Jack Reed

Mr. REED

Mr. REED. Thank you, Mr. President. I thank Senator Reid for yielding. This amendment contains many elements, one of which is apparently an attempt to provide access to specialty medicine and specialists. But it is an attempt that I think falls far short of the mark. If you look at the definition of specialty care, it means, according to the legislation, someone who has ``adequate expertise.'' I don't know of any medical professional who would define themselves as a specialist using that terminology--it seems oxymoronic--``adequate expertise.'' It also says ``age appropriate expertise.'' That is one of the crucial issues we must address. It is one of the critical differences between the Democratic proposal and the Republican amendment that is before us today, because in our proposal we specifically guarantee access to pediatric specialists. For example, these are individuals who we hope have more than ``adequate expertise.'' These are individuals who have been recognized by their colleagues as in fact highly qualified, highly specialized practitioners of medicine. Their amendment is somewhat illusory. It talks about specialists. But then it just says to the insurance company that if you can find someone with adequate expertise, you can call him or her a specialist. And with respect to age, it doesn't have to be a pediatric specialist; it can just be someone who has, as I quote, ``age appropriate expertise.'' What does this mean? Someone who 2 years ago saw a 12-year old or a 13-year old--the individual might, in fact, be a cardiologist, or a nephrologist, but saw the child a couple of years ago--is that ``age- related expertise?" That is not what I think we have to ensure in this legislation. We should be able to guarantee to every parent that if their child is seen by a general practitioner--a pediatrician, we hope, in the case of a child--and that child needs a consultation, or referral, to a pediatric specialist, that is what will happen. Sadly, this legislation falls far short of that. We must do that. I just spent several hours on Monday at the Providence, RI, General Hospital. I met with pediatricians and pediatric specialists. They all told me the same thing. They have a lot of difficulty getting referrals in managed care to pediatric specialists. They sometimes might be offered a referral to an adult specialist. But there is a difference. I think anyone with any knowledge of the medical profession--in fact, far more than I--would identify and recognize immediately that a pediatric cardiologist and a pediatric nephrologist are in a different subset of specialties from what you find at the adult level. Our legislation guarantees this type of elasticity to the family. The other chorus I heard from listening to these practitioners is the fact that the primary care physician in the pediatric field today are overwhelmed because they are seeing children--particularly in the context of some of these attention-deficit disorders--and they are in five or six different types of medicines that they don't see frequently or commonly in their practice. They need to get a referral to a specialist in child psychiatry, for example, or someone who has much more expertise. And, once again, without hard, iron-clad guarantees of access to pediatric specialists, this will not happen. It is not happening now. I seriously question the effectiveness of this particular language when it comes to doing what we think can and must be done; that is, to have, particularly with some of the children--I have made this point time and time again--to have children be with pediatric specialists and not just with people with ``adequate expertise,'' not just someone who may have seen a few children a few years ago but recognized pediatric specialists. I continue to hammer away at this issue of children because typically they are so poorly served in managed care in regard to access to specialists. For one reason, there is a very small volume of chronically ill children who need this access. As a result, managed care panels seldom will employ these pediatric specialists. For this reason, and for the reasons from the other side, my colleagues, I think this amendment falls far short of what we need to do. I strongly urge its rejection and acceptance of the Democratic alternative.

Mr. REED

Mr. REED. Yes.

Mr. REED. I thank the Chair. According to one of the sponsors, Texas State Senator David Sibley, who is Republican, in his words, stated: [T]he Texas experience has been very positive. . . . Both sides are claiming victory: the HMOs are saying ``see how well it works; people aren't filing many reviews.'' The consumer groups are saying that HMOs are being more responsive and are looking more carefully at the needs of patients before they deny claims.

Mr. REED

Mr. REED. I thank the Chair.

