status, and so forth. Different States have different rating rules and so on. This will help small businesses get more stability and quality.
The insurance plans sold will be subject to the same transparency requirements and consumer protection that other individuals will also find available.
The health care reform bill before us also institutes reforms of the insurance market that will protect individuals and small businesses purchasing plans. I already mentioned that. These reforms will stop insurance companies from denying coverage based on preexisting conditions.
Passing health care reform is critical to small businesses. Without reform, many small businesses will be forced to drop their health care insurance coverage because they will no longer be [Page: S12784]
able to afford the increasing premiums. That would leave employees to fend for themselves in the individual market.
The CBO tells us these reforms will make coverage more affordable for millions of small business employees. The small business tax credit will help reduce health care costs for small businesses and their employees. As a result of the larger health reform proposals in this bill, there will be an increase in the percentage of small firms that offer health insurance coverage.
I ask unanimous consent to extend the period for debate only until 4:30, with the time equally divided, with Senators permitted to speak therein for up to 10 minutes each, with no amendments in order during that time.
Ms. SNOWE. Mr. President, today the Senate is addressing the future of health care in our Nation--both Americans' access to care and its cost. As we confront projections of escalating health spending--exceeding $33 trillion in the coming decade--the imperative is clear that we must address rising costs, or affordable access to coverage simply cannot be achieved and sustained.
That is why I am joining Senator Dorgan, who has been a relentless champion on the issue of drug reimportation, in proposing the amendment to this legislation, so that Americans can safely and affordably access the medications which they rely upon to improve their health and which the industry has reminded us time and again are critical to reducing severe illness and hospitalization and, of course, extending life.
Senator Dorgan has long been the Senate's tireless leader. In fact, it has been more than a decade, as I recall, that he began to pursue this endeavor and this journey in seeking to end the inequity which resulted when Americans were barred from importing less expensive medications. He has reminded us regularly of the trade inequity which has been imposed on consumers. He also has reminded his colleagues that drug importation, conducted with proper safety measures, provides a route to
improving access to lifesaving medications.
I am pleased to have joined him in this effort, once again, along with Senator McCain, who has been a stalwart on this issue from the very outset and a tremendous advocate and a driving force. Of course, the Presiding Officer, the Senator from Vermont, Mr. Sanders, throughout his career has been pursuing and advocating this inequity to be remedied once and for all.
We introduced this legislation back in 2003 for the very first time. We worked on a comprehensive approach required to address the safe, economical importation of medications. I well recall the efforts--the yeoman efforts--of the late Senator Kennedy who worked relentlessly to remedy this flaw in our policy, along with Senator Grassley, Senator Stabenow, and Senator Vitter, whose bipartisanship on this vital question has also been instrumental as we advanced this cause
for the better part of a decade. It has been a greater undertaking than I think many would have surmised or anticipated, frankly.
There can be little doubt that the effort to reduce health costs poses one of the greatest challenges in health care reform. That is why the Senate Finance Committee, under the leadership of Chairman Baucus, has worked mightily to incorporate provisions in the pending legislation to ``bend the cost curve.'' Let there be no mistake, the resistance to reforming spending has been immense. That is in part because, as so often has been said: ``One man's waste is another man's profit.'' So
while other nations pay 35 to 55 percent less for their prescription drugs than the United States, we have continued to pay the world's highest prices for brand drugs for the past decade, despite nearly 10 years of effort to provide for the safe importation of prescription drugs.
Fortunately, that has not deterred a broad bipartisan call to arms on this issue, despite the industry's actions that have blocked attempt after attempt to provide Americans both access and assurances that imported drugs would be safe. Indeed, this issue of both safety and affordability has drawn a bipartisan coalition which has been a model for how we can work together to address this health care problem.
We created legislation which the Congressional Budget Office previously estimated would save our Nation approximately $50 billion over 10 years. The CBO has not yet estimated the total savings to consumers but has projected a savings to the Federal Government alone of $19.4 billion. Since Federal savings was about 20 percent of total savings in the past, one can hypothesize dramatically increased consumer savings likely approaching $80 billion. These are exactly, precisely the kinds of savings
we must advance today.
