Service Members Home Ownership Tax Act Of 2009--Motion To Proceed

Floor Speech

SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009--MOTION TO PROCEED -- (Senate - November 20, 2009)

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Ms. COLLINS. Mr. President, I rise to discuss the health care bill that the Senate will begin voting on tomorrow evening. Let me begin by making clear that I believe our health care system needs fundamental reform.

One of my top priorities as a Senator has been to work to expand access to affordable health care. The fact is, however, that the greatest barrier to health care coverage today is the exploding cost. Monthly health insurance premiums in Maine have risen at an alarming rate. They now often exceed a family's mortgage payment. Whether I am talking to a self-employed fisherman, a displaced mill worker, the owner of a struggling small business, or the human resource manager of a large company, the soaring cost of health insurance is a vital concern.

Much of the health care reform debate so far in this Congress has centered around the need to expand coverage to the uninsured, a goal I embrace. The fact is, however, it will be difficult to achieve our goal of universal coverage until we find a way to control health care costs that have driven up the cost of insurance coverage for families, employers, and governments alike.

While I agree that our health care system is broken and in need of major reform, the bill we are about to consider falls far short when it comes to reining in health care costs. This is a critical issue because the high cost of health care is the biggest barrier for those who lack insurance. The high cost of health care is what is driving up the cost of insurance premiums, causing many middle-income families and small businesses to struggle to meet these rising costs.

I am concerned that this bill takes us in the wrong direction and that it will actually drive up costs and reduce choices for many middle-income Americans and small businesses.

Health care reform should give Americans more, not fewer, choices of affordable health insurance options. Under this bill, many Americans will be required to purchase health insurance that is more expensive, not less expensive, than the coverage they currently have.

Under the majority leader's bill, all individual and small group policies sold in our country must fit into one of four categories: bronze, silver, gold, or platinum, and they must have an actuarial value of at least 60 percent. Post reform--if this bill becomes law--it will be illegal to issue new policies in the individual or small group markets that do not meet those standards.

Moreover, unless they are grandfathered, most Americans who are not enrolled in at least a bronze plan will face a new $750 fine.

Let's look at what this means. In my home State of Maine, 87.5 percent of those purchasing coverage in the individual market today have policies with an actuarial value of less than 60 percent. In other words, they have policies that do not qualify under the standards that would be established by this bill.

The most popular individual market policy sold in Maine costs a 40-year-old about $185 a month. Under Senator Reid's bill, that 40-year-old would have to pay at least $420 a month, more than twice as much, for a policy that would meet the new minimum standard, or pay the $750 penalty.

I believe Americans should have the choice to purchase more affordable coverage if that is what works best for them. Health care reform should be about expanding affordable choices, not constricting them. It should not be about forcing millions of Americans to buy coverage that is richer than they want, need, or can afford. Yet under this bill, even an individual who does not qualify for any taxpayer assistance, for any subsidy, would have to buy a prescribed plan rather than, for example, a low-cost, high-deductible policy that, when combined with a health savings account, may best meet his needs.

Moreover, the very tight rating bands in this bill will increase costs for young people.

Why does that matter, when we are trying to expand coverage for those who are uninsured? For this reason: More than 40 percent of uninsured Americans are between the ages of 18 and 34. Extreme price increases for the young and healthy will simply force them out of the market because most young people, I fear, will just do the math. They will decide to pay the new $750-a-year fine, rather than paying $5,000 a year or more for health insurance. This is particularly true because under the bill, if they do get sick later, they can still buy insurance with no penalty, no increased cost. That is why the National Association of Insurance Commissioners--keep in mind, this is the association of State officials which regulates insurance; these are public officials--according to the NAIC, these provisions will lead to severe adverse selection that will drive up the cost of premiums for everyone else who is in the insurance pool.

Proponents of this legislation contend that the subsidies included in the bill for low- and moderate-income Americans will compensate for any premium increases. Let's take a look at that. First of all, it is important to know that the subsidies do not go into effect until the year 2014 yet a lot of the taxes which I am going to discuss later, which are also going to drive up the cost of premiums, go into effect next year. So that is a problem as well.

Moreover, these subsidies are going to be available, it is estimated, to fewer than 8 percent of Americans. Moreover, if you receive your health insurance from your employer, as the vast majority of Americans now do, you are not eligible for a subsidy under this plan. But your premiums are still going to go up because of the increased taxes and fees imposed by the bill.

When Americans understandably are so upset about the high cost of health care, and when health insurance premiums are going up by double digits, making it so difficult for most Americans to afford health insurance, the last thing we should be doing is to make the situation worse. I can't help but think of the Hippocratic Oath, ``do no harm.'' Should not that be our first rule?

Americans who are already shouldering the burden of too high health care costs would hardly consider a bill to be ``reform'' if it drives those costs up further. Yet I fear that is exactly what will happen if this bill becomes law as written.

