Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to join my good friend and colleague Senator Baucus, as well as Senators Lincoln, Roberts, Conrad, Enzi, Schumer, Cochran, Salazar, Smith, Bingaman, and Snowe, to introduce the Pharmacy Access Improvement Act. I am pleased with how well the Medicare Part D program is working. It has demonstrated how effectively private sector competition can work in delivering an entitlement benefit. The program has defied official predictions and come in under budget by $113 billion compared to the baseline projected in 2006. Premiums, initially estimated at $37 for 2006, in fact averaged $23; in 2007 they fell to an average of $22. We understand that this year's bids are even lower and that premiums are expected to fall again next year. The vast majority of Medicare beneficiaries have enrolled in the program, and while there were some troubling start-up problems initially, beneficiaries are very pleased with their plans. At the same time, the first years of implementation of the Part D program have revealed some areas in which the program can be improved. One is related to pharmacy participation in the program. Changes are needed to ensure that Part D treats pharmacies as Congress intended and to make the program friendlier to pharmacists and independent pharmacies. As Senator Baucus, Senator Lincoln, and my other colleagues and I talked to beneficiaries, pharmacists, pharmacy owners and prescription drug plans about changes that would make Medicare Part D work better, many of our discussions centered around how to make sure that Part D works not just for the beneficiaries, the chain drug-stores, and the plans, but also for the local, independent pharmacies, the long-term care pharmacies, and the safety net pharmacies that many beneficiaries rely on. That is exactly what this bill is intended to do. My colleagues and I hope with this bill to improve contracting for pharmacies, increase CMS's and prescription drug plans' customer service, and give beneficiaries better access to pharmacies. Let me give you some of the specifics of the bill. First, the Pharmacy Access Improvement Act would strengthen standards for ensuring convenient beneficiary access to pharmacies. During the first two years of implementation, CMS has permitted some plans to meet the pharmacy access requirements in the law by counting non-preferred and out-of-network pharmacies. The plans charge higher cost-sharing at these pharmacies to discourage their use and drive utilization to preferred pharmacies. Counting non-preferred and out-of-network pharmacies to meet the access requirements is clearly not what Congress had in mind in establishing the beneficiary access guarantees in the law. To correct this problem, this bill would require that plans, with certain exceptions, count only ``open'' pharmacies, those that are accessible to the general public, in meeting the Medicare pharmacy access standard. It also would require plans to count only their preferred in-network pharmacies, not the non-preferred pharmacies, in determining whether they meet the access standard. The bill would allow pharmacies to initiate negotiations with plans under the ``any willing pharmacy'' provision regardless of whether they had already rejected, or failed to act on, previous offers from the plan. The bill also would help ensure the inclusion of safety-net pharmacies in a prescription drug plan's network by preventing plans from specifically excluding 340B entities in the terms of their contracts. 340B entities include federally qualified health centers, migrant health centers, health centers for residents of public housing, school health centers, as well as black lung clinics, entities receiving grants for early intervention for HIV under the Ryan White Act, disproportionate share hospitals, and others. They serve more than ten million people. Many of these entities operate their own pharmacies, which operate under different constraints than other retail pharmacies. They may have abbreviated hours or be available only to patients of the 340B entity. If 340B entities' pharmacies are not available as in-network pharmacies in Part D, these patients may have difficulty getting their prescription drugs. The Model Safety Net Pharmacy Addendum was developed by the Centers for Medicare and Medicaid Services and the Health Research and Services Administration to facilitate 340B entities' participation in Medicare Part D. Because it takes the 340B entities' special circumstances into account, it has appropriate contract language for Part D plans to use when contracting with safety net pharmacies. Under the bill, plans would have to apply the Model Safety Net Pharmacy Addendum to their contracts if a 340B entity so requests. The bill also would require plans to include a contract provision to allow these safety net pharmacies to waive cost-sharing if the entity so requests. Many safety-net pharmacies waive cost-sharing for their patients, but the Part D plan contracts typically prohibit this. Given that 340B entities serve low-income and poor populations, we believe those entities should be able to waive cost sharing for drugs, and our bill would facilitate that. We have found that long-term care pharmacies similarly operate under conditions different from those of retail pharmacies serving the general population. For institutionalized populations, each resident's daily drugs must be specially packaged to help ensure that each gets the drugs meant for her, not for other residents. Long-term care pharmacies specialize in this, but the Part D rules to date do not adequately reflect how long-term care pharmacies work with long-term care facilities, which affects residents' access to these pharmacies. Our bill would require the Secretary to establish rules that include pharmacy access standards for long-term care residents. Another problem that has arisen in the implementation of Part D concerns the ability of beneficiaries to obtain extended supplies of their drugs from a local pharmacy. Our bill therefore would ask the Secretary to establish standards for access to pharmacies that dispense extended supplies of covered drugs. We have also heard from our local independent pharmacies that many, despite contract terms, face delayed payments from prescription drug plans. Given that the pharmacies must pay for their drugs on a more abbreviated schedule, these delays have created cash-flow crises for some pharmacies and put some at risk of closing. As much as I hate to legislate contract terms, I would hate more for the independent pharmacies in my State to close and my beneficiaries to be left without a pharmacy. In our bill, we would require plans to pay most pharmacies within 14 days upon receipt of an electronically submitted clean claim. For paper claims, they would have 30 days. If they were late, the prescription drug plans would have to pay the pharmacies interest. If a pharmacy submitted claims electronically and requested electronic payment, the plan would have to pay electronically. Because long-term care pharmacies operate under unusual circumstances compared with retail pharmacies, our bill would allow pharmacies in long-term care facilities, or that contract with long-term care facilities, at least 30 days but no more than 90 days to submit their claims for reimbursement to the plans. Another problem involves how plans use maximum allowable prices as the upper limit of what they will pay a retail pharmacy for the cost of a drug. What has come to light is that some plans will not disclose to the contracting pharmacies exactly what the maximum allowable prices are either when the contract is proposed to them or even after they sign the contract. It seems unconscionable to me that a pharmacy would be expected to sign a contract where the price term is hidden and not disclosed. In the Medicare program, no other health care providers are subject to signing a contract in which they don't know what they will get paid. Another abusive practice by some plans occurs when they do not update their maximum allowable prices in a timely manner. When a pharmaceutical company raises its price for a drug the pharmacy has to pay that new higher price right away. But the plan might not update what it pays for weeks. That leaves the pharmacy to absorb the difference. The plans that do this know exactly what they are doing. They know they are making the pharmacies eat the higher cost while they delay updating their payment rates. To address these concerns, the bill would require plans to disclose to pharmacies their ``maximum allowable cost'' pricing, and also to update those prices as they change, through an Internet website and a toll-free phone number. Similarly, the bill would require plans to update their prescription drug pricing standard at least every seven days. The drug pricing standard changes frequently, and the price the pharmacy is paid is based on that standard, and so it seemed fair to us that the prescription drug plans' payments should reflect recent changes. Our bill is intended to improve CMS's and prescription drug plans' service to pharmacies. It would require the HHS Secretary to establish a pharmacists' toll-free hotline. Prescription drug plans would have to establish separate pharmacists' and physicians' toll-free hotlines, and would have to comply with customer service standards established by the Secretary. We hope this will prevent pharmacists being placed on long holds when they have customers standing at the counter waiting for their drugs. We have some questions about pharmacists' average dispensing fees, and under the bill the HHS Inspector General would conduct a study of dispensing fees, including studying whether the pharmacist is dispensing a standard prescription or an extended one; whether the pharmacist is in a chain store or an independent pharmacy; whether the pharmacy dispenses specialty pharmacy products, or is a long-term care pharmacy. The Inspector General's report would be due October 1, 2008. I believe that with these changes, the Medicare Part D program will work even better for beneficiaries and for the pharmacies that serve them. As we refine the Medicare Part D program, we want to build on its success even as we hope to make it fairer to all the stakeholders involved, the beneficiaries, the pharmacies, the PDP plans, and the manufacturers. I believe this bill does just that.