One can easily see that the failure to act on this legislation since its introduction in April 2004 has needlessly carried a high cost for the American people, made all the more egregious and unacceptable given these difficult economic times, as more Americans are reducing or skipping doses or forgoing medication altogether. And this problem is not going to get better. It is regrettably only going to get worse.
The trend is undeniable and unabated. We are all painfully aware of the price increases in brand-name prescription drugs this year that bear absolutely no relationship whatsoever to our overall economy. Manufacturers have increased prices of brand drugs by an average of 9 percent, just as inflation measured by the CPI actually fell by nearly 1 percent.
We can look at this chart and demonstrate the contrast in increases. Brand drugs increasing 9 percent, and here are generics and here is the CPI. It truly is emblematic and reflective on this chart how actually prices have been decreased by the same amount that brand drug prices have escalated.
In other words, just as we are working to expand coverage to tens of millions of more Americans, we have the industry establishing a new pricing baseline that is entirely off kilter with the rest of the economy, in comparison between the CPI and the cost of brand-name drugs. It is widely unaffordable for the American people and clearly unsustainable for the future. How can we possibly not act on this amendment?
This is an industry that has offered $80 billion in concessions toward health care reform--approximately $8 billion over the next 10 years. When one considers that our annual spending, while this single price increase of 9 percent imposed over $290 billion in drug spending, with over two-thirds of that amount representing brand drugs, it is clear that this single price increase alone at this 9 percent will yield at least twice as much as the industry has pledged to reform in the pending health
care reform legislation.
Frankly, that is cost shifting of the worst kind because it occurs on the back of the American taxpayer, most especially on those in greatest need who are also the least able to afford these exorbitant prices. There should be no mistake, these most recent increases are following the patterns we have witnessed year after year.
How do we know? Following passage of the Medicare Modernization Act, Senator Wyden and I requested that the GAO track drug price trends, including looking back to before the bill was enacted.
What did we find? First, that the price of brand drugs has escalated two to three times the rate of inflation. That means $100 in drug costs in 2004 has grown to more than $140 today.
Tell me whose income has increased by that amount in the last 5 years alone. These unabated, escalating costs for drugs are only widening the already yawning gulf of unaffordability for the American people.
But that is not all. When Senator Wyden and I examined the GAO data, we also discovered that as we neared the achievement of a prescription drug benefit under Medicare, the rate of price increases actually rose faster. History also appears to be repeating itself once again to the everlasting detriment of all those whose health security depends on medications.
One year ago, the Associated Press reported a startling find that for the [Page: S12785]
first time in a decade, prescription drug use was down. Given the rising costs imposed on struggling American families, that should come as no surprise.
It also should serve as a wake-up call, an alarm bell. We are long past the point where we should heed Einstein's timeless truism that one should not keep doing the same thing over and over and expect a new result. The fact is, we simply cannot assume pledges of savings in the form of the industry's monetary concessions to health reform actually amount to real, fundamental reforms or that drug assistance programs are a substitute for a market which brings consumers better value. They are not.
It is clear that the time for enactment of this legislation is long overdue and, frankly, more urgent than ever, as illustrated by this second chart of unfilled prescription drugs. Just looking at it, you can see how the unmet need for medications has actually increased since 2003. Among working age adults, only those with Medicare coverage experienced any improvement in their ability to fill their prescriptions. All others saw a rise in their inability to obtain the necessary medications.
Among the uninsured, more than one in three individuals went without a required prescription. And in those with chronic diseases, that number doubles. This is a travesty. Indisputably, despite manufacturer assistance programs, despite the increased use of generics, the high and escalating cost of brand-name drugs is directly and
negatively affecting the health of millions.
That is why our voices today echo those of an overwhelming 7 out of 10 Americans who have called for lifting the ban on prescription drug importation. Let there be no doubt, this is a mandate for action. The President has added his voice to ours, calling for safe drug importation as one means to address health care costs which threaten the health of Americans in perilous economic times.
The bottom line is, when nations institute safe, regulated trade in pharmaceuticals, they achieve results, as Sweden did when it entered the European system of trade and saw a reduction of 12 to 19 percent in the price of traded drugs.
