Judd Gregg

Mr. GREGG

Mr. GREGG. I have very serious reservations about this. I presume the leaders worked hard on reaching this agreement, and I presume that there is going to be further consideration of this issue.

Mr. GREGG. Well, on that representation, I won't object, but I have serious reservations, I must say. Mr. ROCKEFELLER addressed the Chair.

Mr. GREGG. The practical effect of this then is that the programmatic activities are specifically mandated as being either a Medicaid Program or a Blue Cross/Blue Shield equivalent program, is that not correct?

Mr. GREGG. Further reserving the right to object.

Mr. GREGG. Is the practical effect of this amendment that there will only be two options available now to States: One would be to put the child in Medicaid, and the other would be to use a Blue Cross/Blue Shield standard option plan with hearing and eyeglasses?

Mr. GREGG. Reserving the right to object.

Mr. GREGG

Mr. GREGG. So if you follow the logic of the Senator from Massachusetts, you are saying John and Mary Jones, the wage earner of America, should be subsidizing the person who is earning $100,000, that would be the practical effect of adopting Senator Kennedy's amendment.

Mr. GREGG. Thank you, Mr. Chairman. Mr. President, listening to this argument here, it seems to me that it is extraordinarily disjointed coming from the other side. Let's remember what we are talking about. We are talking about people who are making $75,000 or $100,000 a year being supported in their health care under part B by people who are making $25,000 a year, $30,000 a year, or $40,000 a year. People who are working on a line job in New Hampshire, at a restaurant in Texas, and at a garage in New Mexico are supporting people who are retired who are making $75,000 to $100,000. And what is the complaint from the other side? The complaint from the other side is that somebody who makes $100,000 might have to pay 2 percent of their income in their retirement years to buy part B insurance--2 percent. You tell me where you can go out and spend as a senior citizen in the private sector 2 percent of your income and buy a health care plan that is going to cover you for physician costs. You can't do it. The statement was made from the other side that somehow these extremely wealthy people have been paying into the system more; and, they paid in more and, therefore, they should get some sort of extraordinary benefit as a result of that where they are subsidized by people earning $25,000 to $30,000 a year. That is simply not true. They may have paid more into part A, yes. But they have not paid more into part B. Part B is on a cash basis system. It is a pay-as-you-go system. You buy that insurance on an annual basis. The people who pay more for part B happen to be the poor men and women who are working in America who are paying payroll taxes, and who are paying into the general fund and then have to subsidize to the extent of 75 percent the person who is making $100,000. That is the person who is paying more--the wage earner. The concept that high-income individuals should not have to pay the full cost of the health care benefit which they are receiving, the insurance benefit they are receiving, makes no sense at all. It makes no sense that someone who is making $100,000 shouldn't have to bear the full cost of the part B premium. We heard earlier today that the other side was surprised that people are living longer, and that is why they don't want to move too quickly into the issue of whether or not we should raise the retirement age. We heard earlier today from the other side that people were, I guess, surprised that the part A trust fund is going broke. That is why they don't want to move too quickly into the issue of whether or not people should have their age of retirement raised. I can't believe, recognizing the speakers from the other side who have been carrying the water on this issue, that they are surprised that there are rich people in America, and that is what this is about. There are rich people in America, and they are not paying their fair share.

Mr. GREGG. That means 75 percent of the cost is being paid by the wage earner.

Mr. GREGG. By John and Mary Jones who happen to be working on a line in a factory in New Hampshire or working in Texas trying to raise a family, they are paying 75 percent of the cost of the premium of the person who today is receiving part B Medicare benefits, is that not correct?

Mr. GREGG. I think you have raised a very significant point. It goes to the argument of the Senator from Massachusetts. What you are saying is today a person who participates in the Medicare system pays 25 percent of the costs of the part B premium.

Mr. GREGG. Will the Senator yield for a question?