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I am pleased to join my good friend and colleague Senator Baucus to introduce the Continuing the Advancement of Quality Improvement Act. The purpose of this legislation is to reform Medicare's troubled Quality Improvement Organization, QIO, program. QIOs and their predecessor organizations have long been responsible for ensuring that the care Medicare beneficiaries receive is medically necessary, meets recognized standards and is provided in appropriate settings. They are currently tasked with a wide variety of important roles ranging from investigating beneficiary complaints of poor quality care to giving technical assistance to Medicare providers for improving health care quality. I have been an advocate of reforming the QIO program for quite some time. About 2 years ago, I initiated an investigation into a number of the QIOs. Those investigations revealed a program that is in desperate need of reform. This program was running with little or no oversight, and it was expending more than $1 billion every 3 years with little measurable results. In other words, I found trouble. Let me elaborate on a few disturbing things that I discovered. I found that one QIO leased residential properties for board members and a CEO. That same QIO also used Federal funds to lease automobiles for its top executives. I also found other QIOs who had board members and staff attend conferences, many at lavish resorts. I was not the only one to identify serous concerns with the QIOs. Others identified concerns too. Specifically, the Institute of Medicine, IOM, the General Accountability Office, GAO, and the Department of Health and Human Services, HHS, Office of the Inspector Geheral (OIG) all identified numerous concerns about the effectiveness of this program. These independent organizations also voiced their concerns with the manner in which it is operated and have made recommendations for major reform. Their findings clearly show the need to hold the Centers for Medicare and Medicaid Services, CMS, and the organizations that serve as QIOs accountable for the important tasks they must perform. The Continuing the Advancement of Quality Improvement Act will ensure that the QIO program is not only effective in improving the quality of care provided to our Medicare beneficiaries, but also that it operates in an effective, efficient and accountable manner. Much of this legislation is based on the investigations that I conducted and the troubling findings that I came across and on the work of the IOM, the GAO, and the HHS OIG. First, the Continuing the Advancement of Quality Improvement Act would focus the mission of the QIO program on quality improvement. QIOs currently have many diverse responsibilities. As a result, they served conflicting roles of both ``regulator'' and ``technical assistant.'' This conflict poses significant barriers to QIOs effectively serving either role, and we have come to learn that they really don't perform either function particularly well. The legislation would also address this conflict by following the IOM's recommendation to make the sole purpose of QIOs to be technical assistants for quality improvement and performance measurement. The HHS Secretary would be required to transfer all other QIO: responsibilities to other entities called Medicare Provider Review Organizations, MPROs, in a manner that will support the needs of beneficiaries and be accountable to them. Second, the legislation would improve the beneficiary complaint review process that I think is in desperate need of reform. You may recall that in 2006 we read about the plight of Mr. Schiff. Mr. Schiff went to a QIO and filed a complaint about the care provided to his wife, who died. The QIO in that case was unresponsive to Mr. Schiff. He was forced to take legal action to learn what the QIO found out about his wife's death. He should not have had to do that. After all, he was the one who filed the complaint with the QIO in the first place because he thought that someone did something wrong that lead to his wife's death. It was at that juncture that I learned that the beneficiary complaint review process was too opaque and ineffective. More importantly, beneficiaries were not being properly served. In fact, I came to learn that complainants often do not receive the findings of the investigation conducted by the QIO. Now I ask; what sense does that make? The Continuing the Advancement of Quality Improvement Act would require MPROs to report the investigational findings to the complainant and refer the provider to a QIO for technical assistance and/or the appropriate regulatory body for sanctions. In other words, this part of the bill would bring transparency to a process now shrouded in a cloud of silence. Third, the Continuing the Advancement of Quality Improvement Act would ensure that limited resources go to providers that need them the most. The GAO recently found that QIOs prioritized their assistance to providers who would be easiest to help rather than the providers who were most in need of help. In other words the QIOs decided it was easier to take a B plus student and make them into an A student rather than putting their resources into the D student to bring them up to par. I guess that way they thought that they would look better and more successful. But if you ask me; that is not the best way to spend limited taxpayer resources. Now, this bill will insure that if demand for technical assistance exceeds available resources, the QIOs would give priority to providers that are in rural or underserved areas, in financial need, have low performance measures or have a significant number of beneficiary complaints. In other words the help is going to go to those who need it most. Fourth, the Continuing the Advancement of Quality Improvement Act would make QIO data more available to CMS and providers for quality improvement and patient safety purposes. Amazingly enough, QIOs are currently restricted from sharing such data despite the obvious value of this data for improving health care quality. This legislation would permit the sharing of QIO data with providers for quality improvement and patient safety purposes and require CMS to make recommendations on how to improve the data sharing process. Fifth, the Continuing the Advancement of Quality Improvement Act would promote competition in the QIO program. This is a giant leap forward. These organizations are currently not subject to significant competition because of limitations on who can be a QIO and the availability of noncompetitive contract renewals. This lack of competition has led to a gross lack of accountability and stagnation in the QIO program. This legislation would promote competition by allowing other types of organizations to serve as QIOs and eliminate noncompetitive renewals. Sixth, the Continuing the Advancement of Quality Improvement Act would enhance governance at the QIOs. During the course of my investigations I identified repeated failures in governance. I exposed board members who were more interested in helping themselves than helping others. This bill will also address board member conflicts of interest. My investigations identified numerous incidents of questionable QIO governance practices and board member conflicts of interest. Since the QIO program receives over $400 million in taxpayer funding every year, it is reasonable for us to expect not only that QIOs are governed in an ethical manner free of conflicts of interest, but also that CMS appropriately oversees the program. This legislation would require QIOs to comply with board governance requirements and would require CMS to establish procedures to address conflicts of interest and follow those procedures. Finally, the Continuing the Advancement of Quality Improvement Act would increase much needed accountability in the QIO program. The I0M, the GAO and the HHS OIG have all questioned the effectiveness of the QIO program. This legislation would require the Secretary to perform interim and final evaluations of program effectiveness not only at the individual QIO level, but at the overall QIO program level as a whole. Also, high performing QIOs would receive financial rewards while low performing QIOs would receive financial penalties. Finally, the Secretary would be required to submit a more detailed annual report showing performance results of QIOs and MPROs and details on how taxpayer dollars are spent. We have been placing more emphasis on the quality of care that our Medicare beneficiaries receive from providers. You see this as we require more transparency in the Medicare program with the public reporting of provider quality measures. You also see this as we transform Medicare from being a passive payer of services of any quality to a value-based purchaser. These are important reforms that will help improve the quality of care provided in the Medicare program and work toward ensuring that limited resources are used more efficiently and wisely. As we move toward a payment system based on quality, the reforms in this bill will position the QIO program to support that transformation in Medicare to a quality-based purchaser by making the tools and assistance available to help Medicare providers improve the quality of the care they provide. The Continuing the Advancement of Quality Improvement Act would ensure the QIO program's ability to provide this assistance in an effective, efficient and accountable manner and correct the problems currently plaguing the program.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, may I claim my time?