Opponents claim importation will cause American consumers harm. For those who did express concern about safety, no one shares that sentiment more than I do. So let me be unequivocal in stating that safety is the foundation of this legislation.
Our constituents have taken action repeatedly to purchase drugs which they could afford mostly in Canada. That is certainly true in my State of Maine. It is true in the State of Vermont, the Presiding Officer's State. It has been demonstrated time and again that importation is safe. We can ensure Americans safe access to imports. In Europe, over 30 years of parallel trading of pharmaceuticals has demonstrated indisputable safety. In fact, a former Pfizer executive, Dr. Peter Rost, has stated
from his firsthand experience in Europe:
I think it is outright derogatory to claim that Americans would not be able to handle reimportation of drugs, when the rest of the world can do this.
Yet some will point to a recent FDA letter cautioning that drugs must be demonstrated to be safe and effective, that they must be manufactured under the highest standards, that an imported drug must be demonstrated equivalent to existing products used domestically, and that we must guard against contaminated and counterfeit drugs. This amendment does each of these things and much more to ensure that Americans can safely have access to safe imports.
Under this legislation, we see with this next chart, we would import drugs from 31 countries which meet high regulatory standards. Those are shown in blue on this chart. There are nations which meet our high standards. In most cases, individuals will purchase an imported prescription drug from their local pharmacists. Pharmacies will receive these drugs from U.S. wholesalers which import them. These wholesalers will be registered, inspected, monitored by the FDA. This higher level of safety is
a first step in establishing a higher standard in the handling of prescription drugs in the United States.
Our legislation also allows individuals to directly order medications from outside the United States when using an FDA-registered and approved Canadian pharmacy. Again, just as with wholesalers handling prescription drugs, the FDA will examine, register, and inspect these facilities on a frequent basis. FDA will assure the highest standard for such essential functions as recording medical history, verifying prescriptions, and tracking shipments. Regardless of whether the purchase is from the
local pharmacist or a Canadian pharmacy, we assure that a legitimate prescription and a qualified pharmacist are required to help assure safety.
For those who say that consumers could unwittingly purchase an unapproved or suspect drug, our legislation assures that drugs received will always be FDA approved. If any difference exists in a foreign drug--even the most trivial of distinctions--our legislation assures FDA will evaluate the product and determine its acceptability.
For those who say counterfeiting is a threat, our legislation requires the use of anticounterfeiting technologies to protect drugs. Today we can thwart counterfeiting by employing technologies like the one now used on $20 bills. Our bill not only requires the use of such counterfeit-resistant technologies but also a standardized numerical identifier unique to each package of a drug. Moreover, this bill supports the development of future anticounterfeiting and track-and-trace technologies which
we hope will be used to protect all drugs.
For those who say the consumers won't know who has handled an imported prescription drug, our bill requires a chain of custody--otherwise known as a pedigree--be maintained and inspected to help ensure the integrity of imported drugs. A pedigree for medications was mandated by law in 1988 and has still not been implemented. This bill will change that.
For the first time, in fact, this legislation will include resources to inspect all facilities handling medications. So we are not just making imported drugs safer but also domestic drugs.
Some attempt to alarm Americans about the countries from which we would import drugs, citing nations such as Latvia, Estonia, Slovakia. The last time I checked, these are members of the European Union. The same is true for Ireland, for example, where Lipitor is made.
So let me get this straight: It is fine for those countries to manufacture drugs in their plants for domestic U.S. companies and ship those drugs here where we then have the privilege of paying higher prices than anywhere else in the world, but we somehow cannot safely import drugs made in those same countries. Exactly what kind of sense does that make?
In fact, going back to this chart where the European Union and other countries from which we would import appear in blue. So all those countries that are in blue are areas in which this amendment would allow the importation of drugs, which we see infrequent FDA inspections are in these red countries.