Mr. GREGG

Mr. GREGG. Mr. President, I am not sure who rises in opposition to this amendment. I understand there are some concerns that have been raised. Let me review the amendment so people understand what it does. Essentially, this amendment creates a marketplace, creates competition, and it gives seniors the opportunity to go into the marketplace, be thoughtful purchasers, and the result of being thoughtful purchasers is getting an actual return, a monetary return, for being thoughtful purchasers. What the amendment does is strike the language in the bill which says that there can be no cash incentives tied to any sort of Choice plan. Now, in the original bill as it was presented by myself, the original Choice bill, the vast majority of which has been incorporated in this bill, we had a section which said that if a senior was able to purchase a plan at less dollars, then the senior would be allowed to keep 75 percent of the savings, and 25 percent of the savings would go into the part A trust fund. Under the bill as it is presently structured, the practical effect was it created more marketplace forces. It meant seniors would be more thoughtful purchasers of health care. This is important. Second, it meant that the health care provider groups like HMO's, PPO's and the PSO's who are now being empowered to compete for senior dollars, those groups would have a reason to deliver the same benefit structure as Medicare gives today at the same quality but deliver it at less cost. It is called capitalism. It is called a marketplace force. It is what we are trying to put in place to try to control the cost of health care and Medicare, and it is what is working in the private sector. Under the bill as it is presently structured, that opportunity would be eliminated. Now, we are not suggesting that opportunity has to be pursued. We are just saying let's leave open that opportunity under HCFA's guidance, and by the way, if it was determined this might be a way to create better competition and better health care delivery, it would be available. Now, I cannot speak for the opposition, but what I have heard from the opposition is that there is a feeling that this cash rebate may in some way affect the Treasury. Well, it does not. Under the present law as it is structured in this bill, if there is no cash rebate, the only beneficiaries of more efficiency are the provider groups. They get to keep the money. They get to keep the money. They do not rebate it to the seniors. They get to keep it, to quote Jerry McGuire. Then I heard another comment, ``Basically what we want to do is encourage the provider groups to supply more benefits, not to supply a financial rebate to senior citizens.'' I think that makes sense. I think that should be an option. I think provider groups like PPO's that can deliver the services for less might want to throw in eyeglass care, might want to throw in prescription care. I think it is a good public policy decision to encourage that. But at the same time I bet you there are some provider groups today, because we pay so much in insurance for Medicare, who could pay the cost of eyeglass care and some percentage of prescription drug care and still be delivering that service for considerably less than what the basic premium is today that we pay in Medicare. Who is going to keep that difference? The provider groups. They will keep it in profit. Now, I do find it ironic that people would oppose the concept that we want to open it up to competition in a way that allows the senior citizen to benefit from the cost savings, by putting some pressure on those provider groups to have to say, ``We are going to make $100 extra on this contract. Maybe we better return $50 to the senior citizen because, if we do not, our competitor down the street will make that $100 and they will return that $50 and they will get this client.'' Right now this is an issue. I understand there are some undercurrents of opposition to this. I am appreciative of that. The fact is that this is an attempt to open the marketplace to more competition and create more cost-conscious purchasers and buyers, and as a result I think it is a good approach. It does not demand that that occur. It does not even allow that to occur in the first instance. It simply makes that additional avenue of competition available by giving HCFA the authority to do it rather than banning HCFA from having the authority to do it. I reserve the remainder of my time.

Mr. GREGG. I appreciate the comments of the Senator from New Jersey, but they are inaccurate. This does not create a two-tier system. Under the law, the basic benefits package of the Medicare system has to be supplied by all providers. Therefore, any provider that comes forward and produces a less costly system is going to be producing a system that still meets the basic benefits package of the Medicare system. The added benefits might be eyeglasses or prescription drugs, but those are benefits which are not presently covered by Medicare anyway. So there is no opportunity for a two-tiered system. What the Senator from New Jersey said that was accurate is that efficient suppliers of health care will end up creating a savings. What I am pointing out is that savings then flows to the supplier of the health care, the HMO or the PPO. You are basically underwriting the big health care companies at the disadvantage of seniors because seniors get none of that savings unless there is a benefit added that they may not want. They may not want eyeglasses. They may not want prescription drugs. They may have that under another system. Why not make this option available? However, I have been asked by the chairman of the committee to withdraw the amendment at this time. I have great respect for the chairman of the committee and will acquiesce to his request. I understand his concern. I believe this is bad policy as it is presently structured. It is not in the House bill, and I hope it will be straightened out in Congress because I think we ought to give seniors this chance. I ask unanimous consent to vitiate the yeas and nays and withdraw the amendment.