Mr. REED. Mr. President, we are engaged in a historic debate about the future of health care in the United States. I have tried very diligently to ensure that children are a large part of this debate. In conjunction with those activities, yesterday I had the opportunity to visit with pediatricians and pediatric specialists in my State of Rhode Island at Hasbro Children's Hospital, an extraordinary hospital in Rhode Island. I am very proud of it. While listening to those professionals, I got a sense of the real needs we have to address in this debate on the Patients' Bill of Rights. First of all, there is tremendous frustration by these physicians and medical professionals about their ability to care for children, their ability to effectively provide the kind of care which parents assume they paid for when they enrolled in the HMO. They are frustrated by the mindless rules. For example, one physician related to me there is the standard practice of giving a child a complete examination at the age of 1. He had a situation where a child came in at 11 months 28 days. They performed the examination, and the insurance company refused to pay because, obviously, the child was not yet 1 year old. That is the type of incredible, mindless bureaucracy these physicians are facing every day. I had another physician tell me--and this was startling to me--she was treating a child for botulism. She was told the company was refusing to pay after the second day. She called--again, here is a physician who is spending valuable time calling to find out why there is no reimbursement--and she was told simply by the reviewer--not a physician, the reviewer--that according to the guidelines of that HMO, no one can survive 2 days with a case of botulism; therefore, they were not paying for more than 2 days. Mercifully, the child survived, and eventually I hope they were paid for their efforts. These are the kinds of frustrations they experience. This is throughout the entire system of health care. There are some very specific issues when it comes to children. One is the issue of developmental progress. An adult is generally fully developed in cognition, in mobility, in all the things that children are still evolving. Yet managed care plans seldom take into consideration the developmental consequences of a decision when it comes to children. Unless we require them to do that, they will continue to avoid that particular aspect. So a child can be denied services. For example, special formulas for infants can be denied because the HMO will say: Well, it is not life-threatening; there is no serious, immediate health consequence. But the problem, of course, is, unless the child gets this special nutrient, that child is not going to develop in a healthy fashion. Five, six, seven, eight years from now, that child is going to have serious problems, but, in the view of an HMO, a dollar saved today is a dollar saved today. Oh, and by the way, that child probably will not even be in their health care system 5 years from now, the way parents and employers change coverage. We have to focus on developmental issues. We also have to ensure children have access to pediatric specialists. There is the presumption that a rose is a rose is a rose, a cardiologist is a cardiologist is a cardiologist, when, in fact, a pediatric cardiologist is a very specific discipline requiring different insights and different skills. We also have to recognize that many very talented pediatricians find themselves overwhelmed today with the young children they are seeing. I had one physician tell me he sees children who have problems with deficit disorders, problems with attention issues, and they have prescribed some very sophisticated pharmaceutical pills and prescriptions that he, frankly, has trouble managing because he is not a child psychiatrist. Yet they have difficulty getting access from the general practitioner to the specialist, the child psychologist to the child psychiatrist. The other thing is, the system has been built upon adult standards. One of the great examples given to me is that there are new standards now to reimburse physicians when they are doing a physical, but they are based upon adult standards. The important things a physician has to do to evaluate a child are not even compensated because they are immaterial to an adult. Why would the company spend money paying a doctor to do that? This whole bias towards adults distorts the care for children in the United States. The Democratic alternative which is being presented today recognizes these issues in a very pronounced and emphatic way. We do explicitly provide for access to pediatric specialists; we do specifically require, in making judgments about health care, the development of a child must be considered as part of the medical necessity test; and we also talk about developing standards, measurements, and evaluations of health care plans that are based on children and not just adults. I urge all of my colleagues to endorse this concept. The best reason to pass this Democratic alternative is to help the children of America.

Mr. REED

Mr. REED. Mr. President, once again we hear the same old misestimate of the costs associated with the legislation. The true cost calculated by the Congressional Budget Office is 4.87 percent over 5 years. That is exactly what Senator Lott said on ``Meet The Press'' on July 11. In his words, ``By the way, the Democratic bill would add 4.8 percent cost. That is less than 1 percent a year.''

Mr. REED. I thank the Chair. As I indicated, the true cost is 4.8 percent over 5 years. ``That is less than 1 percent a year.'' That is what Senator Lott said on ``Meet The Press.'' Indeed, if you calculate that down to a monthly cost, it is about $2 extra a month to the average family paying health care premiums. It is not going to cause a huge eruption of costs. It is also to me somewhat disconcerting to think that the insurance industry is worried about people losing their health care coverage. They raise costs every day. They will raise costs to protect their profits. What this legislation wants to do is guarantee that there is quality in the American health care system. Make no mistake, this amendment is calculated and designed to undercut all the protections in the Patients' Bill of Rights. It is calculated within 2 years to undercut and remove all of the protections that are so necessary to the American family, which we are fighting for. This would be a recipe also to reward those companies that have excessive costs, and it would be virtually impossible to figure out what costs are associated with their need for profits versus what costs are associated with the increase in quality in the system. They would be doing the audits. They would essentially be exempting themselves. We are giving them a key to let them out of the responsibilities to their patients and to their consumers. We can't do that. This is just another red herring, another ruse, and another device to prevent the American people from achieving what they definitely want-- rights in the health care system.