All of these countries that are designated in red are the ones in which we have manufacturers importing ingredients for the final product. Yet there are infrequent FDA inspections. There are plants right now--today--shown on the chart in red that are making drugs that are sold and consumed in the United States, plants where there are few FDA inspections. In fact, it has been estimated that approximately 40 percent of the active ingredients in prescription drugs consumed in the United States are
actually made in India and China, and we know oversight there is lacking. In fact, such plants may be inspected as infrequently as every 12 years.
Currently, there are more than 3,200 foreign manufacturing plants that make medications for the United States market according to GAO. The GAO also found that FDA, in the words of an Associated Press article on the matter, ``isn't even sure how many foreign facilities are producing for the American market. One government database suggests it's 6,760. Another says about 3,000.''
With the explosion of drugs coming in from nations such as India and China, as reported in the Washington Post, the FDA's ``budget for foreign inspections has not kept pace,'' and as a [Page: S12786]
result, as of 2007, ``foreign drug and drug ingredient makers are inspected on average once every eight to 12 years, while American-based manufacturers must be inspected at least once every two years.''
The article also reported that China itself has more than 700 plants, but the FDA only has the resources to conduct about 20 inspections a year there.
So let me just indicate, on this chart again, that we, under this amendment that is pending before the Senate, would allow drugs to be imported from those countries designated in blue. The countries that are designated and reflected in red are those countries where we currently manufacture the ingredients of the final product. We are not suggesting that drugs be imported from these nations. Yet our legislation will make it safer because of the resources that we have incorporated in this legislation
before the Senate and all of the standards that will be required for FDA to inspect these facilities that are currently not inspected.
We have seen the dangers in ignoring these problems, and that is why this legislation would fund enhanced FDA foreign inspections to fundamentally improve the safety of drugs consumed in the United States. But that is not all. While opponents will cite current law on drug importation, the fact is, in the Medicare Modernization Act--the current drug importation statute which has never been implemented--there are just six safety provisions over as many pages--as detailed in this chart--versus the
31 major provisions in our amendment.
So when we passed the Medicare Modernization Act back in 2003, we included safety features because we heard from many of our colleagues who simply did not want to have drug importation. They claimed we had to have a safety certification process, which we have had numerous times for the last decade, to which nothing has advanced with respect to importation. Obviously, a safety certification hasn't been made because we haven't given any resources. We haven't implemented that certification in good
Under the pending amendment, we incorporate 31 major provisions in our legislation to address each and every issue. We systematically analyze and identify every issue that has been raised by the opponents to the drug importation legislation--every safety-related issue, every standard-related issue, every failure that has occurred with respect to the FDA inspection system on where they are importing drugs currently and where they have not inspected those facilities. We have 31 different provisions
in order to address every facet of safety-related issues.
So for those who say importation isn't safe, we show that it shall be. This legislation will set a model and a mandate for improving safety in the handling of not only imported prescription drugs but of all medications--even domestic ones.
But if that is not enough, let me also suggest to the opponents of this legislation that they are failing to observe the greatest safety threat to Americans--that the inability to take a drug as it is prescribed undoubtedly exacts a toll on thousands of American lives every year.
So beyond question, our measure addresses the crucial issue of safety. I think it is certainly indicative and reflective in this chart today, all the provisions that have been incorporated in the pending amendment before the Senate. This clearly will deliver the real savings as well as safety for consumers.
Organizations across the board are supporting this legislation. They represent more than 50 million Americans who realize that extending this coverage is fundamentally critically important to the well-being of all Americans.
Mr. DORGAN. Madam President, I have listened this afternoon to some of the opposition to the legislation, the amendment we have offered trying to deal with the increasing price of prescription drugs. Those who are opposed apparently are oblivious to the question of the dramatic runup in prices for prescription drugs. They talk about counterfeiting and their worry about that. I wish to talk about that. Because if you are worried about counterfeiting--and, by the way, there is a counterfeiting
issue with respect to prescription drugs in this country and several of my colleagues have described that issue--if you are worried about that, then you have to support the amendment I and Senator McCain and others have offered that provides the only basis for getting to things such as pedigrees on prescription
drugs, batch lots, and tracers. The only mechanism to do that is in this amendment, which will make the domestic drug supply safer, allow us to track back drugs to their origin, and will certainly allow us to import FDA-approved drugs when they are sold in other countries for a fraction of the price.