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendment No. 2547

Mr. GRASSLEY. Madam President, I ask that further reading of the amendments be dispensed with.

Mr. GRASSLEY. Mr. President, en bloc, I want to do for Senator Graham and for Senator Kyl three amendments, and I call up en bloc amendments Nos. 2558, 2537, and 2562.

Mr. GRASSLEY. I yield the floor.

Mr. GRASSLEY. Madam President, I yield the floor.

Mr. GRASSLEY. Mr. President, we simply, then, have an honest disagreement on whether we want to cover additional low-income kids. Some Members do; some Members do not. I am on the side that wants to cover additional low-income children who are eligible for coverage. It is as simple as that. The other main difference is the income eligibility for children. Right now, 91 percent of the SCHIP funds are being spent on kids at or below 200 percent of poverty. Under current law, States have the flexibility to adjust their income eligibility to respond to rising health care costs and the cost of living within a particular State because it differs so much between California and Iowa, to name two States. The Lott amendment imposes a ``Washington knows best'' mentality regarding a State's ability to determine what income within that State is most appropriate. And then it goes one step further: It reduces the Federal match for covering kids above 200 percent of poverty. There are 18 States that currently cover kids above 200 percent of poverty. Under this proposal, a State currently receiving the enhanced match under SCHIP for coverage of eligible children would see that match reduced for those very same children. While I would prefer that all States focus on children at or below 200 percent of poverty, the fact remains that $42,000 a year for a family of four is a lot harder to get by on in some States than in other States. By imposing this new requirement that States limit eligibility, the Lott amendment would cause kids to lose coverage. The table CBO sent us on the Lott amendment confirms that. I am sorry, but in a bill designed to cover kids, cutting them off is a step in the wrong direction. The Finance Committee bill takes a different approach. The committee bill would lower the Federal payments to States that choose to cover kids over 300 percent of poverty level. States that go above that limit would only get the regular Medicaid match. Those States wouldn't get the enhanced Federal match under SCHIP for these higher income kids. So the Finance Committee bill creates a disincentive for States to go in that direction. Some have alleged that the Senate Finance Committee bill would permit States to cover kids and families who make over $80,000. That is false. What the Finance Committee bill does is allow States that have passed State laws to increase eligibility to be grandfathered at the SCHIP match as it is right now. There are no States that do that today. So it is incorrect to say that the Finance package expands coverage for these higher income kids. That just is not accurate. Right now, the only State that is even proposing to go as high as 400 percent of poverty is New York, and their State plan amendment still must be approved by the Bush administration. The Bush administration, not Congress, has to decide whether to approve that coverage. So let me repeat. The Senate Finance bill would only permit New York to get an enhanced match for kids and families over 83 percent a year if this administration approves their plan, and it gives my colleagues on this side of the aisle who don't want that to happen a chance to lobby the Secretary of HHS to make sure it doesn't happen. Given the criticism they leveled against the Finance plan, I would be shocked if they did approve it. I will wait and see, however, if their actions match their rhetoric. Wrapping up, let me just say again that the Lott amendment has many similarities that I have delineated for the Senate--many similarities to the Finance Committee package. I commend them for their work in putting together this proposal, and I would hope that since their amendment has so many similarities to the Senate Finance Committee bill, perhaps they will take another look at the policies in our bipartisan package. There are key differences in the two approaches, however. I appreciate my colleagues' work in pointing out these differences. I, for one, am happy to stand on the side of covering kids rather than cutting them out, and I support giving States flexibility. Amendments Nos. 2540 and 2541 to Amendment No. 2530 Madam President, I call up for consideration two amendments by Senator Ensign, amendments Nos. 2541 and 2540.

Mr. GRASSLEY. Mr. President, I am not going to speak to the substance of the amendment but to the process. This bill is a bipartisan approach where a lot of different points of view were brought together to a bill that can pass this Senate. We have people on the left for whom $50 billion might not be enough money. We have people on the right for whom anything over $5 billion was too much money. We have come out at $35 billion. This is a well-balanced, well-thought-out compromise. Compromise is the essence of getting things done. You have to bring people in the Senate to the center to get things done or nothing is going to get done. In order to get this job done, we have to defeat this amendment, regardless of the merits of it. I yield back.

Mr. GRASSLEY. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendments Nos. 2558, 2537, and 2562, En Bloc

Mr. GRASSLEY. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GRASSLEY. Mr. President, if it is OK, I yield to the Senator from Idaho.

Mr. GRASSLEY. Mr. President, there are legitimate issues being raised about how adults are dealt with in this SCHIP bill. First of all, adding adults to SCHIP should have never been allowed. It was wrong when the Clinton administration started it. It was wrong when the Bush administration continued it. Stopping it is the right thing to do. However, I think this amendment goes too far, too fast, and I encourage my colleagues to consider how the Finance Committee bill deals with adults. Let me be clear, in some States, the problem is extreme. Some States cover more adults than children. The even bigger problem is that several States that cover large numbers of adults have very high rates of uninsured children. This problem started under the Clinton administration but the Bush administration made it worse. Both the Clinton and the Bush administrations helped push Humpty-Dumpty off the wall. Now, it is our job to try to put the piece back together. Advocates for parent coverage under SCHIP argue that in order to get kids covered, you have to cover the parents. I don't buy that argument; too many States that are covering parents are still among the worst in the country at covering kids. But the Congressional Budget Office does buy the argument that covering parents will get a few more kids covered. And they estimate that a reduction in parent coverage will lead to a reduction in children covered, so we have to be cautious. This amendment will lead to children losing coverage. So what we have done in the Finance Committee bill is to say to States covering parents: put up or shut up. You either cover the kids or you get a far smaller Federal match for the parents you want to cover. The bill before us eliminates coverage under SCHIP for childless adults by 2009. It eliminates the enhanced match for parents currently covered under SCHIP and prohibits new state waivers for parents. CBO estimates that it would reduce spending on adults by $1.1 billion. Furthermore, the easiest way to put the emphasis back on lower-income kids is to refocus the SCHIP program away from adults. The Finance Committee bill redirects States' efforts to low-income children. Our bill covers 1.7 million kids in Medicaid who are currently uninsured. We are not talking about adults. We are not talking about middle-income kids. We are talking about 1.7 million of the poorest uninsured kids in this country. As a former Governor, I am sure the Senator from New Hampshire can appreciate that concept. If your States will only get a lower matching rate for covering adults in SCHIP but significant financial incentives for covering low-income kids, where will you direct your energies? The parent policy in the Senate bill represents a reasonable compromise and I urge my colleagues to oppose the Gregg amendment.