Mr. REED

Mr. REED. Mr. President, I rise today to address an issue of critical importance to nearly 6,000 federal workers in the state of Rhode Island and to the agencies that employ them. The absence of federal locality pay for workers in Rhode Island has created serious recruitment and retention problems for federal offices due to the substantial federal pay differential between Rhode Island and the neighboring states of Massachusetts and Connecticut. Let me briefly give the background on this complex issue. Nine years ago, Congress enacted the Federal Employees Pay Comparability Act of 1990 to correct disparities between Federal and private salaries. The Act authorized the President to grant interim geographic pay adjustments of up to 8% in certain areas with significant pay disparities during 1991-1993. Beginning in 1994, the Act provided for a nationwide system of locality pay intended to close the gap between Federal and private salaries over a nine-year period. Unfortunately, implementation of the Act has created significant pay disparities among Federal employees in southern New England, in particular between Federal employees in Rhode Island and those in Massachusetts and Connecticut. Rhode Island is literally surrounded by locality pay areas. On its western border, Rhode Island is adjacent to the Hartford locality pay area, which includes all of New London County, Connecticut. Rhode Island's entire northern border is adjacent to the Boston-Worcester- Lawrence locality pay area, which includes the towns of Douglas, Uxbridge, Millville, and Blackstone in Worcester County, Massachusetts; and all of Norfolk County, Massachusetts. The Boston pay locality even reaches around the state of Rhode Island to encompass the adjacent town of Thompson, Connecticut, which lies directly west of Woonsocket, Rhode Island, on the opposite side of our state from Boston. Finally, Rhode Island's eastern border is separated from the Boston locality pay area by as little as four miles. One facility within a few miles of the Boston locality pay area, the Naval Undersea Warfare Center in Newport--a premier Navy R&D laboratory with world class facilities and progressive employee benefits--has seen its starting salaries continue to fall below the industry average. As a result, the Center's acceptance rate has dropped to approximately 40% and the average GPA of new employees is down. The Federal Salary Council's eligibility criteria have created what I frequently refer to as a ``donut hole'' in locality pay in our region that leaves thousands of federal employees in Rhode Island with a minus 3.45% pay differential in 1999 when compared to federal employees just a few miles to the north, east, and west.

Mr. REED. I will be happy to yield to the senior Senator from Rhode Island.

Mr. REED. The Senator is correct. This situation makes no sense given the similar cost of labor across southern New England and the unusually heavy commuting patterns between Rhode Island and the Boston and Hartford pay localities, especially with the Boston area. It is only 45 miles from Providence to downtown Boston. The question before us now is, how did we get into this situation, and how can we correct it? The main obstacle to federal locality pay in Rhode Island is the federal government's use of county data to determine the eligibility of ``Areas of Application'' to existing pay localities. First of all, I would note that Rhode Island has no county governments, and the Federal Salary Council's use of county data is, therefore, impractical and arbitrary. Secondly, the criteria for application are structured in such a way that our state cannot become eligible. To be considered, a county must be contiguous to a pay locality; contain at least 2,000 General Schedule employees; have a significant level of urbanization; and demonstrate some economic linkage with the pay locality, defined as commuting at a level of 5% or more into or from the areas in question.

Mr. REED. The Senator is absolutely right. And to remedy this situation, the bill we have introduced, S. 1313, the Rhode Island Federal Worker Fairness Act, will require the President's Pay Agent to consider the State of Rhode Island as one county strictly for the purposes of locality pay. We believe this bill will enable Rhode Island, the smallest state in the nation and about the same size as the average county in the United States, to apply for locality pay on an equal footing with county governments in other parts of the country. We look forward to working with the distinguished Chairman of the Governmental Affairs Committee, Senator Thompson, and the Committee's ranking member, Senator Lieberman, in our effort to reduce the inequities among Federal employees in our region and enable federal offices in Rhode Island to attract and retain qualified employees. I yield the floor.

Mr. REED

Mr. REED. Mr. President, I yield myself 5 minutes of the allotted 10 minutes, and I yield the remaining 5 minutes to the Senator from Maryland, Ms. Mikulski.