Let me describe what brings us to the floor of the Senate. To those who are opposed to this amendment, if one wants to be oblivious, I guess, fine, but the consumers will certainly notice. You want to buy some Nexium, guess what. Nexium is going to cost you $424 in this country. But if you buy it in Great Britain, it is $41 dollars; Spain, $36; Canada, $65; Germany $37. Once again, the American consumer gets to pay $424 for an equivalent amount, 10 times the cost of what it costs in Great Britain.
Is that fair? To me, it is not. It is not fair to me that the American consumer is charged the highest prices in the world.
Plavix, you can see what is happening here, $133; $59 in Britain; $58 in Spain. The American consumer gets to pay $133 for the equivalent amount. Lipitor, the popular cholesterol-lowering drug, for an equivalent amount of Lipitor, the American consumer pays $125. In Great Britain, they pay $40. In Spain, they pay $32. In Germany, they pay $48. Again, the American consumer is told: You get to pay $125. I have described, over and over again, the two bottles of Lipitor, empty bottles made in Ireland
by an American corporation and distributed all across the world, the most popular cholesterol-lowering drug. Same pill put in the same bottle made by the same company, FDA approved. Only difference is this one has a blue label and this one has a red one. This one went to Canada and this one to the United States. The U.S. consumer got to pay nearly triple the price. Is that fair? Not where I come from.
By the way, my colleague from Maine, who spoke moments ago, talked about a nearly 10-percent increase in the price for brand-name prescription drugs just this year. This chart shows what is happening. You take the arthritis drug Enbrel; you got a 12-percent increase this year. Singular, for asthma, this year you got a 12-percent increase. Boniva, for osteoporosis, an 18-percent increase this year in drug cost. The list goes on. Plavix, 8 percent up this year. In fact, I have a chart that shows
what has happened year after year after year. The price of brand-name prescription drugs in the United States is way above the rate of inflation in every single year. In fact, during this year, the rate of inflation has dropped down here and the price of prescription drugs has gone up 9.3 percent.
Several of my colleagues, at least a couple of my colleagues have talked about the issue of counterfeit drugs. I am concerned about counterfeit drugs as well. In fact, there were proposals in the Congress that would have done what we should have done long ago with respect to ensuring a safe drug supply: attaching pedigrees to drugs, batch lots so you can trace them all the way back to their origin and trace them all the way through the chain of custody. That has never been done, and it should
be done. It is in our amendment. That is the only way we will have a totally safe drug supply.
A couple of my colleagues have talked about circumstances where there have been counterfeit drugs in this country. That is true. Those were domestic drugs, drugs inside the country. By the way, how does some of that happen when you have not only counterfeit drugs but contaminated drugs? Forty percent of the active ingredients in prescription drugs for the United States comes from India and China. Think of that: 40 percent of the active ingredients of all the prescription drugs consumed in our
country comes from India or China. I described earlier today the Wall Street Journal investigative report which shows the circumstances with the active ingredient for Heparin, the production of Heparin in a building in China. This shows the development of pig intestines for the production of Heparin. You will see this in the Wall Street Journal articles and the expose. Here is a man in this building
in China who is producing Heparin, stirring a rusty old pot with what appears to be a twig from a tree, clearly unsanitary conditions. That becomes ingredients for America's prescription drug supply; 40 percent of our active ingredients comes from circumstances in which there is virtually no inspection or very few inspections of those kind of places where those prescription drugs are developed.
By the way, there was a drug called Epogen produced by a pharmaceutical company, a very reputable one. There is a wonderful book written called dangerous doses by Katherine Eban. She traced this drug to a 16-year-old boy named Timothy Fagan, whose health was dramatically affected by what has happened here. This drug found its way all the way through these places, including a strip joint in Miami, a cooler in the back of a strip joint in Miami, in the trunks of automobiles, distributed through
all sorts of strange and unusual places, and gets to a 16-year-old boy with devastating results because this drug had one-twentieth the strength that was supposed to have been given to this young boy for his disease. Does anybody have the capability to understand where all this happened, how it got tracked? A journalist did the investigative work to find this out. Fortunately for us, we now have a track on this one drug that affected this young boy in a devastating way.