Mr. GREGG

Mr. GREGG. As long as it is not eliminated.

Mr. GREGG. Fifteen minutes.

Mr. GREGG. First, I rise to congratulate the Senator from New Mexico and the Senator from New Jersey, the chairman and ranking member of the Budget Committee, for getting us to this point where we are in the process of voting on and hopefully reaching a conclusion on two very important reconciliation bills which deal with the critical elements of how we manage entitlement spending and how we manage tax policy here at the Federal level, and which lead, hopefully, to a conclusion that we can say with certainty that the balanced budget agreement which was reached has been met and that we will therefore have a balanced budget which our children can look to as a benefit and which we can look to as a success. I want to speak specifically about two elements of the reconciliation bill which I consider to be important, two different bills, the one that deals with the spending, the entitlement bill, and the one that deals with tax policy, and talk about the Medicare Choice Program, reform program, and the pension language within these two bills, because I think these bills have made giant strides in both these areas toward addressing some fundamental public policy needs. I commend Senator Roth and the Finance Committee for including these important provisions on both Medicare and on pension reform. Earlier this year I introduced S. 246, the Choice care bill. It was essentially similar to legislation that I had introduced in the last Congress, which was included in the Balanced Budget Act that year, which unfortunately was vetoed by the President. The Medicare savings achieved in this reconciliation bill represent only a tentative start, however, toward placing the Medicare system on a path toward long-term solvency. But they are an important start. There are still trillions of dollars of unfunded Medicare liability awaiting us, and this legislation does not address it all, but it does get us off on the right foot. I am pleased we have taken this opportunity to enact some of the structural reforms that are key to real substantive Medicare reform and the stabilization of the Medicare trust funds. In my Choice care bill and in the provisions contained in this legislation, seniors will be able to choose from a large variety of health care purchasing options. They can remain in their traditional Medicare plan, they could instead buy an HMO, or they could buy from a competing medical plan provided that it meets the benefit standards of the present Medicare system. So seniors will have a wide variety of new and exciting choices. When we offer seniors this great array of choices, we benefit not only the seniors but the system as a whole by bringing it into the marketplace. Traditional Medicare must then effectively compete for the right for seniors' health care spending in the marketplace and the people in the marketplace who are willing to give other options to seniors. Suppose, for example, there are plans that can deliver services more effectively and more efficiently than Medicare in a particular region of this Nation. If they can do that, then they can offer a more substantial package of benefits for the same costs, and, therefore, seniors will have an incentive to buy from these plans. Take, for example, if a plan was able to offer the seniors not only the basic Medicare benefit but also maybe an eyeglass benefit or a prescription drug benefit. That option is now going to be available to the seniors. This benefits the health of the system because, at the same time, this legislation gains control over the rate of growth of the per capita spending in the Medicare Program. So whenever seniors move into these plans that can offer them a better benefits package, the entire system will save money because the Medicare system will be spending less money per capita on these seniors than it would under the traditional Medicare system. If they are getting a stronger package, you might say, how can that be? It is called the marketplace, it is called capitalism, it is called what is happening in the private sector today, in the health care system generally. But, unfortunately, it is not helping Medicare, which was designed for a 1960's health care delivery system, which simply is not operable in the 1990's or as we go into the year 2000. This legislation begins to flatten the wide disparity in reimbursement levels that exist between geographic regions in this country by gradually blending over time local and national reimbursement rates. If we do this, then we make spending patterns in Medicare more fair and reward those regions of the country that have already done well in holding down costs. The disparity between regions is really