Mr. REED

Mr. REED. Mr. President, I rise to discuss the state of home ownership in the U.S., in addition to legislation I am introducing with Senator Schumer and Senator Edwards to enable more families to achieve the American dream of home ownership. Today, we have many reasons to celebrate. Indeed, the national home ownership rate has soared to an all-time high of almost 67 percent, which is up from 64 percent in 1993. Of further significance, this increase has, in large measure, been fueled by the growth in home ownership among minority households. In fact, minorities were responsible for 42 percent of the increase in home ownership between 1994 and 1997, although they only account for 17 percent of the home owner population. Despite these positive developments, a number of distressing trends should give us cause for concern. For example, minority home ownership rates still lag significantly behind those of non-minority households: 45 percent for minorities versus 72 percent for white households. In addition, only 45 percent of low-income households live in owner- occupied homes, as compared to 86 percent of high-income households. These alarming disparities have broad societal implications because of the tremendous benefits associated with home ownership. Historically, home ownership has been the key to wealth creation in this country, and wealth in the form of home equity has enabled families to start businesses, finance their children's education, and cover unexpected expenses. Consequently, unequal home ownership rates lead to wealth disparities. In fact, the median wealth of non-elderly low income home owners is 12 times greater than the median wealth of non-elderly renters of the same income. In addition to wealth-building, home ownership has a positive effect on families and on our communities. Indeed, research has found that children of homeowners are less likely to become involved in the justice system, drop out of school, or have children out of wedlock. Moreover, home ownership is correlated with membership in community organizations and voting, as well as participation in neighborhood enhancing activities. In view of the substantial benefits associated with home ownership, the Federal Government has actively worked to increase the home ownership rate. The primary tools in this effort have been the mortgage interest and the real estate tax deductions. Although these tax deductions have reduced the costs of home ownership for many, they are of little use to low-income households because their itemized tax deductions generally do not exceed the standard deduction. As such, over 90 percent of the total benefits of the mortgage interest deduction accrue to home buyers with incomes greater than $40,000, and because of the progressive nature of federal income tax rates, even if lower-income households do itemize their deductions, they receive a smaller deduction as a percentage of income than more affluent buyers. To attack the home ownership disparity between low- and upper-income households, the Federal Government has relied on the Mortgage Revenue Bond (MRB) program, the Mortgage Credit Certificate (MCC) program, and, to a limited extent, the Low-Income Housing Tax Credit (LIHTC) program. Under these programs, the Federal Government subsidizes interest rates to reduce monthly mortgage costs for low-income home owners. While these programs have been successful, their effects have been limited. Indeed, the size of these programs, as measured by their annual cost--$2.2 billion--pales in comparison to the annual cost of the mortgage and real estate tax deductions--$58 billion. Also, while attacking the income constraints that prevent many low- income families from being able to afford monthly mortgage costs, these programs do not address wealth constraints such as a lack of savings for a down payment and closing costs, that keep many low-income families from becoming home owners. During these times of economic prosperity, we have a rare opportunity to close the home ownership gap that exists between low-income and upper-income families. To this end, I am introducing legislation to establish a Home Ownership Tax Credit targeted to low-income families. This legislation, which has been developed in conjunction with Harvard's Joint Center on Housing Studies, the Brookings Institution, and Self-Help Community Development Corporation, would attack the wealth and income constraints that prevent many low-income families from becoming home owners. Under this legislation, the Federal Government would issue tax credits to participating lenders who would then be obligated to extend either low-interest or zero-interest second mortgages to low-income families. These second mortgages would effectively be used to cover the downpayment and closing costs, although a prospective home buyer would still be required to make a small contribution toward the purchase. Families could defer repayment on the second mortgage for 25 years, at which point a balloon payment would come due, or they could repay the second mortgage over 30-years, concurrent with the repayment of their first mortgage. In either event, the interest rate on the second mortgage would be subsidized, which would lower families' monthly mortgage costs. Also, these second mortgages would eliminate the need for private mortgage insurance, providing additional savings of roughly $60 per month. Under this proposal, families earning as little as $14,500 would, for the first time, have the opportunity of realizing the American dream of home ownership. Mr. President, I believe this legislation represents a common-sense approach to addressing the home ownership disparity which exists and I would hope my colleagues can be supportive. Mr. President, I ask unanimous consent that additional material be printed in the Record.

Mr. REED

Mr. REED. Mr. President, this amendment I am offering, on behalf of myself and Senator Chafee, deals with a problem that is particular to Rhode Island. The problem involves what is known as locality pay. That is the differential pay that Federal employees are given because of higher costs in the area in which they live and work. Essentially it is a comparison between the labor cost in the private sector and the Federal sector. If there are higher private labor costs, there is a differential added to the paycheck of the Federal employee in the particular area. The problem with Rhode Island is, because of the complicated rules of allocation, my entire State is excluded from locality pay. So Federal workers who work in Rhode Island do not receive locality pay, even though their fellow workers, in some cases just a few miles away, in Massachusetts or Connecticut, receive this differential locality pay. Now, the reason the rules disadvantage Rhode Island is, essentially, to qualify for locality pay, you have to have at least 2,000 workers in a county and that county has to be contiguous to another locality area. This is a map of New England and parts of New York. Because of the high cost of labor in Boston and in these major areas, such as New York City and Hartford, CT, because of the concentration of workers, these areas in blue represent locality pay areas. However, Rhode Island has been, in a sense, discriminated against because, for one thing, the managers of this program have stopped the locality line about 4\1/2\ miles from the border, in some cases. In a county in which we have 3,500 workers-- we have enough workers in Newport County, but we are not contiguous to a locality pay area. In northern Rhode Island, we don't have 2,000 people in a certain county, but we are contiguous to another area. So the combination of these rules of numbers of Federal employees and being contiguous to a high locality pay area works to the detriment of Rhode Island. Let me suggest something else that also I think is unique in the situation of Rhode Island. We, I think unlike every other State in the U.S., do not have county governments. We don't operate anything on a county basis. Rhode Island is the smallest State in the Union, roughly 70 miles long and 35 miles wide. The concept of county is something that really is not apropos. When you look at some of the larger States in the country where counties are of sufficient size, where they easily accommodate several thousand workers, then it makes a difference but not in Rhode Island. The proposal that Senator Chafee and I have developed is quite simple; that is, to consider the entire State of Rhode Island as a county. Frankly, in the context of the United States, it is about the size of many counties. If we had that change in the law, we would have a situation where our workers in Rhode Island--we have approximately 6,000 Federal employees --would, in fact, be in an area contiguous to locality pay zones and would qualify for the extra pay. What does this mean in the paychecks of our workers? Essentially, what they are seeing is 3.45 percent less in their 1999 paychecks than people doing the same jobs in New London, CT, and in Boston, MA. In fact, Boston is about 40 miles from Providence. So we have this awkward situation. In fact, we have people who live in Rhode Island and work in Boston for the Federal Government and get paid higher than their neighbors who live in Rhode Island and work in Providence, RI. So this situation is both unfair and, I think, unfortunate. Our amendment would correct that situation and it would do so in a way which, I think, would not do great damage to the overall structure of locality pay throughout the United States. After all, we are talking really about a unique situation--the smallest State in the country, which has no effective counties in it as a measure of any governmental type of activity. So I suggest very strongly that we approach this with a legislative solution. I must thank both the subcommittee chairman, Senator Campbell of Colorado, and also the chairman of the authorizing committee, Senator Thompson. We have been talking with both individuals and they have been most helpful, as have their staffs. They have suggested that we can probably, with their assistance, make more progress by simply today discussing and describing the issue and then relying upon our mutual efforts to try to derive some type of administrative solution to this issue. Let me say one other thing that makes this a very compelling problem to us. This is not simply going out and saying I want to have my workers treated the same way their brethren and sisters are treated just 30 miles away; there is something else here. We find it, in certain cases, difficult to recruit Federal workers to come into the Rhode Island area because if they have a choice between going to Boston or to parts of Connecticut, or parts of Long Island, NY, in the same region, they will choose these other regions because they will automatically get a 3, 4, 5 percent pay increase, simply by choosing to work in Boston rather than working in Providence. We have, in the past, tried to recruit individuals to come into our FBI and our Secret Service office, and many, many qualified people have said: I would love to work there. The challenges are there, the career potential is there, but the problem is, how can I turn to my family and say I am going to take a 3, 4, 5 percent pay cut? This really affects our ability to recruit those individuals that we need--as anyplace needs--to effectively run our Federal agencies. So both Senator Chafee and I are concerned about and committed to this issue. First, we recognize that this is something that, with the cooperation and the help of the Appropriations Committee and Senator Campbell, and the authorizing committee with Senator Thompson, and their ranking members, we hope we can make progress on the administrative front. At this time, unless the Senator from Colorado has comments, I ask unanimous consent to withdraw the amendment.

