Bill Cassidy

Mr. CASSIDY

Mr. CASSIDY. Mr. Speaker, as a substitute for a plan that actually controls health care costs, the Senate majority leader has devised a gimmick. Under the plan announced yesterday, the Federal Government imposes billions of dollars of taxes on all 50 States, imposes billions in unfunded mandates via the Medicaid program, increasing the debt load of every citizen, creating a new government-run insurance program that, according to the CBO's official analysis, is more expensive than the status quo. Individual States can opt out, but their citizens cannot opt out of the taxes, and they can't opt out of the debt, and they can't opt out of the job losses that will result from these higher taxes and debt. Real reform will not require gimmicks or job loss. States should not have to pass laws to save themselves. Real health reform lowers costs by empowering patients. If we give patients direct control over health care dollars and the information they need for value-conscious decisions, we will have reform.

Mr. CASSIDY

Mr. CASSIDY. Thank you, Dr. Gingrey. I think Congressman Blunt made some great points. One of them is we want reform, but we want reform that works. Actually, I want to compliment President Obama, because of the three things we want in reform, one is to control costs so we can increase access to quality care. I think he has nailed it. My concern is the approach to achieving these will not work. I am also concerned that the Democratic proposals before us attempt to achieve that through gimmickry. They are using gimmicks to try and convince the American people that they are achieving the appropriate goal that President Obama has laid out, that it will not add to our deficit. I was struck today that on the Senate side they are saying that States can opt out of the public option. I am wondering, can you opt out of the taxes that will go into offsetting it? Can you opt out of the debt that the Congressional Budget Office says will accumulate? Can you opt out of losing the jobs that the increased taxes and the increased national debt will inevitably lead to? No. All you can opt out of is the benefit that is offered. You cannot opt out of the high cost that goes into providing this marginal benefit. I am also struck that there is this tax that they are creating for the American people, and on some similar criticism, it is truly bipartisan. The bill before the Senate Finance Committee that Mr. Reid says that we can opt out of is funded by about $350 billion in taxes. If I may quote Speaker Pelosi, she says that these savings, these taxes, if you will, come off the backs of the middle class. So I think we have a bipartisan criticism of the bill that is before the Senate right now. I think we would agree on the Republican side with Speaker Pelosi that the ``savings'' in those bills, that $350 billion, comes off the backs of the middle class. Indeed according to the Joint Committee on Taxation, families earning less than $200,000 pay 87 percent of these taxes. This is remarkable. During the presidential campaign it was stated that if you earn less than $250,000, your taxes will not go up. Yet, now, through these various accounting gimmicks, we are seeing indeed 87 percent of these new taxes will come off of those who earn less than $200,000. There are other gimmicks in this as well. It is pushing the cost of an expansion of Medicaid. And for those watching who don't worry about--I used to work in a hospital for the uninsured. For 20 years I have spent my life trying to bring health care to the people who don't have insurance. Medicaid is the safety net insurance program that is partly funded by the Federal Government and partly by the State government. Now, in this plan before both the House and the Senate, both plans, they are going to expand Medicaid. In the Senate plan, they are going to make the State taxpayers pay for this expansion. That is really great. It looks like we are saving money on the Federal level, but all we are doing is shoving that cost upon a taxpayer, it is just through the State income tax or property tax or sales tax, not through the Federal tax. That is a gimmick. If you want to say it is the taxpayer paying for it, absolutely she is paying for it. And so this expansion, this increased cost is going to lead to increased taxes, but it will be through the State tax code, not the Federal. There is the sleight of hand that is being passed off as fiscal responsibility. Now, on the other hand, we agree on the goals. We want to have quality health care, accessible to all at an affordable price. But we can see that this kind of bargain being offered by the Democratic proposals is really not controlling costs at all. It is merely shifting it onto State taxpayers or it is using taxes upon the middle class to fund. I like to say they are using new tax dollars in the old wineskin of an old health care delivery system. Just as we know that new wine in old wineskins will not work, so we know that these new taxes, these savings off the back of the middle class, as Speaker Pelosi says, will not work in the old wineskin of an old delivery system. Republicans, on the other hand, I think we truly want a transformation of how health care is delivered. The Republican proposal I have signed on to, and I think several of my colleagues have, H.R. 3400, is wonderful in the sense that it empowers patients to make cost- conscious decisions. If I might yield to my friend from Shreveport, he has got this great anecdote of how Health Savings Accounts in his business worked not only to hold down costs, but how by empowering his employees, also improved our health, if I may yield.