excessive. For example, in some parts of this country, like New Hampshire and Oregon, and I suspect in Wyoming, where the Presiding Officer is from, the costs of Medicare benefits are significantly lower than in areas like Staten Island. In fact, it is lower by almost $500 a month. It is imperative we include such reform as a component of the Medicare Choice Program because only by doing so can we be sure that seniors in low-cost areas will ultimately have access to a wide array of benefit packages. As long as reimbursement rates in some parts of the country are unfairly low, it will be difficult to entice plans into those regions to compete for seniors' dollars even though the health care benefits in those areas today are being maintained at a high level. I believe we should have increased the incentives available to seniors to become cost conscious by offering them opportunities to save money in the manner in which they buy Medicare. That is the incentive that truly moves shoppers, and I believe that Medicare Choice would be a greatly strengthened reform if we had included a cash-rebate incentive. Under my original bill, S. 246, every time a senior bought from a less expensive plan, even though the benefit package in that plan had to meet the same benefit package or exceed the benefit package of the present Medicare system, if the plan costs less because of competition and efficiencies within that plan, then 75 percent of the savings would have gone to the individual, and the remaining 25 percent would have been deposited in the trust fund. Thus, the trust fund would never lose money due to such rebates. On the contrary, the trust fund would receive money every time a senior sees this incentive to make a cost-conscious decision. Unfortunately, this language was left out of this bill, and, in fact, there is some language in this bill which undermines the ability to create incentives in the Medicare system under the Medicare Choice plan. I expect I will be offering an amendment to correct this, an amendment to strike that section which limits the ability to offer incentives, because lacking that important incentive we cannot, in my opinion, create the huge marketplace forces which we need in order to significantly control the costs of health care and to create marketplace forces within the health care systems. Even considering that, this package still offers the incentive to seniors that where their plan can be more efficient, they will be offered an enhanced package of benefits. That is a significant incentive. While perhaps not as powerful a purchasing incentive as an actual cash rebate, for example, it is my hope that the prospect of strengthened benefits will prove a powerful enticement that allows seniors to move more comfortably into buying Medicare Choice plans. I am reminded of the old saying that you begin a trip, a long journey, with one small step. Well, this package that has been brought forth by the Finance Committee is a series of small steps. It has gotten us well into the journey. It has not gotten us to the end, but it has gotten us down the road by giving seniors more choices and more opportunities in the way they purchase their health care. At the same time that the Finance Committee has made significant strides in the area of Medicare by making Choice care available to them in the Choice care plan which I introduced, it is also contained in the tax resolution which will be coming forward later in the week, a significant incentive to increase retirement savings. I congratulate, again, and thank Senator Roth, the chairman of the Finance Committee, for including so many of the ideas and initiatives which I was able to participate in pulling together as chairman of the Retirement Task Force. I also want to particularly thank Senator Bob Graham and other members of the bipartisan working group for their aggressiveness in promoting pension reform which will promote savings. Some months ago, I was asked by Majority Leader Trent Lott to chair the Republican task force on retirement security, and in that capacity I worked with Senator Roth and the rest of the task force to develop a package of proposals introduced a week ago as Senate bill S. 883. I will not use this time here to describe again the dire circumstances of this Nation with respect to retirement savings. When we introduced S. 883, we detailed the vast gap between our Nation's retirement income and the inadequate amount of funding we are currently putting aside to meet those retirement needs. Approximately $7 trillion of unfunded liability sits in our different retirement accounts. I am very pleased to note that no fewer than 13 of the provisions, 13 of the provisions of S. 883 have been included in some form in this