Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Might I inquire, Mr. President, how much time remains on this side for this block?

Mr. BAUCUS. I thank the Chair. Mr. President, I yield 10 minutes--5 minutes--to the Senator from Colorado.

Mr. BAUCUS. Mr. President, I yield the remainder of the time to the Senator from Pennsylvania, Mr. Casey.

Mr. BAUCUS. Mr. President, the debate on this bill is winding to a close, so let me return to the nonpartisan Congressional Budget Office. The Congressional Budget Office is the referee we all turn to as an impartial judge of whether we are accomplishing what we set out to do, so I will take a moment and quote from the Congressional Budget Office. It is very appropriate as it relates to the prior conversation on the other side. Let me read excerpts from the most recent Congressional Budget Office statement on deficits, debt, and coverage and whether this is deficit neutral. This was released Saturday. This is a statement by the Congressional Budget Office and the Joint Committee on Taxation. They are our scorekeepers. They determine how much we are spending and how much revenue we are taking in on legislation and what the net result is. Here are the highlights of the letter: Enacting both pieces of legislation--H.R. 3590-- That is basically our Senate bill that passed the House and the President signed-- --and the reconciliation proposal--would produce a net reduction in Federal deficits of $143 billion over the 2010- 2019 period. That is a direct quote from the CBO. Further quoting: Enacting H.R. 3590 by itself would yield a net reduction in Federal deficits of $118 billion over the 2010-2019 period. Further quoting: The incremental effect of enacting the reconciliation proposal would be an estimated net reduction in Federal deficits of $25 billion during the 2010-2019 period over and above the savings from enacting H.R. 3590 by itself. Further quoting CBO: The combined effect of enacting H.R. 3590 and the reconciliation proposal would be to reduce the number of nonelderly people who are uninsured by about 32 million people. The share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent. CBO said of the new health care law: Enacting H.R. 3590 would reduce Federal budget deficits over the ensuing decade-- That is the next decade, the second decade-- with a total effect during that decade in a broad range between one-quarter percent and one-half percent of gross domestic product. But what is more, CBO further said: The combined effect of enacting H.R. 3590 and the reconciliation proposal would also be to reduce Federal budget deficits over the ensuing decade . . . with a total effect during that decade of a broad range around one-half percent of GDP. I might add parenthetically, that is about $1.3 trillion. CBO continues: The incremental effect of enacting the reconciliation bill over and above the effect of enacting H.R. 3590 by itself would thus be to further reduce Federal budget deficits in that decade, with an effect in a broad range between zero and one-quarter percent of GDP. In other words, the new health care formula would accomplish major deficit reduction. This is the CBO talking, not Senators. Don't take my word for it. Don't take anyone else's word for it. This is the Congressional Budget Office. This reconciliation bill itself would accomplish major deficit reduction, probably the greatest deficit reduction actually we are going to take over a long period of time--the preceding perhaps 8, 9, 10 years and a subsequent period of time. We don't know that, but this is certainly major deficit reduction. Together, these two bills would accomplish deficit reduction of historic proportions. Let me continue to quote the letter from the Congressional Budget Office. [T]he reconciliation proposal would probably continue-- Get this-- to reduce deficit budget deficits relative to those under subsequent decades. . . . Not just this period, not next decade but subsequent decades. This is my edit now. This means this bill continues to reduce the deficit in year after year after the second decade, according to the Congressional Budget Office. Finally, CBO says: In subsequent years, the effects of the provisions of the two bills combined that would tend to decrease the federal budgetary commitment to health care would grow faster than the effects of the provision that would increase it. Let me get to that statement. It gets to the Federal involvement in health care as a result of the consequences of this bill. In subsequent years the effect of the provisions of the two bills combined that would tend to decrease the federal budgetary commitment to health care would grow faster than the effects of the provisions that would increase it. Further quoting: As a result, CBO expects that enacting both proposals would generate a reduction in the federal budgetary commitment to health care during the decade following the 10-year budget window. . . . Even less government in the second 10 years relative to current law. In other words, CBO says that after the first decade, health care reform will reduce--yes, reduce--the budgetary role of government in the health care sector. Whom do we trust? Whom else are we going to listen to? We all have opinions. Those folks at CBO have sharp pencils. They are very good at what they do. They are nonpartisan. Nobody has ever suggested they are partisan. Nobody has ever questioned their professionalism. They are very good. This is what CBO says. That is it. CBO says health care reform cuts the deficit. Let me pause there and let that sink in. CBO says health care reform will cut the deficit. CBO also says it expands coverage. More people will get health insurance, from 83 percent to 94 percent. Also, this legislation reduces the Government's budgetary role in health care. It reduces it. That is quite a feat--more coverage, deficit reduction, and less Federal involvement in health care. I think this bill is pretty well designed to accomplish all those purposes--cuts cost, increases coverage, and reforms the health insurance market, most significantly in the individual market and also in the small group market. On another matter, I think it is relevant and important--this is a letter from AARP, dated March 24 of this year. It says: Dear Senator, We have made enormous progress advancing historic, urgently needed health care reform legislation but we are not done yet. This is from the AARP. Continuing: We now urge you to promptly pass the Health Care an Education Affordability Reconciliation Act of 2010--without amendments. Let me repeat that. AARP, in a letter dated March 24, strongly suggests the Congress, especially Senate, pass this legislation without amendments. Those are their own words, ``without amendments,'' in order ``to help make affordable, high-quality health care available to all Americans.'' The letter is much longer. I just wanted to quote the more salient provisions, where the AARP suggests amendments not be adopted so we can get reconciliation passed so we can implement the law which the President already signed and get health care to Americans who desperately need it and reform of the health care industry, which is desperately needed, and start getting control of health care costs, which is desperately needed. I ask unanimous consent the full letter be printed in the Record.