Mr. CASSIDY

Mr. CASSIDY. Thank you, Dr. Broun. I am pleased to be here. Let me start off by saying I actually totally agree with our Democrat colleagues on the goals of health care reform. We have to control costs. By doing so, you can create access to high quality care. As you mentioned, I have been working in a hospital for the uninsured for 20-something years, a public hospital in Louisiana, part of our safety net system, so it occurs to me that I know firsthand the need to control costs. In our budget, there is a fixed budget, if you will. If we exceed that, then we don't have the ability to provide more access. We do have to form those long lines. And I kind of applaud the President because he recognizes the need to control costs. For example, he has more than once said that the price of failure is that costs will double over the next 10 years. In fact, I think the President has said that without his reforms or the reforms he agrees with, that we know that the costs will double over the next 10 years and they will be out of control. I think he recognizes that cost control is one of the three legs of the stool. Again, we must control costs in order to ensure access to high quality care. But we on the Republican side, I think, have continually pointed out that his programs will lead to higher costs, not lower costs, and that is of concern to me, who has worked in a public hospital, that knows that once costs are out control, then you inevitably have a decrease in access. I was struck today that there is an independent article that just came across the Associated Press that under the proposed overhauls, the U.S. health care tab would grow. That is the headline. And this is an analysis by the Health and Human Services Department looking at the impact of H.R. 3200 upon overall health care costs.

Mr. CASSIDY. CBO, if I may, the Congressional Budget Office, because I find sometimes we get used to these terms, but the independent arm of Congress that evaluates the fiscal matters, if you will, whether or not something costs more or less or is just right, the Congressional Budget Office says the rate of growth will be 8 percent per year under the plans before us from the House Democratic leadership and the Senate Finance Committee, and that more than doubles costs in 10 years.

Mr. CASSIDY. You know, in one sense, in one sense it is almost humorous, and in another sense, it is almost tragic. Because what we have been saying all along is that under these proposals, costs actually go up, and we know in our practice when that cost goes up, inevitably there is some sort of squeeze-down on people's access to high quality care. By this, which is an independent government economist, this is the Medicare Office of the Actuary, it says that the report found that health care would account for 21.3 percent of the U.S. economy in 2019 under these reforms, slightly more than an estimated share of 20.8 percent of the economy if no bill passes. Additionally, it says that with the exception of the proposed reductions in Medicare, the legislation would not have a significant impact upon future health care gross costs. It adds, it is doubtful that the proposed Medicare cuts will stay in. What we are seeing is that when the President says that reform must be done or costs will double, indeed, under their reform plan, costs more than double. Another report by the Congressional Budget Office suggests that under the reform plans before us, including the Senate Finance Committee, that the rate of inflation will be 8 percent per year. That is compounded. That more than doubles costs. At a minimum, reform should not be more expensive than the status quo if cost is the issue. So, Dr. Broun, I want to return, I think you are right on when you spoke earlier about your bill, and, of course, I am a cosponsor of H.R. 3400, which includes things such as Health Savings Accounts, that actually can bend the cost curve. I was speaking to a woman back home who does small group insurance. I called her up and I said, If you have a family of four with an HSA and a wraparound catastrophic policy versus a family of four with the traditional insurance policy, what is the rate of inflation? She said, Well, with the Health Savings Account and the wraparound catastrophic, about 6 percent per year. Now, that actually begins to bend the cost curve down. She said, though, for the traditional insurance policy, it is more along the lines of 9 to 11 percent per year. So I think what we in this delegation, this conference, have found is that if we empower patients, if we do what a Health Savings Account does, which is take a portion of that health insurance premium, puts it into an account, and if the patient has money left over at the end of the year, it belongs to the patient, she can roll it over into the account the subsequent year, as opposed to a program which empowers government, which is a top-down, central planning Medicaid-Medicare type of program, which, as good as they are, nonetheless have inflation rates which are higher than the inflation rates for even traditional insurance policies. If we go with the patient-empowered process, we control costs. If we go with the same paradigm as this report states, we actually increase costs, the kind of government paradigm. If I can defer to my colleague from Shreveport, Dr. Fleming actually has a very nice story about how they brought Health Savings Accounts into their small group and indeed lowered costs.