budget reconciliation package. While many of them are small or technical corrections without significant revenue impacts, enacting these reforms will do much to improve the prospects for expanding pension coverage and retirement savings. Because time is limited, let me list only a few of the reforms that have come to be included in this package which I think are positive for encouraging people to save for their retirement. This budget reconciliation package includes the first title of the WISE bill, S. 260. This part of the WISE bill--the WISE bill being a bill directed at giving more equity to women in the area of being able to save for their retirement--strengthens the homemaker IRA. I, personally, have placed a higher priority on this provision than on any other of our task force savings initiatives, so I am particularly pleased to see it was included. This provision received the active support of a bipartisan group of Senators, including, most notably, Senator Carol Moseley-Braun from the other side of the aisle. This provision, Mr. President, will sever the link between the homemaker's ability to make a fully tax deductible contribution to IRA and allow her to make that contribution whether or not her husband or her spouse who is in the workplace has a pension plan. This is an important provision not only because it will stimulate additional savings but because it will enable homemakers, especially women, to generate additional savings in their own name. It is about time we do that. I especially want to congratulate, of course, Senator Roth, the chairman of the Finance Committee, who has been a tireless advocate for this idea. This reconciliation bill also will gradually raise the income limits on the tax deductible contributions to IRA's. Our Republican task force endorsed the Roth-Breaux legislation that would have completely phased out the income limits so that every American will be eligible to fully deduct their IRA contributions. I believe that Finance Committee Chairman Roth exerted every effort to achieve as much as he could in this area, and I am pleased he included at least a version of the language from the task force bill, gradually phasing up the income limits, doubling them by the year 2004. This will do a tremendous amount to spur savings in our marketplace and as people head toward retirement. This budget reconciliation package also includes the backloaded IRA, an important new option in retirement savings in which the contributions are not tax deductible and the tax advantages come up upon withdrawal. This expands the capacity of individuals to take advantage of retirement incentives in a way that works best for them. It also limits the revenue loss in the short term from IRA expansion, because the contributions today will be taxed when they are made. I know many individuals will wish to use this alternative backloaded-IRA structure, and thus this will be an important incentive for additional long-term savings. Mr. President, one thing we must do as a nation is simply make it easier and more convenient for people to save. The fact is that if we do not do this, we as a nation are going to face bankruptcy as a result of the costs of our pension systems as the postwar baby-boom generation fully retires in the year 2010 and beyond. One reason why the thrift savings plan worked so well for Federal employees is that it has the feature of automatic deduction from one's payroll, automatic investment, automatic savings. I am pleased that the Finance Committee has also included the provision to allow for automatic payroll deductions into IRA accounts. This will also stimulate additional retirement savings simply by making IRA investment easier. I am also pleased this reconciliation package recognizes we must continue to do more to stimulate retirement savings not only through individual savings but also through employer-provided pensions. I have long been troubled by the limitations that have been placed on employer funding of future pension liabilities. Employers must fund these liabilities sooner or later, and it is good policy to put more of the funding upfront to allow that funding to be invested and to use the compounding interest to increase the investment and to assure an adequate amount of funds when people retire. The reconciliation package picks up most of the provisions authored by the task force to raise the limits on full funding by 5 percent every 2 years. I believe that our Nation's workers will be more secure by their pension benefits being funded more fully. This is a critical point because so many of our pension benefits are underfunded. The capacity of the employer to be able to fully fund the pension benefits at an earlier time in the cycle is critical to assure