In light of this, I think it is a legitimate question to ask whether this bill may actually increase the number of uninsured Americans by driving up the cost of health insurance for years before the subsidies go into effect?

Let me take a further look at some of the increased taxes that are in this bill. Americans will face at least a dozen new or increased taxes and fees amounting to $73 billion before the subsidies go into effect in 2014. What kind of new taxes are we talking about? This chart shows just some of the taxes that will hit Americans when the bill goes into effect--and there are many more. Here are a few.

There is a tax on pharmaceutical manufacturers, a tax on health insurance providers, a tax on medical devices. Think of what we are talking about taxing here: We are talking about insulin pumps, artificial hips and knees, stents put into hearts--all sorts of medical devices. If a new fee is put on these devices, that is going to be passed on to consumers and reflected in insurance premiums.

All in all, as I mentioned, these taxes will cost $73 billion before 2014. These taxes will be paid right away by Americans in the form of higher health insurance premiums. That is not just my opinion, that is the view of the Congressional Budget Office, which evaluated the impact of several of these taxes. For example, here is what the CBO said about the $6.7 billion increased tax on insurers:

We expect a very large portion of the proposed insurance industry fee to be borne by purchasers of insurance in the form of higher premiums.

The problem is, the way these taxes are structured, they are going to be passed on to consumers, and it is not only the taxes on insurers that will be passed on. Here is what the CBO Director said about new fees on the pharmaceutical industry and also on medical devices. The CBO said:

Those fees would increase costs for the affected firms, which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount.

The Joint Committee on Taxation looked at the tax on the so-called Cadillac plans, the 40-percent excise tax. Here is what it said:

As insurers pass along the cost to consumers by increasing the price, the cost of employer-provided insurance will increase.

I do not believe that the American people have sent us to Washington to raise their taxes and call it health reform--especially now, in the midst of a recession, with unemployment above 10 percent.

This leads me to another point. I am so concerned about the impact of this bill on our small businesses. They are the job creators in our economy, and the rising cost of health care has been particularly burdensome for them. A small business owner in Maine recently e-mailed me to say the following:

I just received our renewal proposals for our small business. The plans are all up anywhere from 12 to 32 percent on the three plans that we offer. ..... You are right when you say we need to address the cost of health insurance, not create another vehicle to deliver the services. The current legislation, as I understand it, totally misses the mark.

How does this bill help small business? On balance, it doesn't. That, again, is not just my opinion; that is the opinion of our Nation's largest small business group, the NFIB. In a statement on the bill released yesterday, the NFIB said:

This kind of reform is not what we need. New taxes ..... new mandates ..... new entitlement programs ..... paid for on the backs of small business.

In fact, NFIB described the bill as ``a disaster.''

I ask unanimous consent a copy of the NFIB statement be printed in the Record.

There being no objection, the material was ordered to be printed in the Record, as follows:

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Ms. COLLINS. Mr. President, there are some provisions in the bill that are intended to try to help small business but again they miss the mark. I support and have long proposed the idea of tax credits for small businesses to help them afford to provide health insurance for their employees. But the credits for small businesses in this bill are poorly structured. Only businesses with no more than 10 workers, paid an average of $20,000, can get the full tax credit. So if a small business hires additional employees or pays more, its credit begins to decline and it is eventually phased out. Businesses with more than 25 workers, or paying average wages of above $40,000 get no tax credit whatsoever.

Take a look at this. I realize this chart is a bit busy, but stay with me. Under the Finance Committee bill, if you have 10 employees and you pay them on average $20,000, you get a 50-percent tax credit applied to the cost of the insurance. But if you give them a raise, the tax credit begins to decline. For example, if you have 10 employees and you pay them $25,000 on average, you only get a tax credit of 38 percent.

Let's say you are trying to improve their quality of living. They have done a great job for you, so you give all your employees a raise, bringing their average wage to $30,000. Now the tax credit is only half as much as when you paid them $20,000.

If you pay them $40,000 on average--zero. You lose the tax credit altogether.

What we have here is a tax credit that is structured in such a way that it discourages small businesses from adding employees and paying them better. That doesn't make any sense at all. That makes no sense at all.

This legislation would have enormous consequences for our economy and for our society. We have to remember that this bill would affect every single American, every small and large employer, every health care provider. It affects 17 percent of our economy.

There are many reforms, such as allowing small businesses to pool together to have better bargaining clout, that I support and that have strong bipartisan support, that could have been the basis for further debate and amendments. So it disappoints me greatly that we are about to proceed to a divisive, partisan bill. I continue to believe that the American people would be better served by a bipartisan bill that brings together the best ideas on both sides of the aisle, and I pledge to continue to work with Members on both sides of the aisle to develop alternatives that will bring about true health care reform.

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