Thad Cochran

Mr. COCHRAN

Mr. COCHRAN. Mr. President, today I am introducing legislation to grant Federal tax exemption to State health risk pools. The purpose of a health risk pool is to provide health and accident insurance coverage to individuals who, because of health conditions, would otherwise not be able to secure health insurance coverage. Since 1976, 28 States have enacted legislation establishing a health insurance pool aimed at protecting uninsurable and high-risk individuals. Most of the pools were established in the last 4 years. For example, the Comprehensive Health Insurance Risk Pool Association Act was enacted by the Mississippi State Legislature during the 1991 legislative session and became effective April 15, 1991. At that time Mississippi became the 25th State to enact such legislation. The Comprehensive Health Insurance Risk Pool Association was created to implement such a health insurance program. Members of the association include insurance companies and nonprofit health care organizations which are authorized to write direct health insurance policies and contracts supplemental to health insurance policies in Mississippi. The association also includes third party administrators who are paying and processing health insurance claims for Mississippi residents. Over the past 3 years, the association has issued medical insurance policies to approximately 900 Mississippians. The association is funded by premiums paid by policyholders and quarterly assessments against members of the association. There is no public funding--State or Federal--involved. Currently, about 120,000 individuals nationwide are a member of a State pool. Nationally, there are an additional 1 to 3 million people who are uninsured and uninsurable, and who could be eligible for inclusion in a State pool. Unfortunately, several State health risk pools have applied for, and have been denied, exemption from Federal taxation under International Revenue Code sections 501(c)(4) and/or 501(c)(6). Generally, the Internal Revenue Service's [IRS] rationale for such denial has been that the sole activity of the health risk pools is the provision of health insurance for individual policyholders. The IRS perceives, incorrectly in my view, health risk pools as a regular business ordinarily carried on for profit, which primarily provide commercial type insurance. Moreover, the IRS takes the position that health risk pools are primarily serving the private interests of its members and not the common interest of the community as a whole. In its decision to deny the State of Mississippi's Comprehensive Health Insurance Risk Pool Association exemption from Federal income tax, the Internal Revenue Service in a letter dated August 16, 1993, states: For purposes of section 501(c)(6) of the Internal Revenue Code, an organization providing insurance for its members or other individuals, except in very limited instances, either is considered to be engaged in an activity that is an economy or convenience in the conduct of members' businesses because it relieves the members of obtaining insurance on an individual basis, or is a regular business of a kind ordinarily carried on for profit. In either case, the activity of providing insurance is not considered to be an exempt activity under section 501(c)(6) and, if it is the primary activity of the organizations, exemption under section 501(c)(6) is precluded pursuant to section 1.501(c)(6)-1 of the regulations. However, health risk pools have been created by statute in several States to serve a public function of relieving the hardship of those who, for health reasons, are unable to obtain health insurance coverage. These pools do not carry on an activity ordinarily carried on by insurance companies and are not designed to make a profit. Further, they are established by State statute and none of the net earnings benefits any private shareholder, member, or individual. The Federal Government should serve as an impetus for, not an impediment to, State health care reform. We should do all we can to increase the ability of States to help the uninsured. The Senate Finance Committee recognized the value of health risk pools and included a version of this bill in their health care reform legislation last year. In order to allow States real flexibility in designing effective health care plans, State health risk pools should be exempt from taxation. By passing this legislation, we will promote State-based health care reform by expressly granting Federal tax exemption to State health risk pools, notwithstanding the IRS's current position. While future national health care reform may eliminate the need for State health risk pools, until such reform is implemented, these entities will remain the only source of medical insurance for many of our citizens. I urge my colleagues to support this legislation. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. COCHRAN. Mr. President, I understand the status of the situation on the floor is that we are in morning business; is that correct?