Mr. CASSIDY

Mr. CASSIDY. What we see on this previous slide is there is $81 billion, these are in billions, so there is $81 billion in savings. That's how much it cuts the Federal deficit. The $33 billion you speak of is from the Congressional Budget Office estimate, the independent arm of Congress. We would have to at least subtract $33 billion from that $81 billion if we are talking about total health care spending by a government entity. Fair statement?

Mr. CASSIDY. Madam Speaker, I had several communications today that were just so appropriate for this time of discussing health care. I spoke to a physician in Ville Platte, Louisiana, who spoke just how the only people that can actually control costs in health care is the patient. Because if you think about it, if patients come in and want a test and they don't get the test, and there's going to be a dissatisfaction, sometimes patients will go elsewhere, and they will get the test from another provider. Secondly, I spoke to a small businessman who said that his premiums are going up by 27 percent. And the third thing, I wrote a letter to a former patient of mine, the widow of a man who had died of cancer, and I was struck that in each of these, a common consideration was the cost of health care. Indeed, as we speak about health care, we can never get away from the fact that cost is a driver of our discussions. As we approach reform, there are three things we need. We need to have quality health care accessible to all at an affordable cost. When we say ``cost,'' the President acknowledges this, as well, the President has said that he will not sign a health care bill that adds one dime to our Nation's deficit. Now, by that criteria, and he understands that we are, as a Nation, having a problem with the budget deficit, if we create a new entitlement and if that adds to our budget deficit, then we, as a Nation, will be worse off. I work in a public hospital in Louisiana. And in that public hospital, whenever money is tight in the State, there tends to be a squeeze on the financing of the hospital. I can remember years in which we would wait to order a test until after the new fiscal year. And this happens when cost is an issue. So as we look at our goals of health care reform, it is accessible, quality health care at an affordable cost. Now, if the President says that he will not sign a bill that adds one dime to our Nation's deficit, we can understand why four of the five bills before us are essentially eliminated. Four of the five bills include the public option, and the public option has been projected to increase our Nation's deficit. Importantly, they are also projected to increase costs at 8 percent per year. Now, 8 percent per year more than doubles cost over 10 years. So when the President says that we know if we do nothing, we know if we persist with the status quo that costs will double in 10 years, four of these five reforms, on the face of them, according to the Congressional Budget Office, will more than double cost. That leaves us with the fifth option which has received a lot of attention. That is the bill that is coming out of the Senate Finance Committee and which has come to be known as the Baucus bill. Now the Baucus bill is gathering our attention because according to the initial estimate, it would save $81 billion. Wow. If we can actually control costs in that way, that's remarkable. It should be something that we all get behind. This is being seen as a vehicle where the Democratic leadership in Congress can achieve their goal of having health care reform in the way that they wish to achieve it. Now, let me pause for a second. We all want reform. When I speak to that small businessman that says that his cost of insurance is going up 27 percent in 1 year, we know that that is not sustainable. At issue is, will he do better if it is merely the taxpayer or the ratepayer? If we come up with something which more than doubles cost in 10 years, that's really reform absent reform. It is merely changing a private insurance bureaucracy to a public insurance bureaucracy. So we come back to the Baucus plan. Now the Baucus plan is significant because, again, it supposedly will save us $81 billion in 10 years. But clearly there is an issue with it. I say that because where do those savings come from? Who pays? Well, according to Speaker Pelosi who is, by the way, a Democrat, she says who pays this particular plan from the Senate Finance Committee? The savings come off the backs of the middle class. If you have insurance, you get taxed. There are $201 billion in taxes on health insurance plans with a 40 percent excise tax on insurance plans worth more than $8,000 for individuals or $21,000 for family policies. Families making less than $200,000 a year shoulder 87 percent of this burden. As it turns out, many of these people are union workers. Over years, union workers have given up wage increases in order to have more generous insurance benefits. By this, it makes it a bad situation. So the Senate finance plan will tax those benefits. And that's why Ms. Pelosi says the savings come off the backs of the middle class. So if you have insurance, you get taxed. But if you don't have insurance, you get taxed. There are $4 billion in fines on the uninsured and $23 billion in penalties and fines for businesses whose employees enter the government exchange. So if you don't have insurance or do not provide it, then you get $27 billion in taxes. If you use medical devices, hearing aids or artificial hearts, you get taxed. There's going to be a $38 billion tax on medical device manufacturers. If you take prescription drugs, you get taxed. There are $22 billion in savings that are achieved by taxing prescription drug producers. Total, there's $349 billion in new taxes on employers, individuals, medical device and drug manufacturers and insurance providers and families making $200,000 or less. Let's face it, $200,000 is a lot of money, but that's also ``or less'' will pay 87 percent of the taxes. If the math holds, then about $300 billion in these taxes will come from folks who are middle class or just lower upper income, if you will. Despite that, there's still higher health care costs. According to the Congressional Budget Office, the independent arm of Congress, the premiums in this new insurance exchange which is created by this plan would tend to be higher than the average premiums in the current individual market. In fact, Mr. Elmendorf, who is the head of CBO, said that we note that piece of legislation would raise premiums on average. There's also $200 billion in taxes on health insurance plans. So that tax, presumably, will be passed on to the person purchasing the policy, so that makes those policies more expensive. And ultimately, we know that taxes upon the pharmaceutical industry and manufacturers of durable medical equipment will be passed to the people that consume it. So there are several other things that we will explore as we go through. I'm joined by my colleagues, so I will ask Congressman Gingrey, who is also a physician, as I am, if he would contribute to the conversation.