Mr. BAUCUS. Mr. President, may I ask my colleague a friendly question?

Mr. BAUCUS. I trust in the good faith of the Senator from New Hampshire not to abuse the situation. As I understand it, basically the Senator does not question the professionalism of CBO. Clearly, CBO had all the facts. All Senators have them, all Senators, House Members, the whole world has. CBO has all the facts. You are not questioning their professionalism. You do question their conclusions.

Mr. BAUCUS. Mr. President, that sounds fair. Let me say to my good friend from Arizona, first of all, clearly this body, the Senate and the Congress, is going to not let the SGR problem expire; that is, doctors are not going to be cut 21 percent, whatever the rate is the first year or more and so on. That is not going to happen. First, from the seniors' point of view, second from the doctors' point of view, that is not going to happen. I do not want to take too much time on the subject, but the long and short of it simply is we are going to have to find a way, this Congress, to address that problem. If I might finish, it is not part of health care reform, and we will find a way. A question is going to be how much will be paid for. That is a judgment this body is going to have to make in the pretty near future.

Mr. BAUCUS. Mr. President, we are coming to a close, or a beginning, I am not sure which, when we start the vote on amendments. If my calculation is correct, the time for debate on this reconciliation bill will expire around 5:10, about that time, approximately. At that time, approximately, we will start voting on amendments. By my count we have 21 amendments pending, and if we vote on amendments in the time in which it usually takes to vote on amendments in a series, my experience is it roughly takes around an hour for three amendments. Maybe we can speed that up. With 21 amendments, that is 7 hours. That is the good news. There probably will be some intervening disruptions. But the good news is, that means the earliest we might be finished is around midnight. But, of course, that is not the case, because there will be other amendments offered. For the information of my colleagues, we will probably start voting on amendments at approximately around 5:10, thereabouts. We have 21 amendments pending at the present time. It takes about 1 hour to vote on three amendments. I believe we can squeeze that time down. It is my hope that we can. But that is my experience around here, it takes about that long. Because there are a lot more amendments most likely to be offered, I inform my colleagues that we will be in very late tonight, certainly way past midnight, because of the number of amendments that are currently pending.

Mr. BAUCUS. Mr. President, how much time remains?

Mr. BAUCUS. I yield half that time to the distinguished chairman of the Banking Committee, former acting chairman of the HELP Committee, and one of the most valuable and productive Members of this body, the Senator from Connecticut.

Mr. BAUCUS. Mr. President, I yield to the distinguished chairman of the HELP Committee, who has been so involved in health legislation, education legislation. Might I ask, how much time do we have left?

Mr. BAUCUS. Mr. President, I yield as much time to the Senator as he wishes to take, including 11 minutes 48 seconds.

Mr. BAUCUS. I thank the Senator for bringing attention to this issue. He is a true champion for Puerto Rico and a constructive member of the Finance Committee. I share his concern about the possible under count of fee-for-service costs in areas like Puerto Rico. That is why we included a provision in the Medicare Improvements for Patients and Providers Act of 2008 to have MedPAC study the accuracy of the calculation and report to Congress. As he points out, MedPAC recommends that CMS alter the FFS cost calculation so that such under counts do not exist, particularly in areas like Puerto Rico where Medicare Advantage provides benefits to over 80 percent of its seniors. I strongly agree with him that CMS should promptly use its authority to correct any and all under counts that might exist in areas like Puerto Rico. The island has unique circumstances that could affect Medicare expenditures and spill over to Medicare Advantage. Moving forward I will continue to work with the Senator closely to monitor and correct this issue as expeditiously as possible.

