Small Business Tax Relief Act of 2007
Floor Speech
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Mr. THUNE. Mr. President, I am pleased to be here today in support of the Kids First Act, which is being referred to as the McConnell-Lott or Lott-McConnell alternative, which will in the long run, in my view, do more to lower health care costs and help the underlying expansion bill we are debating here today. Let me say also it is frustrating that instead of debating a reauthorization of a very popular program--the SCHIP program--Members on both sides of the aisle are being asked to support a new program, a brandnew program, that will cover children and adults at 300 percent of the poverty level--and some at even higher levels.
Let me tell my colleagues a little bit about the makeup of the uninsured population in my State of South Dakota. Right now, approximately 2.6 percent of the children in my State are uninsured, or approximately 5,000 children. This percentage does not include the approximately 5,000 Native American children who receive their health care from the Indian Health Service. It is very important to break down these statistics in each State since the needs vary greatly in each State and from region to region.
For example, of the approximately 5,000 uninsured children in South Dakota, a number of these children are currently eligible but not enrolled in Medicaid or SCHIP. In other words, in my State, a number of our uninsured children are actually at or below 200 percent of the Federal poverty level. This SCHIP expansion bill under consideration doesn't focus on these children. Instead, it channels more money to cover children from families at higher incomes.
I mention these facts because I am concerned that the underlying bill misses the most key problems in my State for the uninsured, and it misses the basic goal to make sure that eligible low-income children are able to take full advantage of our safety net health care programs. If our goal is to simply put all children--or even all families, for that matter--in South Dakota, insured or uninsured, into Government health insurance, and make thousands more families in my State dependent on the Government for their health care, and limiting more choices for families and parents in my State, then that is an entirely different goal, and it is a goal I don't share.
Let me expand on that a little bit, if I might, to give an idea of what the uninsured problem is in its totality in South Dakota. Currently, according to our State, there are approximately 61,000 uninsured individuals--an uninsured rate of the adult population of about 9 percent. I have already discussed the statistics for children, so let me do so for adults. In a recent survey done by the State of South Dakota, the adult uninsured population breaks down in the following way: Of the total number of uninsured adults--approximately 53,390--13,401 are not employed. That amounts to about 25 percent. This means that approximately 70 percent of the uninsured adults in my State are actually working. If you break down that number even further, most of that number--31,000 out of 37,000--are employed, working 30 or more hours a week. They are not part-time workers.
About 10,500 of these employed and uninsured individuals are self-employed. We happen to have a large number of self-employed farmers and ranchers and business owners in my State who simply cannot afford health insurance.
But the uninsured population in my State could purchase insurance if it were more affordable. There are huge steps we could take to bring down the cost of insurance in my State for all of those small business employees and self-employed and cover even more uninsured, and without expanding a government program with tax increases.
Also, the cost to insure a child or adult under the SCHIP program is three to four times the cost of insuring a child with private insurance. That is an inefficient way of covering people who are uninsured. Already today, about half of our country's children are on public insurance. That is not sustainable, and it makes it nearly impossible in the State of South Dakota--a very rural State--already with more limited options than others when it comes to health care access to have a vibrant health care insurance market.
I was in the House of Representatives when the current SCHIP bill passed in the Balanced Budget Act of 1997. I voted for that. I voted for other reforms as a Member of the House of Representatives and since coming to the Senate. Frankly, I think the debate over health care needs to be engaged in this country, because we have way too many people who are uninsured. Our health care costs in this country now are a couple billion dollars--we have heard that repeated throughout the debate on the floor today--or about 16 to 17 percent of our gross domestic product. That is an enormous amount of money that is spent on health care in this country.
I think we have to ask ourselves: What can we do to make reforms in the health care system that will lower costs, make health care more accessible to more people in this country, and make sure that the ranks of the uninsured decrease rather than increase?
One of the things I supported as a Member of the House of Representatives is small business health plans--expanding access to tax-advantaged accounts that allow people to own and take control of their own health care, such as health savings accounts. In fact, small businesses make up most of the employers in my State. In 2003, according to the Small Business Administration, there were 20,400 employer firms with fewer than 500 employees, which represented 96.9 percent of employer businesses in my State and employed approximately 63 percent of the nonfarm private workforce. The alternative I referred to--the McConnell-Lott alternative that will be offered--will allow for small business health plans, a proposal that will do much more for my State in the long run and strengthen our private health insurance market in the future. Small business health plans would allow small business associations to band their members together to purchase more affordable insurance, which increases their bargaining power to get better benefits at better prices such as big businesses currently get.
This proposal also gives small business health plans the flexibility to provide a variety of uniform benefit packages across State lines, which is the only way small business associations could provide new options affordably. As a result, this proposal would reduce the cost of health insurance for small employers by about 12 percent, or $1,000 per employee, according to a respected actuarial firm. The bill would also cover more than 1 million uninsured Americans and working families or 1 out of every 12 people
who live in a family headed by someone who works for a small company. The Congressional Budget Office states that three out of every four small business employees would pay lower premiums under the McConnell-Lott alternative than under current law.
What I want for South Dakota is for more people to have control over their health care, more options for their care, and more competition in the insurance market to help bring prices down. In fact, last week I introduced a bill to expand access to private long-term care insurance by allowing individuals with IRAs or 401(k)s to withdraw funds penalty free to pay for long-term care premiums. This is extremely important in South Dakota and across the country where many seniors have to spend down their life savings to pay for long-term care or to qualify for Medicaid.