Mr. CASSIDY. That's 10 percent now without the imposition of the unfunded Medicaid mandate; is that correct?

Mr. CASSIDY. Thank you, Congressman Gingrey. I think what you are talking about when you have the money, honey, let's go buy a new car, means that you actually have a way of financing within your own budget that's honest and that you know you can sustain, so that after a year of purchasing the car, you can continue the payments. I would like to in a later point go back to Republican solutions, but just provide a little bit of a critique on the Senate Finance bill, because I don't think that they actually have their money, honey. One of the reasons I am concerned is because this is, if you will, a schematic of where they have achieved their savings from. One of these is an unfunded mandate on States to provide Medicaid coverage for folks for whom they do not do so now. That's important because it means that it is a State taxpayer that does it. Even though they achieve savings and theoretically are not increasing the Federal deficit, they will be increasing State deficits. According to different Governors, Arnold Schwarzenegger says that in California this unfunded mandate will be $8 billion a year. That's in The Washington Post. Now, they already have a $45 billion deficit in California. Governor Schwarzenegger is saying that it's going to add to that $8 billion a year; in Tennessee their Governor says $5 billion; Texas $20.4 billion increased cost over 10 years; Arizona, $4 billion cost over 5 years. My State of Louisiana, which has a $1.8 billion shortfall in Medicaid over the next 2 years, this will increase the Medicaid deficit by $640 million over 5 years. I wish our State was as wealthy as California; but in our State, $640 million over 5 years is truly a tall mountain to climb. We are joined tonight by Congresswoman Lummis, who is a former State treasurer from Wyoming. Congresswoman Lummis, will you please offer your thoughts.

Mr. CASSIDY. Reclaiming my time, we have about 1 minute left together. We can say that we have really two contrasting visions: one is basically nationalizing the health insurance industry; and although scored as an $81 billion cost savings by the Congressional Budget Office, we have discussed that that's in part because of cuts to Medicare, which means cuts to health care for folks on Medicare, unfunded mandates on the States so that States will force their taxpayers to either pay higher taxes or cut the amount of money available for construction, education, and such like that, to achieve something which frankly seems illusory. But if we contrast that with what the Republican Party is proposing, which is to put patients in the middle of the process, to say to patients, Listen, once you're there, you are empowered to not only direct your health care, but to control costs. And we have quoted data from Kaiser Family Foundation how that truly happens, as well as the experience of groups like yours with numerous employees. So at the end we will say that Republicans' ideas, I think, will empower patients, whereas the Democratic ideas appear to empower government. Thank you for joining us.

Mr. CASSIDY. Excuse me, Congressman. I'm sorry, $74,000 a year for malpractice insurance?

Mr. CASSIDY. Dr. Roe, as we try and come up with a plan which is patient centered, that controls costs, that expands care, OB-GYNs, which you are, have had more problems--except maybe neurosurgeons--with the cost of malpractice. Would you mind commenting?

Mr. CASSIDY. If I may reclaim my time, again, going back to the McKinsey & Company report that spoke about the three imperatives for health reform, one was decreasing administrative costs. I read a statistic that 40 percent of the overhead of a primary practitioner is related to billing. With that debit card, you just lowered that 40 percent to a minimal percent.

Mr. CASSIDY. Reclaiming my time, and that's because you're empowered, if you will. Now, what if someone else were filling up your gas tank? Do you think that if someone else were the responsible party as opposed to you, would it be the same dynamic?