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

Mr. REED. Mr. President, I ask that my amendment to the bill be called up at this time. It has already been laid down.

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

Mr. REED. Mr. President, I yield the floor. Mr. BINGAMAN addressed the Chair.

Mr. REED

Mr. REED. I ask unanimous consent to send an amendment to the desk to the Treasury-Postal appropriations bill and that the amendment be laid aside.

Mr. REED

Mr. REED. Will the Senator from Pennsylvania yield for a few seconds for a unanimous consent request?

Mr. REED

Mr. REED. Mr. President, I rise to discuss the state of home ownership in the U.S., in addition to legislation I am introducing with Senator Schumer and Senator Edwards to enable more families to achieve the American dream of home ownership. Today, we have many reasons to celebrate. Indeed, the national home ownership rate has soared to an all-time high of almost 67 percent, which is up from 64 percent in 1993. Of further significance, this increase has, in large measure, been fueled by the growth in home ownership among minority households. In fact, minorities were responsible for 42 percent of the increase in home ownership between 1994 and 1997, although they only account for 17 percent of the home owner population. Despite these positive developments, a number of distressing trends should give us cause for concern. For example, minority home ownership rates still lag significantly behind those of non-minority households: 45 percent for minorities versus 72 percent for white households. In addition, only 45 percent of low-income households live in owner- occupied homes, as compared to 86 percent of high-income households. These alarming disparities have broad societal implications because of the tremendous benefits associated with home ownership. Historically, home ownership has been the key to wealth creation in this country, and wealth in the form of home equity has enabled families to start businesses, finance their children's education, and cover unexpected expenses. Consequently, unequal home ownership rates lead to wealth disparities. In fact, the median wealth of non-elderly low income home owners is 12 times greater than the median wealth of non-elderly renters of the same income. In addition to wealth-building, home ownership has a positive effect on families and on our communities. Indeed, research has found that children of homeowners are less likely to become involved in the justice system, drop out of school, or have children out of wedlock. Moreover, home ownership is correlated with membership in community organizations and voting, as well as participation in neighborhood enhancing activities. In view of the substantial benefits associated with home ownership, the Federal Government has actively worked to increase the home ownership rate. The primary tools in this effort have been the mortgage interest and the real estate tax deductions. Although these tax deductions have reduced the costs of home ownership for many, they are of little use to low-income households because their itemized tax deductions generally do not exceed the standard deduction. As such, over 90 percent of the total benefits of the mortgage interest deduction accrue to home buyers with incomes greater than $40,000, and because of the progressive nature of federal income tax rates, even if lower-income households do itemize their deductions, they receive a smaller deduction as a percentage of income than more affluent buyers. To attack the home ownership disparity between low- and upper-income households, the Federal Government has relied on the Mortgage Revenue Bond (MRB) program, the Mortgage Credit Certificate (MCC) program, and, to a limited extent, the Low-Income Housing Tax Credit (LIHTC) program. Under these programs, the Federal Government subsidizes interest rates to reduce monthly mortgage costs for low-income home owners. While these programs have been successful, their effects have been limited. Indeed, the size of these programs, as measured by their annual cost--$2.2 billion--pales in comparison to the annual cost of the mortgage and real estate tax deductions--$58 billion. Also, while attacking the income constraints that prevent many low- income families from being able to afford monthly mortgage costs, these programs do not address wealth constraints such as a lack of savings for a down payment and closing costs, that keep many low-income families from becoming home owners. During these times of economic prosperity, we have a rare opportunity to close the home ownership gap that exists between low-income and upper-income families. To this end, I am introducing legislation to establish a Home Ownership Tax Credit targeted to low-income families. This legislation, which has been developed in conjunction with Harvard's Joint Center on Housing Studies, the Brookings Institution, and Self-Help Community Development Corporation, would attack the wealth and income constraints that prevent many low-income families from becoming home owners. Under this legislation, the Federal Government would issue tax credits to participating lenders who would then be obligated to extend either low-interest or zero-interest second mortgages to low-income families. These second mortgages would effectively be used to cover the downpayment and closing costs, although a prospective home buyer would still be required to make a small contribution toward the purchase. Families could defer repayment on the second mortgage for 25 years, at which point a balloon payment would come due, or they could repay the second mortgage over 30-years, concurrent with the repayment of their first mortgage. In either event, the interest rate on the second mortgage would be subsidized, which would lower families' monthly mortgage costs. Also, these second mortgages would eliminate the need for private mortgage insurance, providing additional savings of roughly $60 per month. Under this proposal, families earning as little as $14,500 would, for the first time, have the opportunity of realizing the American dream of home ownership. Mr. President, I believe this legislation represents a common-sense approach to addressing the home ownership disparity which exists and I would hope my colleagues can be supportive. Mr. President, I ask unanimous consent that additional material be printed in the Record.