Mr. BAUCUS. If the individual providing services to the PEO client organization pursuant to the PEO arrangement continues to be an employee of the PEO client organization, the Senator from Florida is correct.

Mr. BAUCUS. Mr. President, I want to talk a moment about one of the only retroactive tax provisions in the Patient Protection and Affordable Care Act, Section 9016. This one deals with the special deductions given to the many nonprofit Blue Cross Blue Shield organizations which are no longer exempt from Federal income tax. Under section 833 of the Internal Revenue Code, these organizations receive a 25 percent deduction for claims and expenses and an exception from the--otherwise applicable--20 percent reduction in the deduction for unearned premium reserves. Effective January 1 of this year, these non-profit Blue Cross Blue Shield organizations must now meet a medical loss ratio of 85 percent or higher in order to take advantage of the tax benefits of section 833. This provision was included to ensure that recipients of this special deduction actually spend out most of their premium income on the people they insure and not on administrative fees or executive compensation. But I want to clarify two issues here. First, it was our intention that, in calculating the medical loss ratios, these entities could include both the cost of reimbursement for clinical services provided to the individuals they insure and the cost of activities that improve health care quality. Determining the medical loss ratio under this provision using those two types of costs is consistent with the calculation of medical loss ratios elsewhere in the legislation. This determination would be made on an annual basis and would only affect the application of the special deductions for that year. Second, it was our intention that the only consequence for not meeting the medical loss ratio threshold would be that the 25 percent deduction for claims and expenses and the exception from the 20 percent reduction in the deduction for unearned premium reserves would not be allowed. The entity would still be treated as a stock property and casualty insurance company. It is my understanding that the Joint Committee on Taxation scored this provision consistent with the policy I just outlined. We intend to clarify these two issues in a technical corrections bill as soon as possible. Mr. President, I want to speak concerning the accounting treatment of one of the tax provisions that passed in the Patient Protection and Affordable Care Act, Section 9008, and that is proposed to be modified in the Health Care and Education Reconciliation Act. This deals with the annual fee on pharmaceutical manufacturers which, as passed, is to go into effect this year. It is our hope that Congress will delay the implementation of this fee by 1 year, to 2011, by passing the reconciliation bill which we are discussing today on the floor. This will give the government reporting agencies more time to establish systems to report the drug sales to the Secretary of the Treasury as required by health care reform. As a reminder of how the fee works: our legislation sets an aggregate, annual fee that is to be apportioned among the relevant companies based on their market share of branded U.S. prescription drug sales made to or funded by specified government programs. The U.S. Treasury will allocate this annual fee to each company based on its relative market share for the prior year. Now, we understand that there have been questions about the nature of this fee that are affecting how the fee should be treated for accounting purposes. It was our intent that the fee is assessed in the year that it is due. A fee is assessed on an entity in any given calendar year only if the entity is engaged in the business of manufacturing or importing branded prescription drugs and has sales to the specified government programs in that calendar year. The reference in the legislation to sales for the preceding calendar year is for the sole purpose of providing the method of calculating market share. It would be difficult to calculate market share and impose and collect the fee in the same year, so we decided to look back to a completed year as a proxy of market share. But it is not intended that a manufacturer or importer would be assessed an annual fee in a calendar year in which it had no branded prescription drug sales to the government programs. This is regardless of whether the manufacturer or importer had any relevant sales in the preceding year. As an example, suppose a pharmaceutical company made sales in 2011 but in November 2011 shut down its U.S. operations and had no further sales to the specified government programs. In 2012, that pharmaceutical company would not be subject to the fee. Instead, the 2012 aggregate fee would be allocated among those companies selling drugs in 2012 to the specified government programs. These same accounting questions may also be raised under the annual fee on health insurance providers--section 9010 of the Patient Protection and Affordable Care Act, as amended. On these issues, our intent as to the treatment of the fees is the same. We anticipate that the Secretary of the Treasury will provide guidance on how to determine the fees in situations involving mergers, acquisitions, business divisions, bankruptcy, or other situations where it may be difficult to account for sales taken into account in determining market share. We intend to work with the IRS and the affected groups to further clarify the law consistent with the policy I have just outlined.

Mr. BAUCUS. Mr. President, how much time is remaining on our side?