That was not importation. That was the domestic drug supply. How can this happen? Because we don't have batch lots and pedigrees and tracers and the capability to find out where a drug is produced and where it goes from that production to the final user in every single circumstance. We have that in our amendment. It is the only way it will happen if we pass this amendment.
It is interesting to me. There was a man named Dr. Peter Rost. He was the former vice president of marketing for Pfizer Corporation. By the way, Dr. Rost also worked in Europe in the parallel trade area for 20-some years. They do this in Europe routinely. They actually have parallel trading where you can purchase drugs, one country to another, no problem. Here is what he says:
The biggest argument against reimportation is safety. What everyone has conveniently forgotten to tell you is that in Europe reimportation has been in place for 20 years.
They say this is going to be unsafe, you can't do it. Europe has been doing it for 20 years. Don't tell me we don't have the capability if Europe can do it. Why would we do it? Because it is unfair to the American people to be paying double, triple or quadruple or 10 times the cost of prescription drugs that are being paid for by people in the rest of the world. That is unfair. It doesn't make any sense to me.
We offer an amendment. It is one of the few amendments in the Senate, in recent days and weeks, that is bipartisan. Most of the things offered are not bipartisan. This is an amendment, Dorgan-Snowe. We offer it with broad support. The late Ted Kennedy, bless his soul, sat right over there. He was a cosponsor of our amendment. JOHN MCCAIN is a cosponsor of our amendment. Senator Grassley and Senator Stabenow are cosponsors.
Mr. DORGAN. This is broadly bipartisan. It is one of the few bipartisan amendments. My expectation is, we will have a vote on the Crapo motion. He offered his last evening and I offered mine last evening. My expectation is [Page: S12789]
we will have a vote on the Crapo motion and then a vote on this amendment and move on. I would hope we will have the votes on this. It is the only thing in any health care proposal in the House or the Senate that starts to put the
breaks on the escalating prices of prescription drugs. It is the only thing. Without this, we will pass health care reform, if, in fact, it passes and if someone says to you: What have you done to try to put the brakes on the fact that prescription drugs are increasing at 9 and 10 percent? What have you done about that? The answer is going to be, we didn't do anything. We just couldn't do that.
The fact is, a whole lot of people in this country use prescription drugs regularly to control their cholesterol, their blood pressure, and otherwise manage diseases. It keeps them out of the hospital. The fact is, many of these prescription drugs are very important in the lives of people. The question for us is, if we are allowing these drugs to be priced out of the reach of people, what does that say about the value of the drugs? We need to have fair pricing for the American people. We must
insist on fair pricing for prescription drugs for the American people. It is that simple. This notion of there being any kind of a safety issue is a total canard by those who ignore the very provisions of the bill that establish the most rigorous regime of safety ever established for the domestic drug supply and for the reimportation of prescription drugs. That is just a fact.
My hope is, in very short order, we will have an opportunity to have the Members of the Senate cast their votes on this and, at long last, Senator Snowe and I, having been at this, I think, now for 8 or 10 years, will have at the right time--and that is health care, when you are considering health care, when is a more important or more appropriate time to consider the questioning of prescription drugs--and in the right place, the ability to pass the legislation. We offer a bill as an
amendment. Thirty Senators having cosponsored it, Republican and Democrats, conservatives and liberals and moderates having cosponsored it. It is my expectation, we will have this vote and at long last be successful in doing something for the American people.
The question is, does the pharmaceutical industry have a lot of clout? The answer is, they sure do. As I said many times, I have no beef against that industry. I want them to succeed and earn profits. I think their pricing strategy is unfair to the American consumer. Do they have a lot of clout. Yes, they do. But it is my hope that when it comes time for a vote, the American people and the interests of the American consumers will have as much clout in this Chamber, based on the facts, facts that
suggest the American people ought to be treated fairly.