Mr. GRASSLEY. Mr. President, the alternative Senator Craig just spoke about is the amendment I wish to speak against. I am a Republican, but I am part of the bipartisan effort to pass this SCHIP bill. So I will tell my colleagues on both sides of the aisle why the Lott amendment, or the Republican alternative, should not be accepted. First of all, I commend the people who authored the alternative because all ideas ought to be considered. It is creative, and it is thoughtful. It certainly contributes to the debate. In reading through it, I am struck by the similarities between this proposal and the bipartisan bill before the Senate that I am backing. Both proposals increase funding for State allotments. Both proposals largely base the new allotments on State projections. Both proposals limit the availability of allotments to 2 years. Both proposals restrict coverage for nonpregnant adults. Both proposals prohibit new waivers for adult coverage. Both proposals provide funds for outreach and enrollment activities. Both proposals include additional State options for premium assistance. Lest my colleagues think I am attacking them with faint praise, I do acknowledge there are significant differences in the approaches between the Republican alternative and our bipartisan bill that is before the Senate. The position taken by the Lott amendment is that SCHIP has been a successful small program that covers about 6 million kids in 2007 and should not cover many, if any, more. The position of the Lott amendment is that any increase in the enrollment of children should be limited to the relatively better off SCHIP kids and not cover the poorer Medicaid kids. That is a perfectly reasonable position for them to take, but that is the biggest difference between the Lott amendment and the bipartisan proposal that is referred to as Grassley-Baucus. The difference is that the amendment supporters cannot claim that it increases coverage for any of the 4 million uninsured children who are eligible and entitled to Medicaid, the kids who need it most. In fact, not only does the Lott amendment do virtually nothing to improve coverage for the 4 million children eligible for Medicaid, but it adds insult to injury by reducing the Medicaid Program by over $10 billion to pay for an expansion of SCHIP. Let me put this another way. The Lott amendment drains billions out of the Medicaid Program, which is a program that covers the poorest of the poor, and it redirects that funding to SCHIP, a program that covers kids and families who make too much to qualify for Medicaid. It is the old issue of robbing Peter to pay Paul. The Senate Finance Committee bill, on the other hand, covers 1.7 million kids eligible for Medicaid but not enrolled. At this point, it is important to reiterate for colleagues that the Senate Finance Committee bill does not expand Medicaid. The bill does not change eligibility for Medicaid one single bit. The Senate Finance Committee bill does include the very precise and targeted incentive funds that Director Peter Orszag of CBO concluded is ``as efficient as you can possibly get per new dollar spent.'' This incentive fund helps increase coverage of 3.2 million uninsured children. The Lott amendment, however, does not increase coverage for the lowest income children and actually causes some individuals, including children currently enrolled in SCHIP, to lose coverage.