Mr. REED

Mr. REED. Mr. President, I thank the distinguished Senator from Vermont for his graciousness in allowing me to speak. I rise today to express my opposition to the Brownback amendment which would implement the Silk Road Strategy Act of 1999. I urge my colleagues to support the second-degree amendment offered by Senators McConnell, Abraham, and Sarbanes. I am also a cosponsor of the second-degree amendment. The purpose of Senator Brownback's amendment is appropriate, in the sense he wants to provide assistance to integrate the Caucasus, provide more cooperation and collaboration between these countries. But what we have seen over the last several decades, really, has been the resistance, particularly by the Government of Azerbaijan and the Government of Turkey, to a cooperative and collaborative relationship with the Government of Armenia. That is a polite way of saying they have been blockading Armenia for many years. In response to that blockade, we have passed, I think wisely, legislation in this Congress and preceding Congresses to prevent our cooperation with these countries unless they lift the blockade. It has been the only real way we have been able to put leverage upon the governments of Turkey and Azerbaijan to recognize that a dialog, cooperation, collaboration, and regional harmony is necessary. The interesting and ironic point at this juncture is that our strategy seems to be working because for the first time, in the context of the NATO meetings here in Washington just a few weeks ago, the President of Armenia and the President of Azerbaijan had face-to-face meetings. Up until that time, the Azeris refused to even recognize, really, the Government of Yerevan to have a constructive dialog. Now at the point where we are making progress, where we have a dialog initiated by the Azeris and the Armenians, we are attempting to undercut that progress with this amendment which will essentially take all the pressure off both the Azeris and the Turks in terms of their relationship with Armenia and, in particular, the region of Nagorno-Karabakh. Nagorno-Karabakh has been for generations an area of concentrated Armenian population but under the control of Azerbaijan. In 1988, Nagorno-Karabakh seceded from Azerbaijan. There was warfare. Mercifully, the warfare has ceased, but this is still a festering point among the three countries--Nagorno-Karabakh, Armenia, and Azerbaijan. Again, if we are to make progress on this very critical issue, the issue of Nagorno-Karabakh, the issue of the general relationship among Armenia and its neighbors, Azerbaijan and Turkey, now is not the time to take off the one piece of leverage, section 907, which is giving the Azeris an incentive to go to the table, sit down, and talk and collaborate. I have had the privilege and the opportunity to travel to Armenia and to Nagorno-Karabakh. There is a sincere willingness to seek an understanding, to seek a cooperative arrangement with the Azeris, with the Turks. But that cannot happen unless there is a dialog. The dialog has started, but my fear is that if we adopt this measure, proposed with every good intention by the Senator from Kansas, we will undercut the progress we have made. We will send a strong message to the Azeris that they do not have to do anything, they do not have to talk to the Armenians, they do not have to do anything, because they now are unrestricted in terms of their type of diplomatic initiatives. It will be terribly unfortunate, and it will essentially undercut the motivation which I believe is compelling and moving this underlying amendment of the Senator from Kansas forward: the notion of regional dialog, regional cooperation, regional collaboration. I urge my colleagues to support the amendment proposed by the Senator from Kentucky, because that is the only way we are going to keep both the Azeris and the Armenians at the table. We know from a long sweep of history, if two nations are talking, then there is hope. Once the dialog is over--and it will end if section 907 is repealed--we are going to see a much more hostile and threatening environment in the Caucasus, one which will not only impact our relationship but also will be a threat to the stability of that region. I thank and commend the Senator from Kentucky, the Senator from Maryland, Mr. Sarbanes, Senator Abraham from Michigan, and those who are standing up and saying, now that we are making progress, now that we finally have a dialog between the President of Azerbaijan and the President of Armenia, do not take away the motivation for that dialog; let's continue to talk; let's continue to work for peace in this area. I yield back any time to the Senator from Vermont.