Mr. BAUCUS. First, I thank all of my colleagues on both sides of the aisle. This has been a very civil discussion, very heartfelt feelings on both sides, and I appreciate that. Let me also say it is interesting that this is the first time in recent memory that a reconciliation bill has all amendments on one side only. These are clearly amendments designed to kill the reconciliation and therefore kill health care reform. So I very much hope that all of these amendments are defeated. I note there are 23 amendments pending. It is going to take 7 or 8 hours, hopefully less. There will be many more amendments offered tonight. It is our expectation that we will continue voting on all amendments until we finally vote on all amendments and we can get reconciliation passed, and therefore all of the measures surrounding health care reform will be enacted and we can proceed.

Mr. BAUCUS. Mr. President, make no mistake----

Mr. BAUCUS. Mr. President, make no mistake, the intent of every single one of the amendments offered on the other side of the aisle is to kill health care reform. That is the sole purpose of each of those amendments. That was the sole purpose of the amendments in the Finance Committee last year--to kill health care reform. It was the sole purpose in the HELP Committee, except for a few benign amendments--to kill health care reform. It was the sole purpose on the floor of the Senate when we took it up. Every amendment was to kill health care reform. A Senator on the other side of the aisle stood up and said that this is hopefully the President's Waterloo. They want to kill health care reform. It is clear they want to kill health care reform. The other side has said repeatedly in campaign statements in the other body that they want to repeal health care reform. They have orchestrated legislatures to repeal health care reform. Each amendment offered here is intended to kill health care reform, and that is why each amendment should fail.

Mr. BAUCUS. Mr. President, without being dramatic, this is a killer amendment, pure and simple. Why? Because it is basically designed to prevent spending. That means it will take away tax credits to middle Americans to help them buy insurance. This amendment would take it away. It would kill the assistance to seniors for prescription drugs. It would take that away. It would take away assistance to States. That is why it is a killer amendment. I proudly support this bill. Why? This bill reduces insurance costs for working-class and middle-class Americans, expands Medicare prescription drug coverage to more than 3 million seniors, provides immediate tax credits for nearly 4 million small businesses, stops $6 billion in annual government subsidies for banks, and puts money into college grants for students and their families. In contrast, our friends on the other side do not want to do that. They want to kill this bill. I think that is patently against the wishes of the American people. Mr. President, I move to table the Gregg amendment, and I ask for the yeas and nays.

Mr. BAUCUS. Mr. President, I think it is important to recognize this amendment for what it is. It is basically a political stunt at the expense of a lot of victimized people. One is victims of Hurricane Katrina, another is victims of asbestos in Libby, MT; it is at the expense of rural Americans; it is an attempt to derail the bill and force the House to have to vote again, therefore force, probably, the Senate to go through another vote-arama, go back and forth. It makes no sense whatsoever. Let's not forget the underlying legislation passed recently and signed by the President yesterday reduces insurance costs for working and middle-class Americans. This amendment would have the effect of taking that away if passed. If passed, it would take away Medicare prescription drug coverage for more than 3 million seniors. If passed, it would have the effect of taking away immediate tax credits for small businesses, and I could go on and on. I urge Members to support my motion to table. I ask for the yeas and nays.

Mr. BAUCUS. Mr. President, I move to reconsider the vote.

Mr. BAUCUS. Mr. President, I don't want to be dramatic about this, but it is a fact that this amendment is a killer amendment. That is why we cannot adopt it. I remind colleagues that the underlying bill the President signed yesterday is a very large tax cut. It has tax credits in the neighborhood of about $400-some billion. That is a big tax cut for Americans who today are having a hard time buying insurance, a tax credit that enables middle and lower income Americans to buy insurance. I think we should keep that in mind. A vote for this amendment would, in fact, prevent all the benefits this bill provides for forming a health insurance market, stopping preexisting conditions. It would prevent about $17 billion in tax credits that otherwise would go to small business. I strongly urge colleagues to support my motion to table this motion. I move to table the motion to commit and ask for the yeas and nays.

Mr. BAUCUS. I move to reconsider the vote.

Mr. BAUCUS. Mr. President, sending the bill to committee sounds like killing the bill to me. I have never heard of a motion to commit that is not, in effect, a motion to kill the bill. We are all in this together in America in enacting health care reform--all groups: business groups, consumers, labor, and so forth. We have consulted with business groups. They are an integral part of this. Business groups want to work with us and have worked with us to get health care reform passed. I might also remind my colleagues there are tax credits in here for small business to the tune of--I think it is $17 billion. Firms with fewer than 50 employees are totally exempt from any penalty. This clearly is a motion to kill the bill. Therefore, it would result in taking away all these provisions enacted.