Mr. GRASSLEY. Mr. President, I rise for two reasons: one, to give the compromise that is before the Senate a defense against Senator Kerry's amendment; and then to comment on the bill generally, and mostly to comment to some of my fellow colleagues on the Republican side of the aisle in relation to what I consider unfair criticism of this compromise. I do not rise to find fault with the goals Senator Kerry has put forth. I do not even find fault with some of his arguments about loophole closings. I might feel compelled to argue against the marginal tax increases he might want to have, but right now I will concentrate on his view of expanding this compromise, not questioning his motives, and not raising any question about the sincerity of his wanting to do more--except reflecting on the 4 or 5 months Senator Baucus and I have been putting this bill together, we have all had some rude awakenings. Those rude awakenings are that what we put together as a $50 billion package, when it was first scored came back much higher than $50 billion. So to get everything everybody wants in $50 billion is very difficult. The other thing is a philosophy I had, that somehow with something less than $50 billion we would be able to cover every kid under 200 percent of poverty, and we found out that was not possible. I am sure we both--from Senator Kerry's point of view and from my point of view--went into this whole discussion with a great deal of good intent and finding out that it may be a little more difficult than we anticipated. So only with that caveat I ask Senator Kerry to consider, I now want to say why we ought to defend the compromise that is before the Senate. I appreciate Senator Kerry's goal of covering more kids. The bill we have today insures 3.2 million kids who do not have coverage today. I am very proud of that effort, and I am not going to warm to any suggestion that we have not done enough. The Finance Committee bill does so through a new incentive fund, and it is a proposal both sides of the aisle support. It is a compromise. The incentive fund is a product of months of work. We built on ideas that were formed by another bipartisan couple--Senator Rockefeller on one hand for Democrats, Senator Snowe on the other hand for Republicans. We took those ideas that Senator Rockefeller and Senator Snowe had and reshaped them into what we think represents a very efficient and cost-effective way to increase coverage for children. As Senator Kerry may recall, during the markup of the Senate Finance Committee, the Congressional Budget Office Director Peter Orszag characterized the incentive fund ``as efficient as you can possibly get per new dollar spent.'' Simply throwing money at States is not an effective strategy for covering more kids. Cost is an object. The bill that is moving in the House does cover 1 million more kids who are not currently covered than the Senate bill. But they do so while spending $12.2 billion more than we do--getting back to the efficiency and effectiveness statement of the CBO Director Peter Orszag. I will leave it to my colleagues to decide for themselves whether they think $12.2 billion for a million kids is cost effective. But I can assure you, the cost will leave us then--if we do that--without a bipartisan bill, and maybe not the chance of getting anything through, other than an extension. It has been stated, even from our Republican colleagues who do not like the waiver process, that is bad policy. The Finance Committee bill then--I am begging Senator Kerry to understand--is the best of the possible. The left wants more; the right wanted a lot less. We can make speeches or make legislation. Making speeches does not get any kids covered. Making legislation does. Our compromise does that. I urge my colleagues to keep on the right track for making legislation; that is, doing the art of the possible. I oppose this amendment and urge my colleagues to do the same. Now, Mr. President, I would like to speak on the bill. I start out by referring to a chart that I hope we have in the Chamber that has been used by a lot of Republican colleagues over the last 2 or 3 days. This was in relation to speeches that were given yesterday by many of my colleagues who are sincere in their approach. They refer to this as the ``cliff chart.'' Everything to the right of the green is after this legislation expires. They want you to believe we do not take into consideration anything about the future. They are making out this is an unrealistic proposal we have before you, because following that red line up into the future, they maintain it is going to cost more than we can afford. I want to say how this approach is intellectually dishonest. I have a tremendous amount of respect for the Senators who have been giving these speeches, and I can identify a couple. There are probably more who have been giving these speeches, but I want my colleagues to know I respect Senator Gregg, the ranking Republican on the Senate Budget Committee. The Senator from Mississippi, Mr. Trent Lott, our assistant minority leader, I think has referred to it. I respect his views. But I think everybody ought to take into consideration what we are going to do. I have a chart that is going to lay this out. In this particular instance, we clearly are on different sides of this argument. There has been a lot of talk around here about how the Senate Finance Committee bill is funded. This chart was used in that discussion. Taking a hard look at how bills are financed is a good thing. Maybe we do not do that often enough. So let me focus on the criticism that has been made about how this SCHIP bill is financed. We need to step back and look at the whole picture. That is what I am begging my colleagues to do. The SCHIP program is a pretty small part of that picture. The thing about SCHIP is that it is not like Medicaid or Medicare. How many times have you heard the people using this chart refer to it as if it is an entitlement? It is not an entitlement we are discussing today. Or maybe if people do not understand the term ``entitlement''-- it is not a permanent program, such as Medicare and Medicaid because they are entitlements. SCHIP is not. So when the program expires, it truly ends. The day after the authorization ends, poof, there is no more SCHIP program. That is true of any program that sunsets. But Medicare and Medicaid do not sunset. They are entitlements. SCHIP is reauthorized for 5 years. That is 5 years on top of the original 10 years it was authorized. So this year it is sunsetting. That is not an entitlement. It is an expiring program. While I know most of us in this Chamber would no sooner let the Department of Defense expire than we would let SCHIP expire, that is a simple fact. And because it is an expiring program, it is subject to a very particular budget rule. That budget rule does not fit this chart. That budget rule says the Congressional Budget Office must score future spending for the program based upon the last year of the program's current authorization. So the baseline for SCHIP for the next year is $5 billion. That is under existing law. If we pass this legislation, that would not be true. But for what is law right now, in the future, they are going to score that at $5 billion. For the next 5 years, the baseline--let me say again--is $5 billion. For the next 10 years, the baseline for SCHIP is $5 billion. It is actually $5 billion a year forever. Does anyone in this Chamber think the budget rule governing SCHIP is realistic? Well, of course it is not realistic. But that is the way the budget process and the Budget Office must work under existing law. So I am not here to kid anybody. According to the Congressional Budget Office, 1.4 million children would lose coverage if we simply reauthorized SCHIP at the baseline of $5 billion into the future. Who among us would go home and tell our constituents that we individually voted to reauthorize the SCHIP program--reauthorize it, yes. If you stopped there, they would think: Well, you did a good thing. What you are doing right now, you continue to do. But if you did that, what you would be doing, without telling them--but they would soon find out; you do not fool the American people--1.4 million kids would lose coverage. So when the Finance Committee went to work to reauthorize this bill-- Senator Baucus and I, with the help of Senators Hatch and Rockefeller-- we had this problem: The baseline only assured $5 billion a year in spending into the future. It was unrealistic. Let me digress and point to a problem the Agriculture Committee has this year exactly the same way. We did not spend all the money in the agriculture bill last year, so we are working on a baseline that is $15 billion less than it was in 2002, the last time we wrote a farm bill. So this is not just the case of health care for kids. A lot of committees get caught this way. But we do have the realistic fact that costs continue to increase in SCHIP, even though the $5 billion was frozen in the baseline because of the budget rules. So what did we have to do? We had to come up with the money to keep the current program afloat. That meant we had to find at least $14 billion to keep the current program afloat. That is right, of the $35 billion in funding in this bill, $14 billion is put into SCHIP to maintain the current program. That is $14 billion to maintain coverage for kids who are currently enrolled. Do you know what the White House wanted us to believe all this year since they submitted their budget? That you could do that $14 billion-- maintaining the current program--for the $5 billion they put in their budget. Now, those people down at OMB have to be smart enough in advising the President that you cannot do for $5 billion a policy of doing what we are doing now, and even expanding a little bit, for $5 billion when, in fact, it costs $14 billion. To a very real extent, this is the same kind of situation my good friend from New Hampshire, Senator Gregg-- when he was speaking--was complaining about. The current baseline was not realistic. That created a hole in the budget we had to fill. In our case, it