This amendment is all about freedom, giving the American people the freedom to do what everybody else can do and that is participate in the global marketplace. When the medicine they need that is FDA-approved is available somewhere else for half price or for an 80-percent reduction, why on Earth should they not be able to acquire that lower priced drug that is FDA-approved? The answer is, they should have the freedom to do that. The only way that freedom will exist is if we pass this amendment.
That is just a fact.
I yield the floor.
Mr. ROBERTS. Madam President, I understand the distinguished Senator from Michigan wishes to attend the very important Democratic conference on a brand new health care bill. I understand that, and I shall try to expedite my remarks, only with the suggestion to the Presiding Officer that when you are late in the Senate, you are early, and they are not going to say anything important without you.
I wish to yield at this time to the distinguished Senator from Georgia, who I understand has a statement to make.
Mr. ROBERTS. Madam President, President Obama has repeatedly made two pledgees to the American people--and we have heard it and heard it before, and we will probably hear it again--about health care reform. The first is, if you like the health care you have, you can keep it.
We know the bill before us breaks this pledge because all but two in the majority voted to preserve the nearly $500 billion in cuts to Medicare, which includes $120 billion in cuts to Medicare Advantage.
The nonpartisan Congressional Budget Office, or CBO, has confirmed that these cuts to Medicare Advantage mean that ``approximately half'' of the Medicare Advantage benefits will be cut for the nearly 11 million seniors who are enrolled in this program.
This vote confirms whether Americans will be able to preserve and keep the health care benefits they have and like. That answer, unfortunately, is no.
So now let's look at the President's second pledge: that he will not raise taxes on families earning under $250,000 or individuals earning under $200,000.
A number of my colleagues have pointed to comments made last year in Dover, NH, by then-Candidate Obama, who said:
I can make a firm pledge--
And we have heard this before--
..... no family making less than $250,000 will see their taxes increase--not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.
I think he said ``by one dime'' at the end of that.
Yet time and again in this bill, that pledge is also broken. This bill calls for nearly $500 billion in new taxes, penalties, and fees that hit virtually every American, including middle-class families making less than $250,000 and individuals earning less than $200,000.
Even though the majority has tried to disguise these taxes as various ``fees'' and presents them as being paid for by targeted health care industries, the reality is that this bill taxes the average American coming and going.
It taxes you if you have health insurance. It taxes you if you do not have health insurance. It taxes you if you use medical devices, such as a hearing aid or a pacemaker. It taxes you if you save on your own to pay for your health care expenses. And it effectively increases taxes for individuals and families with catastrophic medical expenses.
Americans should understand that the higher taxes called for in this bill will come straight out of their pockets, with the middle class bearing much of this tax burden.
Let me give you a few examples of the new taxes proposed and who will pay for them.
The bill imposes a 40-percent excise tax on health insurance providers that offer high-cost health insurance plans. This provision is the largest tax hike in the bill and raises almost $150 billion and will be paid for primarily by individuals--not the health insurance provider, but by individuals--through increased income and payroll taxes.
By the time this bill is fully implemented, 84 percent of this tax on ``high-cost plans'' will be paid by Americans who earn less than $200,000--taxpayers the President promised would not pay additional taxes.
Second, the bill imposes new taxes on health insurance providers and medical device manufacturers. Both the nonpartisan Congressional Budget Office and Joint Committee on Taxation have said these taxes will be passed on to consumers in the form of higher insurance premiums. The new $60 billion tax on health insurance providers alone could raise premiums by as much as 2 percent according to some analyses, and that increase could come as early as next year.
Not only that, the $19.3 billion in new taxes on medical devices could increase costs for up to 80,000 medical products, such as heart stents, blood pressure monitors, eyeglasses, pacemakers, hearing aids, and advanced diagnostic equipment. Such a tax would stifle and will stifle innovation and reduce the ability for manufacturers to develop new lifesaving devices and technologies.
So make no mistake, the cost of this tax will be passed on to and paid for by anyone who uses a medical device, including those middle-class taxpayers the President has pledged will not experience any tax increase.
If you need a pacemaker or a stent, you will pay more for it because of these new taxes. If you need a diagnostic procedure, you will pay more for it because of this new tax.