Mr. REED

Mr. REED. Mr. President, I will speak for a few moments about a topic that has consumed many of us for many days this week and preceding weeks, and that is the Patients' Bill of Rights. A particular concern to me has been the status of children in the various versions of the Patients' Bill of Rights. I argue very strenuously and very emphatically that the Democratic proposal recognizes the key differences between children and adults when it comes to health care, and there is a significant difference. For a few moments, I will try to sketch out some of these differences. First of all, if one looks at the adult population in terms of types of illnesses, they are characterized as chronic diseases with relatively simple symptoms, simple manifestations with known consequences. They are quantifiable over a short period of time. Prostate cancer, breast cancer, heart attack are familiar diseases to all of us. The other aspect of adults is that there is a large volume of adults who have these types of diseases. As a result, there is more than a sufficient supply not only of physicians but of specialists, those who are particularly skilled and particularly knowledgeable about the most efficacious treatments one can use for these types of conditions. In contrast, children present another type of population to the health professionals. The good news is that most children are healthy. But if a child is sick, that child usually does not have one of these chronic diseases that is well-researched and well-treated and staffed by numerous specialists, but something more complicated. In fact, as the professionals say, these diseases are usually complex and with multiple co-morbidities. For the layperson, that means different problems interrelated causing a much more complicated case for the physician. There is another aspect of this dichotomy between adult health and children's health. There are so many healthy children --the good news. The bad news is in terms of managing this population, there is a very small volume of very sick children. This makes it very difficult for physicians to maintain their clinical competency, particularly for general practitioners. They will see many adults who have similar symptoms and they know very well how to treat them. By contrast, they very rarely see chronically ill children, so treating them effectively becomes especially difficult for a general practitioner. Another difficulty is the sense these general practitioners or even adult specialists can treat this population of patients. There is a further complicating factor, that is, to manage cases you need volume, you need data, you need to understand what the best treatments are, and you can only do that in a rational way by studying lots and lots of cases and, frankly, because of the nature of children's health, they do not have the same type of volume in children's diseases as they do in adult illnesses. One other complicating factor is that many times children's true health conditions manifest themselves long after they have actually contracted the condition. It is not the short duration, it is not the heart attack that one can rush the person into the emergency room, do the surgery, apply the drugs, and get that adult on the road to recovery. It is much different when it comes to a child. Managed care organizations and the way they deliver care can compound these inherent differences between the adult population and the children's population. First, let me give credit where credit is due. When a managed care plan does it right, they do preventive care very well. They can anticipate, through the management of the child's case, immunizations and well-baby visits, et cetera. But there are certain inherent characteristics of the managed care system of health care delivery that makes it--appropriate for adults but less appropriate for children. That is why we have to focus a part of our efforts on making sure that children are truly recognized in the legislation we are discussing. First of all, because there are a relatively small number of very sick children, there is not the adequate number of patients for the HMO to maintain a number of pediatric specialists in their provider network. The other fact is that HMOs tend to fragment the market. They go after parts of the market and leave other parts out, but they do not tend to accumulate large groups of children so that a pediatric specialist in a particular area can be fully employed. Another aspect of the managed care delivery system is that they typically look for an affiliation with what they call centers of excellence, hospitals that are well-known for their practice in a certain field of medicine. In most cases, what they consider to be the center of excellence is a center that provides the best adult medicine because after all, they are marketing their products to adults, not to children. They are marketing their products to human resource managers who have to buy for a company, or they are marketing directly to people who make decisions about health care who are by definition adults. When they are out looking for centers of excellence, they are looking for those hospitals that have the best urology departments, have the best records with prostate cancer and breast cancer and heart attack. That is another built-in aspect of the HMO dilemma which complicates the care to children. There is something else. There is an economic incentive for these HMOs to refer children to adult specialists and not to pediatric specialists. There is a great difference between a cardiologist and a pediatric cardiologist because of the differences in caring for a child versus caring for an adult. The incentives are sometimes very compelling. For example, if you have a staff model HMO--that is where the doctor actually works for the HMO--you have a cardiologist simply because that is expected, and if you look at the numbers, you are likely to have a lot of adult cardiology patients and very few children. To add a pediatric cardiologist increases the fixed costs. Why do that when you can simply make a referral to the adult cardiologist that is already in the plan's network? When you look at the nonstaff model, one where they will contract with individual physicians, typically what they will do is look at volume discounts. A physician will say: Sure, I will sign up for so much per visit, but you have to assure me that I will get a lot of visits. That is another incentive to drive children not to pediatric specialists but to adult specialists. As a result, these incentives tend to diminish the quality of health care that HMOs give to children, particularly very sick children. It is not because they have some type of grudge against kids. It is simply, if you look at the market