people will have a pension when they retire. Some of the technical changes made by this bill are very significant. This reconciliation bill would exempt State and local government plans from the cumbersome nondiscrimination rules. This was a prime example of how many of our pension laws and regulations have been unduly complicated. Nondiscrimination rules were not created to apply to Government plans, where it is difficult to find exactly who the employer is and thus to compare employer and employee benefits. This type of commonsense change will make it easier for States and local governments to plan for functions around the country. Another task force-endorsed reform picked up by the reconciliation bill will do much to help small business. Until now, the matching contributions made by the self-employed were treated differently under tax law than the matching contributions made by employers. By straightening out the discrepancy, we will remove another obstacle from among the many that deter small business owners from providing pension coverage. As we all know, small business is where we most need to increase participation in pension plans. There is not time, Mr. President, to discuss every reform that was inserted into this reconciliation bill in the pension area. But I am pleased that this bill draws from reform initiatives in a variety of areas. In the area of portability--I am talking now about the tax bill coming to us after we complete the bill on spending--this bill will add extra protection to defined benefit plans that accept rollovers, protecting them from disqualification if they do facilitate that kind of portability. Moreover, the bill includes a few provisions that will streamline the paperwork process. The bill will facilitate the use of new technologies to replace old paperwork filing, and also eliminate some paperwork requirements that should no longer be required. Finally, various technical inconsistencies within the law will be eliminated if we retain those provisions in conference. Let me close by thanking Chairman Roth for his extraordinary effort and for his willingness to include so many provisions to promote pension reform and Medicare Choice in both reconciliation bills, as well as several other Finance Committee Senators, including Senators Bob Graham, Chuck Grassley, Orrin Hatch, Jim Jeffords, and others. Although I am not on the Finance Committee, I was certainly pleased to be able to work with this group to advance efforts to increase retirement savings. Savings incentives are an effective and important use of tax relief--one of the very best things that we can do with our opportunity this year to relieve the tax burden on American taxpayers. I do hope and expect that we can retain these critical provisions in these two bills. Now let me express one area that I have concern about, and that is the area of how we handle the Medicaid expansion, or the new program for the purposes of assisting child health. I have read the bill. I understand that States have the right to choose between a capped grants program and the expansion of the Medicaid Program. It is not, however, clear to me what the requirements are relative to coverage, and how demanding the Federal Government is going to be on each State as to how and what must be covered on each child. I would have serious reservations if we have created a new entitlement program. This would be a mistake, at a time when we are trying to control the rate of growth of the Federal Government and growth of the most explosive side of the Federal Government, the entitlement accounts of this Government; it would be a serious error for us to embark on a new entitlement program. It is not clear to me, after having read this, whether or not we have done that. It is clear to me that there was an intention not to do that. At least, in the language of the bill, and in the explanation of the bill, statements were made that it was not the intention of the committee to move down the road of a new entitlement program. Whether or not the operable language in fact creates such an event, demanding that certain action be taken, that certain expenditures be made and not funding those, or creating a situation where people can come in and demand those expenditures in a way that creates an entitlement or a mandatory program is not absolutely clear. As we go forward with this debate, I hope we will get clarification on this point. Should it turn out that this is a new entitlement program, I hope we will change that, either here on the floor or in conference, so that the intent of the language is clear, which is to create a grant program to benefit children and their health needs. Mr. President, I yield the floor. I suggest the absence of a quorum.