was a $14 billion hole to fill, if you want to maintain current policy. So what did we do? Well, we did what you have to do if you are responsible and deliver on what you say you are going to do. We filled it. It is that simple. We had to comply with the budget rules. What people forget around here is the Director of the Congressional Budget Office is like God, and everybody who works in the Budget Office can also be little Gods because what they say has to be followed, and if you don't follow it, you know what you have to do? You have to do almost the impossible around here. You have to have 60 votes to get around it. Should they have that much power? Well, if you are going to have any budget discipline, they have to have that kind of power. But it is that simple. We had to fill that hole. We had to comply with the budget rules, so we did. Do those budget rules make sense? Well, I think I have indicated they probably don't, but that is a question for the Budget Committee to answer, Senator Gregg's committee, Senator Conrad's committee, not the Finance Committee. We have to abide by it. There is another budget rule that the Finance Committee was required to follow. That rule is called pay-go, which people around here know is short for pay-as-you-go financing. It means the bill needs to cover its 6-year costs and 11-year costs, and that makes sense after all. This bill proposes new spending, and because it proposes new spending, you have to pay for it, or have 60 votes. This bill does pay for it. This bill complies with the budget rules. It complies with the pay-go requirements. Now, the SCHIP reauthorization we are debating is only a 5-year authorization. That means 5 years from now it will sunset. Congress will have to go through the process of reviewing it. To remind people it is not an entitlement, Medicare and Medicaid doesn't get a review every so often forced upon them. They may get a review by Congress but instituted by Congress, not forced upon Congress by a sunset. As I think everyone knows, this bill is paid for with an increase in the tobacco tax. This is similar to the original SCHIP bill when it was created under the Republican-controlled Congress in 1997. Now, similar to 1997, when the Republicans did it, we had a problem with how the tobacco tax works. The revenue from the cigarette tax is not growing as fast as health care costs, so that means the revenue-raiser is not going to grow as fast as the cost of health care, generally, and specifically in this instance, the costs associated with the Children's Health Insurance Program. So the Finance Committee did what was required to do to comply with the pay-go budget rule. The Finance Committee bill reduces SCHIP funding to just below the funding that is in the current baseline. That means the Finance Committee in 5 years will have the same problem we face in putting this bill together today. They will have to come up with the funds to keep the program running because the tobacco tax over the years is not going to bring in enough revenue to keep up with the increased costs of health care. That is just like the $14 billion we had to keep and find to keep the current program running with no changes. It is true we are covering even more low-income kids in this bill. That is a good thing. But it also means the Finance Committee in 5 years will have a bigger job to keep the program running at that rate. They will have more kids to keep covering and health care costs will be even higher than they are today. This is for the Finance Committee to face in the next 5 years. Of course, during that 5-year period of time, I hope we get a lot of reform of health care in the United States that reduces costs, gets the uninsured covered, so we are not just dealing with SCHIP. Of course, what we have to face in 5 years is similar to the job the Finance Committee had today to continue the SCHIP program. So it is nothing new. But I think some are getting the impression from some of my colleagues who use this chart that this is something new-- some gimmick to get around budget rules. But my good friend from New Hampshire, Senator Gregg, has expressed serious concern about the bill, and I think we should at least take a moment and look at his concerns in proper perspective. So I go back to one of the charts Senator Gregg has used. Here is the chart used to raise the issue. It shows only the funding in the Finance Committee bill. I think looking at it like this paints a distorted picture. As we all know, the SCHIP program was created to supplement the Medicaid Program. The goal of the program was to encourage States to provide coverage to uninsured children with incomes just above Medicaid eligibility. So to put my colleagues' concerns in perspective, we should look at SCHIP spending as it relates to Medicaid spending. So I would like to draw my colleagues' attention to a new chart that represents figures for the future from SCHIP, as well as from Medicaid, so everyone can fully appreciate the consequences of our SCHIP bill in the context of the Medicaid Program, which SCHIP supplements. So take a closer look. Let's start with this little green line at the bottom. That is current law, the green line that goes along the very bottom of the chart. It is a pretty straight line across the chart. The green line represents the SCHIP baseline under current law. As I have already discussed, it is $5 billion each year for the next 10 years and as far into the future as you can go. If you don't change the law, that is the way it is. Now let's look more closely and honestly at the actual problems we are facing. The massive orange area, as indicated, above the green line is Medicaid. This is the projected Medicaid spending for the next 10 years. It is a lot bigger than SCHIP. Then, on top of that, we are looking to add new spending for the SCHIP bill, and that is the blue line above the Medicaid indicated by the orange. Again, it is not very big. It is quite obvious it is not very big. As you can clearly see, costs are growing at a rapid pace overall. The overwhelming driver of the costs is what? It is Medicaid. We have a very big problem. Entitlement spending is growing, and in future years we are going to struggle to keep these programs afloat. That is why I would not agree to do a $50 billion SCHIP bill. I thought it was too much spending. I am not particularly happy with spending $35 billion, but as I have said, this bill is a compromise, and it is $15 billion less than what the Democratic budget approved. So let's focus on the total obligations of the Federal program. This chart, when you look at the whole picture, puts things in perspective. Now, remember, all that fire and brimstone about the awful cliff that was on the previous chart, the awful cliff that this bill brings before the Senate, where is that cliff, you might ask, on the chart I put before my colleagues. If you look closely, right here where the blue line on top goes down gradually to beyond the green line, if you look at the blue there where it dips down a little bit, that little dip to the right of the dotted vertical line is what my good friend from New Hampshire is so exercised about. So this little blue line is what the debate is all about. The little blue line is this legislation before us. The little blue line is creating all this rancor. But it looks a little bit different here, doesn't it, than it did on that cliff chart I showed you ahead of time. Let me tell my colleagues then what the Finance Committee bill--this little blue line--is not; not what it is but what it is not. Looking at this dip, this is not a government takeover of health care. Looking at this dip, this is not bringing the Canadian health care system to America. Looking at this dip in the blue line, this is not the end of the world as we know it. While I concede that allotments under our bill in the years beyond the 5-year reauthorization do not behave as described in my friend's chart, I don't think it warrants the heated rhetoric we are hearing during this debate yesterday and today and probably tomorrow. SCHIP is not the real fiscal problem we have. The problem is the big orange area. That is Medicaid. The ranking member and I worked together--I am referring now to Senator Gregg, the ranking member of the Budget Committee. He and I worked together last year on the Deficit Reduction Act to try to rein in Medicaid, and I am proud of the work we did. We also found out how hard it is to dial back entitlement spending, even in a Republican-controlled Congress and even with special procedural protections we call reconciliation. We only succeeded in shaving $26 billion over a 10-year period on Medicaid spending. The problem of entitlement spending is still there, and SCHIP is a pebble next to the boulders of Social Security, Medicare, and Medicaid. Do we have a funding issue? Yes. There is no denying that. We had one today that was the $14 billion hole that we had to fill if we were going to do what the President said he wanted to do with $5 billion. The Republican Congress created that hole in 1997, I am sad to say, but the Finance Committee filled that hole and produced a bill that complies with the budget rules. I am confident the Finance Committee in 5 years will do the same thing. I think it is also important to point out we have so many far bigger problems in health care today that we need to deal with. If I am supposed to infer from Senator Gregg's speech that this is supposed to be the opportunity to do something about the problems of entitlement spending, I should point out the obvious: The substitute we expect to vote on does absolutely nothing about the entitlement spending but make a big deal out of it. So I appreciate Senator Gregg's remarks. They are not without some merit, but you have to put them in context. I don't think they fit the crime we are accused of committing. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that Emily Wieneke and Molly Gallentine be granted floor privileges during the debate on H.R. 976.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. GRASSLEY. Madam President, I yield the floor.