Mr. COCHRAN

Mr. COCHRAN. Mr. President, to put this debate on the budget situation in context, I hope that we will keep in mind the difficulty that Congress has had over the years, and each administration in recent years, in trying to cope with this very, very difficult challenge of controlling deficits. In 1960, for example, interest payments on our national debt amounted to 6 percent of the Federal budget. Today, that figure has grown to 16 percent. That is the percentage of the total expenditures that will be required to be appropriated and paid in interest on the current debt in the next fiscal year, according to the President's budget. Last year, the Federal Government paid a total of $203 billion in interest on the existing debt. The budget just submitted by the President calls for spending $257 billion in the next fiscal year on interest on the accumulated debt. By comparison, Senators might be interested to know that if these interest costs are as they are projected to be next year by the President's budget, we will spend just about as much on interest payments as we will on national defense. The national defense dollars that are requested by the President to be appropriated for our Nation's security next year are at $262 billion in the President's budget; the interest payments, $257 billion, a $5 billion difference. In a $1.6 trillion budget, the percentage is about the same, 16 percent. It seems to me that to believe we are going to be able to meet this challenge of controlling deficits more effectively without some requirement to do so or some new procedures in place such as this constitutional amendment to require a balanced budget is a triumph of hope over experience. One item that I received in my mail this week from a constituent was very interesting from a historical perspective. Andy Halbrook is a resident of Greenville, MS. His father, David Halbrook, has been a member of our State legislature for a number of years and one of our important influences in State government. He sent me a Reader's Digest article of July 1979 which talked about the origin of the movement for State legislators to petition the Government for a constitutional convention to require a balanced budget. I am going to read the first paragraph and put the rest of it in the Record with this letter for the information of Senators. In Ollie Mohamed's Belzoni, Miss., department store-- Ollie Mohamed was a State Senator at the time-- a group was discussing Federal spending, inflation and Congress's perennial inability to balance the budget. State legislator David Halbrook spoke of his new grandchild: ``That baby is going to have to pay for the things I'm enjoying. It ought to be the other way around. I ought to leave the world a little better for him.'' This article goes on to talk about the conversation that then led to, well, what are we going to do about it? And one of them got the Constitution down and read here where it is provided the State legislatures can petition the Congress to convene a constitutional convention to amend the Constitution, and they decided that it ought to be done. And so David Halbrook led the effort in the Mississippi legislature to have that resolution passed. Then some other States got involved. The National Taxpayers Union got involved. And according to this article, over a period of years they almost reached the point where they were successful. They were four States short at the time this article was written in 1979. Andrew--``Andy''--Halbrook, David's son, suggests that we ought to name this legislation the ``David Halbrook Act,'' requiring the Congress to balance the budget as a matter of constitutional amendment. I think it is a good suggestion. I ask unanimous consent that Andy Halbrook's letter be printed in the Record, along with the article from the Reader's Digest.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, I thank my good friend for permitting me to make that unanimous-consent request.

Mr. COCHRAN. Mr. President, I ask unanimous consent to insert in the Record a copy of an article written by Mr. Neely Mallory in the Commercial Appeal of Memphis, TN, on Sunday, January 29, dealing with the importance of agriculture and nutrition programs. It is a cautionary signal and call to the Congress to recognize the importance of these programs as we work through the efforts for reform, reduction in spending, balancing the budget, and the other important challenges that we are considering now in the Congress. I ask unanimous consent that the article be printed in the Record.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, in conclusion, let me simply say that one mark of the courage and interest in the political development of our State was illustrated by Mrs. Lyells' active and conspicuous participation in the development of the modern Republican Party in Mississippi. As an African-American, she took a stand and defended it with grace and with dignity and with intelligence, in a way that reflected credit on many of us who were actively involved in trying to build a new political party as a vehicle for political expression for our State and the citizens of our State at the national level. For that, I also will be forever grateful to her and to her family. Mr. President, I yield the floor.