Mr. GREGG. Absolutely. I would agree to a unanimous consent to place my amendment behind whatever amendments are offered by the chairman and ranking members of the committee.

Mr. GREGG. I would need about 15 minutes.

Mr. GREGG. Mr. President, is the time being controlled?

Mr. GREGG. Mr. President, it is my intention to shortly offer an amendment which is technical in nature but goes to one of the philosophies of the Choice care issue. The Choice care, as presented in this bill which is an excellent step forward in trying to make the Medicare system more viable, efficient, and most importantly more effective for our senior citizens, is a concept where seniors are going to be given an opportunity to go out in the marketplace and choose between the variety of different care providers. Today under the Medicare system, basically seniors are limited to the traditional Medicare and to a very limited HMO option. The traditional Medicare, of course, is a 1960's program designed to meet a 1950's medical system structure. It is not current or effective for today. It is a cost-plus system, for all intents and purposes. It is extraordinarily inefficient, and it does not allow very much flexibility in the marketplace. The pre-Medicare system, as is structured today for the delivery of its different options to seniors, is like driving a 1961 Chevrolet down a highway in 1997 with the understanding that you are going to have to go into the year 2000 still driving a 1961 car. Everything on the car has been replaced. Very little of it works. It is blowing out a lot of smoke. It is chugging along at 45 miles an hour top speed. It simply isn't working correctly. So, in order to try to redress that, the committee has put in place a very creative initiative in the area of Choice care, which essentially says that seniors are now going to have the ability to go out in the marketplace and choose between a variety of different health care providers. That variety of health care providers could involve an HMO. It could involve a PPO where a group of physicians get together. It can be called a PSO, again, a group of physicians getting together. Or it could involve some new way, I suspect, where hospital and doctors and somebody else designs a new way of delivering services. But the services they deliver must equal the benefits package which is presently under the Medicare system. So seniors lose nothing in the definition of the size or nature of their benefits package. And it must equal the benefits package in the area of quality so that seniors lose nothing in the area of quality of their health care. What they get is a marketplace which will come forward and compete for the seniors' health care. What does that do? Well, as we have seen in the private sector, that will give the seniors a whole new variety of choices, a whole new panoply of choices, from which to choose the health care provider group that they want to give them Medicare. They may get options coming at them which say, ``Here, we are going to give you the basic Medicare package, but we are going to also throw in eyeglass care. We are also going to throw in pharmaceutical care. It is not going to cost you any more, but we will put that in to try to attract you to our supplier of health care, to our HMO, to our PPO.'' So seniors are going to get more choices. Under this benefits structure, as put forward in the reconciliation bill, new benefits can be added on top of the benefits that are supplied by the basic Medicare plan. That is a given. That is an incentive that can be put in. But what is not allowed under this package, or what is specifically disallowed, is the concept that a senior could pay less for the same benefit package. You have to remember here that what you are dealing with is the market system. So it is more than likely--in fact, it is expected--that a variety of health care providers, as a result of being efficient, as a result of cost-saving structures which they put in place, are going to be able to supply the health care basic benefits structure of the Medicare system to a senior citizen for less than what it costs today. For example, we pay out $4,800 a year for health care benefit. Insurance pays about $4,800 a year for insurance for seniors. That is a very high price, by the way. It is very likely that you are going to see provider groups come forward at $4,300 a year. There is going to be a $500 saving in that provider group. Under this bill, the way the provider group adjusts for that is they must put more benefits into the package. That is the only option they have. They have to put in eyeglasses. They have to put in drug benefits. That is a reasonable approach. Yes; to give the senior more options at the same price for more health care types of health care. But another option, of course, would be let's sell it to the senior for less. That is probably going to happen, too. You are going to probably see some health care providers give the same package of options but be able to give it at less than $4,800. Under this bill as it is presently structured, if that were to occur, the health care provider would get all the savings. There would not be any incentive for the health care provider to turn some of that savings back to the Government or back to the senior citizen. In the original Choice care plan that I drafted--I do not say this to try to be too expansive about my own efforts--I believe was essentially one of the cores from which this plan was put together, which is in the reconciliation bill. In my original health care plan, I had language which said, if a senior is able to purchase their health care--the same package, the same benefit structure--from a health care provider, that health care provider cannot use that for selection. They cannot try to pick and choose seniors. It must take all comers. If a senior is able to find a health care provider who is willing to charge less--and the quality must be maintained under the standards we have here--then the senior, rather than having only the option of getting more benefits, would also have the option of getting a return on the lower cost premium. So, if you paid $4,800 for seniors' health care but you could purchase health care at say $4,300, there would be a $500 savings annually. We would take that $500 savings. And the health care provider could as an option, rather than buying eyeglass care for the senior or buying health prescription drugs for a senior, could say to the senior, ``We are