Health Care

HEALTH CARE -- (Senate - February 28, 2007)

Mr. DURBIN. Mr. President, if one travels across the States of Maryland or Illinois and stops at any business, large or small, and has a conversation about how the business is going, it won't take long for the conversation to move to the issue of health care. Virtually every business I have visited in Illinois in the last 10 or 20 years--or labor union, for that matter--wants to talk about health care. There is a growing concern that the cost of health insurance keeps going up and coverage keeps going down. It is affecting our competitive edge in America. It compromises the security many families want to feel when it comes to medical care necessary for their loved ones.

Yesterday, I was visited by a spokesman for the Business Roundtable. They are infrequent visitors in the offices of Democratic Senators, but it was a good, positive meeting. We talked about a number of issues and started with their concern and our growing concern about the limited availability of health care and its cost.

We now have some 47 million uninsured Americans and many who are underinsured and more and more who are vulnerable each year. There was a disturbing story in this morning's Washington Post about a young mother who lost her son because she had no way to pay for the extraction of a tooth. The child's tooth became decayed, abscessed, and led to a terrible condition which ultimately cost him his life. So for an $80 tooth extraction, this little boy gave up his life. It is unthinkable, in a great country such as America, that such could occur. It is one small example of a life that has been lost because of a lack of concern we have about extending health care coverage.

It has been a long time since we have had a real conversation about this issue. One has to go back to the previous administration, when President Clinton came forward with a plan. It was complicated. It was controversial. I joined in the debate on the plan because I thought it was long overdue. After some months, the forces in the health care industry, which is very profitable today, came together and killed the idea.

So for 10 years nothing has happened except the situation has disintegrated and we are now facing a real crisis.

Recently, President Bush put forward a health coverage proposal that claims to make health coverage more affordable, make the tax treatment of health benefits more equitable, and create incentives for people to enroll in lower cost health plans. I welcome the President's proposal as a sign that he, too, believes the status quo of health care in America is unacceptable and we need to begin the hard work to reform it. But when you take a close look at the President's proposals, some questions arise, and some concerns.

The heart of the plan is a proposal to equalize the tax treatment of health benefits, whether you obtain health coverage through an employer or purchase it yourself in the individual insurance market. On the surface, it sounds very appealing. After all, some people simply do not have access to employer-sponsored coverage. But such a change would not provide people with two equally good options for obtaining health insurance.

Employer-sponsored health coverage is far superior to the individual insurance market for the vast majority of people, even if they have access to a tax deduction. Unless you are in perfect health, individual-market insurance is often unaffordable or unavailable. To a much greater extent than employer coverage, insurers in the individual market can deny you coverage if you have a preexisting medical condition or can refuse to cover you at all. Insurers in the individual market also can charge much higher premiums if you are older or sicker. In short, if you are not in perfect health, you do not want to be in the individual market. Recognizing this, the President's proposal to equalize tax treatment is really not as appealing as it sounds unless you happen to be one of those very young, very healthy people who can go to an individual market and find a competitive rate.

The President's plan has an even more alarming implication. The way he has constructed it, equalizing the tax treatment of benefits could weaken employer-sponsored coverage, which is the bedrock of our current health coverage system. He could do it in two ways.

First, offering the same tax deduction, for either employer-provided coverage or individual coverage, could create an incentive for some employers to drop coverage. They can just basically say: Now you are on your own. We are finished providing health coverage. Use the tax deduction to buy your own plan. Given the current state of the individual insurance market, this could be terrible news for everyone but the youngest and healthiest workers. Most people losing employer coverage would likely end up with insurance that costs more and covers less--if they are lucky to find a policy at all.

The second adverse effect is that even if an employer maintains health coverage, young and healthy employees would have an incentive to leave their employer plan for individual coverage. You know what that means: When the younger and healthier workers leave the pool, there is more risk and higher premiums for those who remain.