Mr. GRASSLEY. I appreciate those kind remarks. I obviously have commented many times on this floor in the last 6 years about the close working relationship I have had with him and his efforts, because most everything that came out of our committee in the last 6 or 7 years has been bipartisan. As we all know, nothing gets through the Senate that is not bipartisan, and so you might as well start at the committee level if you are going to get anything done. I think we have gotten a lot done. I thank the Senator for his kind comments. Obviously everybody knows we are just beginning, yesterday and today and probably this week, and hopefully completing work this week, on the State Children's Health Insurance Program. So we are going to continually refer to the acronym known as SCHIP. This, as I said yesterday, is a product back from 1997, now sunsetting 10 years later, by a Republican-led Congress. It is a very targeted program, because too often some people giving speeches on the floor of this body want to leave the impression, or maybe they think it actually is, an entitlement program. This is not an entitlement program. An entitlement program is when a program goes on forever, and if you qualify, there is automatic access to the program, and withdrawal from the Federal Treasury. This program is not an entitlement program because it is based upon a specific amount of money appropriated for the program. That money has got to be divided up among all of the States and among all of the participants. So it is not an entitlement. I think you are going to hear a lot of debate this week that people want you to think this is an entitlement. This program, targeted as it is, is designed to provide affordable health coverage for low-income children in working families. These families make too much to qualify for Medicaid, which is one of those entitlement programs--and legitimately an entitlement program--but these are families who earn too much to qualify for Medicaid but struggle to afford private insurance. It is important that we reauthorize this very important program targeted for children. The Finance Committee's bill proposes a reasonable approach for reauthorizing SCHIP that is the product of months of bipartisan work in the committee. I emphasize the word ``bipartisan.'' As I have said so often, this Finance bill is a compromise. I think it is the best of what is possible. Clearly folks on the left wanted to do more, and if you did what they wanted to do, you would have a Democratic bill. My colleagues on the right wanted to do less, and if you did and even go in a different direction, if you did what they wanted to do, you would have a Republican-only bill. So one way or the other, you have got 51 to 49, and nothing is going to get done. You have got to have bipartisanship, because it takes 60 votes around here to shut off debate, to go to finality. Neither side got what they wanted. I would suggest to you this is the essence of compromise. This compromise bill maintains the focus on low- income, uninsured children and adds coverage for an additional 3.2 million low-income children, children who could presently qualify but not enough money is available or States were not doing their job of outreach to bring these people in. I have heard some harping from different quarters about the role Senator Hatch and I have played in developing this important piece of legislation. Some on my side, meaning the Republican side, have suggested our efforts at finding compromise have been inconsistent with advancing the Senate Republican agenda. For a person like me who has been chairman of a committee for the last 6 years, getting a lot of Republican programs through, I take exception to someone who says I am not concerned about Republican principles and getting a Republican program, so I want to put this harping in context. I wish to remind the critics that we would not have made tax relief law if we had not found a way to compromise with Democrats who shared some of our tax reduction goals. The bipartisan tax relief plans of 2001, 2003, 2004, and 2006 could not have passed the Senate on Republican votes only. During the 4\1/2\ years of my chairmanship, we were able to enact almost $2 trillion in broad-based tax relief that was not tax relief as an end in itself but was meant to stimulate the economy, and did stimulate the economy to a point where we have had $750 billion more coming into the Federal Treasury than anticipated as a result, as Chairman Greenspan said, of these tax bills expanding the economy and producing 8.2 million new jobs in recent years. None of that would have happened if Republicans were working by ourselves, just by ourselves. It took bipartisanship to get that done. So while the temptation is always there for some Members on both sides of the aisle to not engage the other side, rarely if ever will that policy result in sustaining itself. When it comes to the Republican agenda here, I have not heard any Republicans say to me in the 5 months we have been talking about reauthorizing SCHIP that we should not provide coverage to low-income children. I have not heard anyone say we should not reauthorize this specific bill. Quite to the contrary. First, the President himself made a commitment to covering more children. I wish to refer to the Republican National Committee in New York City in 2004, and President Bush was very firm in making a point on covering children. Let me tell you what he said. America's children must also have a healthy start in life. In a new term [meaning when he was reelected] we will lead an aggressive effort to enroll millions of poor children who are eligible but not signed up for the Government's health insurance program. We will not allow a lack of attention or information to stand between these children and the health care that they need. That was back in New York City, early September, 2004. Three months later the President is reelected, with a mandate. It seems to me the President was very clear in his conviction then. Let me repeat his words because I think they are important. He said he would lead an aggressive effort to enroll millions of poor children in Government health insurance programs. President Bush, this is your friend Chuck Grassley, helping you keep the promise you made in New York City, and helping you keep your mandate that you had as a result of the last election. But somewhere the priorities of this administration seem to have shifted. The Congressional Budget Office reports that the proposal for SCHIP included in the President's fiscal year 2008 budget would result in the loss of coverage, not an increase of coverage as the administration had been advocating for in the year 2004; and that loss of coverage would add up to 1.4 million children and pregnant women. Secretary of Health and Human Services Mike Leavitt has also supported expanding SCHIP. Secretary Leavitt is the President's Cabinet member for health care. When Secretary Leavitt was Governor of Utah, he favored expanding SCHIP during a public media availability on SCHIP following a meeting with the President. Here is what he, now Secretary Leavitt, but then Governor, had to say about that meeting: There was a discussion on children's health care. A lot of celebration among governors and the President on the successes that we have had in implementing the Children's Health Insurance Program. Over the course of the last couple of years, it has been a very successful partnership. And we discussed [I assume that ``we'' means the President and the Governors] ways in which that could be expanded. That is Michael Leavitt. Also there was a Governor Glendenning at that time representing the Democratic Governors, holding a roundtable with the President. Now, however, Secretary Leavitt wrote the Finance Committee to say that the President would veto the Finance Committee's SCHIP bill. But even in that letter, he does not call for ending SCHIP. He does not suggest we should not cover kids through SCHIP, not at all. Here is what he said about SCHIP: The President and I are committed to reauthorizing a program that has made a significant difference in the health of lower-income children. Through 10 years of experience and bipartisan support the State Children's Health Insurance Program serves as a valuable safety net for children and families who do not have the means to purchase affordable health care. We are committed to its continuation. I appreciate this support in the past for expanding SCHIP from both the President and Secretary Leavitt. Now, however, some around here say we should not update the SCHIP program regardless of what the President said in the past in New York City, regardless of what Secretary Leavitt said. These people are basically saying the program is fine as it is right now. They want a simple continuation of the current program and current funding. I will soon say what is wrong with that. But the current program does not work, and the current levels of funding will not do the job everybody says they want to do. Under current law, the current program is authorized to spend $25 billion over the next 5 years. That is if this program were not sunsetting, just continuing on as is. That is what we call a baseline amount. But the Congressional Budget Office says the $25 billion baseline amount will not fully fund the program. CBO says that without more funding, 800,000 kids would lose coverage. To the chagrin of many Republican Senators and even some Democratic Senators, the administration in the last 6 years--in fact, in one case in Wisconsin, in the last 3 months--has allowed adults to get covered under a program for children. That is not what we intended with the Children's Health Insurance Program. SCHIP is for kids, not for adults. There is no letter ``A'' in the acronym ``SCHIP.'' A simple extension of current law, however, means that adults, about whom everybody is complaining for being on a program only for children, would stay on the program. A simple extension would also mean more adults would be added. Of course, the reason for that is that States will continue in the future to ask for waivers and, be those waivers granted, they would be free to get approval for more childless adults and parents to be on a program that was not intended for anything but children. Covering adults drains scarce resources away from what we consider a priority-- children's coverage first. We may end up having to pass a short-term extension of the current law for a few months before work is finished on this reauthorization. I hope not, but that is a possibility. This is something we have to live with while Congress finishes work on a final version of the reauthorization. If that happens, so be it. But hopefully we can avoid a long-term extension of current law. The SCHIP formula funding in current law doesn't work either. It actually gives less money to States that get their kids covered. That doesn't make sense. An extension of current law won't fix the formula. The current formula also penalizes small rural States. That is because uninsured kids are not counted accurately in small rural States. That has resulted in funding shortfalls in those States. An extension of current law means this inaccurate funding formula would continue. That means more shortfalls for these States. Another problem with current law is that there isn't enough funding. Under a straight extension of current law, there are going to be additional State shortfalls. We dealt with that earlier this year. I believe 14, 15, 16 States had shortfalls. The Congressional Budget Office says those shortfalls would cause 800,000 kids to lose coverage. When Congress has faced these shortfalls in the past, what have we done? We just handed out more money to the States. Congress did that on three separate occasions. So that would keep those 800,000 kids from losing coverage, but this wouldn't fix any of the other problems. In fact, it would perpetuate the problems about which everybody is complaining--the funding coverage of adults, No. 1; and No. 2, a fundamentally flawed formula that our legislation takes care of. That is why an extension of current law won't work. More adults? Think of all the Senators who have been complaining to me because there is no ``A'' in ``SCHIP.'' It wasn't meant to cover adults. It just leaves things as they are--more adults. We have a broken funding formula. We have some States coming up short. So you have to appropriate more money. And most importantly, you have 800,000 kids losing coverage. So what other options are there? Well, there is the President's proposal. I am not here to bad-mouth the President's proposal or any of my colleagues on this