going to turn that $500 back to you.'' If the health care provider decided to do that, then the senior, under my original bill, would get to keep 75 percent of that and 25 percent goes back to the Federal Treasury. That was the plan of the original bill. This language of this bill says a Medicare Choice organization is not authorized to provide cash or other monetary repayments as an inducement for enrollment. That makes it impossible for an incentive system to be put in place. Markets work on incentives, not only benefit incentives but money incentives. Thus, I believe that subject to the limitations of what HCFA will put on the provider, subject to the limitations that it has to be a quality system, subject to the limitations that it has to be a system which meets a health care insurance plan that meets the basic Medicare requirements of what must be covered, subject to the fact there cannot be adverse selection, there is no disincentive, no downside to creating a marketplace in force beyond added benefits of added cash, of the potential of refunding cash. So, basically, I think this language is counterproductive to the basic goal of Choice care, which is to create market forces not only on behalf of the provider groups but within the senior community to go out and be cost-conscious purchasers. The whole idea of Choice care is to give seniors more options to choose from and create a more efficient marketplace, which will in turn create a lower cost of health care for the basic benefits package of Medicare, or at least slow the rate of growth of the cost of that health care package. That is the whole concept of Choice care. But if you take out of Choice care any financial incentive to save, if you say to seniors: Your only incentive to purchase another plan may be additional benefits, which they may not need, then you have reduced dramatically the marketplace forces. If you take out of the system any incentive for the provider group to rebate those savings, then you have created an atmosphere where provider groups may generate savings, but they will keep them themselves. In that way, I think you skew the marketplace because in an open market when somebody is able to sell a product for less, they pass the benefit of that lower cost on to the consumer, and that is what we are trying to do in the language of the original bill-- pass the benefit of the lower cost of health care on to the consumer. So in order to address that, without putting in place the incentive system that I design in my bill--we are not suggesting that that incentive system should go in as I designed it. We are just suggesting there should be the opportunity for HCFA and for the regulatory agencies to be able to look at incentive systems and not be barred from looking at incentive systems, cash incentive systems, monetary incentive systems. In order to allow that to occur, we need to remove this language. In order to make this Choice care more effective, a potentially more dynamic force to create more of a marketplace event where seniors are actually out there thinking, hey, I intend to look around and see how much I can buy insurance for, and one of the reasons I am looking around is while I might get better benefits, the second reason I am looking around is I may get it at less cost--in order to create that type of market dynamic, which is absolutely critical if you are going to have Choice care work effectively, you cannot have language which says under no circumstances, even if HCFA were to find that it would work, can you in any way create an incentive system that involves monetary consideration. So this language, I believe, is counterproductive to the basic goal of Choice care. I think it should be noted as an aside here also that the concept of Choice care is to make seniors more cost-conscious purchasers, but in doing that you have to remember that, yes, those seniors who are on the system today probably are not going to change. They probably are not going to change their health care system. They have been there. They have been in the system. They came out of the 1950's and 1960's when they had a sole care provider. They are used to less health care. That is the way they are brought up, most of the seniors on the system today. So we are not really targeting the Choice care concept at that group. What we are targeting the Choice care concept at is the next generation of seniors coming into the system, that generation which has already been through the health care explosion of the late 1980's and early 1990's. A variety of health care providers were made available to them, where HMO's became commonplace in the private sector and in the marketplace. These folks are going to be familiar with the concept of a PPO, PSO, or HMO as a provider group, so they are going to be comfortable with going out and shopping around. If we create a disincentive for them to do that by saying, well, if you shop around, you do not get any of the benefits of shopping around other than some higher benefit package which you may not want to begin with, then we will be undermining a culture which already exists. We will be saying to people who are coming out of the private sector, having been used to shopping around--maybe they were in a cafeteria program where they actually got a refund of some of the costs of the lower cost health insurance since they purchased it. We are going to be saying to those people, when you get into the public system, it is basically a cost-plus system and you are not going to be able to get any of benefits of the thoughtful purchase of lower priced health care in relationship to your needs or in relationship to a one-size-fits-all package. So I do believe that to leave this language in not only undermines one of the options that might make Choice care much more effective, but it undermines the natural, inherent attitude that is going to be coming with this new generation of people who receive funds from Choice care, who participate in Medicare, and who have been brought up in a marketplace where Choice care is the typical type of health care approach. Amendment No. 426 So, in light of that explanation, Mr. President, which I know the Presiding Officer was closely following, which I very much appreciate, I would send the amendment to the desk.

Mr. GREGG. Certainly.

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

Mr. GREGG. I would like to ask for the yeas and nays on the amendment.

Mr. GREGG. Reserving the right to object.