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Mr. THUNE. Mr. President, let me again pick up where I left off in regard to the cost of health care, both health care in the sense that we all need it, and as we get into retirement age, Medicare, but I was also making reference to long-term care in some legislation I introduced recently with regard to that.
It is important that affordable, long-term care insurance allow individuals to plan for their later years as well. More competition in the long-term care insurance market would mean more options for South Dakota's families and seniors, not to mention reductions in Federal spending. So putting the politics of Government on health care versus private insurance aside--and again, I believe that is a debate this Senate is going to have to join in the not too distant future, because I believe this is where the debate actually today is taking us. We are growing the amount of Government health care out there, pushing aside the options for private health care insurance. Frankly, I believe the thing that differentiates our country from those around the world and why people come here for health care rather than going to other countries is because we have the best health care in the world.
We have a robust free market-based system that allows for innovation and for research and comes up with literally the best therapies in the world.
I want to continue to make that market work. I don't want to make it harder for citizens in my State to get health insurance in the private marketplace. I fear that as we go down this road, we are starting to look at what, in effect, will be a major debate raging; it is raging across the country, but it will ultimately be dealt with here, and we will decide whether we want to have a government-run, bureaucratic health care system or whether we want to preserve the market-based system that has worked so well for us in the past. I don't want to make it harder for citizens in my State to choose and afford the insurance plan that is best for them.
Finally, I don't want to support doubling the size of this particular program, which, after 5 years, is going to have to be paid for with substantial tax increases on all Americans, because I think as we all know when you reach 2013, there is a cliff there, and at some point that issue is going to have to be dealt with because there is a huge funding shortfall under the proposal that is on the floor before us today.
I support the McConnell-Lott alternative, which reauthorizes the current SCHIP program and also helps lower health care costs for all Americans and because it allows for small business health plans and other types of alternatives that can be used by allowing South Dakotan small businesses to pool together to purchase more affordable health insurance and make further needed improvements to the underlying SCHIP program for children, as well as providing long-term solutions for lowering the cost of health care for all Americans.
I also wish to speak on amendment No. 2579, which I offered. Under this bill, the Congress will be making it possible, as my colleague from Montana pointed out earlier--it is not the case today, but there are some States around the country where this bill expands the underlying amount, or income eligibility, up to 300 percent of the Federal poverty level. But there are States which have waiver requests that would allow them to go to 400 percent of the poverty level. There is not anything in the underlying bill that prevents that from happening. That would make it possible for people to be put on the rolls of the SCHIP program for health care who are not only low income but who at the same time are subject to the alternative minimum tax, or the AMT, which is a tax intended for individuals and families who are wealthy.
Let me repeat that. Under the bill, individuals eligible for SCHIP--one of our Nation's safety net health insurance programs--may also be hit with the alternative minimum tax, which is meant to ensure that the wealthy in our society are paying their fair share of taxes. Effectively, the Federal Government could consider you poor under the SCHIP program for the purpose of providing you free health insurance, while at the same time the Internal Revenue Service considers you wealthy because of the level of income you make, so that you would have to pay higher taxes.
My amendment is pretty straightforward. It simply says that if a family finds out when they file their taxes that they are subject to the AMT, then the State in which they reside has to remove them from its SCHIP program by the following fiscal year. In other words, you cannot be eligible for both. You cannot be both rich and poor at the same time.
The SCHIP program should be preserved as a program for low-income children, for those who need it. This amendment is simply intended to ensure we continue focusing on that fact.
I remember, as I said, this debate from 1997, when we decided to create the SCHIP program. I was in the House at that time, and I supported the creation of this program to help the uninsured who have incomes too high to qualify for Medicaid. But I also remember the concerns of my colleagues that down the road we would be faced with pressure to expand the program. That is what has happened for decades with entitlement spending in this country. We know we are facing a fiscal crisis already in Medicare and Medicaid that cannot be solved with more Government expansion. Yet here we are today debating how much to expand a government safety net program for the uninsured, which originally was supposed to serve only low-income children.
Of course, my amendment today also points out the fallacy of the alternative minimum tax. Under current law, if we don't enact another ``patch'' or comprehensive AMT reform, middle-income families everywhere will be hit with this tax, and some people on SCHIP might even hit both. This amendment is not simply to point out we have a looming AMT problem, which we all know must be paid for, my amendment points out the mixed intentions of the underlying bill. If you want to make this debate about low-income children, let's do that, but if we want to expand eligibility for SCHIP for families making up to $62,000 or $82,000 for a family of four, if waivers are granted, then let's have a debate on the uninsured. Let's not kid ourselves that this bill doesn't take us closer to government-run, government-dominated universal health care for lower, middle, and upper income families.
I welcome the debate on the uninsured. There are so many things we can do to help lower the cost of prescription drugs and increase competition and portability in the health insurance market and help our small businesses and the self-employed in our States afford their health insurance. It is these ideas we need to discuss in a debate in this Chamber--an open and honest debate on the merits of a government-run system or one with competition, choice, and affordability. The estimated 61,000 uninsured adults and children in my State and the over 40 million uninsured around the country makes it imperative to this Congress to have that debate.
The amendment I offered, amendment No. 2579, would make it very clear under this bill that if somehow someone gets to an income level where they are running afoul of the alternative minimum tax or are considered wealthy or rich in this country, they are not also then considered poor in a sense that they qualify for the SCHIP program. That seems to be an inherent contradiction in this particular legislation.
I hope the Members of the Senate will support my amendment. It will improve the underlying bill.
I yield back the remainder of my time.
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