Another major element of the President's plan is a proposal to cap the tax deduction for health benefits at $15,000 for families and $7,500 for individuals. Those with health benefits above this cap would face a new tax on the health benefits exceeding this threshold. The President says capping the tax deduction would dissuade people from enrolling in ``gold-plated' or ``Cadillac' health plans, which the administration has fixated on as a major cause of rising health care costs. Some have gone so far as to characterize this part of the President's plan as a way to tax the rich and their expensive health benefits in order to help lower income people.

What a curious juxtaposition, that for 6 years this administration has argued for tax breaks for people at the highest income categories, saying they must be rewarded, even at the expense of middle-income and lower income families and now, when it comes to health insurance, the tables are turned and the administration is arguing that we should not be rewarding expensive health benefits, we should be, in fact, trying to help lower income people, though his approach does not achieve that.

A closer look at his plan raises even more serious questions. It rests on a shaky premise that large numbers of Americans have an overabundance of health insurance. The President believes Americans are overinsured when it comes to health care protection. There may be some people out there who fit in that category, but most of the people I talk to do not. They are very anxious about their coverage. They are anxious about the cost of their premiums, their deductibles, and their copayments. We find a lot of important health services are not covered.

We know what is happening in bankruptcy courts. Those who can make it through the new maze that has been created by this Congress and this administration usually are there primarily for medical bills. The real problem is not the overinsured but the 16 million Americans who are underinsured. Their health coverage is not adequate to protect them if they have a serious problem. Forty-seven million Americans have no coverage at all. The President's focus on the overinsured seems misplaced, to put it mildly.

Part of the problem stems from this notion of ``Cadillac' health plans. The phrase suggests that buying health coverage is like buying a car: You can buy the basic model, which allows you to get to work, pick up the kids, and go to the store, or, if you have some extra money, you can buy the high-end model with lots of extras--leather seats, more horsepower, some electronics, and a fancy stereo. Health coverage just does not work that way. The cost of health coverage typically has more to do with the characteristics of who is being covered: How old are you? Do you have a medical problem? Where do you live? These are some of the factors which are taken into consideration when people assess the cost of a health care plan.

I am concerned that the new health tax the President proposes would hit many people who are older, with chronic conditions, medical problems, those who live in high-cost coverage areas. If this is the case, the tax is highly unfair. It raises the taxes on the people who can afford to pay them the least.

It also is going to hit people who have sacrificed wage increases in the past for comprehensive health care coverage. I cannot tell you how many labor unions I visit where they say their members have to make a hard call: take-home pay or better health care protection. If they chose better health care protection, the President's approach is going to penalize them. That is not fair.

To make matters worse, the $15,000 cap the President proposes could increase only at the rate of general inflation, even though the cost of health benefits usually rises much faster than inflation. For example, since 2000, premiums for family coverage for health insurance have increased five times faster than general inflation--a 73-percent increase in premiums for family coverage for health insurance in the last 6 years; and the overall inflation rate, up 14 percent--73 percent to 14 percent. So when the President says he is going to index the $15,000 in health coverage, it is not going to keep up with the actual increase in health care costs.

The administration estimates that 20 percent of people would be subject to this new tax. But that number could grow considerably over time. Before long, people with below-average coverage would start to pay the tax. That approach only makes sense if the goal of the administration is actually to reduce health care coverage in America--hardly a worthy goal of this Nation.

The President's plan also misses another critical point. A tax deduction really does not help people with low or moderate incomes. The value of a tax deduction increases with income. Someone with a high income receives a large deduction under the President's plan. Someone with a lower income, even people with moderate incomes, has little to look forward to. The President should have proposed a tax credit.

The last piece of the President's health plan--called the Affordable Choices Initiative--is the part about which we know the least. Under this initiative, funds that now go to help hospitals care for low-income and uninsured patients would be taken away and used instead for the purchase of basic private insurance. The plan would snip away the existing safety net without guaranteeing health insurance for everyone. Even by the administration's own estimates, only a fraction of the uninsured would gain coverage. Already hard-pressed safety net providers would still be responsible for caring for the uninsured and underinsured, yet they would have fewer funds to do so.