Furthermore, under this bill, the floor for deducting medical expenses from income tax is raised from 7.5 percent to 10 percent of adjusted gross income. Those who will take this deduction are most often seniors and those with serious or catastrophic medical issues.
For a family of four, earning $57,000 in 2013, limiting the deduction means they would lose a tax deduction of $1,425. A family of four earning $92,000 would lose a tax deduction of $2,300.
It goes without saying, I think, that losing a portion of your tax deduction means you pay more in taxes. These are real dollars to hard-working Americans. This provision alone raises $15 billion in new taxes on Americans who deduct medical expenses.
Finally, this bill raises taxes for the more than 35 million Americans who participate in flexible spending accounts, or FSAs. For the first time, this benefit to middle-income workers is taxed to pay for new government spending and an expansion of entitlement programs.
FSAs are a key benefit for many families for whom health insurance does not cover or does not cover sufficiently some of their highest cost health care expenses such as dental, vision, as well as prescription drug costs. They are also important for individuals who manage chronic diseases such as diabetes, heart disease, or cancer.
Flexible savings accounts allow the participants to set aside money out of their own pocket to pay for these necessary expenses. However, under this bill, the government caps how much can be set aside in an FSA account at $2,500, effectively raising the tax burden on certain FSA participants and increasing their health care costs.
The typical worker who contributes more that $2,500 to their FSA has a serious medical condition. This means that under this bill, workers with serious illnesses and earning an average of $55,000 will be paying more in taxes.
I have highlighted a few of the many tax hikes in this bill and the fact that the middle-class taxpayers will bear the brunt of these higher taxes, but if there are any doubts remaining about what this bill means for Americans' pocketbooks, let's consider this. An analysis by the nonpartisan Joint Committee on Taxation looked at four tax provisions in the bill and how, when taken together, they will affect Americans. They looked at the tax credit for health insurance, the additional Medicare
payroll tax, and several I have already mentioned, including the high-cost plan tax and the medical expense deduction limit. Their analysis shows that when this bill is in full effect, on average individuals making over $50,000 [Page: S12791]
and families making over $75,000 would see their taxes go up under this bill. Even
after taking into account the premium tax credit, the subsidy that the government will provide to help people offset the cost of health insurance, when this bill is fully in effect, more than 42 million individuals and families or 25 percent--one-quarter of all tax returns under $200,000--will see on average their taxes go up as a result of this bill.
In addition, based on the same information, the Joint Committee on Taxation identified two groups of taxpayers. The first are those individuals and families who are not eligible to receive the premium tax credit to purchase health care, and second are those individuals and families whose taxes will increase first before they then see some type of tax reduction as a result of their premium tax credit. Taking these two groups together, the number is even more disturbing: 73 million individuals
and families or 43 percent of all tax returns under $200,000 will on average see their taxes increase under this bill, says the Joint Committee on Taxation.
To put it another way, under this bill, for every one individual or family that benefits from the tax credit to purchase insurance, this bill raises taxes on three middle-income individuals and families. These tax increases are on top of those I discussed earlier, such as the new taxes on FSAs, so the estimates I have already mentioned understate the tax impact, again, on middle-income taxpayers. The JCT the Joint Committee on Taxation--has confirmed that these additional taxes, such as the FSA
tax, will likely further raise the taxes of middle-income Americans.
All Americans, and middle-class taxpayers especially, need to take notice of what these higher taxes will mean for them and their families. They need to know these taxes will be used in part to pay for a vast expansion of the role of government in health care and more government intrusion into families health care choices.
Paying for health care on the backs of the middle-class and working Americans is the wrong solution for health care, violates the President's pledge to these taxpayers, and is terribly counterproductive in regard to the No. 1 issue facing this country, and that is jobs and the economy.
I urge my colleagues--I plead with my colleagues--to support the Crapo motion to prevent the enormous tax hike this bill inflicts on middle-class Americans.
Mr. President, I appreciate your indulgence. I know you are ready to go to your conference.
I yield the floor.
The PRESIDING OFFICER (Mr. Nelson of Florida.) The majority leader is recognized.