side of the aisle who are working on proposals. I am not going to, obviously, bad- mouth anything Senator Wyden is doing in the same respect on the Democratic side of the aisle. These policies are good. But I am going to tell the President: Now is not the time. Going back to the President's program on SCHIP, the President's plan is in his budget. It proposes a $4.8 billion increase in SCHIP, but it does not work either. What many have overlooked is that the President's plan assumes a massive redistribution of about $4 billion in SCHIP funds that States have in reserve. So the President assumes States will willingly relinquish all of those SCHIP reserves. It assumes the Secretary will redistribute those funds to States that currently have SCHIP shortfalls. As someone who was worried about State SCHIP shortfalls before, worrying about SCHIP shortfalls was cool, I tell my colleagues: That dog won't hunt. It is robbing Peter to pay Paul. There is no way a proposal that sucks $4 billion out of State coffers will ever fly around this Senate. That is not all. Under the President's plan, 1.4 million children and pregnant women would be cut off of the program between now and 2012; 1.4 million would lose coverage, to emphasize. That is the end result of the President's plan: Rob Peter to pay Paul; 1.4 million children losing coverage. Then we are going to hear about a more comprehensive plan. This is the one I was referring to when I referred to Senator Wyden and when I was referring to the President having a proposal and some well-meaning people on my side of the aisle. Most of the news is from either Senator Wyden or from Republican colleagues of mine, a well-meaning approach, a proposal to use the Tax Code to cover many millions of uninsured children and adults through private health insurance. Again, I don't disagree with that policy, but now is not the time for it. I said during Finance Committee consideration of this bill that I would have liked the debate about SCHIP to focus on a larger effort to address the millions of Americans who are uninsured. I think we are missing an opportunity by only focusing this debate on SCHIP reauthorization. Too many Americans don't have health insurance, and we need to address rising health care costs. That approach will help that as well. I agree that we should be doing more, and I want to see Congress consider proposals to reform the tax treatment of health care to increase coverage for tens of millions of the 46 million people who don't have insurance today. But in terms of this bill and the whole issue of SCHIP reauthorization, that is not realistic. I continue to be disappointed by the fact that there isn't bipartisan support for trying to do more as part of SCHIP. I urged the administration months ago to get bipartisan support--I emphasize bipartisan support because that is the only way we get things done in the Senate--if they want the President's initiative to be successful. I never saw any effort beyond maybe talking to Senator Wyden. It just didn't happen. I looked far and wide. I can't find a single Democratic Senator who will support a tax reform alternative to the SCHIP bill. Even though it won't happen with this bill, we still need to work for a broader package to address the more fundamental problems of rising health costs and the uninsured. Until then, I see SCHIP as a stopgap measure--5 years in duration, 5 years to do something bigger. The $35 billion we are investing in children's health coverage over the next 5 years is a drop in the bucket. When I say $35 billion is a drop in the bucket, somebody will say: You have been in Washington too long. Let me explain. That is one- quarter of 1 percent of the $14 trillion that will be spent on health care in this entire country, public and private expenditures, between now and the end of this authorization, 2012. Economists generally agree that if a condition cannot persist, then it won't persist. The current spending on health care cannot persist. Members on both sides of the aisle have worked on proposals to address the broader issues of the uninsured and health reform overall. I have already referred to Senator Wyden as a leader among Democrats on this issue. He has Senator Bennett of Utah as a Republican working with him. They have been championing a more comprehensive approach to cover the uninsured. Many Republican Senators want to make changes in the Tax Code to help cover tens of millions of Americans of all ages instead of the few million kids whom we do with this legislation. I am looking forward to a fruitful debate on this issue of health reform and the uninsured through the Senate Finance Committee but not until we complete action on this bill. SCHIP must be passed. Turning back to the Finance Committee bill, meaning the SCHIP bill before us, I am rather surprised at the overheated rhetoric that has emerged from both sides of the aisle. It has really been pretty unbelievable. On one side, I hear that nothing less than $50 billion will do the job, and if that number is not reached, children are at risk of dying. On the other side, I hear maintaining coverage for kids currently on this program and covering about half the kids eligible for Medicaid or SCHIP represents a slippery slope that leads us to the Government takeover of the entire health care system. Both sides need to call time-out to cool down, stop the hysteria, and take a look at what we actually have before the Senate in this Finance Committee compromise. In 1997, SCHIP was conceived as a capped block grant program, not an entitlement. That was very important to Republicans. It is our model for how a safety net should work. It is not an open-ended entitlement. The Finance Committee bill maintains the block grant. It does not create an entitlement. I warn my colleagues, they are going to hear this too much, and they are going to hear me wake them up that this is not an entitlement. I believe they know better, but we know the game that is played around here. In 1997, SCHIP was intended to encourage public-private partnerships. The Finance bill improves and strengthens private coverage options. In 1997, SCHIP gave States the tools they needed to control costs. These tools included allowing waiting lists, adding reasonable cost sharing, and limiting enrollment. The Finance bill maintains the flexibility which was in that 1997 act. In 1997, SCHIP gave States the flexibility to address geographical differences in health care costs. States determine eligibility for benefits and tailor the benefits to their needs. The Finance bill affirms the States' role in managing this program. SCHIP is also a humble program when compared to Medicaid. Medicaid is the bigger and more expansive entitlement program. Medicaid is a program for low-income individuals, pregnant women, and families. The bill before us today represents a modest update of the SCHIP program created by the 1997 act. So what does the bill before the Senate actually accomplish? The bill before the Senate extends the program and fixes problems with current law, first, by extending the program that would otherwise expire September 30, doing away with the sunset or extending the sunset 5 years; No. 2, eliminating shortfalls that have plagued the program; No. 3, eliminating enhanced match for coverage of parents and childless adults--in other words, saving money so you spend more on kids; and No. 4, preserving the original SCHIP mission, coverage of low-income children. The bill before the Senate continues and focuses coverage on low- income children by doing the following: No. 1, it provides additional resources targeted toward covering low-income children. No. 2, it extends coverage for the 6.6 million children currently enrolled in SCHIP. I want to emphasize, 91 percent of these families have incomes below 200 percent of poverty. No. 3, it covers an additional 2.7 million children already eligible for Medicaid or SCHIP under current law. No. 4, it provides coverage for an additional 600,000 uninsured low-income children. The Finance Committee bill provides targeted incentives to precisely and, more importantly, efficiently cover the lowest income children. It does this by doing two things: one, by providing precisely targeted incentives that use an incentive fund to encourage enrollment of the lowest income children--in other words, go after those with the most need--and, two, by encouraging States to increase outreach and enrollment. The Director of the Congressional Budget Office, Dr. Peter Orszag, characterized the incentive fund ``as efficient as you can possibly get per new dollar spent.'' The Finance Committee bipartisan bill also removes childless adults and limits payments for parents. It eliminates coverage under SCHIP for childless adults within 2 years. Those are the people who are already on the program. It eliminates the enhanced match for parents covered under SCHIP. It prohibits new State waivers to expand coverage for parents. Now, again, I wish to emphasize this point. It does away with State waivers. You get back to every complaint I hear about this bill. You do not hear complaints about covering kids under 200 percent of poverty from Republicans or Democrats. But you hear an awful lot from both Republicans and Democrats about covering adults because there is no letter ``A'' in the acronym SCHIP, and those adults are covered because the law allows waivers. So this bill does away with waivers, so you do not get the adults on the program the way they have gotten there in the past. Next, it reduces spending on adults by $1.1 billion. Finally, the Finance Committee bill spends less than the $50 billion authorized in the budget. Now, once again, let me emphasize, there are people around here who say $5 billion in addition to what we are spending now is enough. Then, you have people who say only $50 billion more than what we are spending now is enough. Somewhere in the middle is where you end with compromise. Now, for Republicans who are irritated because I am here with a bipartisan compromise, along with 16 other members of the Finance Committee--17 to 4 this bill was voted out--we are $15 billion under what a lot of people in this body would like to spend. I think for some people maybe $50 billion would not have been enough. Continuing SCHIP with static enrollment would cost $14 billion over 5 years over the baseline anyway. At $35 billion, the SCHIP Reauthorization Act will cost $15 billion less than what was included in our budget. This additional funding goes toward coverage of lowest income children. This bill does not include everything on everybody's wish list. I worked hard for a responsible, bipartisan agreement because I wish to see this bill pass. I think we have done a good job. But I also wish to make one more point very clear. My support for this legislation, in the end, will depend upon the outcome of the floor debate and the conference. I am not going to be able to support a bill that changes significantly from what we have in this proposal. I appreciate very much the leadership Chairman Baucus has provided. I thank him and Senator Rockefeller for what they did to reach a bipartisan agreement. I also extend my sincere thanks to Senator Hatch for the hours and hours he has put into this effort. Senator Hatch was the main Republican sponsor of the bill that created the SCHIP program 10 years ago. His commitment to the ideals and fundamentals of the program is steadfast, and the program is better for it. I also have to say I am disappointed by the way the Democratic leadership is handling the process of bringing this bill up for consideration on the floor. It does not bode well for the outcome of the bill. In the Senate, process matters as much as policy, and this process has not been managed in a bipartisan or responsible manner. However, the Finance Committee SCHIP bill is still one I can support. It is a compromise. It is based upon reality. This bill is for kids. So I will end with an analogy from a child's bedtime story. This bill is not too big, it is not too small. It is not too hard, it is not too soft. It is not too hot, it is not too cold. It is just right. Mr. President, I yield the floor.

Mr. GRASSLEY. Madam President, for Senator Ensign, I send an amendment to the desk and ask for its consideration.

Mr. GRASSLEY

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

Mr. GRASSLEY. I suggest the absence of a quorum.

Mr. GRASSLEY. I yield back the remainder of my time.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that Tyler Tigges, Anne Freeman, and Lynda Simmons of the Finance Committee staff be given the privilege of the floor during the duration of the debate on H.R. 976.