It appears those who would gain private health insurance would be enrolled in health plans that may not meet their needs. The President's proposal makes reference to changing State benefit requirements and premium-setting rules, which could make health insurance more expensive or provide less coverage for those who need it.

I appreciate the President has put forward a plan. My vision of health reform differs from his. We should have a health system that covers everyone regardless of income or health status. We should make sure everyone has the health benefits they need to prevent illness and to obtain care when they get sick. We should conduct the research that tells us which medical interventions work best and create incentives for physicians to provide recommended care, and we need to do a better job of managing chronic disease.

On the insurance front, the starting point should be legislation I have introduced with Senator BLANCHE LAMBERT LINCOLN of Arkansas. Here is a radical concept: What if we established a standard across America that small businesses would be able to offer the same type of health insurance that is available to Members of Congress? How about that for a revolutionary statement?

It turns out that Members of Congress are part of the Federal Employees Health Benefits Program. In other words, we are in the same pool with 8 million Federal employees and their families all across America. Of course, that employee pool includes younger workers, older workers, workers who are healthy and those who are not, and people who live all across our Nation in large cities and small, in rural areas and urban areas. It is a plan that has worked for 40 years. For 40 years, we have pooled together Federal employees and we have asked private insurance companies to bid for their business, and they do.

We have the best deal as Federal employees. Every year, there is an open enrollment period. Think about this in your own family situation. Let's assume you are unhappy with the health insurance you have at work or what you had to buy in the individual market. Sometimes you are stuck with it, you have no choice in changing it. A Federal employee has a decision each and every year at the end of the calendar year: Did you like the way you were treated last year by your health insurance company? If you did not, chose another one.

In my State of Illinois, my wife and I have nine choices. We can choose from nine different health care plans that could protect us. Well, of course, we take a look at what the cost might be, what the coverage might be, and pick the one best for our circumstances. If we pick a plan with more coverage, they take more out of my paycheck; lower coverage, less out of my paycheck--just as it should be.

These are private insurance companies bidding for the business of Federal employees. The Federal Government administers this plan with an overhead cost of less than 2 percent. It is widely popular. It is successful. It has worked for 40 years. Why couldn't we take the same model--that is what Senator Lincoln and I believe--and apply it to small businesses across America and say no matter where you are, you can join a pool of small businesses, and you as a small business employer and your employees would be sought after by the same private insurance companies?

We sat down with some of the major health insurance companies and said: We don't want to write the bill like legislators. We want to write the bill like insurance companies. We want to make sure, when it is all said and done, there is some potential business for you here. Well, they helped us write the bill.

We do provide some tax incentives in the bill which I think are entirely appropriate. If you have a small business, low-income employees, you still want to have health insurance for the owners of the business and the people who work for you, and you want to offer this and provide a little toward paying those costs, I think we ought to reward you. I think the Tax Code ought to create incentives for that to happen.

Now, we have had a debate within the last year on the floor. Senator MIKE ENZI of Wyoming is my colleague and friend. He sees this issue the same as I do in terms of needing a solution. Our approaches have been different. We have sat down to speak since then about how we might merge our two approaches. I hope we can.

It would be good for us around here once in a while to cooperate, to compromise, and to come up with a bipartisan approach that says to families across America: We are just not coming to the floor to score political points; we are just not coming here to disagree; we are going to try to find areas of agreement and try to move forward so that at the end of the day we can point to a positive accomplishment.

I think this bill Senator Lincoln and I have introduced is a good starting point. I believe if a President of the United States said to the American people: We are going to eliminate Americans being uninsured in America in just a certain number of years--4 or 5 or 10 years--that would be a positive step forward. We could set a goal, and then it would be up to us in Congress to work with the President each year to reduce the 47 million uninsured even more. I think we can do it. I think we have to do it. We cannot be competitive as a nation, we cannot have a compassionate policy when it comes to health protection for our fellow citizens unless we show initiative and leadership in the area of health care.

Our vision differs from the President's that I described earlier, but the goal is important and affects every American. I welcome the President's interest in health care. Let's begin the debate.

Mr. President, I yield the floor.

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