Mr. COCHRAN. Mr. President, on December 22, Mississippi lost one of its most outstanding citizens when Mrs. Rubye Stutts-Lyells passed away. She was a personal friend of mine, but she was also a friend of many, and was one of the real leaders in our State in many areas of activity and interest. She took a very active role in helping to improve the opportunities for everyone in our State through her work in civic, cultural, religious, and political endeavors. While I was not able to attend her funeral, which was described as ``The Celebration of Triumph,'' which was held in Jackson, MS, members of my staff did represent me on this occasion and sent me a copy of the program which contains a very fine and sensitive obituary. In memory of Mrs. Lyells, I ask unanimous consent, Mr. President, that a copy of the obituary and the program, ``The Celebration of Triumph, Mrs. Rubye Elizabeth Stutts-Lyells,'' be printed in the Record.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, I am pleased to join my colleague, Senator Lott, in cosponsoring legislation which would authorize funds to stabilize the river bluffs at Natchez. Two years ago, at my request, the Energy and Water Appropriations Subcommittee, in its fiscal year 1994 appropriations bill, asked the Corps of Engineers to undertake a technical study of the condition and possible stabilizing actions that could be taken. Last year, we asked the corps to prepare a second report focusing on updated cost estimates and, in light of more recent bad weather and deterioration, on the current severity of the situation. We have seen the corps' second report. In that report, the Corps of Engineers states what the Governor of Mississippi, the mayor of Natchez, and the people of Natchez have known and have been saying for some time: That the Natchez Bluff situation is an emergency. Last October, the Natchez Democrat editorialized, ``Each day that passes without a remedy, sections of the bluffs become more precarious, threatening homes and businesses.'' Natchez Bluffs is like a deteriorating health problem. Every day that goes by without action means that corrective action will be more complex and more expensive. And so, in this day when budget constraints are the watchword, it is even more imperative to move on truly important projects like this one without delay. More delay will mean more money. More delay will mean more hardship for the people of Natchez. Therefore, I urge the Senate to approve this authorization for Corps of Engineers work in Natchez. Individuals homes, businesses, and important, historic sections of a grand old American city are at stake.

Mr. COCHRAN

Mr. COCHRAN. Madam President, first of all, I want to commend the distinguished Senator from Idaho, without whose energy and hard work and determination we would not be here today considering this legislation. Obviously, the committees with jurisdiction had important roles to play as well because they considered the legislation and reported the bill favorably. Both the Governmental Affairs Committee and the Budget Committee worked expeditiously to get this done. My strong commendation includes the leaders of those committees, as well. I must say that as a member of the Governmental Affairs Committee, it has been my pleasure to work on this legislation for some time now, and I do not know of any bill where there seems to be such strong support among local elected officials, Governors associations, and others who would be directly affected by this legislation as we have seen with this bill. Letters have poured in, last year particularly. In 1993, when we were considering the legislation, I can recall the Mississippi Municipal Association very strongly endorsing this concept and urging that we act in the way we plan to act in the passage of this bill. It is not a problem that has just developed overnight, either. It is one I can recall back as far as my early service in the other body when we were enacting legislation to help provide education opportunities for handicapped children, to ensure that they would not be denied an opportunity to learn and grow and develop in our public school systems just because of some physical or mental impairment that made it difficult, maybe, or more expensive to provide those educational opportunities to them. But the catch was that the Federal Government, while it was imposing this rule and requirement on local school districts, was providing no funds whatsoever to pay the additional costs that were going to be incurred. Many of us tried to get the legislation amended to provide a Federal funding matching program of some kind, and we were unsuccessful. The costs of that were enormous. I am not saying we should not have enacted the legislation because the goal is certainly worthy and honorable, but what the Federal Government did is shift all of the costs of compliance to local governments. I can also remember as a Member of the other body on the Public Works and Transportation Committee trying to develop ways to help clean up our rivers and streams, our groundwater resources, so we were directing, as a part of that effort, local governments to build wastewater treatment facilities, with a lot of Federal rules, a lot of Federal specifications, EPA issuing regulations about the kinds of facilities that had to be constructed. What was missing in all of that, again, was any kind of real effort to help withstand the enormous costs, particularly in those communities that had no way to really pay for what had to be done, according to the Federal Government. It seemed to me at that time--and later, too--that we needed to be more cost conscious. We needed to try to design programs that had flexibility so local governments could figure out a better way or less expensive way to achieve the same results, maybe, in many cases. But even then, the Federal Government is hard to deal with on issues like that. The tendency is, if you are not having to pay the bill here, let the local government officials worry about how to do it, how high they have to raise the taxes, and how much burden they have to impose to comply with Federal mandates. problem by passing this bill, and it is because of the strong leadership of Senator Kempthorne, and others I mentioned, that we are able to see this come to pass. One issue that has arisen--and I want to ask the distinguished Senator if he can help me answer this question--from my constituency is about those entities in the private sector who provide services that are sometimes in competition with municipal or other government services. I have in mind particularly a request that I had to consider offering an amendment that would prohibit any private utility, for example, being put at a competitive disadvantage because of this legislation. My reaction when I had the request put to me was, ``Sure, I'll be glad to offer that amendment. That sounds fair. We don't want to put anybody at any disadvantage.'' Then I began looking into the situation, and I heard from my friend from Idaho that this might start a process of unraveling the bill, and I do not want to do that, either. I am for this bill. I am a cosponsor of the bill. I want the bill to pass, and I do not want it to be unnecessarily weakened by any amendment that I might offer. But what is my friend's response to my constituent who says, ``We don't want to be in competition with Government utilities; we don't want to be put in the position because they are going to have these Federal mandates somehow minimized or satisfied with Federal dollars, whereas the private utility is not going to have that kind of help from the Federal Government under this legislation''? I am happy to yield to my friend for the purpose of responding to my question.