dynamics, if you look at the volume they are trying to manage, it all argues against the type of care that sick children must be assured. In other words, there is a failure in the market to recognize the needs of children. That is why we have to step in. That is why we have to require HMOs to make sure that there is access to pediatric specialists, to make sure HMOs are tracking the health progress of children, to make sure they are measuring their outcomes in terms of children and not just adults. If we do not, the system will always be driven to the needs of the adults who managed care plans are trying to recruit as patients. Another way to say this very simply is that HMOs operate on economies of scale. That is how they make the money. And children with particularly complicated pediatric health care cases do not conform to those types of economies of scale. I mentioned before there are other particular issues about the health status of children that make them distinct from adults, and one of them is the fact that children are still developing. They are constantly changing their functional levels --mobility, toddlers start walking, and then they start running, speech, puberty--all issues which are seldom associated with adult health. As a result, unless you consider development as a first order of priority, you are going to overlook a lot of the emphasis that should be placed on children's health care. I suggest that most HMOs do not factor in the sensitivities to development that are so necessary. Also, when you get into a situation like this, when the development of a child is at stake, the challenge is early intervention. It is not simply catching the disease someplace along its course and providing some type of treatment. It is early intervention. There are numerous examples. One that I recently read about is a condition in infants called strabismus, which is muscle weakness of the eye. If it is not corrected soon after birth when the neurological connections between the eye and the cortex of the brain are being formed--again, this is not a situation that an adult would ever encounter--if you do not catch it early, you are going to have significant and irreversible loss of sight. That is a special concern for kids, a very serious developmental concern for children diagnosed with the disease. That is why we need to make sure that development is built into HMOs consideration of the type of treatment and services they provide children. The economics of HMOs means they will not do it themselves. Therefore, we must make it our job. I think that is what is part and parcel of a good part of the Democratic initiative. Let me suggest something else on the issue of development. My colleague from California, Senator Feinstein, and so many others, have talked about medical necessity. This whole definition of medical necessity tends really to prejudice kids from getting a fair shake in HMOs, for many reasons. First of all, most medical necessity determinations are documented by data. How efficacious is the treatment? How often do we use it? And it goes right back to one of the inherent issues: The very lack of the volume of seriously ill children to generate the kind of data, treatments and outcomes. There is nothing in the law that I can see today at the Federal level that even requires HMOs to start thinking about outcomes, to start thinking about effectiveness in terms of kids. The other thing that we should be concerned about is that a lot of medical necessity is cost based--using the cheapest option. Once again, when you have a very small volume of very sick kids, the appropriate form of treatment may be extremely costly. Another factor concerning medical necessity is that usually it is tied to the notion that a health plan will not pay for innovative treatment. It will not pay for experimental treatment. Once again, many of the treatment modalities used for children, simply because they are not routine, can be called innovative or experimental. That is another example of how children are prejudiced by the system. It is something that we have to correct. Finally, very seldom will you find in the definition of medical necessity this concept of developmental impacts, beyond simply returning to normal function. As a result, it is easy for HMOs to say a treatment or procedure is not medically necessary when children present themselves or their parents present them for care. It is not threatening their lives today, or even their ability to function today. However, they probably know that months from now, a year from now, 2 years from now, their development will be severely impaired. But that is not part of medical necessity. So that is another example of why we have to step up to the plate, particularly when it comes to children. We have learned so much about the development of young children, particularly from ages 0 to 3, including the way the brain develops. Once again, this is an issue that has very little correlation with adult experience. Children are developing. Just a few examples. At the Baylor College of Medicine there was a survey of abused and neglected children. They focused on 20 children who they described, in technical jargon, as living in ``globally understimulating environments.'' In other words, these children were rarely touched; they had no real opportunity to play; they had no opportunity to explore and experiment. They found that the brains of these young children were 20 to 30 percent smaller than those of children who had the opportunity to be stimulated. Indeed, literally parts of their brains had wasted away. Again, this is an issue that would never confront a practitioner looking at an adult. Another example relating to development is in the area of childhood trauma. We have been able to show, through scientific examination, that children who have witnessed violence have physically continued to register that violence, they remain in a high-alert state, and this leads to emotional, behavioral and learning problems. Again, these are conditions that you would never find in an adult, with some exceptions of course. But they are part and parcel of the developmental process of children. If we do not understand that, we do not recognize it. If we do not provide particular protections for children, it will not be done by the HMOs. It costs too much. They do not have the data. It is just something that they do not think about a lot. I see my colleague from Oregon is here. Let me make one other point, if I could.

Mr. REED

Mr. REED. We are really talking about a procedure where we could fully ventilate all the issues--and there are numerous issues that are inherent in this bill. I hope that is the spirit and the actuality of the agreement.

Mr. REED

Mr. REED. I thank the Chair.