Mr. CASSIDY. So Congressman Gohmert, have you ever driven across five lanes of traffic to get some gasoline at a penny cheaper?

Mr. CASSIDY. And reclaiming my time, to have some independent judgments, again, the Congressional Budget Office is the one that says that the Senate Finance plan will have a growth in cost of 8 percent per year, which more than doubles. Contrast that with the Kaiser Family Foundation study about health savings accounts, and they've found that a family of four with a health savings account and a catastrophic policy on top had a cost of insurance 30 percent cheaper than a family of four with a traditional insurance policy. So because the family is engaged, their costs are 30 percent cheaper, again, per Kaiser Family Foundation. That's bending the cost curve.

Mr. CASSIDY. So, as opposed to the Senate finance plan which, frankly, I think punishes the middle class--again, Speaker Pelosi says that the savings in this plan will come off the backs of the middle class. Instead, we're offering a different sort of thing which costs are controlled by empowering patients. As Dr. Ardoin said, from Ville Platte, Louisiana, patients are the only one that can control costs. And so that would be our sense, empowering patients as opposed to putting the savings off the back of the middle class.

Mr. CASSIDY. Reclaiming my time, I was speaking to that small business man today back home whose premiums have just gone up 27 percent, and he was unaware of the Republican options. And there's a wall of sound that says the only thing we can discuss are the Democratic-controlled bills as opposed to the other options. There is H.R. 3400, which really encapsulates many of the things that Congressman Murphy was speaking about earlier. Now, if we want to say that there are the essentials of health care reform, there's an article by McKinsey & Company which is very good. And it says the essentials are to reduce administrative costs, reduce the cost of chronic care, which is what Congressman Murphy was talking about, and incentivizing patients to make value-conscious decisions so that when the patient actually becomes aware of how much something costs, she will make a different decision than if she feels as if it costs nothing more at all. I know, Congressman Roe, you have experience with the health savings accounts, if you wouldn't mind commenting on that.

Mr. CASSIDY. Now, reclaiming my time, that is not an industry. That is a set of patients. Is that a fair statement?

Mr. CASSIDY. Reclaiming my time, as we come back to this, the conversation is that the bill which has been favorably reported as $81 billion in savings, actually the savings, as Ms. Pelosi says, comes on the back of the middle-class. If you will, part of the conversation is that it punishes the middle class. In fact, if you include the cost of the unfunded mandate to the States, if you recognize that some of these Medicare cuts just won't happen, it is reasonable to say that it is going to increase the deficit. If you will, I would like to say it is not so much fiscal responsibility as it is fiscal sleight of hand. That said, Congressman Thompson, you have been a hospital administrator. What would be the impact of these savings upon the patients who were seen in hospitals where you worked?

Mr. CASSIDY. You are speaking of Medicare, if I may reclaim my time.

Mr. CASSIDY. Reclaiming my time, it strikes me really in one way there is nothing radical about these plans, because all these plans do is take the current top-down, bureaucratic-controlled system and they nationalize it. Now, it is not the same sort of, if you will, patient- centered, where patients are involved in their care, patients are involved in saving costs. It doesn't involve that. In a sense it is new wine in an old wineskin. All we are going to do is put the new wine of a nationalized, centralized, controlled type process, and without any of the things that you describe, which are, if you will, truly transformative, things that would help lower costs by empowering patients and empowering the physicians to work with those patients.

Mr. CASSIDY. Reclaiming my time, Congressman Gohmert, your State will have a 77 percent increase in your Medicaid population, so your governor predicts it will be $4 billion more a year in costs to the State of Texas. So as we score this Senate finance bill, which supposedly saves the Federal Government money, it apparently saves it by making Texans pay more on their State taxes, is that correct?

Mr. CASSIDY. So, reclaiming my time, your experience is basically the kind of experience I have had. If costs are not controlled, ultimately patient care suffers.

Mr. CASSIDY. Your point being that some of these savings that are achieved to give this nice Congressional Budget Office evaluation of the cost of the Senate Finance bill are, if you will, the savings coming from $240 billion cuts to providers. Now, Dr. Roe, you have practiced medicine in Tennessee for many years. Two questions for you. Is Medicare payments to hospitals and physicians so much above their cost that you can decrease them this amount and not impact the ability of those folks to continue to see Medicare patients? I will start with that question.