Mr. COCHRAN. Madam President, I thank the distinguished Senator from Utah for his comments and again reiterate my support for the legislation. I commend the Senator from Idaho. I look forward to working with him through the debate, the amendment process of this legislation, to make sure that it does achieve the results for which we all are striving. I thank him for his courtesies. (Mr. ABRAHAM assumed the chair.)

Mr. COCHRAN. Madam President, I am happy to yield to the Senator.

Mr. COCHRAN. Madam President, I thank the distinguished Senator. I hope that I am understanding the Senator correctly then that the amendment that I am describing is really not necessary to help ensure that this balance, this fairness will exist as between private and public sector entities that may be providing the same kinds of services.

Mr. COCHRAN. Mr. President, I thank the Senator for his comments and answers to my questions. I look forward to working with him through the remainder of this process of this bill, to bring it to passage and deal with the amendments so that we will achieve the result that we are all seeking. I yield the floor. Mr. GLENN addressed the Chair.

Mr. COCHRAN. I am happy to yield to the Senator.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, this past Saturday I read in the New York Times an interesting editorial dealing with the challenge of attracting good teachers into the Nation's classrooms, and the importance of having well-qualified, well-trained, and excellent teachers. There can be no greater challenge to us today than improving our education system throughout the country. It struck me as I read the editorial that this calls the attention of all of us to the fact that no matter what kind of programs we have, how much money we spend, what kind of national goals we adopt and try to implement, if we do not have good, qualified, conscientious, and committed teachers in the classrooms of the schools of America, we are not going to have a good education system. They are the cornerstone of our education system in America. Mr. President, I ask unanimous consent that a copy of the New York Times editorial of Saturday to which I refer be printed in the Record.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, I send a resolution to the desk which has been cleared by both sides.

Mr. COCHRAN. Mr. President, for clarification and explanation to the Senate, the resolution will permit the Governmental Affairs Committee, which is conducting a hearing this morning on the unfunded mandates legislation to proceed with that hearing while the Senate is in session. We hope that hearing will enable us to bring that legislation to the floor as soon as possible after the disposition of the congressional coverage bill, which we discussed earlier in the announcement. time. Mr. HEFLIN addressed the Chair.

Mr. COCHRAN. Mr. President, I know of no controversy surrounding the resolution.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, first let me commend the distinguished Senator from Alabama for his introduction of the resolution on the subject of a constitutional amendment to balance the budget. As the Senator knows, it has been an item of high priority in terms of planning for the legislative agenda for this new session of Congress. It is one of the three legislative measures that we hope to call up at the earliest time on the calendar for the attention of the Senate, for debate and for action. We welcome, commend, and appreciate the support of the Senator from Alabama for this initiative. He has worked for many years on this subject and in a very effective and constructive way.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, I suggest the absence of a quorum.

Mr. COCHRAN. Mr. President, I ask unanimous consent that all bills read a first time on January 4, 1995, be considered to have had their second reading and that objection to further proceedings thereon have been made.

Mr. COCHRAN

Mr. COCHRAN. Mr. President, I move to reconsider the vote by which the motion was agreed to.

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

Mr. COCHRAN. I move to table the Harkin amendment, and I ask for the yeas and nays.